From 1900 to 1902 there was a clear improvement in the economic situation but, at the same time, an increase in labour conflicts, almost as if to prove Giolitti’s idea that class conflict was part and parcel of capitalist modernization. If Giolitti, ultimately, failed in ‘making the Italians’, this was due to the weakness of the Italian state, not its excessive strength; to division among the ruling elites; the failure to bring down military spending; the obscurantism of the entrepreneurs; and to the provincialism of its intelligentsia. This, and much else, turned Giolitti’s reformism into what some have called, with exaggerated severity, a ‘reformism without reforms’, un riformismo senza riforme.97
Legislation, trade unions, and paternalism were all ways to mitigate the ‘red in tooth and claw’ aspects of capitalism. The labour movement was usually regarded as the main opponent of capitalism. Yet it was a creature of capitalism: no capitalism, no workers. It was almost always a reformist movement against the harsher manifestations of capitalism, such as long hours and low wages, but not necessarily against the system per se. As wages increased and conditions improved, enmity against capitalism subsided, without ever disappearing. Trade unionists, wearing their trade union hats and not their revolutionary berets, were ready to accept capitalist relations and even profit-making as long as workers obtained their ‘fair share’. What was ‘fair’ was a matter for negotiation, even involving bitter disputes with strikes and lock-outs, but it also meant that there could be such a thing as ‘fair’ capitalism. One just had to fight for it. And while capitalism needed workers, the owners of capital were unnecessary – the unanswerable argument of socialists. Of course, managers were needed, but one could always find them and pay them, and, if required, pay them well.
Eventually ‘capitalists’ became simply the owners of capital but, at the end of the nineteenth century, the separation of ownership and management was in its infancy, except in some enterprises, such as railways and oil, which required such large amounts of capital that no single person or even group of persons could finance them without the help of many investors; although, as Louis Brandeis pointed out before the First World War, a few men could control American corporations without owning them.98 Even John Rockefeller, the richest man in the United States before the war, held only a fraction of Standard Oil shares.99 In the twenty-first century, shareholders, whether the stereo-typical old lady sitting on her shares in some far-flung part of the country or the impersonal investment funds (such as pension funds, mutual funds, hedge funds, etc.), have little effective control over the actual running of the company, nor do they wish to have any. All they want is for the shares to appreciate in value and for the dividends to be paid. Thus the actual owners of capital are, in fact, real business parasites.100 As long as they are content, the managers, having, in effect, taken over from the owners of capital, can use their position of power to appropriate for themselves extravagant sums, in the guise of salaries and bonuses, which is the situation that faces us now. In the nineteenth century, savers would have put their money under the mattress in the knowledge that inflation barely existed, or in a bank to collect interest, or in property. They would have been called ‘rentiers’ and despised accordingly. Today they are ordinary citizens, even less knowledgeable than yesterday’s rentiers, who entrust their savings and their pensions to financial advisers and fund managers.101
16
God and Capitalism
Religion had an important humanizing role to play because capitalism was becoming impersonal. The visible figure of the owner-entrepreneur who could behave in a tyrannical manner, but also with humanity (just like some slave-owners were ‘good’ and others ‘wicked’), was becoming less central to the system. In capitalism both capitalists and workers were at the mercy of economic relations which they had not created, and which, though man-made, were as impersonal as the British court system denounced by Dickens in Bleak House when his character Mr Gridley exclaims in a rage: ‘The system! I am told on all hands, it’s the system. I mustn’t look to individuals. It’s the system.’1
If capitalism and the labour movement were relatively new, religious beliefs were as old as humanity. Religions, however, generally said little about the economic organization of society, though some economic activities were disliked or prohibited, for instance usury (in the sense of excessively high interest) by the Roman Catholic Church. Dante, in his Divine Comedy, had placed usurers in Hell to be burnt by a constant rain of fire. Yet the modern banking system was born in Catholic Italy, in the shadow of the throne of St Peter’s. The Lutheran Reformation was more open-minded, though it objected to the sale of indulgences, to what today we might call the privatization of salvation: buy indulgences to get to heaven, or, as Martin Luther put it in one of his Ninety-Five Theses (no. 27), ‘as soon as the money clinks into the money chest, the soul flies out of purgatory’.2 But John Calvin discarded the prohibition of usury and might have been pleased, though not surprised, that his adopted city, Geneva, has become a major financial centre; since the sixteenth century it has been a thriving commercial hub. Islam (like Judaism) had no particular animosity towards commerce (the Prophet Muhammad was himself a merchant and so was his wife Khadija), but prohibited the taking of interest (yet through legal subterfuges and creative accounting some get round the prohibition). The Torah regarded usury as perfectly acceptable, as long as lending was done to non-Jews: ‘Do not charge a fellow Israelite interest’ (Deuteronomy 23:19–20).
Confucianism, with filial obedience as its cardinal principle, thought commerce was demeaning and vulgar but never suggested it should be banned. As the Master (Confucius) said: ‘The superior man (the gentleman) seeks virtue, the inferior man (the small man) seeks material things’ (Analects 4.11). During the latter part of the Zhou Dynasty (1046–256 BC) Confucius’s followers divided the people into four groups. On top were the scholars (quite rightly), then the farmers, then the artisans, and, at the bottom, the merchants and traders (shāng). Even during the Ming and Qing Dynasties (1368–1644 and 1644–1911) commerce was seen as a vulgar occupation (as in some aristocratic Victorian circles), which is not to say that the Qing state was not extremely active in facilitating commercial growth.3
Hinduism too has four classes or Varna with the scholars (Brahmin) on top, followed by the Kshatriya (soldiers), the Vaishya (farmers and traders) and, at the bottom, the servants or Shudra, while the Untouchables, now called Dalit, were outside society. Buddhism has little to say about commerce, though it urged its followers to eliminate selfishness and an acquisitive mentality. Judaism, in spite of all the stereotypes about Jews and money, has no significant position on commerce, let alone capitalism.
The Russian Orthodox Church had been, in Richard Pipes’s words, the ‘servant of the state’ since the days of Peter the Great: the Tsar appointed all the senior bishops and high-ranking lay personnel to the Holy Synod, which was a tool of the Tsar.4 On industry and social questions the Russian Church produced little independent thinking. It was alienated from the intelligentsia and was not a popular institution; priests were held in low esteem even by the peasantry.5 It completely failed to address itself to the problems of industrialization.6 Liberalizing legislation in 1905 and 1906 established religious tolerance and granted other ‘sects’ – such as the Old Believers – certain rights, forcing churchmen to rethink their relationship with an increasingly fragmented society.7 Of course, there were socially concerned clergy, such as Sergei Bulgakov, elected to the Duma in 1907 as a Christian socialist, and Father Georgy Gapon, who, in 1903, formed the Assembly of Russian Workers, and in 1905 led the demonstration of Bloody Sunday. But the Russian Church, on the whole, stamped down successfully on liberalizing tendencies.8
The obvious candidate for the most capitalist-friendly religion was Protestantism, especially Calvinism. This was theorized by Max Weber, in his celebrated The Protestant Ethic and the Spirit of Capitalism, a series of essays written in 1904–5. (Marx had somewhat preceded him by musing that Protestanti
sm, ‘by changing almost all the traditional holidays into workdays, plays an important part in the genesis of capital’.)9 Weber was particularly interested in the doctrine of predestination, a core claim in Calvinism, since, with predestination, it was impossible to ‘buy’ one’s way into the saved by good deeds or good works, or by repenting one’s sins. Given the uncertainty of one’s salvation, explained Weber, a Calvinist had to behave as if he was one of the elect: ‘Restless work in a vocational calling was recommended as the best possible means to acquire the self-confidence that one belonged to the elect.’10 Worldly success could be taken as a sign that one was going to be saved. Weber argued that since Calvinism was hostile to giving money to the poor (it encouraged indolence) and frowned on the idea of spending it on luxuries (sinful), and since one was supposed to work hard, the best thing one could do with one’s money was to make more of it. This was the ethical basis of capitalism, explained Weber, which is why, or so he claimed, it was born in Protestant countries. The British historian and Christian socialist R. H. Tawney followed in Weber’s footsteps with his Religion and the Rise of Capitalism (1926), where the true initiators of capitalism are the Puritans: Puritanism ‘became a potent force in preparing the way for the commercial civilization which finally triumphed at the Revolution’.11
Such connections between religion and capitalism seem to be simplistic. If commerce and industry had never developed in Calvinist countries an explanation would immediately surface attributing such failures to the fatalistic and deterministic outlook of Calvinism, just as some have attributed the presumed lack of entrepreneurial spirit in India to Hinduism, karma, and mysticism. Yet there is no empirical evidence to show that Hindus who ‘profess such beliefs have become fatalistic and other-worldly and as a result do not arrive on time for appointments, have a high frequency of absences from their jobs’.12
Weber never claimed that his argument was a total explanation for the rise of capitalism (as some of his followers maintained), but it rests anyway on dubious historical foundations. Capitalism, whether as merchant capitalism, finance capital or manufacturing capital, was thriving in much of Catholic Italy in the fourteenth and fifteenth centuries, particularly in Genoa, Venice, and Florence (see Introduction). In fourteenth-century Florence the wool guild alone accounted for some hundreds of firms, employing 10,000 workers. As the historian of Florence John Najemy writes: ‘Measured by the number of entrepreneurs and labourers, the manufacture and sales of textiles constituted Florence’s largest complex of economic activities.’13 In eighteenth-century Ming China the region of Jiangnan (south of the Yangtze) was a major producer and exporter of silk and cotton. Catholic Belgium was the first industrial country in continental Europe, and Ghent, famous for its cotton mills, became known as the ‘Manchester of Flanders’. Moreover, a careful comparison of economic growth in Protestant and Catholic cities and regions over the very long run (1300–1900) found that religion made no difference at all.14 (The main difference was that the population in Protestant countries was more literate than that in Catholic countries.)15
In the later part of the twentieth century capitalism did well in Buddhist and Shinto Japan, as well as, even more recently, in Confucian-Communist China. Various communities throughout the world have excelled in commerce without any connection to Protestantism: the Lebanese in Latin America, the Chinese in South-East Asia, the Guajarati in east Africa, the Hausa merchants in west Africa and, of course, the Greeks in Alexandria as well as in the Tsarist Empire, the Armenians in the Ottoman Empire, and the Jews in much of Europe and the Middle East. The only thing such disparate groups have in common is that they were often a diaspora and a minority in their host population.
Admittedly, Weber’s focus was on ‘modern capitalism’ and not the various manufacturing and commercial activities that had existed for centuries. This, for Weber, entailed a relatively free market and a certain degree of organization. In fact, organization seems to be the central aspect: the ‘systematic utilization of skills or personal capacities on behalf of earnings in such manner that, at the close of business transactions, the company’s money balances or “capital” exceeds the estimated value of all production costs’:16 a roundabout way of saying, ‘maximizing profit’.
Religion did not like the pursuit of money for its own sake, and though not specifically anti-capitalist, it looked with some hostility at capitalism’s manifestations and, above all, to its modernity. Religion, and Christianity in particular, for obvious historical reasons, was unavoidably linked to rural life. This is where most of the churches had been built, where the faithful could be found, where the priests lived, where one was at the mercy of the weather and the elements, and praying seemed a rational way of facing the unexpected. Capitalism was about cities, the class struggle, the cult of the individual, democracy, secularist values, and sinful entertainments. It was not conducive to family life. In a village families work in close proximity. In a city everyone works separately. Cities created circumstances where religiosity was more difficult and one lost one’s faith only too easily. In 1869 rural churches in Germany were full. But in Berlin in the same year only one per cent of nominally Protestant workers went to church on Sundays; in Leipzig and Bremen it was much the same.17
Although the nineteenth century was and is seen as the century of secularism, secular advances were met by countervailing revivals of religiosity. In Weber’s days, religion appeared to be on the wane, but it was on the wane, if at all, only among the elites and above all among the educated elites. America was more religious at the end of the nineteenth century than at the beginning. In Ireland there were twice as many priests in 1901, proportionately, than in 1800. There were far more nuns in Germany in 1908 than in 1866.18 One in eight books published in Germany in the 1870s was a work of theology.19
As democracy expanded, religion too had to organize itself along the lines dictated by the evolution of the state. Once upon a time the Churches had to deal with absolute rulers, kings, princes, and emperors. Now they had to deal with parliaments, elections, voters, lobbies, and pressure groups. In some countries religion had to organize itself as a political party, begging for votes, just like liberals, socialists, and conservatives. This was not a universal position. In Britain, no confessional party ever emerged, even though the Conservative Party was regarded as the ‘Anglican Party’ and the Church of England as the ‘Tory party at prayer’; and there was a close connection between the so-called Nonconformist Churches (which included Methodists, Presbyterians, Baptists, Quakers, and others) and the Liberal Party and, later, the Labour Party.
Hugh Price Hughes’s Methodist Times and the Congregationalist William Robertson Nicoll’s British Weekly (both founded in 1885–6) tried to persuade their readers to consider the social implications of their faith. The Methodist Times rejected the idea that poverty was the fruit of sin. In 1893 an assembly of the Congregational Union agreed that ‘the rights of humanity must always take precedence over those of property’ and that profits from coal mining ‘made out of the labours of men receiving wages inadequate for the support of themselves and their families are obviously inconsistent with righteousness and fraternity …’.20 Resistance was considerable, partly because members of the congregation tended to be middle class and hostile to anything that smacked of socialism, and partly because strict evangelicals maintained that the duty of a Christian was to reject the world not to reform it.21 Compromise was often reached by reasserting the rights of property as well as the duty of Christians ‘to diminish the inequalities which unjust laws and customs produce …’.22 There was always much concern about the threat of socialism among the labouring classes.
Some members of these Nonconformist Churches, such as the Quakers, were extraordinarily active in business and founded the Lloyds banking group, Barclays Bank, the match-making concern Bryant and May, Clark rugs and later shoes, famous manufacturers of confectionery such as Cadbury and Rowntree and many others. Bethlehem Steel in the United States and, of co
urse, Quaker Oats were also founded by Quakers.
The involvement of religion in politics was different from country to country. In Japan the official state religion in the years between the Meiji Restoration (1868) and 1945, Shinto, was used to celebrate nationalism and keep the country united, not unlike Anglicanism in England and Catholicism in Ireland and Poland, but there was no formal Shinto party. In fact, there never was in Japan an ecclesiastical force aspiring to match in any way the powers of the central government.23
In Italy, since national unification had taken place against his wishes, Pope Pius IX had forbidden Catholics from taking part in the politics of the new state. His letter Non expedit (‘It is not convenient’, 1874) prohibited the formation of a Catholic party. Good Catholics should not vote. If they did, they would be excommunicated and go to Hell. Gradually, the Church relented. Pius X, in his encyclical Il Fermo Proposito (‘The Firm Purpose’, 1905), encouraged Catholics to vote (he was worried about the advances of socialism). But it was only in 1919 that Benedict XV allowed the formation of a Catholic party, the Partito Popolare Italiano.
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