ABSTRACT
I propose Max Weber’s theories as a foundation for a new approach to the study of capitalism and capitalist transition. Weber was born to a German merchant family in 1864. He died in 1920 before completing the writings assembled in Economy and Society (first published in German in 1922), his greatest work. Weber studied law, and he taught political economy at universities in Germany and Austria. Among his collaborators and friends were leading figures of twentieth-century economics and sociology, including Schumpeter, von Mises, Sombart, and Simmel. Weber left his characteristic mark on major intellectual controversies of the period. He was active in German politics, and wrote widely on sociology, economics, politics, law, philosophy, comparative history, and culture. The themes of his scholarship and his opinions on economic policy reflect his engagement in debates on the side of the German Historical School as well as on the side of its main rival, the Austrian School. Today, however, Weber is best known as one of the founders of modern sociology. His economic sociology offered perhaps the most rigorous twentieth-century counterweight to Marxian political economy. More broadly, and in the best sense of the term, Weber was a social scientist. His systematic development of methods and theoretical concepts for the social sciences dealing with social and economic action, rationality, bureaucracy, organization, and power is unmatched by any scholar before or since. Of most relevance in the present context is Weber’s central interest in the nature of ‘capitalism’. My argument grows out of Weber’s emphasis on the impersonal procedural norms of state institutions in capitalist societies. In addition, I present Weber’s theories of capitalism as explanations of the logic of a development strategy favouring (1) the construction of a parametric state with classical liberal eco-
nomic functions, (2) market expansion as the driving force for legal reforms, (3) the short-run precedence of legal change over administrative and political change, and (4) the short-run precedence of political leadership over political participation. Weber clearly demonstrated, on technical grounds, why bureaucracy must be rationalized and why politics must be democratic in modern capitalism. In the absence of free political representation bureaucracy’s power escapes supervision and feeds on economic irrationalities. On the other hand, Weber’s theories can show why market-led and law-led transitional sequences to capitalism are usually more appropriate in developing societies than bureaucracy-led and democracy-led sequences. In this and the following chapter I will single out Weberian ideas that seem most relevant to the understanding of contemporary transitions to capitalism. Some steps in the analysis build on Weber’s concepts or suggest alternative concepts that fit better with current realities. His best-known essay, The Protestant Ethic and the Spirit of Capitalism (1992), which often misleads people about Weber’s view of the nature and origins of capitalism, is only briefly discussed. Weber himself said that this essay treats ‘only one side of the causal chain’ of capitalism (ibid.: 27). I concentrate on Economy and Society (1978), which can be read as a brilliant though somewhat inscrutable manual for the practitioners of capitalist transitions. My objective is to distil the practical inferences from Weber’s extraordinary vision of ideal state action, a chain of reasoning made up of many elements that are often only loosely held together under seemingly disparate thematic headings, and to reassemble the elements that most tellingly reveal the present-day potential for constructed capitalism.
