rational capitalism

rational capitalism

WEBER'S IDEAL TYPE of Western CAPITALISM, involving the systematic rational calculation of profit and loss (e.g. accountancy), in contrast with less rational, non-Western, preindustrial forms of capitalism. See also RATIONALITY, PROTESTANT ETHNIC.
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In his concluding chapter, Babb turns to the thesis enunciated by Max Weber over a century ago concerning the connections--which Weber argued were causal--between an ascetic approach to life, as seen in Protestantism and Jainism, and the rise of rational capitalism. Weber introduced this thesis in The Protestant Ethic and the Spirit of Capitalism, and then expanded it in a comparative framework in his The Religion of India.
John Bellamy Foster, Monthly Review's editor, analyses what he calls the end of rational capitalism. He explains how John Maynard Keynes, and to some extent Joseph Schumpeter, developed a defence of capitalism--a system that had just endured some very bad times, for example, World War I, the Great Depression, and World War II.
Foster explains that for Baran and Sweezy the new regime of accumulation did not resemble the myth about rational capitalism. The last chapter of their book is called an "irrational system." In contrast to Keynes and Schumpeter's models the realities were militarism and imperialism (albeit some without traditional colonies); furthermore, these phenomena were "built into the very fiber" of how the really existing capitalism operated.10 In fact, as Foster explains:
The twentieth century's dominant myth was that of a "rational capitalism." The two economists who did the most to promote this idea were John Maynard Keynes and Joseph Schumpeter.
Keynes, located at Cambridge in England, was the embodiment of rational capitalism. He not only perceived contradictions of the system but also believed they were subject to rational management.
Professor Kaelber raises the question of how my book is related to my earlier article on rational capitalism in Renaissance Italy.
Munch claims to have derived the subject of thesis, the "interpenetration between ethics and the world of instrumental activism" from Weber's approach to the relationship between "the ethics of ascetic Protestantism and the spirit of modern rational capitalism." But here a problem arises: Critics have generally misidentified the accumulation of capital as the essential connecting link, for Weber, between Calvinist world and modern society.
A very useful typology for different kinds of capitalism is also presented: "rational capitalism," "political capitalism," and "traditional commercial capitalism."(11) The last of these three categories represents a kind of capitalism that has existed very far back in history and which consists of fairly systematic forms of trade and money change.
Legal domination is the only form of authority which is hospitable to rational capitalism. Traditional domination represents a more complex case than either charismatic domination or legal domination and there exists some important differences between its two major forms (patrimonialism and feudalism).
Berger also sketches some ideas on the place of rational capitalism in the Confucian tradition, as well as in East Asian cultures.
Taken together, these articles comprise a critique of nation-statism, rational capitalism, and concentration of power in the postcolonial world by focusing our attention on the cracks in the armor of the dominant western paradigm, and by illuminating the continuing struggles for equality and power among those who remain marginalized in the new world (dis)order.
1980 "Rational Capitalism in Renaissance Italy." American Journal of Sociology 85:1340-55