Faith & Freedom Chapter Nine: The Protestant Spirit of Capitalism

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We have discussed at some length the Puritan contribution to America's political institutions: written constitutions, separation of powers, regular elections, the secret ballot, the federalist principle, religious toleration and separation of church and state. But there is also a strong connection between the rise of Puritanism and the emergence of capitalism. To fully appreciate this fact, it is worth reflecting briefly on conditions in Europe prior to the economic revolution, which began to take place following the Protestant Reformation. Living standards for most people in medieval Europe were poor. About 90 percent of the people spent their waking hours working in agriculture, trying to acquire food. Whether or not one could eat on a particular day was a major source of insecurity. Poor weather often meant starvation.

The abject poverty of the average medieval sert, though, had nothing to do with lack of native intelligence or ability, but with the social and economic system with which he had to contend. The medieval ethos was decidedly hostile to commercial activity. The merchant was seen as a scurrilous character in feudal Europe. To most, he seemed to provide nothing of obvious value, serving as middleman who skimmed his profit off the labor of others, buying cheaply and selling to someone else for more than it was worth. His contracts were not enforced in the medieval court system. In an effort to protect the unsuspecting peasant from being scalped by shady middlemen, charging interest on money was prohibited by the Catholic Church, as was the selling of insurance. But such laws made it very difficult for a merchant to hedge his bets against possible future calamity.

In addition, there were rigid economic controls imposed on the population. Among the most pernicious regulations involved the ‘just wage" and ‘just price" theories, promulgated mainly through the Roman Church. It seemed, on the surface, a sensible doctrine given the impoverished and desperate condition of the vast majority of the people. Hence, except for a small minority, ‘just wage" and ‘just price" regulations were uniformly accepted and enforced. The idea that a price could be settled through negotiation between buyer and seller was an alien notion in medieval society. Wages and prices were set by custom. Every service and every product had a fixed price, even if external circumstances made the prices unworkable. A drought, for example, might make it necessary for the farmer to raise his crop prices in order to turn a profit. But this notion was completely antithetical to the medieval understanding of a just social order. The result was economic havoc, food shortages, and regular famines.

In addition, anyone engaged in trade was required to belong to a guild, which was similar in some respects to a modern trade union - except that gaining access to a guild was all but impossible. One acquired his position in this structure through inheritance. The vast majority of people in the Middle Ages were barred by law from entering into markets, as the force of heredity perpetuated all authority and privileged position. The guild enforced all regulations of the trade - prices, wages, rules for workmanship - and administered punishments to transgressors. Those engaged in trade at all were lucky and few, the entire point of the guild being to protect the few market jobs that existed. The great majority of people were marooned on a manorial plantation in indentured servitude, under the authority of a lord or baron.

What we now call feudal Europe evolved naturally from the break-up of the Roman Empire. As law and order from the sixth through the ninth centuries disintegrated, the crying social need was for safety, which only the powerful landowners could provide. The small and isolated individual was forced by circumstances to exchange his freedom, as well as the freedom of all his descendants, to a particular lord, who, in turn, would provide protection and social identity. The tenant agreed to become the lord's hereditary serf. The giving away of the freedom of all the serf's descendants was an essential part of the bargain, because it was the lord's guarantee of continued agricultural service.

Sometimes these landowners were church authorities, sometimes friends or relatives of a king or prince. Usually land was accumulated in the form of grants from a king to a lord or monastery in return for their loyalty. The armed castle or manor was the focus of medieval life. The Southern plantation in the American colonies was a descendant of this system, antiquated and outmoded by the time of the American Revolution.

Typically, a serf and his family would be given a tract of land to cultivate, from which they would be permitted to keep a small percentage of what was produced, usually subsistence level, sometimes less. The amount taken by the lord in duties, taxes, and actual goods varied from manor to manor. It was understood by all, however, that everyone worked for the benefit of the lord-not themselves, and certainly not for profit.

The Catholic Church is often blamed for the quality of life of the average serf, as it was the dominant force of the age. The official Church, to be sure, did Christianity no service by embroiling itself in power politics, by selling indulgences, by using what amounted to slave labor to build its magnificent cathedrals. But as corrupt as it sometimes was, the Catholic Church was the one unifying social and religious force without which the individual became isolated, defenseless, and spiritually adrift. The Church was not merely one aspect of civilization. It was civilization. The Church was the only systematic machine spreading literacy and advancing learning. It was a source of comfort and enlightenment for the vast majority of people. Indeed, there were many brave missionaries in the Church, selflessly spreading the Gospel among barbaric tribes throughout Europe. Without the likes of Dante and Thomas Aquinas, two titanic intellectual powers, our understanding of spiritual truths would not be as rich. Without living examples such as Francis of Assisi and John of the Cross, the hope of actually living a life worthy of the men of New Testament fame would seem a distant dream.

Because civilization had been in decline for so long, one of the Church's main missions was to rediscover its classical heritage and copy it down. During the early Middle Ages, all intellectual efforts went toward relearning old concepts. With good reason, this project placed strong emphasis on order, custom and continuity. Intellectual and material progress cannot be made-indeed the Gospel cannot easily be spread - if the foundation of society is ignorance and chaos, as was the case from about the 6th to 11th centuries. Monks, who were the most learned class of people during this period, labored in the monasteries to meticulously preserve Scripture and reconstruct texts from vanquished Greek and Roman culture.

Since the Church's main preoccupation was the rebuilding of classical civilization on a Christian foundation, rituals, serving as a memory mechanism to preserve tradition, became very important and grew increasingly elaborate. Over the centuries, legal and social relations also became bewilderingly complex, and had little to do with economic considerations.

The idea that new products could be developed, larger markets found, or that a service could be delivered more efficiently, cheaply, and with higher quality if competition were permitted and agreements enforced was not part of the medieval experience, or its understanding of a just social order. The prejudice the businessman endured in English society - one day to be a great trading culture-was apparent in Shakespeare's Merchant of Venice, in which Shylock, "the Jew," tricks Antonio into accepting unreasonable and deadly terms on the delivery of a cargo. Naturally, justice prevails in the play and the merchant of Venice is comically disgraced.

This anti-market culture made the amassing of wealth through a combination of skill, luck, and sure calculation all but impossible. Ever since Adam Smith published The Wealth of Nations in 1776, in which he set forth an economic model based on his observation of human behavior, we have referred to the inexorable laws of economics. But medieval society had no understanding of how wealth could be created, or of the forces that drive men to strive to make better lives for themselves. A good example of this was the response of feudal policy makers to the first of the major plague epidemics, which eventually wiped out about one third of Europe. Instead of permitting wages to rise with the accompanying labor shortage, the English Parliament enacted the Statute of Laborers in 1350, requiring a cut in what workers were to be paid. Thus, the living standards of the general population was worse off than it needed to be, as people were prevented from earning what the market would have permitted.

The Roman Church was not alone in failing to recognize the benefits of allowing economic freedom. The nominally Protestant government of Henry VIII was at least as suspicious of trade as was Rome. The English aristocracy wanted taxes, customs, and a military. But it did not want fluid class mobility or a destabilization of the existing social structure. Not until after 1688 could the protection of private property for the lower classes be defended as a right in England's courts. Though the royal court permitted trade in luxury items such as silk, glass, spices, and tobacco, the production of essentials, such as food, lumber, and coal were actually discouraged by a proclamation of 1585 forbidding the breaking of fresh ground. The Statute of Artificers, passed in 1563, excluded from industry all those who had not undergone seven years of apprenticeship, thus nationalizing the guild system. A statute of 1533 limited the number of sheep one could own, and there were numerous restrictions on the transport of food from the farms into London. In this light, it is not surprising that the prospect of famine was a continuous worry for the average citizen. Many of these economic regulations were actively promoted by the Anglican clergy, who said they were looking after the interests of the little man who was in danger of being taken advantage of by the crafty merchant. The church-state establishment, whether it happened to be Roman Catholic or Episcopal Protestant, had a decided bias against the trader, in part because government and church officials were not dependent on commerce for their positions in society, and because trade inevitably creates an independent class of people, less beholden to the paternalistic state for their livelihoods. Trade threatens governments because money equals power for the individual; and trade threatens privilege because money also equals status.

One of the most important developments of the 16th and 17th centuries was the emergence of a new class of traveling peddlers, often operating outside city limits; middlemen who supplied clothing, food, and other goods to the towns. They were often harassed by officials and even tougher laws were passed against their trading in established industries. But they flourished anyway. Some were Jewish, and made their way in the underground economy because they were ostracized from the mainstream culture. But the great majority were dissenting Protestants. There is a strong connection between the independent wayfaring merchants and the independent Protestants who rebelled against the English Church. The Stuart kings spent much of their energy denouncing the activities of these middlemen, and attempted to legislate out of existence not only their churches, but their professions as well.

Many of them stayed in England, and eventually waged war and won against the Crown in the Puritan Revolution of the 1640s, after which attempts to regulate commerce broke down and the spirit of capitalism began to permeate all areas of English life. As we shall see later, the destruction of the royal and ecclesiastical bureaucracy by Oliver Cromwell during the 1640s was one of the decisive events in the history of progress towards a free society. But many non-conforming Protestants left England for America, where they proceeded to build from scratch the greatest commercial empire the world has ever seen.

At first glance it would appear that the Puritans were good businessmen because they were largely excluded from positions of political influence, that commerce was, therefore, their only vehicle to social advancement. No doubt, their circumstances as religious dissidents in England encouraged them to choose business over pursuing positions in the king's court. But there is more to the Protestant proclivity toward commerce than their situation as outcasts. Catholics in Europe were never good merchants even when they were out of power. There is no evidence in England that Catholics felt especially inclined toward business, and they were far more hated than Puritans in English society. English Catholics remained poor, while English Puritans prospered. Moreover, the Puritans (as opposed to the Separatists) were not in continuous disfavor. The Puritans dominated the House of Commons during the reign of the Stuart kings. In fact, the Stuarts were generally disliked more than the Puritans. Oliver Cromwell was popular for most of his 12-year reign. The evidence suggests that the Puritans were exceptionally good capitalists regardless of whether they were in or out of fashion in English society. Max Weber, in his classic study, The Protestant Ethic and the Spirit of Capitalism, makes the case that the central force driving the Puritan to be industrious was theology.

The rejection of privilege, hereditary or otherwise, is essential to both the Protestant and the capitalist spirit. The bishop was as anathema to the Puritan as the courtier seeking royal favor was to the free marketeer. Indeed, the Puritans combined hostility to the clergy with a rejection of aristocracy. John Calvin put the same value on a worker as on a minister, and taught that all honest callings are sanctified by God and should be pursued with equal diligence. Calvin himself was a socialist. But his work ethic was modified by the New England Protestants to say that if work is good, then wealth is a just reward. Moreover, it was soon discovered by the settlers of Massachusetts Bay that wealth was good not only for the individual, but for the entire community, so long as it was pursued in a lawful, honest, and Christian spirit. For reward encourages work, and work is a holy endeavor.

It might seem, at first, that the capitalist ethic and the Christian ethic are contradictory. As the Apostle Paul says, "The love of money is a root of all sorts of evil" (1 Tim. 6:10). Indeed, luxury and avarice were continuous targets of attack by Puritan preachers. Isn't capitalism about greed and the acquisition of luxuries? The answer is a most emphatic no. The great industrialists and traders of American history have not lived in luxury. Quite the contrary: a good capitalist makes sacrifices, forgoes immediate consumption, and invests his time, effort, and resources in an enterprise that might or might not work. At heart, he is an ascetic. A spendthrift is not a good businessman. Capitalism is really about discipline and restraint, which is one reason we look at a nation's savings rate to determine the health of an economy. The following paragraphs were written by a prominent American colonist, and they shed light on what Max Weber meant by the Protestant Work Ethic:

"Remember this saying," wrote the colonist: "The good paymaster is lord of another man's purse. He that is known to pay punctually, as exactly to the time he promises, may at any time, and on any occasion, raise all the money his friends can spare. This is sometimes of great use. After industry and frugality, nothing contributes more to the raising of a young man in the world than punctuality and justice in all his dealings; therefore, never keep borrowed money an hour beyond the time you promised, lest a disappointment shut up your friend's purse forever.

"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."

This advice was offered by Benjamin Franklin. Franklin was no Puritan. Far from it. Indeed, his advice to the young tradesman was utilitarian, not spiritual. But the Puritan would not have been troubled at all by the practical nature of Franklin's advice. For the Puritans, the Bible was not only a road map to salvation, it was also a blueprint for living. In the Book of Proverbs, for example, we find equally practical advice: "Do you see a man skilled in his work? He will stand before kings" (v.22:29). Virtue not only helps us win eternal rewards, it also improves our prospects here on earth. Paul was very careful to say that it is the "love of money" that is a root of evil, not the money itself. In fact, Paul was strident in warning that "if anyone does not provide for his . . . household, he . . is worse than an unbeliever . . . " (1 Tim. 5:8). A successful enterprise, in the Puritan mind, reflected good character. Duty, honor, discipline, integrity, and restraint were essential capitalist, as well as Puritan, virtues.

The Protestant Work Ethic created reliable patterns of behavior, important for the development of a market system. An alarm clock appeared in a poem of 1654, indicating a new importance placed on regularity. It was certain that a good Protestant would carry out the terms of an agreement with diligence, care, and honesty, thus following Calvin's views on how one is to conduct his daily affairs: "We shall not rush forward to seize in wealth or honors by unlawful actions, by deceitful and criminal arts, by rapacity and injury to our neighbors; but shall confine ourselves to the pursuit of those interests, which shall not seduce us from the path of innocence." This attitude dominated the lives of the early settlers of New England. Whereas the Catholic Church (and the Anglican Church) - essentially medieval institutions - regarded the merchant, until relatively recently, with intense suspicion, the Puritans lifted social stigma from the trader. It was all right to charge interest on money and still be a Christian. A minister had no greater claim on salvation than a banker. While the Catholic tendency was always to acquiesce to tradition and to clerical superiors, the 17th-century Puritan and the entrepreneur responded to a personal calling. The Puritan was single-minded; he forged ahead regardless of conventional opinion; his spirit, often ferocious, was not dissipated by failure. These qualities also enhanced greatly the prospects of his business ventures.

Capitalism and Puritanism fed off each other. Both developments placed responsibility on individual initiative; and both involved clean breaks from the paternalistic and static feudal order. Both were highly destructive of hierarchy and empowered the individual to determine his own fate. Was it the Reformation that created the cracks in the medieval hierarchical system that permitted the rise of the merchants; or was it capitalism that broke up the old arrangements, making possible the Protestant rebellion against the medieval Church? My reading of history is that freedom - whether economic or religious -is always threatening to those in positions of power, and that freedoms tend to rise and fall together. How can we have freedom of conscience if the state can confiscate our property? We can't. The rise of Protestantism and the rise of capitalism were part of the same movement. One could not have survived without the other.

As soon as the Puritans arrived in Massachusetts, they began building fisheries in Marblehead. They quickly discovered a market for dried codfish that became so important an industry that someone carved a statue of a codfish, placed it in a "meeting house," and dubbed it "The Sacred Cod," demonstrating a sense of humor even about Christianity (which forbids idol worship). Massachusetts Bay also prospered in the raising of cattle, poultry, horses, pork, corn, and other vegetables. Lumber became an important industry, as did ship building. Soon, New England's vessels could traverse the Atlantic more rapidly than the British Merchant Marine. There was no one in the world who could compete with unfettered Puritan merchants, a fact that can be documented by New England's astounding growth. New England's population in 1630 numbered about 1,500 settlers; by 1680, this number had increased to 68,000; and by 1710, approximately 115,000 industrious people lived in New England, which, with Boston as its trade center, had become a significant economic power. So successful were the New England industries that the British government felt forced to place draconian trade restrictions on the colonists in the form of the notorious Navigation Acts. In contrast to the asceticism of the medieval monk who retreated to the monastery for prayer and contemplation, the New Englander believed his business, his craft, and the support of his family to be an entirely Christian enterprise.

The capitalist spirit alone was inadequate for ensuring the triumph of the market over a world of hostile forces, and more than the profit motive was needed to tame the American wilderness. The Puritans believed it had to be a holy endeavor. They were not interested in placing a few isolated trading posts on the edge of a wild continent; they wanted to build a model society, one founded on the precepts of God. For they understood very clearly the close connection between civilization, the Christian faith, and private property. The ownership of property teaches man responsibility, reinforces in his mind the importance of law, raises man above brutish existence, enables him to pass a better life on to his children, and affords him the leisure to meditate on matters concerning the soul. Perhaps better than any other people, the Puritans of New England understood that piety, liberty, and commerce were three essential pillars of a lasting and flourishing culture; knock one down, and civilization falls.

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