Religion and the emergence of the market dominated society.
8.12.10
(Mostly notes from R. H. Tawney, Religion and the Rise of Capitalism, Penguin, 1922.
It is hoped that these notes will help to focus attention on the "marketing" world view that is now so dominant and taken-for-granted. This is very different from the way people thought about economic affairs in Medieval times, when moral values strictly controlled what was acceptable and when profit maximization was not approved, let alone allowed to determine economic activity. Tawney's scholarly book, like The Great Transition by Polanyi, helps us to appreciate the enormous difference, and the need to put the economy back under moral/social control.
Economic behaviour was determined by religious ideas.
It is difficult for us to grasp how overwhelmingly dominant religious thinking was in Medieval times. Religion determined ideas about everything, including personal conduct, the law, morality, the behaviour appropriate to various roles, politics and economics, and the nature and functioning of society. In any domain you thought and behaved as the scriptures and the church said you should. The supremely important concern was salvation.
", economic interests were subordinate to the real business of life, which is salvation" 43 In other words economic behaviour was just another kind of personal behaviour to be governed by a personal moral code set by religion and strictly administered by the church. Politics was a branch of religious theory, as was economics. In Medieval times politics and economics were not separate from religion; they were topics religion covered. ", economic conduct is one aspect of personal conduct upon which, the rules of morality are binding." 43-44
But by the late 17th Century society and economy were seen as separate. The church no longer controlled the state, and could not control economic behaviour. In England especially in the seventeenth century the emerging economic conditions had become conducive to individualistic behaviour, and clashed with the accepted theory of society.
At the start of the Reformation economics was still a branch of ethics. Before long man had become an economic animal. The separation meant that the religious and economic spheres were governed by different laws. 273
(Comment; The general moral laws, don't harm others, don't take advanta
ge of the misfortunes of others, care for others, help others, are now totally disregarded in the economy. It is a sphere in which you can charge as much as you can get, deceive the buyer, try to ruin a rival, pounce on a firesale bargain, )
In Medieval times society was seen as being explained by religion; it was structured according to God's plan. "There is a moral authority to which considerations of economic expediency must be subordinated." 52 All people had their function, contribution, role, and place, and with this went rights and duties. The church administered all this, ruled on disputes, interpreted, moralized, made judgments and punished. The social order was unalterable, to be accepted, not changed or improved.
Within the realm of economics, monetary relations were a fringe phenomenon. Most production, distribution and consumption was carried out according to rules that didn't involve money, such as how peasants worked for the Lord. About 90% of people were highly self-sufficient peasants. There were a few artisan craftsmen. Consequently there was very little buying and selling, trade, or borrowing money to invest.
Economic motivation; no place for gain.
Economic behaviour was poorly regarded. ", economic motives are suspect, they are powerful appetites, " They are therefore feared and they need repression. "There is no place in Medieval theory for economic activity which is not related to a moral end, " They would have thought it irrational and unacceptable to base a theory of society on the assumption that ", the appetite for economic gain, is to be accepted, " This would be the same as assuming that pugnacity is to be accepted, these are undesirable motives and behaviours, to be disciplined and repressed. There was horror at the sin of covetousness. 281. Economic goods are only aids, means to support a virtuous life.
"At every turn therefore there are limits, restrictions, warnings against allowing economic interests to interfere with serious affairs. It is alright for a man to seek such wealth as is necessary for a livelihood in his situation. To seek more is not enterprise, but avarice, and avarice is a deadly sin." (p. 44.) Trade is legitimate, but ", it is a dangerous business. A man must be sure that he carries it on for the public benefit, and that the profits which he takes are no more than the wages of his labour." 44
Gain, accumulation, were seen as morally bad. "The medieval theorist condemned as sin precisely that effort to achieve a continuous and unlimited increase in material wealth which modern societies applaud as meritorious, " 48 These were ", the vices for which he reserved his most merciless denunciations." 48
", the seller demands no more than will compensate him for his labour and risk." 101 A man should not say, "I will sell my wares as dear as I can or please." 103 He must take advantage of scarcity to raise price. 103
So taking more than is sufficient, accumulating, getting rich, charging more than yoy need to, is avarice, greed, sin. You engage in economic activity to subsist; meet needs and no more. The contrast here could not be greater; the essential element in capitalism is accumulating wealth without limit.
Tawney quotes a fourteenth century Schoolman, " He who has enough to satisfy his wants and nevertheless ceaselessly labours to acquire riches, either in order to obtain a higher social position or that subsequently he may have enough to live without labour, or that his sons may become men of wealth and importance – all such are incited by a damnable avarice, sensuality or pride." 48
Luther said this too, 250 years later. This is a labour theory of value; the value of anything is determined by the amount of labour that went into producing it. Tawney says Marx was the last in this tradition.(This is not how modern economics considers value.)
Avarice is a deadly sin. There is a reference here to a judgment which ", put usury on a par with adultery and fornication.
The Medieval situation made equity in bargaining very important, because deals were mostly between peasants and local tradesmen, and lenders. Lenders were visible, and unfair deals would be seen by all. Contracts have to be fair; both parties must gain equally. A bargain in which one party would gain much more than another is usurious.
"Suspicion of economic motives had been one of the earliest elements in the social teaching of the Church, and was to survive until Calvin endowed the life of economic enterprise with a new sanctification." 47 The Medieval attitude was that ", the ascetic tradition, condemned all commerce as the sphere of iniquity", "For it was of the essence of trade to drag into a position of solitary prominence the acquisitive appetites." 47 "The craftsman labours for his living; he seeks what is sufficient to support him, and no more The merchant aims not merely at livelihood, but at profit." 47
"Labour, the common lot of mankind, is necessary and honourable." ", finance, if not immoral, is at best sordid and at worst disreputable." 45
Collectivism.
The peasant may not cultivate his land in the way which he may think most profitable to himself, but is bound by the law of the village to grow the crops which the village needs, and , the lord is required, to forgo the anti-social profits to be won by methods of agriculture which injure his neighbours, " 154
Private property is ", not applauded as desirable in itself." "The ideal is communism" 45, (which just seems to mean here social systems and behaviour which are primarily geared to ensuring the welfare of the community.)
The concern in Medieval society was stability; to preserve the social order. It was not progress. Individuals and avarice undermined stability. Important is " a willingness to sacrifice personal interests for the good of the community, "165
"Man is born a member of society and is dedicated by religion to the serviced of his fellows. "Economic individualism was hardly less abhorrent than religious nonconformity." 176
As Marx saw the bourgeoise put an end to the Medieval world view which embraced patriarchal relations and bound man to his natural superiors, ", and left remaining no other bond between man and man than naked self-interest and callous cash payment." 267
The idea that there is a just price.
They also thought in terms of a just price. "No man must ask more than the price fixed, either by public authorities, or failing that, by common estimation." 52 "Prices must be such, and no more than such, as will enable each man to ", have the necessities of life suitable for his station'" 53 "The most desirable course is that they should be fixed by public officials, after making an inquiry into the supplies available and framing an estimate of the requirements of different classes." If a person sets his own prices he must consider ", what he must charge in order to maintain his position." 54
Usury
Note that the term "usury" refers to the taking of any interest, not to unfair or extreme interest.
"No man may charge money for a loan." 55 It is in order to take part of the profit in a partnership where one has contributed money, but that is to share the risk.
In Medieval times they condemned ", the iniquity of payment merely for the act of lending." "To take usury is contrary to Scripture, it is contrary to nature, for it is to live without labour, it is to rob those who use the money lent, and to whom, since they make it profitable, the profits should belong, " (this aligns with Marx's view of profit, taking the value the worker's labour produced.)
What is unacceptable about usury is staking "pure interest", i.e., a sum fixed in advance as to be paid regardless of the outcome of the venture. "The essence of usury was that it was certain, and that whatever the borrower gained or lost, the usurer took his pound of flesh. " Thus the certainty of the payment is the core problem according to Tawney.
In the Medieval era the point of the code was", to prevent the well-to-do money lender from exploiting the necessities of the peasant or the craftsman." The core of the code was to do with the personal morality of interactions between two people in a village situation, not the conditions to do with large scale trade, commerce, investment etc. which did not exist at that time. The old code was centred on the notion of Christian charity; i.e., of making sure the welfare of the poor was ensured. 57
The sin of usury was very seriousness. Those found guilty were in effect outlaws. Even those who dealt with them could be refused confession, and excommunicated or indeed punished as a heretic. 58.
(Tawney notes however that these prohibitions were rarely applied to the big end of town; i.e., to kings, popes, abbots, big merchants.)
The emerging new economic conditions.
In the two centuries after 1500 social and economic conditions changed greatly, and these were accompanied by huge changes in ideas. It was gradually realized that the increasing amount of commerce and trade could not be carried out without access to larger sums of capital and therefore witout the capacity to borrow. In other words, quite new economic conditions were emerging in which the old codes were not applicable, or were impediments.
"In the late sixteenth and early seventeenth centuries had come the wave of commercial and financial expansion – companies, colonies, capitalism in textiles, mining and finance." 233
The strict prohibitions evidnt in the Medieval era are understandable when the situation people were in is made clear. "It is a society of small masters and peasant farmers." 50 Very few earned wages. Most production was in fact in the hands of (very small0 "monopolists"; i.e., single producers who were the only sources of their wares, in the very small village etc. So it was important to watch them in order to make sure they did not abuse their power.
In this situation there was a lot of lending, but it was of very small amounts, and for personal consumption, e.g., to buy a new donkey, to get through when the crops failed, to buy seed. These situations provided great opportunities for the money lender (as in the Third World today), especially to foreclose and take over property. Thus people were strongly opposed to lenders taking advantage of misfortune and the attitude to usury was ", men curse and hate it more than other sin." The church reinforced this orientation. 51
The moral code provided for the common person and the poor, especially in its prohibitions against the monopolist and the usurer, as these are people who take from the poor. Again these strict prohibitions are understandable when the situation people were in is made clear. "It is a society of small masters and peasant farers." 50
However the emerging social conditions in England were conducive changes in these economic and moral ieeas. Yeoman farmers, ", prosperous peasants", were emerging, free from the bonds of the Lord, and more able to be enterprising. There was much social dislocation, shaking people free from previous bonds, caused in Europe in part by the Reformation. Previously the village had been the binding, limiting factor.
There was an explosion of economic activity in the sixteenth century; trade, finance, wealth, investment. Commerce needed credit, loans, borrowing, The entrepreneur has to be individualistic, he decides what and how to invest, and trade.
The wars of this turbulent period were also significant causes. States and kings spent heavily and ran up debts, requiring loans, banking, money lenders and financiers. Financial houses, e.g., the Fuggers, became very powerful. All this helped to break down the old attitudes against finance, credit and interest and speculation. Social theory, thinking about society and economy, began to separate from religious thinking. Obviously Medieval views about finance thwarted economic activity and did not suit the emerging business classes.
Luther
Luther reasserted the traditional attitude. He strongly opposed the economic individualism emerging in Germany. He ", hated commerce and capitalism" 101 The Christian would shun international trade, banking and credit. This was part of his revolt against the Church's laxity, its departure from traditional ways and values. Luther idolized the peasant, and despised "commercial calculation". He didn't like the middle classes. He was strongly opposed to usury. The focus should be Christian selfless charity.
However Luther's religious ideas contributed to the change, because he swept aside the need for the priesthood to mediate between God and humans. He asserted the essential Protestant view that your salvation is a matter between you and God, and this made an individualistic orientation primary. This contradicted the old view of the individual and his place in integrated society. "Detailed rules of conduct, are needless, the Christian has a sufficient guide in the Bible and in his own consciousness." The individual referred only to his own inner life to settle all questions. Luther himself realized that ", he had left the world of secular activities perilously divorced from spiritual restraints." 110 Thus his thought contributed to the freeing of economic activity from the bonds of the church or state or the collectivist Medieval world view.
Calvin
Calvin's attitude was utterly different to that of Luther. Calvin accepted the institutions of commercial civilisation. His thought had far more influence than Luther's. It brought war, revolution and radical social change. The new religious ideas influenced every part of society.
Note again the changed conditions and outlooks. The Medieval economy was not a money economy. It consisted " , of the petty dealings of peasants and craftsmen in the small market town, where industry is carried on for the subsistence of the household.." 112, and commerce and finance are rare.
But Calvin recognized the necessity of capital, credit and banking and large scale commerce. He broke with the assumption that ", a preoccupation with economic interests beyond what is necessary for subsistence (is) reprehensible." 113, and the belief that the middleman is a parasite and the usurer a thief.
Calvin does not suspect the economic world as alien to the spiritual life, or distrust the capitalist class, nor regard poverty as meritorious (most important for the later development of harsh attitudes to the poor.)
Calvinism ", is perhaps the first systematic body of religious teaching which can be said to recognize and applaud the economic virtues." 114
(Note the problem of cause; to what extent did Calvin's ideas cause this change in socially accepted theory, or was it that the changing conditions and the emergence of commerce created an atmosphere in which his ideas were welcomed and became orthodoxy? Similarly Adam Smith's views would not have been given so much attention had they not endorsed the theory that suited the capital owning classes.)
To Calvin the sin was not to accumulate riches, but to use them for self-indulgence or ostentation. This is the Puritan attitude, conducive to reinvestment of wealth, not spending it.
Hence the bourgeoise were in the Calvinist view respectable, not despicable and immoral as they would have been in Medieval times.
Tawney stresses that Calvin's attitude to capital was of immense importance; a historical watershed, legitimising new ways. Credit is normal and inevitable. Loans were legal and moral, although there were limits to the benefit that could be derived (115.) Receiving interest on the lending of capital is payment, similar to the wages for labour. The financier is not a pariah but a useful member of society. So, this acceptance of the realities of commercial practice, " is " , of momentous importance" in history.
Prosperity, not for indulgence, but as a sign.
Calvin asserted that salvation was "predestined"; some have been chosen by God for eternal life after death and the rest condemned to eternal damnation. Human effort can make no difference. ", the true aim of existence , . is not personal salvation, but the glorification of God, to be sought not by prayer only but by action – the sanctification of the world by strife and labour." Strict personal discipline is required.
However at this time Medieval views lingered and there were debates. To many economic prosperity still seemed to be ", a denial of all that had been meant by the Christian virtues." 118 This troubled many greatly. Might not there be a way in which the virtues required by the new economic circumstance, thrift, diligence, sobriety, frugality --- were themselves, the foundation, of the Christian virtues?" It is not surprising then that in time ", they seized on the aptitudes cultivated by the life of business and, stamped on them a new sanctification, " The new perspective ", was admirably designed to liberate economic energies." 119
Thus Calvin provided a theory which suited the middle classes, one which endorsed their interests and showed them to be religiously acceptable. "Calvinism welcomed the world of business to its fold with an eagerness unknown before, " 127 The Calvinist emphasis was on intense individualism and personal responsibility, discipline, asceticism. These "found favour with the English upper classes in the seventeenth century, " 120 Calvin assigned to discipline supreme importance just as Luther had enshrined faith.
Rapid economic "progress" took off in England, especially involving investing and speculation. The guilds were seen as an impediment, with their restricted practices and protection. Villages were being transformed. Lords were becoming astute businessmen rather than kings, for example leasing land to peasants. Enterprise undermined tradition.
The individualistic, selfish creed.
The Medieval attitude and social theory had been strongly collectivist. Essential to the new outlook was the individualism, given by Calvin's view of the relation between the individual and God. , "the individual is absolute master of his own (situation), " and may exploit his situation ", with a single eye to his pecuniary advantage, unrestrained by any obligation to postpone his own profit to the well-being of his neighbours, " 151
The old attitude was that meeting obligations set by God is supremely important. The new attitude to social behaviour was that the point of action is to satisfy desires. The idea of individual ownership carried all before it after the English Civil War.
Social theory was thus remade ", by the swift rise of a commercial civilization, " 155 Tudor England had still been a community, with peasants as workers and small property owners.
For a long time there were intense debates on the issue of usury but the payment of interest came to be regarded as not a crime. 184
The Church increasingly lost its power to rule in matters of commerce. Business transactions came to be seen as having no spiritual significance.
The collectivist theme in Medieval thought faded. To the Calvinists society is not a unified community with mutual obligations connected by the common end, it is more like a joint-stock company in which for the individual there are formally limited liabilities and obligations to others. The State exists to protect these rights of individuals, and the most important of these are to do with property.
The idea that the church possessed the moral code by which all things, including commerce, should be judged, was in time abandoned.
The Puritan movement.
The Puritan movement was very influential, it brought a revolution.
"Puritanism was the schoolmaster of the English middle classes." 211
"The triumph of Puritanism, swept away all traces of any restrictions, in the employment of money. It asserted the freedom of churches from the State, and it reinforced individualism. You are alone before God, and this makes kings and authorities rather unimportant, and reinforces the readiness of the individual to go his own way. Every individual is free to choose his own religious way; his fate is a matter between him and God; priests can't determine it.
The connection with enterprise.
Tawney and Weber argued that Calvinism was an important factor in the emergence of capitalism, reinforcing the ideas and dispositions it required.
Firstly the traits the Puritans admired were those of the entrepreneur. The alignment between the traits the rising bourgoise had and religious virtue according to the Puritans. ", an earnest, zealous, godly generation, scorning delights, punctual in labour, constant in prayer, thrifty and thriving, filled with a decent pride in themselves and their calling, assured that strenuous toil is acceptable to Heaven, thinking, sober and patient men, (who believe that labour and industry is their duty towards God." 211 Will and discipline are very important. ", the virtues enjoined on Christians – diligence, moderation, sobriety, thrift – are those very qualities most conducive to commercial success." Industry is meritorious.
Thus Puritanism reinforced capitalist dispositions. Calvin reinforced the rejection of restrictions on economic activity.
Puritanism turned the virtues of enterprise, diligence and thrift, the essentials for an industrial civilization from "unsocial eccentricity into a habit and a religion." 269
"The Puritan sees the world as a wilderness to be subdued with aching limbs. Through it he must make his way alone, " without aid from priests or community. This intense moral self-sufficiency eroded the sense of social responsibility. Your destiny is a matter between you and god. From this intensely individualistic situation the Puritan drew a sense of individual rights, which became politically extremely powerful and significant.
The crucial idea; conduct and action can do nothing to gain you salvation, since this has been determined previously, but their effects could be a sign that salvation has been achieved.
Puritans are fiercely disciplined, willful and energetic. Hence their hard attitude to the poor. "Convinced that character is all and circumstances nothing, he sees in the poverty of those who fall by the way not a misfortune to be pitied and relieved, but a moral failing to be condemned, and in riches, not an object of suspicion but the blessings which reward the triumph of energy and will." 230 Self discipline and will win victories in the market.
Puritanism remade the old social system, towards a commercial system.
Calvinism endorsed business culture, ", which most earlier moralists had regarded with suspicion."
The focus for the Calvinist was personal character and conduct, duty and discipline, ", to be realized by the punctual discharge of both public and private duties." 233
Obviously this individualistic focus increasingly conflicted with the "economic paternalism" and collectivist outlook remaining from tradition.
A crucial development in this era was the separation of economic concerns from ethical concerns, 237, and a reconciliation between morality and the codes necessary for business.
The enemy now ", was not riches, but the bad habits sometimes associated with them."
The new world view: ", money making, could be, and ought to be, carried on for the greater glory of God." The idea that enabled this gulf to be bridged was that of the "Calling". The individual should labour for God's glory. "The only genuine faith is the faith which produces works." 329 On judgment day you will be asked, "Were you doers, or talkers only?" 239 Sinners must glorify God by their work.
Your first calling/duty is to know and believe in God, but the second is ", to labour in the affairs of practical life." "God, doth call every man and woman , to serve him in some peculiar employment in this world." 239 "Next to saving his soul, (the tradesman's) care and business is to serve God in his calling, and to drive it as far as it will go." 244
So there are secular duties. ", the conscientious discharge of the duties of business is among the loftiest of religious and moral virtues." 239 This is not a new idea; Luther also argued it. Religion must be active, not just contemplative.
", success in business is in itself almost a sign of spiritual grace, for it is a sign that man has laboured faithfully in his vocation and that God has blessed his trade." 244 ", enterprise itself is the discharge of a duty imposed by God." 244 ", practical success is at once the sign and the reward of ethical superiority." 224 Business enterprise is the appropriate field for Christian endeavour. 270
So serving God had become identified with labour and enterprise. These ideas were music to the rising bourgeoise. "Such teaching fell upon willing ears." 249 ", a creed which transformed the acquisition of wealth from a drudgery or a temptation into a moral duty, " 251
A number of factors contributed to the emergence of the "doctrineless individualism, which became the rule of English public life, " a century before Adam Smith enunciated it, but these religious ideas were important causes.
"The Christian life must be lived in a zealous discharge of private duties, " 252 The individual's spiritual fate is up to him alone. These ideas do not mean that there are no public or social duties, but that is how they were interpreted. This intensely personal and individualistic conception of religion led to a de-emphasis on the social and the collective. The central Puritan theme was individual responsibility, not social responsibility.
Attitudes to enclosures and poverty.
The transformation was especially evident regarding attitudes to enclosures and to poverty. There had been much concern for a century about enclosures. Again the old view was that there is a Christian commonwealth and the welfare of all is important, including the poor and the peasants. "No man may press his advantage to the full." 253 But now Parliament was not very interested in action to restrict enclosures, and began to pass laws enabling it. Locke's statements simply formalized ideas that had been gathering strength; that the individual had the right to do what he wished with his own property. Opposition to enclosures came to be seen as coming from radicals. Previously all had been against enclosures.
"The pursuit of economic self-interest, (came to be ) identified by the pious with the operation of the providential plan, which is the law of God. Enclosures will increase output of wool and grain. Each man knows best what his land is suited to produce, and the general interest will be best served by leaving him free to produce it, The advancement of private persons will be the advantage of the public." (That is, what's good for General Motors is good for America!) "Enclosure is now considered, morally beneficial." 258
Similarly attitudes to the poor hardened, indeed reversed. Offering them assistance, central in the Medieval view, is wrong because it encourages idleness. What matters is not their circumstances but their character. In the Medieval era covetousness was admonished, now idleness was the problem.
There seems to have been no recognition that poverty was caused by the faults in social structure.
Circumstances gain; in the tiny Medieval village a bad harvest impacted on all, so all felt a need to look after all. The relief of the needy was the primary obligation of those who had means." These circumstances had gone. It became self evident that the poor must be kept poor, or they would not work. 268 The causes of poverty were with the poor, their moral failing, not with society.
The rise of the new view ", which regarded with repugnance the whole body of social theory of which both private charity and public relief had been the expression." 261
Property came to be regarded as the foundation of the social order.
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(As with Polanyi's account, especially re Adam Smith, the general question about ideology that Tawney and Weber raise is, were these ideas causes of the transition to capitalism, or were they taken up because they legitimised the ways that suited the emerging capitalist class? This is a classic debate between Marx and Weber, the former claiming that the economic situation is the major determinant, whereas Weber saw ideas as the main cause of the transition to capitalism.