Max Weber: Capitalism as Calculation of Capital
In the introduction to his book The Protestant Ethic and the Spirit of Capitalism, the German sociologist Max Weber (1864–1920) gives a definition of capitalism:
But capitalism is identical with the pursuit of profit, and forever renewed profit, by means of continuous, rational, capitalistic enterprise. […] We will define a capitalistic economic action as one which rests on the expectation of profit by the utilization of opportunities for exchange, that is on (formally) peaceful chances of profit. […] Where capitalistic acquisition is rationally pursued, the corresponding action is adjusted to calculations in terms of capital. This means that the action is adapted to a systematic utilization of goods or personal services as means of acquisition in such a way that, at the close of a business period, the balance of the enterprise in money assets (or, in the case of a continuous enterprise, the periodically estimated money value of assets) exceeds the capital, i.e. the estimated value of the material means of production used for acquisition in exchange. […] The important fact is always that a calculation of capital in terms of money is made, whether by modern book-keeping methods or in any other way, however primitive and crude. Everything is done in terms of balances: at the beginning of the enterprise an initial balance, before every individual decision a calculation to ascertain its probable profitableness, and at the end a final balance to ascertain how much profit has been made. (Weber 1992, xxxi–xxxiii)
Like Sombart, Weber takes from Marx implicitly the notion of accumulation of capital for defining capitalism. But he does not speak of accumulation, but of renewed profit, capitalistic acquisition, and capital excess. Weber’s notion of rational action is at the heart of his understanding of capitalism which is why he stresses that capitalists have to make calculations about invested capital and expected returns in order to yield profits. Weber influenced the Frankfurt School’s notion of instrumental rationality. His understanding of capitalism falls behind the one of Marx. It lacks a focus on class and exploitation and the labour process that creates commodities and surplus value that are owned by the capitalist class.
The examples of Weber, Sombart, and Schumpeter show that bourgeois definitions of capitalism often are focused in a one-sided manner on capitalists’ actions, interests and rationality. Such understandings disregard the class antagonism and capital’s exploitation of surplus-value producing labour that, as Marx writes, is the “secret of profit-making” (Marx 1867, 280).
Chapter One | Introduction: What is Digital Capitalism?
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What is Capitalism?