Archives for posts with tag: The Protestant Ethic and the Spirit of Capitalism

Karl Marx’s version or Max Weber’s?

“the difference between truth as the “unhiddenness of beings” and truth as the “correctness of propositions” (Martin Heidegger)

Only after reading (again) the Essence of Truth I started to grasp the huge mistake made by Marx and his followers.
His declared motives were ‘the emancipation of the oppressed’ and if we are to grasp his work we need to read him in this key.

Only this way I could finally understand why for him ‘capital’ means exclusively ‘trade-able wealth’, money or things easily measurable in monetary units.
Only this way I could finally understand why for him ‘capitalism’ was exclusively about personal profit and hence despicable.

All this had happened because Marx wasn’t really interested in understanding how capitalism works, what it means and how it generated a medium in which creative and hard working people could make better use of the available resources than in previous social settings.
Marx was a man of a mission (it’s not that clear for me if he considered himself a saint that was meant to free the working class, a con-man who swindled a lot of money from Engels under the pretext of helping the poor or both at the same time) and we need to accept that almost all he did write was dedicated to this mission of his, whatever that was.

On the other hand Max Weber was also a man of a mission only his was different from Marx’s.
What he set out to do was to understand the inner workings of capitalism, how it came about and what consequences it might have.

““The most trifling actions that affect a man’s credit are to be regarded. The sound of your hammer at five in the morning, or eight at night, heard by a creditor, makes him easy six months longer; but if he sees you at a billiard table, or hears your voice at a tavern, when you should be at work, he sends for his money the next day; demands it, before he can receive it, in a lump. ‘It shows, besides, that you are mindful of what you owe; it makes you appear a careful as well as an honest man, and that still increases your credit.’ “

This is a brief excerpt from Weber’s “The Protestant Ethic and the Spirit of Capitalism” – retrieved, ironically, from an internet site run by “marxists”, http://www.marxists.org.
Weber is quoting here Benjamin Franklin in an attempt to make us understand what is the true spirit of capitalism.
At the first glance we might say it corresponds closely to what Marx had said about the subject – that it all boils down to money – only after further consideration it becomes apparent that while Marx had stopped there, at ‘money’, Weber and Franklin had seen way deeper than that.

Capitalism is not that much about mere money as it is about credit. Trust that is.

No one would extend credit without trust, no one would enter a contract without mutual trust and so on.

So what would it be? Which version of capitalism would you prefer?
The one in which we would strive to get hold of as much money as possible or the one in which each of us is held responsible by the others for his actions and holds those around him responsible for their actions – this being the only manner in which real trust can be established among us?

Please note that in reality these two sides of capitalism are like the two hands of a working man. For a short time one can get along with only one of them but no sane individual would prefer to live, and work, with only one hand, right?

Then how come our obsession about mere money has come to trump almost everything else?

http://www.project-syndicate.org/commentary/the-myriad-problems-of-intellectual-property-by-joseph-e–stiglitz

“Fortunately, what motivates most significant advances in knowledge is not profit, but the pursuit of knowledge itself. This has been true of all of the transformative discoveries and innovations – DNA, transistors, lasers, the Internet, and so on.”

This observation is in synch with a concept introduced by Csikzentmihalyi: “flow – the state in which people are so involved in an activity that nothing else seems to matter; the experience itself is so enjoyable that people will do it even at great cost, for the sheer sake of doing it.” (http://edutechwiki.unige.ch/en/Flow_theory)

Unfortunately modern world is dominated by another concept: “monetization”. “To monetize is to convert an asset into or establish something as money or legal tender. The term monetize has different meanings depending on the context.” http://www.investopedia.com/terms/m/monetize.asp.

In real life reaching the state of ‘flow’ is not enough, one also has to eat. Maslow’s pyramid is eloquent enough. If somebody wants to discern between two flow producing activities ‘profit’ comes in quite handy. Being profitable means not only a real demand for whatever is supplied but also that that activity is run by a diligent operator. In this sense profit is a very good efficiency indicator.

Contemporary economic and social life seems to be dominated by another logic. Profit has become a goal, not an indicator. Instead of trying to achieve the state of ‘flow’, people try to get rich. Instead of finding happiness by doing something meaningful people try to numb themselves by ‘consuming’. We have transformed ourselves from ‘free spirits’ into ‘consumers’.

It seems that we have forgotten what Max Weber tried to teach us. “As Calvinism developed, a deep psychological need for clues about whether one was actually saved arose, and Calvinists looked to their success in worldly activity for those clues. Thus, they came to value profit and material success as signs of God’s favor.” In this vision ‘profit’ is indeed an indicator and we should also remember about “Asceticism and the Spirit of Capitalism.” http://www.sparknotes.com/philosophy/protestantethic/summary.html

And yes, this is indeed an agency problem.