Iron Cage for Nothing

When I gave away many of my old books a year ago, I kept my college copy of Max Weber’s The Protestant Ethic and the Spirit of Capitalism. Now Tyler Cowen cites a paper by Davide Cantoni demonstrating that Protestantism had nothing to do with economic development. (Cantoni also co-authored a paper with Simon and others on the impact of the French Revolution — via the Napoleonic conquests — on economic development.) He uses the “natural experiment” created by the division of the Holy Roman Empire (very roughly, modern-day Germany and Austria) into Protestant and Catholic states.

As a fan of Weber and a former historian, the first thing I checked was Cantoni’s treatment of Calvinism vs. Lutheranism. The last chapter of The Protestant Ethic, “Asceticism and the Spirit of Capitalism,” focuses on Calvinism: “For everyone without exception God’s Providence has prepared a calling, which he should profess and in which he should labour. And this calling is not, as it was for the Lutheran, a fate to which he must submit and which he must make the best of, but God’s commandment to the individual to work for the divine glory” ((London: Unwin Paperbacks, 1985), p. 160). Section 4.4 and Table 8, however, find no difference either between Calvinist (Reformed) cities and all other cities, or between Calvinist and Catholic cities.

A defender of Weber could argue that what he was really talking about was the English strain of Calvinism known as Puritanism; that last chapter starts off by talking about English Puritanism only as an ideal type of Calvinism in general, but it when it talks about real economic impact it is mainly about England and the North American colonies (us). But tying the “Protestant ethic” to one historical form of Calvinism weakens Weber’s thesis considerably, since religious doctrine can no longer be seen as the prime mover of economic development.

Which leaves a question. This is probably the most famous passage Weber wrote:

“The Puritan wanted to work in a calling; we are forced to do so. For when asceticism was carried out of monastic cells into everyday life, and began to dominate worldly morality, it did its part in building the tremendous cosmos of the modern economic order. … In Baxter’s view the care for external goods should only lie on the shoulders of the ‘saint like a light cloak, which can be thrown aside at any moment.’ But fate decreed that the cloak should become an iron cage.”

So could we have gotten the spirit of capitalism without the Protestant ethic? Probably Weber would have said that no matter how you get there, capitalism itself is the iron cage. But maybe not.

By James Kwak

45 responses to “Iron Cage for Nothing

  1. D. Christopher Leonard

    One problem is that the HRE as two discrete politico-religious spheres (protestant whether Lutheren or Calvinist versus counter-reformatory catholicism) is that the ‘official settlement’ of the issues (Westphalian settlements) is rather long after the spotty beginnings of capitalist relations of production -writ as regional economic development. One might point to central and northern Italy and the low countries (Tilly had a fine piece called “Space for Capital, Space for States) – one of which is nominally protestant, the other nominally catholic. While Webers account is still wonderfully provocative as a thought experiment – historically, it never held much water

  2. I’m an engineer, not a philosopher, so take it or leave it.

    The Calvinistic work ethic also had a component of a deferment of pleasure. In pre-Industrial era’s, “work” was either craft based or agriculturally based. This also means that there is a substantial part of thinking that goes with it. Contrast that with industrial “work” where it’s a dude pushing buttons on a machine and that thinking goes away.

    What, IMHO, has been lost in the last 30-40 years is that the objective output of work has changed from a means to fulfill Grace to one of self indulgence. People go to Wall Street because they make a boat load of money. I’ve yet to meet somebody who actually *liked* working on wall-street. They all went for the money. And, more importantly, to use that money for self indulgence. I wonder what percent of their income the typical wall-street millionaire tithes?

  3. Also – financial success has become a goal in and by itself rather then an expression of (in the religious context) of God’s Grace. At least, that what Calvinism USED to mean. Now people want to get rich, just to get rich, not to help other people or as a ancillary byproduct of using one’s gifts.

  4. I do believe Christianity has a large degree of correlation with AND CAUSE of economic success. After all, a contract and any business deal means nothing in cultures where truth-telling is seen as a weakness and lying is a national hobby (see China). Where people constantly tell lies and “might always means right” (again see China) even things put in writing mean absolutely nothing.

    If we look at England, America, Germany, Canada, Australia, and even Japan (which has for decades outperformed the much larger China) I think we see that Christianity or at least SOME TYPE of “value set” which treasures the truth and looks down on any form of lies, brings transaction costs much lower.

  5. I’ve often noticed how the Wall Streeters try to justify their extractions by referring to the long hours they work under such extreme pressure.

    They themselves are always saying it’s a horrible way to live.

    Which begs the question: what kind of person would want to live like that? It seems that in trying to say their terrible lifestyles justify their “bonuses”, they’re really inadvertantly admitting that they’re actuated only by psychopathic greed.

  6. 1) Capitalism has never been about “Grace,” deferred enjoyment (per se), monasticism, cloaks or cages. It is about people wanting and needing stuff, and prices that let them decide which is which (OK, strictly speaking, that’s the “Market” part of capitalism, but that is what Weber and most commenters are talking about). Any claim that a particular stripe of religion, no matter how perfectly implemented, is going to provide advantages is spurious, no matter how carefully garbed in high language and rhetoric.

    2) Why do economists always try to be philosophers as well? They are two very different skillsets, and utility with one does not imply mastery of the other. Message to economists: Stick to your knitting!

  7. Kenneth Clark, In his excellent BBC art history series CIVILIZATION, called our present era The Age of Heroic Materialism. I have never come across a better term.

    In his analysis of the Protestant mentality Weber was certainly onto something, but ( rather like Freud ) hadn’t sufficient scope to place his insights into proper perspective. I always thought they feel a bit forced or slightly off-center. I think it will be many centuries before sociologists understand what happened to human history on Calvary. It is a long, long process, and we are still undergoing the transformation. Our relationship with the material world, and with money, is very much a part of it. Kenneth Clark has a pretty good grip on this, I think. So does Rene Girard, who has been called the Darwin of social evolution, but is well-known only in Europe although he wrote and taught in the USA.

  8. Er, what about Confucianism and Bhuddism? Those have moral tenets as well…

  9. It could be argued that the Calvinistic work ethic led to the professions and professional ethics. In the 70’s, however, the professions were transformed into businesses and professional ethic was replaced by business ethic (aka make money for the shareholder/owner). Nowhere is this seen more acutely than in the financial sector where the underlying assumption is that everyone one works for the money and otherwise would not work. The interesting counter-culture to this (pretty much unrecognized by the financial sector) is the open-source phenomenon and social networking. These are in their infancy, but I believe over time will transform how we view work.

  10. I beg to differ. Religion has always been about mediating relations with the divinity to secure material well being. Read the prophet Hosea. The Northern Kingdom got introuble with Yahweh because it was worshipping Ba’al to secure the harvest.

  11. Please expand your understanding of Girard. I have read him and admire his insights, but I don’t follow the comparison with Darwin.

  12. Notice that I don’t make any assertions about what religion is all about. Religions make lots of claims, among them that adherents will gain economic advantages. But an argument that says that a religion confers an economic reward because that religion claims to offer an economic reward is circular.

    Independent analysis, such as that offered by Cantoni, shows no such advantage Weber and his fans notwithstanding.

  13. Indeed. It has been proposed (sorry, citation escapes me at the moment, but listen to this week’s EconTalk for a discussion) that the reason Europe outperformed China in the late middle ages was due to being broken up into so many independent fiefdoms. This Balkanization (no pun intended) gave lots of opportunities for experimentation of all sorts, including economic, legal, and institutional. Structures and systems that had value outperformed and were more widely adopted as a result. Unsuccessful experiments were forgotten or looked upon as examples of what not to do.

    China, under a monolithic empire, was stuck with whatever system the central authority imposed. Bad (or sub-optimal) decisions by small groups of people became the standards, and attempts to experiment or innovate were discouraged.

    That’s the theory, anyway. So moral values, reason, work ethic, asceticism, etc. may play a much smaller role than people think, if it is simply a numbers game.

  14. ‘could we have gotten the spirit of capitalism without the Protestant Ethic?’

    Whether or not we could have, our society has mislaid both. American ‘capitalism’ has always featured the levering of State power for personal plunder, beginning with Hamilton’s Bank scheme. The idea was to buy the legislature and secure a priviledge. Railroads, banks, the Federal Reserve, war contracts, insured mortgages. For two hundred odd years our politicians have talked patriotism and sacrifice and common good and sold themselves to the highest bidder for trifling amounts. Mark Twain told us America has no native criminal class apart from the Congress. Goldman Sachs contributed $385k to Obama’s election. Perhaps capitalism will be tried somewhere, but it has not existed in America since inception.

    We have socialism for the well connected and competition for everyone else.

  15. the thesis tested by cantoni is in no way weberian. Weber is specifically distancing himself from a mono-casuality, against strains of orthodox marxism that postulated an economic base determining superstructure, “It is, of course, not my aim to substitute for a one-sided materialistic an equally one-sided spiritualistic causal interpretation of culture and of history.” (1958 Scribner’s ed. p. 183)

    the relationship between protestantism and capitalism is more complex–its a cultural force that conditions a set of social goals–it begins with protestantism, but it doesn’t end there. the iron cage is a social structure that takes off in the modern world, but it is not a uniquely protestant phenomena.

    its frustrating when interdisciplinary research is so lazy; this mistake is analogous to the undergraduate who don’t bother with the reading and instead relies on a wikipedia page

    for an empirical treatment from economists that actually bothered to read the book:

    http://ideas.repec.org/p/cpr/ceprdp/3588.html

  16. Thanks for the post, James. The NYT had an interesting article back in July about a German company run on Lutheran values: http://www.nytimes.com/2009/07/12/business/global/12german.html?_r=1&scp=1&sq=Trumpf&st=cse

  17. Michael G. Heller

    Poor Max will be feeling deeply misunderstood. Cantoni is wasting his time trying to disprove Weber, who pointed out in the introduction to the Protestant Ethic that the essay treats ‘only one side of the causal chain of capitalism’. Twentieth century social science blew it up out of all proportion to its relative importance in Weber’s oeuvre.

    My recent book ‘Capitalism, Institutions, and Economic Development’ (2009) tries to get attention back on to Weber’s many truly important economic and sociological analyses of capitalist transition. Here’s a short excerpt concerned only with dismissing the notion that religion had a huge part in Weber’s complex multi-causal theory of the origins of capitalism:

    “Although best known as the author of The Protestant Ethic and the Spirit of Capitalism (1992), Weber’s theorization of the modern market ethic can only be understood by emphasizing its secular dimension. The diffusion of the ‘spirit of capitalism’ was ‘a sort of liberal enlightenment’ that looked favourably on business success (ibid.: 70). Although there were ‘correlations between forms of religious belief and practical ethics’, it would be ‘foolish and doctrinaire’ to claim capitalism could only have evolved because of the Reformation (ibid.: 91)… Puritan sects were simply bearers for the asceticism and vocation for hard, methodical, and honest work that helped build the foundations of modern individualism. The Protestant ‘style of life’ coincided with the ‘self-justification that is customary for bourgeois acquisition: profit and property appear not as ends in themselves but as indications of personal ability’ (Weber 1978: 1200)…

    The ethic of capitalism is really founded in social premiums attached to types of moral conduct that resulted from the spread of market relations. Bourgeois ethics, according to Weber, are premiums placed on discipline, production, probity, and cautionary finance, which were founding principles of early capitalism (1947: 313, 321). In capitalist society, money making and capital accumulation are acceptable if ‘done legally’ as ‘the expression of virtue and proficiency’ (Weber 1992: 53–4). Capitalists are governed by an impulse to make money, but also by morals relating to methods of money making, as well as the ‘irrational sense of having done [the] job well’ (ibid.: 71)…

    The important transition in the moral valuation of economic activity is the gradual abandonment of the communitarian conventions of precapitalist society in favour of universalistic economic norms…”

    Besides, religious ideas during the European Middle Ages were themselves a product of geographic, political, and economic interest and circumstance, and of the growth of cities, law, bookkeeping, and science.

  18. From commenter “Urgs” at Marginal Revolution:

    “Still, as a non-economist I would not discount
    the Weber thesis.”

    As a non economist i discount the thesis even faster without boring statistics. Weber was a protestant University Professor and a bogeoisie party co founder in majority catholic Bavaria. Catholics were discriminated at Webers time*, so most of them no matter which class background in a party system that was largely divided by class under protestants voted all for the catholic party. Its like asking coal mine owners about global warming.

    I say we all take a Bocconi University retreat at, say, the Bellagio Center, and really hash this out. (And can we have one of those little wooden motorboats to putter around the lake like young Pliny?)

  19. My view is that the so called “Protestant Work Ethic” became just the work ethic, and so, since work was considered a part of a religious calling at one time, “for the glory of God,” it gradually became (as the world became largely secular) and end all and be all in and of itself. Capitalism was the natural outgrowth, and in today’s environment, with no divine glory at stake, has become glory in riches as the ultimate end.

    This is why morality plays such an incredibly small component of American secular capitalist society. Although I am not a defender of the Protestant outdated rationale, we could do with a bit of morality and understandng that there is a tie between morality in capitalism and balance in society. This whole concept was entirely dropped sometime between 1950 and 1990, but it was a gradual diminution, and not a sudden reversal of morality. Unfortunately todays capitalist kings and princes have completely abrogated morality, and become purely Machiavellian. Sad, and unlikely to change.

  20. The economist Milford Friedman provided the moral justification for that – IMHO – and we are that much poorer because of it.

  21. In Darwin’s time many other naturalists published theories about the “transmutation of species” etc. — but his Origin of the Species identified the key mechanism of evolution. Sociologists studying cultural evolution know religion is universal in all human societies, and are theorizing widely as to why this should be so. Girard identifies the key mechanism of all primitive religion, the sacrifice of the Offender which restores social harmony. He shows how Jesus initiated the modern age by inverting the core sacrificial mechanism, making us identify with the victim, opening the gates of compassion — but leaving us unable to purge the buildup of social disharmony.

    Compassion, as a dynamic force at the very heart of society, is slowly transforming all aspects of our culture. Kenneth Clark leads us to compare the faces of Greek statues with faces of neoclassical (Christian-era) statues — in the nearly identical styles the difference in facial quality is striking, and one can see what has been born into the world, unfolding itself to create the modern age.

  22. You might disagree but I feel that capitalism has distorted and twisted Christianity into a corporate monstrosity. Turn your cheek toward AIG, throw out of the temple of the moneychangers the lepers that need help.

  23. I should add that capitalism itself became twisted by commercialism. The idea that buyers could be fooled by the system to consume that which they truly do not need, but were convinced by the psychology of commercialism that you gotta have it now!

  24. 1. Protestantism was important because it gave a reliable option to absolutism in Europe, it created ideological(religious) competition that actually succeeded the Spanish Empire, the Hapsburg and the power of the Vatican.

    I do not believe that protestantism made closer inroads to GOD than catholicism, or any other religion for that matter. It was a reliable challenger to the status quo and a brake to the oligopolistic way business (religion) was exercised in Europe at the time.

    2. Western vs Oriental religions could be heroically simplified to Hawk vs Dove games. Where Westerners were busy slaving and destroying indegenous populations in Africa and America (because God told to go all over the world to spread the “good news”), while Asians were minding on their own closed societies (because they learned to meditate and focused on internal things) and had no appetite for mass accumulation of rape, erhm I mean wealth.

    3. Western “capitalists” have successfully profited and dominated in a world of slavery, rape, mass murder, and destruction of indigenous cultures.

    Capitalism has always been a “struggle of the classes” were the dominant are always the more criminal or the more indifferent and profiting from, criminal “Hawkish” behavior. Modern Capitalism is a institution that was born where you legalize the activities of the main criminals mainly because they are harming your rivals, benefiting you (or both) or just harming people who you think cant hit you back like natives or africans(or the Environment for that matter). These criminals have traditionally been mad feudal lords, then armies, slavers and colonizers, then Pirates, Drug (Opium) traffickers, and the most modern are speculators. They are any other thing that doesn’t create productivity home but rather steals or destroys (at a profit) productivity elsewhere.

    You only had to TAX these criminals, redistribute some wealth around in the name of nationalism, and created legit business to compete ONLY with those who proved that could hurt you. All that talking you guys are having around morals and “doing the good thing” only applies when competing with other criminals. The rest of the world was and has always been on open season.

    Now that those dear criminals have succeeded, hunting, destroying and facilitating the transplant of wealth from the places they made into “third world” countries to your own, they are turning where there is still wealth left to be accumulated, home. Of course they don’t think it is wrong. They have been doing the same thing for generations and overall the average citizen have always been supportive/indifferent and actually a beneficiary of that.

    Westerners have lied so much to themselves that they actually believe that their criminals who trade life, health, education, independence, and values, for a profit or an interest rate are the successors of Washington or Jefferson, of Lincoln or Roosevelt, that they are freedom fighters who watch out for Democracy. If only they were alive…

    Today, Allow me to introduce you to the new paradigm: It is Open season on American, and then Western Productivity. Welcome home boys!

    Remember this is the same business model that have been imposed on the World. Just that home countries always got the best part of the deal. And now that they have a small taste of what is to come when everything is owned by two guys, they think it is the end of the world.

    Well then, maybe it is.

    4. Japan did not grow rapidly because it assimilated Christianity! In fact, Tokugawa banned and systematically exterminated Christians, because the shogunate concluded Christianity was an inroad to colonization.

    If Japan grew fast it was because it helped westerners in the colonization of Asia and didn’t provide a strong resistance, getting informed and playing good diplomacy and becoming a learning partner. Trying to secure its own national interest, a country that remained at peace for 250 years, and closed from the outside world became a colonial rapist himself.

  25. Perhaps capitalism will be tried somewhere, but it has not existed in America since inception.

    Yup. Nor anywhere else.

    It’s funny how it’s conventional wisdom that Marxism neglected human nature, yet nothing denies human nature more than ivory tower textbook capitalism.

    It denies the obvious fact that nobody wants to “compete” if he doesn’t have to, if he has the power to simply suppress the competition.

    It denies that almost all people are feudalists at heart, not capitalists.

  26. this makes me think that you guys should do a required reading list or something… and a podcast!!! great post. i love this stuff.

  27. Thank you for this comment. It puts into context organizations like “The Family” (see http://www.harpercollins.com/books/9780060559793/The_Family/index.aspx ) who seem to believe that success and power are outward signs of divine approval regardless of the personal morals of the object of that success.

  28. James,

    Check this out:

    http://www.amazon.com/Protestant-Ethic-Debate-1907-1910-University/dp/0853239762/ref=sr_1_16?ie=UTF8&s=books&qid=1259848706&sr=8-16

    From Amazon’s Product Description
    Max Weber’s The Protestant Ethic and the Spirit of Capitalism continues to be one of the most influential texts in the sociology of modern Western societies. Although Weber never produced the further essays with which he intended to extend the study, he did complete four lengthy Replies to reviews of the text by two German historians. Written between 1907 and 1910, the Replies offer a fascinating insight into Weber’s intentions in the original study, and the present volume is the first complete translation of all four Replies in English.

  29. Religion and capitalism? The most important factor was breaking the hold of feudalism and the oligarchy that controlled it. This in turn allowed individuals to actually profit from their labor.

    This is not a religious issue. It does not matter what the religion of the elites are, what matters is how much of the pie is available to the others. History is replete with examples of oligarchic control regardless of the religion.

    Now we face control of our financial system by the few who profit at the loss of the many.

  30. Development economists nowadays are rightly scared away from examining culture or sociological factors as institutions in development. First of all, to most of us it looks unseemly; and second, every author who has made the case, dating back to Weber, has been proven wrong (see the “Hindu rate of economic growth” idea for a great recent example).

    One thing that I’m surprised isn’t acknowledged more often is that cultures change over time. It is ridiculous to imagine that nations are handed down patterns of behavior as if from heaven, and these patterns are fixed forever.

    I wrote something on this recently in the context of Islam: http://metricsoup.wordpress.com.

  31. Patrick Thornton

    I prefer Werner Sombart.
    As for little ol’ me, I think two things happened for the christian reformers – Luther exposed the catholic monopoly as a business model. About the same time, here came the oc’s – the original capitalists from the Levant – the traders and merchants and royal tax collectors; the clarions, courtiers and jesters. Imitation (and competition) was the most sincere form of flattery, and neo-christianity accomodated itself to money and wealth created by business enterprise. Nation states and mercantilism replaced feudal fiefdoms. The capitalists are our high priests, and the rest of us are either worshippers or slaves of the capitalist ruling class.

  32. or want to have every thing made as easy as possible. they want the government to keep potential competitors out (that was the original purpose of import tariffs). or they make it so that customers (among others) can be mistreated or worse defrauded (ex. Madeoff for one. credit card customers for another. and there are many more)

  33. Billy Joe Bobb

    That’s not bad … not only did Luther expose the Catholic monopoly, he busted it. And the “Levant capitalists” moving into Europe were the market makers, the trade networkds, the money lenders (Christians were prohibited from practicing usury) and the bond sellers – the financiers of government. The “neo-christians” changed their religion to accomodate business – took the shame and guilt out of material thing$ …

  34. I guess this means that you don’t buy into the whole “papal infallibility” thing…. OH MY. Well, you know when all those children were being sexually abused in Ireland and the rumors were rampant for decades the Pope was busy with chianti wine and making sure the renaissance art was being properly preserved. Have some sympathy for the man will you???

  35. Billy Joe Bobb

    The catholic church was (is) not a bad business model, especially when a monopoly. As a friend says “god is a prayer, religion is a business”. That the catholic church remains a business can be seen in their response to its child victims – rather than healing the transgressed flock, the church considered only the bottom line and fought tooth and nail to deny and suppress their claims.

  36. It’s very easy to criticize institutions :) but I’d point out a few things:
    1. The catholic church is ALL catholic people, not just the priests etc, so most of the conflict was/is internal.
    2. There are many people within the church (as in most organizations), some suck, some are great. Within the hierarchy, some bishops and priests fought the claims while others helped bring them to light.
    3. Of course pedophiles should be punished.

  37. The nonprofit sector is a relatively large part of the economy; and those folks don’t work for the money per se but the mission of their nonprofits (generally speaking). No need to leap to open sourcing.

  38. How unfortunate for all of you that capitalism was actually invented in northern Italy at the end of the Middle Ages.

    Nothing to see here, carry on.

  39. > Why do economists always try to be philosophers as well?

    Adam Smith, the founder of economics, was in his primary profession a moral philospher. Why did philosophers try to be economists? One of Adam Smith’s accomplishment was taking the vilified greed and give it new meaning as force to the good end. We haven’t solved all problems with greed yet, but without it, people were not so busy working and producing all kind of good things.

  40. > Goldman Sachs contributed $385k to Obama’s election.

    Only 385k? Why so stingy? That’s peanuts for Goldman.

  41. Coudnt Agree with you more.

  42. Rather than this self-perpetuating myth of a divinely-ordered Protestant superiority in the face of the feckless Catholic masses (surely no more than a reflection of Northern Europeans’ traditional disdain for their Southern neighbours), perhaps we could point to two other factors – one (partly) supportive, the other contradictory – which tended to foster capitalist progress beyond the Pope’s sway.

    The first is that the one thing the Reformation did do was break up the whole, capital-absorbing prayer-Purgatory-Religious foundation cycle (as Diarmaid MacCulloch explains in his maigisterial ‘A Reformation:Europe’s House Divided’). This diverted a great source of economic means back to more materially productive ends, a change which also required the evoution of a different form of organisation to that which had prevailed under the now-dissolved monasterial proto-factories.

    The second is that ‘capitalism’ arguably first flourished in the Netherlands and, later, in England societies which were, if anything, more pluralist in their religion than many of their competitors and hence which did not waste too much time and effort, or proscribe the engagement of large swathes of the population, in destructive internal crusades and godly totalitarianism – neither of these traits of which that petty tyrant, Calvin, would have approved.

  43. There have been some interesting branches of eithical/religious entrepreneurial spirit such as the Quakers in the UK.

    In Norway, some think that Hans Christian Hauge almost singlehandedly simulated Norway’s transition from an agricultural economy by ‘seeding’ enterprises wherver he travelled.

  44. What needs to be compared is what sort of poor relief was established in each Protestant state after the break up of the Monasteries. In most of Catholic Europe the accepted convention was that ‘a beggar’ could lodge one night free of charge at any Monastery, and be given dinner and breakfast as well. It was (extremely )plain fare but as long as they kept moving they didn’t have to worry about starving. This was part of the reason why pilgrimages were so popular in the middle ages, for all classes. But with the Protestant Reformation the monasteries were dissolved, and other provisions had to be made for the care of the poor. In Elizabethan England, famously, the poor laws were passed, providing relief by the parish. It was no longer socially acceptable to be destitute. Instead of engaging in a holy, morally commendable activity for the good of your soul, you were a lazy sod living off of your neighbors.

  45. Thanks you, Annie. Very succinct description of Girard’s role and of the mechanism.