The Foundations of Capitalism
subject of capitalism has engaged my interest and attention from time to
time in connection with my studies in economic history, social
institutions, and the history of sociological theory, where the latter
touches upon the views of leading sociologists, such as Max Weber and
Ernst Troeltsch, dealing with the origins of capitalism.
I am glad to return to it for a brief discussion in the form of a
foreword to Professor Oliver C. Cox’s comprehensive work on the nature
and evolution of capitalism as a socioeconomic system.
Writers interested in economics, all the way from the most extreme Libertarians on the Right to Communists on the Left, are at least in agreement that capitalism is the outstanding product of economic evolution to the present time and the basic economic institution of the modern age. Whatever its present status and future prospects, the debate about capitalism was never more lively than at the present time. Of late special attention has been given to the question as to how far the factory system and capitalism were responsible for the harsh working and living conditions in the early days of the first Industrial Revolution.
Libertarians, not unduly alarmed by the current trends towards collectivism and state action, even in the so-called free nations, ardently urge a return to the free enterprise of the days of the Physiocrats, Adam Smith and David Ricardo. The radical collectivists assume that the days of capitalism are numbered if, indeed, they do not view the system as a sort of economic antiquity or museum piece. Realistic scholars, not committed in advance to either extreme, are seeking to understand its origins, nature, present state, and future trends. They recognize that the economic world was never in a more fluid or unpredictable condition than it is today. So far as I can judge by this first volume of Professor Cox’s projected three volume work on the history and theoretical analysis of capitalism as a social system, the author belongs to this third group.
number of classic works have been devoted to the origins, nature
and development of capitalism, notably those by Max Weber, Ernst Troeltsch,
R. H. Tawney, Lujo Brentano,
and, above all, the encyclopedic survey by Werner Sombart, Modern Capitalism.
In addition, there have been numerous systematic economic
histories, the latter portions of which are necessarily concerned with
various technological, material and institutional aspects of the origins
and triumph of capitalism in the modern world.
Cox’s work is a novel departure from earlier books dealing with the
growth of capitalism. It is
not a traditional economic history, with capitalism as the major theme,
but a social history of the capitalist system and the spirit which
engendered it, motivated it, and brought about its integration as a system.
It treats of the broad pattern of capitalistic society, its origins,
growth and expansion, providing a theoretical analysis as well as a
description of the integral elements in the system.
His tribute to the achievements of capitalism well illustrates his
broad approach to the problem:
our present day of crisis and transition the achievements of capitalism
should not be minimized. They involve preeminent cultural gains for
mankind. The magnitude of these gains may be inferred from the
following incomplete list: unification of the world into a system of
national interdependence; effective liberation of the human mind from the
fetters of religious mysticism and hence secularization of the dominant
culture; banishment of irrational fear and hostility towards persons of
other societies; establishment of an imperishable faith in the efficacy of
science and technology, and comprehension of economization in production;
provision of a milieu for the growth of democracy; and, eventually,
demonstration of the feasibility of purposively organizing the societies
of the world in the interest of human welfare.
It would probably be difficult to show that any part of this great
boon to mankind could have arisen without the intervention of capitalism.
In outlining his
method of study and his approach to the problems of capitalism, Professor
Cox makes it clear that he employs a combination of social psychology,
sociology and history, the latter as much for a broad perspective as for
the presentation of specific data.
He is interested in the
patterns of personal and social behavior as they operate within the
capitalistic social system. To
the material and social facts he adds, as a vital element, a careful
consideration and presentation of the spirit or “ethos” of capitalism
which gives cohesion and dynamic impulse to the system.
Professor Cox lays
down a number of fundamental postulates about capitalism and its
Among these are the following:
Capitalism as a socio-economic system is relatively new and recent in the
economic experience of mankind. It
arose only after the fall of Roman civilization in the West, as more
favorable disposing social conditions were gradually provided.
While elements that have gone to make up the capitalist system can
be traced back to earlier times, they did not constitute capitalism in any
true sense, even fractionally or casually.
They became a sector of capitalism only when they were integrated into the
organized capitalist system. When
this system arose all aspects of the society took on capitalist traits,
but never previously.
is a unique form of social organization and a specific type of organized
psychological motivation and orientation.
Previous items which were later gathered into the capitalist social
system took on quite a different psychological and material significance
and functional operation within the capitalist complex.
Generalizations about social and economic facts in the life of
non-capitalistic civilizations, based upon capitalistic assumptions and
experiences, are likely to be distorted and misleading, whatever the
apparent superficial similarities and analogies.
Capitalism can only be understood when viewed and analyzed within the
premises and operations of a capitalistic society.
Even here, there is danger in universal generalizations.
While there is a general similarity in the basic organization and spirit
in capitalism everywhere manifested on the planet, there are significant
differences in details.
This is one reason why the
universalism in the dogmas of classical economics was often fallacious and
Capitalism not only
involves and requires a unique form of economic organization, motivation
and operation, but must also have a suitable government with which to
control public policy. The old
cosmopolitan and heterogeneous monarchies of antiquity or the diffused
agrarian feudalism of the Middle Ages were totally unsuited to the
operations of capitalism.
This requires a republic or
democracy controlled by business men who operate the political and legal
system in accord with the dictates of the capitalistic economy.
The national state, constitutional government and the parliamentary
system have been needed and produced to meet the political demands of
Not only politics but also religion must be nationalized and freed from the more paralyzing restraints of mysticism and ritualism. Protestantism, especially Calvinism and Puritanism, as Max Weber, R. H. Tawney, Georgiana Harkness and others have so convincingly shown, provided the answer to the needs of capitalism in the realm of religion.
Capitalism also requires an urban social base.
It cannot rise and thrive in an agrarian setting, which was a main
reason why it developed but little during the period of medieval
feudalism, save in the city states which lay aside from the feudal system
in their social and economic life, or in eastern Europe during modern
These major traits
and components of capitalism had come into being in
Finally, Professor Cox contends that the historic experience of capitalism proves that a capitalist city or national state must expand its operations, especially in the commercial field, if it is to endure. It is tied to the necessity of gaining ever greater access to, and successful exploitation of foreign markets. In so doing, it either disorganizes the social and economic system of the more primitive or static economies which it penetrates or, as in the case of England, forces them to abandon the old system, become capitalistic, and launch their own process of expansion.
In this first volume of his work, Professor Cox traces the
rise and growth of capitalism from its origins in the Italian city-state
of Venice down through the Industrial Revolution in England, by which time
the capitalistic system had taken on all of its essential attributes prior
to the rise of finance, state and military capitalism in the twentieth
century, a subject reserved for the later volumes.
The book leads off
with an extended history and excellent analysis of the socio-economic
The volume concludes with an extended consideration of the first
Industrial Revolution in
far as this first volume is concerned, while possibly differing on some
details of description and analysis, I find little to complain about in
Professor Cox’s treatment and much to commend in it.
It should prove illuminating and helpful to all three of the groups
mentioned in the opening paragraphs of the Foreword as most actively
concerned with discussing capitalism today.
It provides a fresh and illuminating treatment not duplicated in
the large in any other work in any language.
As such, it must be regarded as a major contribution to social and
economic history in our day.
Naturally, I am unable to predict here what I might have to say about
the two later volumes in his projected series.
I suspect that I might
differ rather more radically with his treatment of finance, state and
military capitalism, and would find Orwellianism far more of a menace to
the future of capitalism than Marxism.
In particular, I would think that I might offer the
it did not do so, and is not likely to do so, is apparent to all students
of recent American economic history and world relations.
Indeed, this country has gone off on a wild and unprecedentedly
expensive form of planetary expansion which does not even have the merit
of the older imperialism in paying its way, or more, for a considerable
period. Hence, there is
evidence that American capitalism may collapse more rapidly than was the
case with any other capitalist society.
This is likely to be especially true so long as the main custodians
of American capitalism are absorbed with the alleged threat of Marxism
from without while ignoring or promoting the surrender to Orwellianism and
military state capitalism within our own boundaries.
Interventionism is far more a threat to American capitalism than
In conclusion, I should say a word about Professor Cox’s professional
record in so far as it relates to his competence to write on the history
and nature of capitalist society. Few
persons could be better qualified for the task.
He had graduate work at the
Such training would have been far more comprehensive and diversified
than that possessed by any other historical student of capitalism known to
me. In addition to this,
however, Professor Cox had two years of instruction at the
HARRY ELMER BARNES
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