The Foundations of Capitalism The educational community has deemed "Capitalism and American Leadership;" "Capitalism as a System;" and "The Foundations of Capitalism" to be a "set," primarily because of the confluence of information contained in them. FOREWORD The subject of capitalism has engaged my interest and attention from time to time in connection with my studies in economic history, social institutions, and the history of sociological theory, where the latter touches upon the views of leading sociologists, such as Max Weber and Ernst Troeltsch, dealing with the origins of capitalism. I am glad to return to it for a brief discussion in the form of a foreword to Professor Oliver C. Cox?s comprehensive work on the nature and evolution of capitalism as a socioeconomic system. Writers interested in economics, all the way from the most extreme Libertarians on the Right to Communists on the Left, are at least in agreement that capitalism is the outstanding product of economic evolution to the present time and the basic economic institution of the modern age. Whatever its present status and future prospects, the debate about capitalism was never more lively than at the present time. Of late special attention has been given to the question as to how far the factory system and capitalism were responsible for the harsh working and living conditions in the early days of the first Industrial Revolution. Libertarians, not unduly alarmed by the current trends towards collectivism and state action, even in the so-called free nations, ardently urge a return to the free enterprise of the days of the Physiocrats, Adam Smith and David Ricardo.
The radical collectivists assume that the days of capitalism are numbered if, indeed, they do not view the system as a sort of economic antiquity or museum piece. Realistic scholars, not committed in advance to either extreme, are seeking to understand its origins, nature, present state, and future trends. They recognize that the economic world was never in a more fluid or unpredictable condition than it is today. So far as I can judge by this first volume of Professor Cox?s projected three volume work on the history and theoretical analysis of capitalism as a social system, the author belongs to this third group.A number of classic works have been devoted to the origins, nature and development of capitalism, notably those by Max Weber, Ernst Troeltsch, R. H. Tawney, Lujo Brentano, and, above all, the encyclopedic survey by Werner Sombart, Modern Capitalism. In addition, there have been numerous systematic economic histories, the latter portions of which are necessarily concerned with various technological, material and institutional aspects of the origins and triumph of capitalism in the modern world.
Professor Cox?s work is a novel departure from earlier books dealing with the growth of capitalism. It is not a traditional economic history, with capitalism as the major theme, but a social history of the capitalist system and the spirit which engendered it, motivated it, and brought about its integration as a system. It treats of the broad pattern of capitalistic society, its origins, growth and expansion, providing a theoretical analysis as well as a description of the integral elements in the system. His tribute to the achievements of capitalism well illustrates his broad approach to the problem: In our present day of crisis and transition the achievements of capitalism should not be minimized. They involve preeminent cultural gains for mankind. The magnitude of these gains may be inferred from the following incomplete list: unification of the world into a system of national interdependence; effective liberation of the human mind from the fetters of religious mysticism and hence secularization of the dominant culture; banishment of irrational fear and hostility towards persons of other societies; establishment of an imperishable faith in the efficacy of science and technology, and comprehension of economization in production; provision of a milieu for the growth of democracy; and, eventually, demonstration of the feasibility of purposively organizing the societies of the world in the interest of human welfare. It would probably be difficult to show that any part of this great boon to mankind could have arisen without the intervention of capitalism. In outlining his method of study and his approach to the problems of capitalism, Professor Cox makes it clear that he employs a combination of social psychology, sociology and history, the latter as much for a broad perspective as for the presentation of specific data.
He is interested in the patterns of personal and social behavior as they operate within the capitalistic social system. To the material and social facts he adds, as a vital element, a careful consideration and presentation of the spirit or ?ethos? of capitalism which gives cohesion and dynamic impulse to the system. Professor Cox lays down a number of fundamental postulates about capitalism and its development. Among these are the following: Capitalism as a socio-economic system is relatively new and recent in the economic experience of mankind. It arose only after the fall of Roman civilization in the West, as more favorable disposing social conditions were gradually provided. While elements that have gone to make up the capitalist system can be traced back to earlier times, they did not constitute capitalism in any true sense, even fractionally or casually. They became a sector of capitalism only when they were integrated into the organized capitalist system. When this system arose all aspects of the society took on capitalist traits, but never previously.
Capitalistic society is a unique form of social organization and a specific type of organized psychological motivation and orientation. Previous items which were later gathered into the capitalist social system took on quite a different psychological and material significance and functional operation within the capitalist complex. Generalizations about social and economic facts in the life of non-capitalistic civilizations, based upon capitalistic assumptions and experiences, are likely to be distorted and misleading, whatever the apparent superficial similarities and analogies. Capitalism can only be understood when viewed and analyzed within the premises and operations of a capitalistic society. Even here, there is danger in universal generalizations. While there is a general similarity in the basic organization and spirit in capitalism everywhere manifested on the planet, there are significant differences in details. This is one reason why the universalism in the dogmas of classical economics was often fallacious and unsound. Capitalism not only involves and requires a unique form of economic organization, motivation and operation, but must also have a suitable government with which to control public policy.
The old cosmopolitan and heterogeneous monarchies of antiquity or the diffused agrarian feudalism of the Middle Ages were totally unsuited to the operations of capitalism. This requires a republic or democracy controlled by business men who operate the political and legal system in accord with the dictates of the capitalistic economy. The national state, constitutional government and the parliamentary system have been needed and produced to meet the political demands of capitalism. Not only politics but also religion must be nationalized and freed from the more paralyzing restraints of mysticism and ritualism. Protestantism, especially Calvinism and Puritanism, as Max Weber, R. H. Tawney, Georgiana Harkness and others have so convincingly shown, provided the answer to the needs of capitalism in the realm of religion.Capitalism also requires an urban social base.
It cannot rise and thrive in an agrarian setting, which was a main reason why it developed but little during the period of m.