One of the most visible differences between Protestant and Catholic Europe in the early seventeenth century was the marked economic superiority of the former over the latter. For example, consider Flanders, which was torn apart in the second half of the sixteenth century by Protestant revolt and Catholic reconquest by the Spaniards. For the best part of two hundred years thereafter, the Protestant zone was bustling and prosperous, and the Catholic area depressed and unproductive. Even in robustly Catholic nations, such as France and Austria, economic entrepreneurialism was primarily due to Calvinists. Capitalism and Calvinism were virtually coextensive by the middle of the seventeenth century.
This observation is easily made; explaining it is somewhat more difficult. It is impossible to engage with this topic without mentioning, however briefly, the "Weber thesis," developed by the German sociologist Max Weber (1864-1920).36 Weber set out a complex argument, not entirely justified by the evidence he assembled, to the effect that a new "spirit of capitalism" emerged in the early modern period and seemed to be associated with Protestantism—more specifically, with Calvinism.37
Weber set out to identify the characteristics of "modern" capitalism by comparing it with what he termed the "adventurer" capitalism of the medieval period. This earlier form of capitalism, he argued, was opportunistic and unscrupulous; it tended to consume its capital gains in flamboyant and decadent lifestyles. The forms of capitalism that emerged in the early modern period, however, possessed a strong ethical basis, which was often linked to personal asceticism in respect to material goods.
Under Catholicism, the accumulation of capital was seen as intrinsically sinful; under Calvinism, it was seen as praiseworthy. In Weber's view, this fundamental change in attitude was particularly well illustrated by a number of seventeenth-century Calvinist writers such as Benjamin Franklin, whose writings combined commendation of the accumulation of capital through engagement with the world with criticism of its consumption. Capital was seen as something to be increased, not something to be consumed. Calvinism, according to Weber, thus generated the psychological preconditions essential to the development of modern capitalism.
Weber's argument linked the rise of the "spirit of capitalism" with Calvinism through the concept of predestination. Weber argued that Calvin's predestinarianism created religious anxiety on the part of those wondering whether they were truly elect. In attempting to overcome this anxiety, Weber argued, Calvinists such as William Perkins developed a heightened sense of a moral obligation to work, the conviction that a person's election by God was authenticated by his or her activism, and a pervasive ethos of living thriftily off the proceeds from such work, with the remainder being saved, invested, or simply given away.
The "spirit of capitalism" thus arose from the quest for the assurance of salvation—which Calvin's theological system accentuated but did not itself resolve.38 This has proved to be an influential, yet not an ultimately persuasive, argument.39 What is clear, however, is that the emergence of modern Western capitalism has a connection with Calvinism—whether as cause or effect, or whether as shared elements of a cultural syndrome. Whereas Karl Marx had argued that the emergence of modern capitalism brought Protestantism into being, Weber argued precisely the reverse. Calvinism made commercial success respectable by declaring that the virtues that lay behind it—such as thrift, austerity, and discipline—were themselves acceptable in God's sight.
Calvinism is clearly linked to the rise of modern capitalism in other respects. The most important of these is Calvin's attitude toward usury—lending money at interest with a view to making a profit on the loan. Throughout the patristic era and the Middle Ages, the entire consensus of the church had been that usury was a mortal sin.40 This was no peripheral matter, no matter of theological vagueness. The credit markets of western Europe, like those of Islamic nations today, were held back by a belief, reinforced by church legislation, that usury was contrary both to the gospel and to natural law.
The Old Testament explicitly prohibited this practice.41 Throughout the patristic and medieval periods, this prohibition was both reinforced and clarified. In a series of sermons, Ambrose denounced the taking of interest on a loan, arguing that such usury was a violation of the law of God and was prohibited by both "the Old and Divine law."42 Jerome defined usury as "collecting more than one has given," something that is explicitly prohibited by the law and prophets. Did not Luke 6:35 explicitly state that Christians should "lend, expecting nothing in return"?
Three medieval councils—the Second and Third Lateran Councils (1139 and 1179) and the Council of Vienna (1314)—reinforced the Old Testament ban, even stipulating that usurers were to be denied a Christian burial.43 In 1140 the great medieval authority on canon law, Gratian of Bologna, declared that:
To demand or receive or even to lend expecting to receive something above the capital is to be guilty of usury; usury may exist on money or something else; one who receives usury is guilty of rapine and is just as culpable as a thief; the prohibition against usury holds for laymen as well as clerics but, when guilty, the latter will be more severely punished.
Yet while Christians were prohibited from lending money at interest, Jews were explicitly exempted from this ban. This exemption led to the emergence of the stereotype of the Jew as an avaricious moneylender, famously exemplified in Shakespeare's Shylock in The Merchant of Venice.
These views were not challenged in the first phase of Protestantism. Martin Luther regarded the biblical prohibition of usury as permanently binding. In his 1524 sermon on trade and usury, Luther lashed out at any attempt to charge interest. In his view, Christians "should willingly and gladly lend money without any charge." The Elizabethan Protestant bishop John Jewel reflected the views of his age when he raged from his pulpit against the iniquities of usury. "It is theft, it is the murdering of our brethren, it is the curse of God and the curse of the people."44 This uncompromising opposition to usury was embodied in a statute passed by the English Parliament in 1571, which had the unforeseen and unintended effect of legitimating usury at a fixed rate of 10 percent.
Yet the lending of money at interest was essential to the emergence of modern capitalism. A steadily increasing hunger for capital led many in both church and state to turn a blind eye to moneylending and to reconsider the entire theological basis of the prohibition of usury. Calvin could not have been unaware of these problems. The survival of the city of Geneva depended on being able to sustain and develop its urban economy and remain independent of potentially dangerous neighbors.
In 1545 Calvin wrote to his friend Claude de Sachin, setting out his views on usury. The letter was not published until after Calvin's death (1564), when Theodore Beza decided to make its contents generally known in 1575. At one level, this letter can be read as a total inversion of the teaching of the Old Testament; a more attentive reading confirms this suspicion but discloses the sophisticated lines of argument that led Calvin to his surprising conclusion. So how could Calvin reinterpret the Old Testament's explicit statements that usury is prohibited to mean that it is actually permitted?45
Calvin's letter of 1545 reinforces the importance of biblical interpretation to Protestantism. In one respect, Calvin reaffirmed the general Protestant idea that not all the rules set out for Jews in the Old Testament were binding upon Christians; in these instances, the Old Testament offered moral guidance only, not positive prescriptions for conduct. Yet this way of interpreting the Old Testament had been applied to cultic issues—such as the Old Testament's demand for animal sacrifices. Calvin's extension of the principle to usury broke new ground.
A fundamental theme recurring throughout the letter was that things had moved on. The situation in sixteenth-century Europe was not the same as that in ancient Israel. As Bieler points out in his magisterial study of Calvin's economic thought, the new realities of financial life in the early modern period made the uncritical application of such Old Testament texts highly problematic.46 The new economic realities of the sixteenth century made it possible to view interest as simply rent paid on capital. Calvin therefore argued for the need to probe deeper and ascertain the general principles that seemed to underlie the Old Testament ban on usury in its original context. It was the purpose of the prohibition, not the prohibition itself, that had to govern Protestant thinking on this matter. "We ought not to judge usury according to a few passages of Scripture, but in accordance with the principle of equity." For Calvin, the real concern was the exploitation of the poor through high interest rates. This, he argued, could be dealt with in other ways—such as the fixing of interest rates at communally accept able levels. Calvin's willingness to allow a variable rate of interest showed an awareness of the pressures upon capital in the more or less free market of the age.47
Calvin's views, which were seen by many as running counter to the clear meaning of the Bible, took some time to become accepted. By the middle of the seventeenth century—more than one hundred years after Calvin's groundbreaking analysis—usury was finally regarded as acceptable. Protestant jurists such as Hugo Grotius and Samuel Pufendorf supplemented Calvin's theological analysis with clarifications of economic concepts, especially in relation to price and value, that finally removed any remaining scruples about lending money at interest. The Catholic church did not legitimate usury, however, until 1830, apparently in response to the widespread acceptance of the practice within predominantly Protestant western Europe.
Yet Protestantism did more than bring about the theological adjustment that opened the way to a modern capitalist economy; its early development in the cities of Europe, especially in Switzerland, created the economic conditions that made such a change inevitable and essential. During the period 1535 to 1540, an economic recession descended on the area around Geneva. Despite this downturn, Geneva was able to survive and to go on to benefit from the subsequent recovery throughout the region, which lasted from 1540 to 1555. It is now thought that one of the prime reasons for Geneva's resilience during this period was the emergence of the Swiss banking system, which allowed Basel and other major Swiss Protestant cities sympathetic to Calvin's religious agenda to bail him out through large loans.48 The Swiss banking system emerged as a direct response to a shared sense of identity throughout the Protestant cantons of Switzerland and neighboring cities—including Geneva.
By the early 1540s, Geneva was a city without an economic hinterland, and it faced considerable pressure from the growing number of religious refugees, often fleeing from persecution in France. Its survival increasingly came to depend on the generation of new markets and industries. As many refugees brought manufacturing and marketing skills with them, the scene was set for economic expansion.49 Geneva's fabled connection with the watchmaking industry began with the arrival of French refugees who specialized in this area. A significant publishing industry developed, along with ancillary industries, such as papermak-ing and the production of printing type. The immigration of French families associated with the cloth and drapery trades—such as the Bor-diers and Mallets—led to the expansion of these industries at Geneva. With the abolition of the old seigneurial ecclesiastical and guild system—the final obstacle to "modern capitalism"—these newcomers could set up business and begin manufacturing and trading without serious restrictions.
The raising of capital for economic expansion thus became imperative for Geneva around this time. Calvin's removal of the remaining theological impediments to the practice of usury was not merely religiously progressive; it was essential if his version of Protestantism was to survive. So intimate was the connection between the religious system of Calvinism and the city of Geneva that the collapse of the latter would have had disastrous implications for the former.
Economic activism subsequently came to be associated with Puritanism in England, Scotland, and the United States in the late sixteenth and seventeenth centuries.50 Welsh Calvinists who settled in Ohio in the nineteenth century brought their faith and their capitalism with them to the region.51 Although there is some evidence that an ethos of hard work and the prudent use of resources may have become a culturally embedded tradition rather than an instinct that arose naturally from personal religious convictions, there is clear evidence that Calvinism's later representatives saw an obvious link between their faith and capitalism.
There is another component of Weber's argument that we must consider here—the notion of "calling." Max Weber suggested that the idea of the call played a critical role in shaping Protestantism, and above all in shaping its characteristically entrepreneurial attitudes.52 In view of the importance of this notion to the Protestant work ethic, we consider it separately in some detail, without any commitment to the specifics of Weber's occasionally problematic analysis.
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