The Weberian interpretation of capitalism distinguishes its
operari, its mechanical functioning which is “rational and systematic” not in a
normative or purposive or still less a teleological sense, but only because its
“economic action” can be “measured” according to mathematical relations that serve
“to maximize” the “profit” expressed in monetary terms of the capitalist
activity. The ultimate “rationality”, the basis upon which the
“rational-mathematic” and “systematic-scientific” measurement of capitalist
economic action is at all possible is the calculation of “profit”, which Weber
defines as the difference, monetarily expressed, between expenses and receipts.
All other “impulses” must be subordinated to this overriding calculating
“rationality”. Yet this does not mean if the “measurement” of profit and the
economic actions taken in its “pursuit” can be calculated mathematically so as
to maximize that profit – this does not mean that the “pursuit” itself is
“rational” in any substantive sense. The “rationality” of capitalist economic
action is limited to and defined by the sheer “calculability” of the steps
taken in the pursuit of profit maximization. But the “pursuit” itself cannot be
“rational” in the sense that the ultimate “motive forces” of human action
cannot be subjected to the formal “rationality” of mathematical calculation and
maximization.
This is a topic we will address in connection with the adoption of
neoclassical value theory from the Austrian
School through to Keynes.
Unlimited greed for gain is not in the least
identical with capitalism and is still less its spirit. Capitalism may even be identical with the restraint
or at least a rational tempering of this irrational impulse. But capitalism is
identical with the pursuit of profit, and forever renewed profit, by means of continuous, rational, capitalistic
enterprise. For it must be so: in a wholly capitalistic order of society, an
individual capitalistic enterprise which did not take advantage of its
opportunities for profit-making would be doomed to extinction.
Let us now define our terms somewhat more carefully
than is generally done. We will define a capitalistic economic action as one
which rests on the expectation of profit by the utilization of opportunities
for exchange, that is on (formally) peaceful chances of profit….
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…Where capitalistic acquisition is rationally
pursued, the corresponding action is adjusted to calculations in terms of
capital. This means that the action is adapted to a systematic utilization of
goods or personal services as means of acquisition in such a way that, at the
close of a business period, the balance of the enterprise in money assets (or,
in the case of a continuous enterprise, the periodically estimated money value
of assets) exceeds the capital, i.e. the estimated value of the material means
of production used for acquisition in exchange. (pp17-8)
At first, Weber’s reasoning appears to be circuitous because
he defines “a capitalistic economic action as one which rests on the pursuit
and expectation of profit and renewed
profit by means of continuous, rational, capitalistic enterprise”. But he quickly extricates himself out of
the difficulty by further defining “capitalistic enterprise” as
a
systematic utilization of goods or personal services as means of acquisition in
such a way that, at the close of a business period, the balance of the
enterprise in money assets (or, in the case of a continuous enterprise, the
periodically estimated money value of assets) exceeds the capital, i.e. the
estimated value of the material means of production used for acquisition in
exchange.
Thus, “capitalistic enterprise” consists of “exchange for
profit” defined as the monetary excess of receipts over expenses. Nowhere does
Weber attempt to define “profit” except in monetary terms. And the profit is
the simple result of “exchange” of goods. Weber here isolates three elements,
namely, “rational” action, exchange and profits. The problem remains, however,
that Weber does not define or explain “profit” and therefore we do not know yet
how the simple act of “exchange” can give rise “rationally and systematically”
to the realization of “profits” unless this is done through extortion or
trickstery. This faulty definition is also inconsistent with Weber’s own
position that “the rational organization of free labour” and therefore of
“production” and “productivity” (see below) is crucial to the definition of
capitalism – indicating thereby that “profit” is to be found in the sphere of
production and not in the sphere of exchange.
Indeed, having considered a number of “peculiarities” of
capitalist economic action, Weber then comes to this startling statement:
However,
all these peculiarities of Western capitalism have derived their significance
in the last analysis only from their association with the capitalistic
organization of labour. Even what is generally called commercialization, the
development of negotiable securities and the rationalization of speculation,
the exchanges, etc., is connected with it. For without the rational
capitalistic organization of labour, all this, so far as it was possible at
all, would have nothing like the same significance, above all for the social
structure and all the specific problems of the modem Occident connected with
it.
Exact calculation—the basis of
everything else—is only possible on a basis of free labour. (p22)
Now, we certainly agree that Weber here is getting very
close to the mark. Unfortunately, however, he fails to give any indication at
all as to why and how “exact calculation… is only possible on a basis of free
labour”!
Hence
in a universal history of culture the central problem for us is not, in the
last analysis, even from a purely economic view-point, the development of
capitalistic activity as such, differing in different cultures only
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in
form: the adventurer type, or capitalism in trade, war, politics, or
administration as sources of gain. It is rather the origin of this sober
bourgeois capitalism with its rational organization of free labour.
Clearly, then, “free labour” is at the very centre of
capitalism with the added attribute or characteristic that capitalism is
responsible for “its rational organization”. But how does this lead us to
profit? Weber does not explain even though he seems to have extensive insights
into the workings of industrial relations and of the labour process for the
production of goods for exchange as well as of the “antagonism” of free labour
and capital with regard to the wage relation, that is, with regard to the
antagonism of living labour to alienate itself to the command of the
capitalist:
A
man does not "by nature" wish to earn more and more money but simply
to live as he is accustomed"* to live and to earn as much as is necessary
for that purpose. Wherever modern capitalism has begun its work of increasing
the productivity of human labour by increasing its intensity, it has
encountered the immensely stubborn resistance of this leading trait of pre-capitalistic
labour. And to-day it encounters it the more, the more backward (from a
capitalistic point of view) the labouring forces are with which it has to deal.
Another
obvious possibility, to return to our example, since the appeal to the
acquisitive instinct through higher wage-rates failed, would have been to try
the opposite policy, to force the worker by reduction of his wage-rates to work
harder to earn the same amount than he did before. Low wages and high profits
seem even to-day to a superficial observer to stand in correlation; everything
which is paid out in wages seems to involve a corresponding reduction of profits.
That road capitalism has taken again and again since its beginning. (p60)
Nor
is Weber bereft of knowledge about the dynamic whereby the antagonism of
workers in the production process compels the capitalist to turn into an
entrepreneur and so transform both the means of production and, with them, the
goods produced:
But
the effectiveness of this apparently so efficient method has its limits. Of
course the presence of a surplus population which it can hire cheaply in the
labour market is a necessity for the
development of capitalism. But though too large a reserve army may in certain
cases favour its quantitative expansion, it checks its qualitative development,
especially the transition, to types of enterprise which make more intensive use
of labour. Low wages are by no means identical with cheap labour. (p61)
But
then, suddenly and inexplicably, Weber abandons his analysis of the antagonism
between capital and workers and begins to describe the process by which certain
“religious upbringing” historically helped overcome the opposition of workers
to the alienation of their living labour and how this “change of attitude” was
itself responsible for the “spirit of capitalism” that transformed industry
from “traditionalism” to modern capitalism:
Labour
must, on the contrary be performed as if it were an absolute end in itself, a calling.
But such an attitude is by no means a product of nature. It cannot be evoked by
low wages or high ones alone, but can only be the product of a long and arduous
process of education. (p62)
The ability of mental concentration, as
well as the absolutely essential feeling of obligation to one's job, are here
most often combined with a strict economy which calculates the possibility of
high earnings, and a cool self-control and frugality which enormously increase
performance. This provides the most favourable foundation for the conception of
labour as an end in itself, as a calling which is necessary to capitalism:
the chances of overcoming traditionalism are greatest on account of the
religious upbringing.
This
observation of present-day capitalism in itself suggests that it is worth while
to ask how this connection of adaptability to capitalism with religious factors
may have come about in the days of the early development of capitalism. (p63)
Of
course, this “explanation” of the origins of capitalism or of its “spirit” can
satisfy no one because it raises more questions than it pretends to answer. Again,
Weber has not explained the meaning and content of “profit”. He has not
accounted for the antagonism of workers to the wage relation both in terms of “distribution”
of goods produced and above all in terms of the alienation of living labour
from the means of production and from social labour. But above all he has not
explained satisfactorily or at all how and why “the Protestant work ethic”
could ever induce workers to relinquish their antagonism to the wage relation
to become instead “enthusiastic and dutiful” participants in the alienation of
their living labour!
Above all, Weber has failed to explain how
the quantification of the “content” of profit as a social relation of
production can be operated by capital and therefore enable the “rationalization”
of production and distribution of commodities for the realization and maximization
of profits from their sale on the market!
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