Abstract:

“The Puritan wanted to work in a calling; we are forced to do so.” The rise of modern capitalism represented a radical new economic and social order, and a system that has endured for over a century. Max Weber claimed to find its spirit in specific religious beliefs. This work is in two parts. Firstly, I will show that Weber’s account does not in fact explain capitalism. His methodology is historical comparative that starts from an understanding of the Puritans and works forward to the social phenomenon that is capitalism. However, by failing to take into account the nature of the phenomenon under question, the method leaves Weber open to mistaking correlation for causation. Social phenomena such as revolutions are predicated on what is functionally required for a society to transition to the new order. Thus, an explanation needs to start from the functional requirements and work backwards to the specific causes.

In the second part I present an alternative explanation for the rise of capitalism. Bringing about a revolution is a collective undertaking. On this view, the rise of capitalism is explained not by religious beliefs qua the beliefs, but by properties of the beliefs that, taken together, can be construed as a functional solution to a collective action problem. I then go on to show that the outcome of the collective action is a stable Nash equilibrium - the Iron Cage - that can explain both the spread and the durability of capitalism."