Religion and The Rise of Capitalism

As mentioned in the introduction, beginning with the onset of the bubonic or "Black Death" plague in 1347 AD, religion became an increasing factor to promote socio economic change and the eventual formation and establishment of capitalism. In this section, some of the most profound effects of religious transformation will be reviewed. Prior to do so, however, a brief description of the nature of political economy before this transformation period will be provided.

From Aristotle's writings (according to K. Polanyi's analysis found in Trade and Market in the Early Empires: Economies in History and Theory, 1971), it is learned that up until this time any type of exchange that occurred was simply performed according to the standing that existed between the two individuals involved in the transaction. In other words, exchange was conducted based on a natural order or policy, and prices were not set with any intent or motive for personal gain or profit. Acquisition of material goods beyond the necessities of one's life or for one's family was therefore considered unnatural, unethical, and immoral. Furthermore, the whole concept of "economy" was different during the pre-capitalist era. To Aristotle, economy was merely an instituted process through which sustenance is ensured. During this pre-capitalist era, "economy" was essentially "embedded" in non-economic institutions where community cooperation, behavior based on reciprocity and redistribution, and acquisition for motives of self-sufficiency and sustenance were norms.

From R. H. Tawney's (1880-1962) book Religion and the Rise of Capitalism (1948), it is learned how the political economy transformed during the middle ages from feudalism or an embedded economy to one of capitalism (a "disembedded" economy) concurrent with changes in religious thought. The Protestant Reformation, especially with the onset of "Calvanism" as created by both Calvan and Martin Luther, played a major role in these changes.

In relation to economics, although Calvanites did believe in an "ascetic" life, (i.e. to deny pleasures of this life and to not show off wealth), they also did believe that there was nothing wrong with getting rich through hard work. However, if a person were to get rich through hard work, Calvanites felt strongly that it was their duty to reinvest the riches (largely in support of capitalism, by the way) rather than to enjoy them. Interestingly, Calvanites believed that many individuals, especially those who became of good fortune in terms of material gain, were considered to be the "elect" of God, and were therefore individuals of high moral character and industry.

From these newly held beliefs that were in direct opposition to previous Christian teachings, especially the predominant Catholic faith, it is clearly evident that Protestantism helped further capitalism's cause by allowing the process of making money to become honorable and therefore moral. By the 17th century, the concept of "rationalism" took over the idea of revelation; the economy, state, and church became separated from each other (i.e. secularized); and the notion of the sanctity of property as formalized through writings of John Locke came to dominant the mainstream views.

It is also interesting to note that the orthodox religion (i.e. the Catholic Church) attempted to stop the enclosure movement in order to protect peasants and to especially protect the Church's influential economic role. However, as capitalism became firmly established by the late 18th century, which also coincided with the "Industrial Revolution" and the invention of the steam engine in 1769 by James Watt, society could no longer be characterized as a so-called "social organism." Rather than be a society with a united, holistic, and collective nature where all individuals were equal before God and only differentiated in terms of status by performing duties with varying degrees of responsibilities, society adopted a highly individualistic, selfish, egoistic, and acquisitive ethic. As such, profits became to be looked upon as the will of God; proof of success in one's calling. Similarly, the market and process of exchange for personal gain became viewed as instituted by God. Church was no longer needed for salvation because men were justified by faith rather than works, and the best way to please God was to do well at one's earthly calling especially in terms of diligence and hard work in the pursuit of profit and accumulating capital.