At the end of a previous post on this site titled The
Profit Motive and the Entrepreneurial Spirit - Sketch of A Theory of Capitalism
you will find the following paragraph:
And this means that – contrary to what
Schumpeter theorized – the real capitalist cannot be the “financier” who simply
sits in a bank and lends money for “interest”!! The real “capitalist” is
precisely the “entrepreneur” who must go to hell and back to realize a “profit”
for the capital invested – and to do so must also “trans-form” the method of
production and the products as well!! It is not the “entrepreneurial spirit”
that defines capitalism, but it is the intrinsic antagonism of the wage
relation that compels the “capitalist” to be “entrepreneurial”!!!
Let us take up the analysis from
where we left it. To clarify the various analytical “elements” or “ingredients”
that we need, let us turn to Schumpeter’s great contemporary sociologist, Max
Weber:
To be sure the capitalistic form
of an enterprise and the spirit in which it is run generally stand in some sort
of adequate relationship to each other, but not in one of necessary interdependence.
Nevertheless, we provisionally use the expression spirit of (modern) capitalism
^^ to describe that attitude which seeks
profit rationally and systematically
in the manner which we have illustrated by the example of Benjamin Franklin.
This, however, is justified by the historical fact that that attitude of
64
mind has on the one hand found
its most suitable expression in capitalistic enterprise, while on the other the
enterprise has derived its most suitable motive force from the spirit of capitalism.
But the two may very well occur separately. (Max Weber, ‘Protestant Ethic’, pp64-5)
In the Protestantische
Ethik, Weber distinguishes three elements, three factors that may be
isolated in the analysis of capitalism as a mode of production. The first is “the
search for or pursuit of profit”. The second is its “rational and systematic”
character or “manner”, which, combined
with the pursuit of profit he calls the “spirit of capitalism”. And this
spirit of capitalism he takes as distinct
from, third, the “enterprise” which, whilst “on the one hand [has provided
the]…. most suitable expression….[for the spirit of capitalism], on the other….
has derived its most suitable motive force from the spirit of capitalism.
But the two may very well occur separately.”
There is first “an attitude that seeks profit”, although
Weber does not define “profit”. Then there is the “manner” in which profit is
sought, which is “rational and systematic” – and this means that the “rationality
and systematicity” of the pursuit of profit is “separate” from the “motive
force” or “attitude” that “drives” or “causes” the “pursuit of profit”. And
this self-same “motive force” or “attitude” or “pursuit” is what “most suitably”
drives “enterprise”. Enterprise
is therefore “the most suitable expression of the spirit of capitalism” because
it derives its “most suitable motive force” from that spirit. Enterprise and the profit motive are “most suited” to
each other. And to find out why and how, we must look deeper into both the
meaning of “enterprise”, the meaning of “pursuit” or “spirit”, and then the
meaning of “profit” and “rationalization” so that we may arrive at “capitalism”.
It is evident that by “rationalization” Weber does not mean
the organization of “the pursuit of profit” according to a “purposive or
substantive or teleological” rationality.
The “rationality” does not consist in the “goals” of the pursuit but purely in
the fact that the “goal” is a “quantifiable” one. If the “spirit” of capitalism
is the “pursuit” of “profit” and “profit” is a “numerical”, “mathematical
quantity or magnitude” – something “measurable” numerically as “profit” is
because it is a “monetary measure” – then and only then the “spirit” of
capitalism can assume a “rational and systematic” form as a “pursuit” that need
not have any substantive “rationality” or “meaning”.
It follows that it is the “quantification” of whatever it is
that constitutes the “substance” or “meaning” of “profit” as a social
institution – it is this “quantification” or “form-alization” of the social content of “profit” that allows its “rational
and systematic” pursuit. But the “pursuit”
as a “motive force” is distinct from the “rationalization”. The “pursuit” of a
goal or end that could not be “quantified” could not be “rationalized” for the
precise reason that the “goal” is not achievable by formally “rational” means.
Capitalism is therefore a mode of social organization that allows the “pursuit”
of profit to be conducted in a “scientific”, mathematically calculable manner
because its “goal” can be “quantified” in the monetary entity of “profit”.
We have then a “motive
force” or “drive” or “ethos” that aims at the “rational and systematic” goal of
the “quantifiable” entity called “profit”. And this means that the only “rational
and systematic” aim or goal of the “pursuit of profit” is its “maximization”
over a period of time.
Weber distinguishes the “motive force”, the motivation or
drive of capitalism, its “spirit”, from the actual “formal-rational goal”, on
one side – the maximization of profit; and from its “purposive goal” which is
the “satisfaction” of the “motive force”. “Profit” as a formal and numerical “quantity”
cannot be “its own goal”, because then it would be meaningless and purposeless
as a “numerical quantity”. The purpose behind the pursuit of profit, the “meaning”
of profit, must be something other than its numerical expression, and can be
its “monetary” expression only so far as “money” means something “other” than a
mere “quantity”!
To understand “profit” we must understand the “motive force”
behind “the pursuit of profit” – what makes profit a “pursuit” -; and we must
understand how “profit” can be “quantified”, that is, we need to know what
allows the “content” of profit to enable it to be “quantified” – not (!) because
the “content of profit” is an actual “quantity” but because it is subject to “quantification”.
In other words, how is it possible for
the “content” of profit (profit outside its “numerical” form) to be “quantified”?
If “profit” were a mere “quantity”, then there would be no
need for “enterprise” because its “maximization” would depend entirely on some “engineering
numerical formula”. The “enterprise” is needed because “profit” needs “entrepreneurial
conduct” in order to be derived. Differently put, if “profit” depended merely
on the “entirely individual conduct” of the “entrepreneur” without involving
other people, then it could never (!) be described as “enterprise” or “entrepreneurship”
but merely as “skill” or “craft” or “strength” in the performance of a “task”. “Enterprise ” involves the organization
of human beings around some “activity”. But this “activity” need not be “for
profit” – and that is why enterprise is indispensable for capitalism but
capitalism is not indispensable for “enterprise”!
Yet when Weber argues that “the two may very well occur separately”, he means that “the
entrepreneurial spirit” and “the spirit of capitalism” are two separate concepts or human motivations
because for him “the spirit of capitalism” contains a “rational and systemic”
component in “the pursuit of profit” that “the entrepreneurial spirit” need not
necessarily contain. But here Weber is as wrong as can be because the two
concepts are “separable” from the other only
because “entrepreneurship” does not necessarily contain “the spirit of
capitalism”, whereas “the spirit of capitalism” necessarily implies “the
entrepreneurial spirit”! The mistake
that Weber has made is to imagine that the capitalist pursuit of profit, whilst
it may have an “irrational ethos” as its “motive force”, does not necessarily
involve “enterprise” but involves necessarily “rational and systematic” methods
for the maximization of profit.
Weber goes to great lengths to differentiate the less
“rational” personal qualities of the “ideal type” of the entrepreneur as
distinct from the “capitalist” and invokes Sombart to distinguish between “traditionalist”
and “entrepreneurial” businesses (pp.63-65 ff) and between profit maximization over
time and sheer opportunistic rapacity (p.56). Yet neither of these distinctions detracts from the fact that capitalist
investment requires necessarily the realization of profit and therefore also “the
command of living labour” which is the essential feature of capitalism
regardless of whether “profits” are then distributed as “interest” or “rent” to
“passive investors”!
That is why Weber never took adequate notice of Schumpeter’s
Unternehmergeist (entrepreneurial
spirit) and chose to concentrate instead on the leitender Geist (leadership spirit) of the charismatic political
leader and on the “calling” of the “rationalizing” scientist. Schumpeter
himself, as we have seen, incorrectly borrows the same “dichotomy” of “capitalist/financier”
(dull and calculating) and “entrepreneur” (“enterprising” and “innovative” as
well as a “captain of industry”). But
both great thinkers neglect the fact that there is no “capitalist enterprise”
or “industry” at all without the political Will to Power that hides behind the
seemingly “formal, quantitative, monetary” notion of “profit”! Both assume that
the normal operation of capitalism – however irrational its “motive force” or “entrepreneurial
spirit” –is or can be entirely “rational and systematic” and “scientific” – in other
words devoid of social antagonism!
And this, as we will see, is simply impossible where the wage relation
and “profit” are concerned.
[To be continued]
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