Early Capitalism and Catholic Scholastic Philosophers

In 1905, German sociologist Max Weber wrote the book, The Protestant Ethic and the Spirit of Capitalism. In that book, Weber began with the observation that in Germany at the time, the great industrialists were overwhelmingly Protestant in a country that had a fairly even divide between Catholics and Protestants (the same would not have worked in England, where the population is overwhelmingly Protestant). Weber examines this phenomenon and traces it back to the Protestant Reformation and as a result concludes that modern capitalism is Protestant in origin. However, looking further back one finds that this blanket idea of capitalism as Protestant in origin is patently false. In fact, modern capitalism (in Europe and its offshoots) has its origins in a group of medieval Catholic philosophers known as the Scholastics, the most prominent of which was Thomas Aquinas.

For the clarification of this work, we must define a few terms in particular. Among these is what makes up "modern" capitalism. Capitalism can be defined in numerous different ways, although the most common generalities are that it is an economic system in which wealth and the means of its production are privately owned. Wealth of course, is defined as possessions and net worth according to the broadly accepted currency of a given area. This definition naturally implies that there will be trade taking place, profits being made, and a free and competitive labor force. In addition, this system must be upheld by a generally recognized rule of law. This definition will be allowed some flexibility and could cover anything from a nearly pure free market system to the social democratic countries of Scandinavia. In the end, the one thing that is mostly constant is that wealth and the means of production are privately owned for the most part.

The reason I use the term "modern" is that previous to the era in which capitalism was taking European societies by storm (roughly 1500s to 1600s) the dominant economic system of European countries was feudalism, a system under which peasants labor for their landlords and in which land is the central factor in wealth, rather than production on an open market. Capitalism is ultimately what supplants the agricultural society for an industrial and service based one (as the peasants in feudalism directly produced wealth for the Lord, and he was not manufacturing a product or service that he sold out, and thus feudalism was generally self-contained). Of course, this terminology "modern" ultimately refers to a generality as some form of buying or selling in a capitalist mode has naturally always existed, it is simply the concept of this system being utilized on a broad-based society-wide scale that separates "modern" capitalism from nascent capitalist activities in non-capitalist (usually agricultural up to this point).

The myth of capitalism as a Protestant phenomenon, while failed in its refusal to look further back than the Reformation, is not entirely without any evidences pointing toward it (it is simply in the final verdict that it falls short). Max Weber, in The Protestant Ethic and the Spirit of Capitalism, begins immediately by focusing upon the nature of German entrepreneurs , and by (as was stated in the very first paragraph) exposing the fact that of the major German industrialists, most he has been able to name were Protestant rather than Catholic. An examination of German demographics reveals that among the religious population even today, there is an even split between Catholics and Protestants , so it is a far better nation to use as an example than predominantly Protestant England or America.

Weber goes into a lengthy argument about the ways in which the ascetic nature of Protestantism led to the development of capitalism. The basics are, that now, with the concept of salvation solely by grace, that outward acts were a sign of grace rather than a way of working toward salvation. Those who are well off financially are said to be in God's good graces and as a result a strong emphasis is placed on work and the asceticism inherent within Protestantism leads ultimately to a staunch frugality. These two combinations make Protestants wealthy capitalists.

While Weber tends to show a generality of greater success in capitalism among all Protestants, he focuses in particularly strongly on Calvinism, the doctrine of French theologian John Calvin, which is famous for its emphasis on predestination. Weber states that the implications of Calvinism, with salvation being predestined for the elect, led to a Puritan ethic in which the practitioners focused mainly on living within God's grace and led to a stronger ascetic feel than was found among the Lutherans, who stressed the importance of inner experience (whereas Calvin stressed the importance of logic, reason, and holding to an airtight philosophical system).

Weber pointed directly to some of his primary sources in those of a Puritan background themselves. He particularly saw the exemplar of the Protestant/Calvinist work ethic in Benjamin Franklin. He quotes Franklin.

Remember, that time is money. He that can earn ten shillings a day by his labor, and goes abroad, or sits idle, one half of that day, though he spends but sixpence during his diversion or idleness, ought not to reckon that the only expense; he has really spent, or rather thrown away, five shillings besides. ... Remember, that money is the prolific, generating nature. Money can beget money, and its offspring can beget more, and so on. Five shillings turned is six, turned again is seven and threepence, and so on, till it becomes a hundred pounds. The more there is of it, the more it produces every turning, so that the profits rise quicker and quicker. He that kills a breeding sow, destroys all her offspring to the thousandth generation. He that murders a crown, destroys all that it might have produced, even scores of pounds.

Now Benjamin Franklin was himself not a practicing Calvinism, but Weber describes him as being "filled with the spirit of capitalism."While Franklin's religious views are hard to pin down, he is generally considered to be either a deist or a fairly liberal Christian. Reading through Franklin's own Articles of Belief and Acts of Religion we find that like many deists Franklin had a very rationalistic conception of God based not on emotion or on the reading of holy books, but on logical philosophy. However, Franklin seems to come closer to Christianity as God is shown as being more active and concerned with worldly affairs than in classical deism. Franklin, however, maintained a Calvinist Puritan spirit.

Benjamin Franklin's father, Josiah Franklin was himself a devout Calvinistic Puritan and instilled those values deeply in his sons. An exceptionally industrious man and exemplar of Weber's Protestant work ethic, when Josiah Franklin died he had placed on his tombstone this quote from the Bible, "Seest thou a man diligent in his calling, he shall stand before kings." This was nothing less than exemplary of the Calvinist attitude that Weber describes as demanding a particular zeal for one's given occupation in life.
Weber certainly, in the Puritan ethic, has hit a treasure trove of evidence and sources pointing directly to his idea that Protestantism jumpstarted modern capitalism. However, Weber's work has several flaws that don't allow it to stack up. First of all, Weber is incredibly weak on statistics, he cites specific examples but rarely compares them directly to the whole. Weber also ignores many key examples of capitalism developing in a Catholic context in times prior to the Protestant Reformation and the rise of Calvinism.

The truth is that broad-based capitalism came before Weber described it in its Protestant form, in fourteenth century Italy. Joseph Schumpeter, an economist from Austria during the early portion of the twentieth century, cited the examples of Florence, Venice, and other Italian cities as being examples of capitalist societies developing in a Catholic context. However, this is not a paper primarily about where capitalism first developed and whether it was capitalist or Protestant, but where the first sparks got going. Weber himself traces those first sparks back to ascetic Protestantism. Others stand by the reasoning that led to the publishing of this paper; that the thoughts and ethics leading to modern capitalism were developed by the medieval group of philosophers known as the Scholastics, who were Catholic, and whose greatest exemplar was Thomas Aquinas.

The Scholastics themselves did not label or in any way declare themselves as such, it was not a formal group. These philosophers were given the label "Scholastics" because the philosophers of the period were known as "magistri," which in the Latin alludes to teachers. Schoolmasters themselves were called, "scholasticus" and much of this philosophy was developed by those running the schools of the time. As a result, the name "Scholastics" is used in spite of the fact it was not a label given by themselves.

The starting point for the Scholastics was the same starting point for all Christian philosophers; that is to reconcile their faith with science, logic, and reason. Christian philosophy began with the Patristics (Fathers of the Church) and continued on to Augustine of Hippo, prior to the onset of the Dark Ages (in which learning in Europe took a hit, the center of world learning in this era being shifted toward the Arabs in what is known as the "Islamic Renaissance"). In those days, Christian philosophy tended more toward Plato, who emphasized the spiritual over the rationalistic.

The Scholastics shifted the focus over from Plato to Aristotle, who was more rational and logical in his approach, and did not emphasize the spiritual/mystical over the concrete realities of life. Logic is a huge focus of Scholastic thought, and is unmistakably used within Aquinas' magnum opus Summa Theologica, which was among the earliest of rationalist-based works of Christian apologetics and total systems of theology.

The Scholastics did not simply focus on the mystical, however, as they had much to say about ethics, and yes, even economics. Thomas Aquinas speaks loudly on the subject of private property. In Summa, Thomas launches into a discourse on the idea of property rights. Thomas goes over to objections to property rights from a biblical basis and then returns by defending them with the following comments on the possession of "external things."

Man has a natural dominion over external things, because by his reason and will, he is able to use them for his own profit... and it is by this argument that the Philosopher proves that the possession of external things is natural to man.

Aquinas is referring back to the Book of Genesis, in which it is declared that God gave dominion to all things to Adam and Eve. Aquinas therefore reasons that even if things are ultimately under God, there still is a place in society for property rights ordained by God. Thomas further elaborates on how the taking of property constitutes theft, and as a result property rights must be protected. While some level of property rights was already recognized, this resounding call from a Christian philosopher for the protection of property rights as a natural right and not for utilitarian reasons was unprecedented (although it had long been established in Judaism).

Perhaps the thing which is most revolutionary in Aquinas and the thing which makes him stand firmly as a forerunner to modern capitalism are his views on lending at interest. Aquinas writes.

A lender may without sin enter an agreement with the borrower for compensation for the loss he incurs of something he ought to have, for this is not to sell the use of money but to avoid a loss. It may also happen that the borrower avoids a greater loss than the lender incurs, wherefore the borrower may repay the lender with what he has gained. But the lender cannot enter an agreement for compensation, through the fact that he makes no profit out of his money: because he must not sell that which he has not yet and may be prevented in many ways from having.

This may not sound radical in this day and age, but for Aquinas' time it was quite progressive. Lending money at interest was roundly condemned for most of Christian history to that point. Now, this was not to say that Aquinas stood behind usury, or the lending of money in exchange for profit (now common and acceptable in banking), but he was indeed allowing for the charging of interest due to the economic loss presented through lending. It was basic economics, in essence.

With no lending, of course, it stands to reason that there can be absolutely no way to build capital of any kind, and without capital there can simply be no capitalism. Aquinas' philosophy put the green light on the development of capital. In addition, Aquinas also allowed for profit. In reviewing the work of historian Rodney Stark, The Victory of Reason, a book on how Christianity formulated capitalism and democracy (similar to this thesis in that it rejects the commonly held idea of origination for an earlier section, in this case rejecting the idea of these two phenomena as Enlightenment), New York Review of Books writer William Grimes captured two examples of pro-profit thought shown in Stark's work to be a part of Scholasticism, he recounts in his review.

Christian theology, which Mr. Stark praises as constantly evolving, kept pace with economic developments. Thinkers like Augustine and Thomas Aquinas gave their sanction to private property, profit and interest. In the 13th century, Albertus Magnus wrote that a just price was simply what "goods are worth according to the estimation of the market at the time of sale." Aquinas imagined the case of a grain merchant arriving in a country beset by famine, who knows that a convoy of other grain merchants will shortly arrive. Is he morally obliged to reveal that fact, and thereby put downward pressure on the price of his own grain? In a conclusion worthy of Adam Smith, Aquinas decided that he was not.

Aquinas in giving sanction to profit clearly took away the final chink in the armor that prevented the development of capitalism in the West.

Indeed, recounting the earlier point on the subject of Italian city-states, we find capitalism itself as not primarily arising in Protestant lands. However, once again the focus is upon philosophy. Capitalism ultimately requires three things to function, property rights, lending, and profit making. It cannot exist when one of those three stools is taken away. Aquinas establishes the legs of these three stools. Perhaps the Protestant ethic did contribute to the further promotion of capitalism, as there is simply something to be said for Weber's thesis, even if it stands as a sociological study lacking the numerical and statistical evidence that ought to be shown. Indeed, correlation does not mean causation. Someone could say that for the theory presented in this paper, but in the end this paper was mainly focused on philosophical roots rather than manifestations. Weber faultily points throughout the entire body of his work toward ascetic Protestantism as being capitalism's philosophical womb, but it is simply untrue. The existence of the capitalist Italian city-states prior to the Calvinist/Puritan ethic proves beyond any doubt that Protestantism could not be the philosophical nurturing ground of capitalism. Simply quoting Puritans does not do, and in the end one must get to the root. The words of Aquinas himself point to modern capitalism's Scholastic origin.

In the end, of course, all ideas are built on others. Even Aquinas' ideas had to be built somewhere, Aristotle's Nicomachean Ethics seems to have many allusions to Aquinas (this author having read the entirety of that work) and indeed the very history of Scholasticism points to the Aristotlean origin. Capitalism itself though, has its strongest defense in the system of Aquinas, a pre-Protestant theologian. The purpose of this work was not to refute Weber's thesis, but to build on it and expose the true origins of modern capitalism, and it certainly does. Did Weber overlook Aquinas? I imagine. Had he read every word Aquinas wrote the Protestant Ethic and Spirit of Capitalism may have never been written. It is in the body of Aquinas' work that we find such an important point in the history of economic thought, one that points to capitalism as a Scholastic, not totally Protestant tradition.

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