«Inaugural-Dissertation zur Erlangung des Doktorgrades des Fachbereichs Wirtschaftswissenschaften der Johann-Wolfgang Goethe-Universität Frankfurt am ...»
Hence, beside the worker, the entrepreneur is another prominent character of the industrial district whose entrepreneurial spirit and ability lie in her ―special function in translating all the capabilities which are latent in the historical heritage of the district into products‖. She has to negotiate to sell and advertise the district‘s products on global markets and hence has a tendency to lose her roots and become a cosmopolitan and thus leave the boundaries of the industrial district.341 However, her motivation and life style are defined by her enterprise whose success is dependent on her reputation which again is locally bound. Her ultimate aim is to ensure the long-term well-being of her family.342 Another very distinct feature is the parallel existence of competition and co-operation which means that ―firms do not fight one other but try to find market places for new production without having destructive effects within the industrial district‖.343 Competition rather leads to technological dynamism which is embedded in social culture. ―[…] Inventions and improvements in machinery, in processes and the general organization of the business have their merits promptly discussed: if one man starts a new idea, it is taken up by others and combined with suggestions of their own; and thus it becomes the source of Ramazotti, 2010, p. 959, fn 3.
Marshall, 1920, p. 271f.
Becattini, 1990, p. 41ff.
Walter, 2004, p. 46, 50.
Capecchi, 1990, p. 21f.
further new ideas‖.344 A district is a very dynamic, adaptive system that conceives technological changes and innovativeness as an important trait.345 Thus, the strong interdependence, or how it sometimes also called ―the merger‖ of the production sphere with that of the social and political structure of the district mentioned above is a crucial factor. Or, as Marshall put it: ―The whole mechanism of society rests on confidence―.346 Even more so, the industrial district is shaped by the functioning and interaction of all spheres. The community, including the family, with its social and political life, plays an important role within the district and for its success. Social structures and shared values are shaped as to complement economic activity in providing labor or financial resources especially in the case of the family, and generally offer mutual assistance in times of need and the incentive to become an entrepreneur.347 The district can also be interpreted as network with the community providing social capital and entrepreneurs being connected over kinship ties.348 A district is a ―thickening of industrial and social interdependencies in a certain place‖ that also includes the role of public policy and a local credit system.349 It is an intermediate case between extremes of social relationships and the ―capitalist core‖ found in factories. This also means that a district exhibits a homogenous system of values related to a certain view on work, the family, reciprocity and ethics in general, including the attitude towards change. These rules and values are distributed throughout the district and passed along to every new generation and lead to a strong feeling of belonging, local traditions and social cohesion.350 Industrial districts can accommodate various sets of values and cultures but these have to be complemented by a certain institutional structure, such as ―market, firm, family, church, school, local authorities and structures of political parties, cultural and charitable, religious and artistic bodies‖. The value system is important for the functioning of the economy of the district and thus is more conceived as enabling than as limiting.351 However, it would be misleading to conceive the industrial district as a closed community. Although it has a quite homogenous population, it still heavily relies on being dynamic, innovative and adaptive to maintain the unity of the district which can only happen if the system stays open to outside inflow, for example through migration. This also implies a Marshall, 1920, p. 271.
Marshall, 1920, p. 271, Marshall, 1919, p. 284.
Marshall, 1919, p. 165.
Pyke and Sengenberger, 1990, p. 5f.
Piore, 1990, p. 54f., Capecchi, 1990, p. 21f., Becattini, 1990, p. 38ff., Pyke and Sengenberger, 1990, p. 2f.
Becattini, 1987, p. 5, Becattini, 1990, p. 46f.
Putnam, 2001, p. 21.
Becattini, 1990, p. 39, 49.
high capacity of assimilation of the migrants to the homogeneous structure of values and views existing within the district, although migration is often a short-distance phenomenon (for example within Italy). The ―cultural distance‖ between native and ―alien‖ also results in behaving differently towards people from within than from outside.352 To summarize, an industrial districts is has several main features: ―the presence of a special ‗atmosphere‘; its settlement for a long period of time (more than one generation); a division of labor among the (small and medium) firms collected in the district; the presence of an ‗automatic organization‘, that is a high degree of technological complementarities; a continuous interplay between competition and cooperation‖.353 It thus mixes specific socio-cultural characteristics of a community such as values and institutions with the historical-natural facts of a certain territory and the technical aspects of the production process resulting a in dynamic process of interaction within production networks for the flexible allocation of labor and the distribution of products. It is a territorial organism and social reality.354 As in the case of innovative milieus it remains unclear how the development of a district comes about and why they, as in the case of the Third Italy, seem almost to appear spontaneously.355 However, for many authors it is obvious that an industrial district can only have long-term success when it besides being able of ―systemic integration‖ is also able of ―social integration‖ that incorporates the ―self-organizing capabilities of society as a whole‖. Often, economic success comes at the expense of social viability of industrial districts.356 Regional networks are a concept that is immanent to industrial districts which are also more local, rather than international constructs. Regional networks are sometimes also called geographically integrated corporate networks but they are enlarged by its embeddedness in the socio-cultural context of the region. Economic activity within an industrial district is embedded in a dense net of relations. As mentioned before, an industrial district is a special case of innovative milieu that enables an analysis of the different levels of network structure within the region. Networks are often also interpreted as economic interaction and the milieu adds to this the surrounding social context. Both concepts interact but do not need to be identical.357 Becattini, 1990, p. 39f.
Belussi, 2009, p. 343.
Walter, 2004, p. 40, 47.
Walter, 2004, p. 52.
Ramazotti, 2010, p. 961, 971.
Walter, 2004, p. 109ff.
4. Capitalism: definition, history, typology “No mistake about it, the travail was over and the market system had been born. The problem of survival was henceforth to be solved neither by custom nor by command, but by the free action of profit-seeking men bound together only by the market itself. The system was to be called Capitalism. And the idea of gain which underlay it was so firmly rooted that men would soon vigorously affirm that it was an eternal and omnipresent attitude.”358
4.1. Capitalism since the 19th century – derivation and rapprochement The term Capitalism was from its creation in the 19th century controversially discussed among and within disciplines, its definition varying enormously in the understanding of different authors, mainly due to the lack of agreement of its precise meaning.359 Therefore, many interpretations exist, of which most are encumbered by value judgments and political connotation.360 Economists and historians are disputing over the question if capitalism is a system that can be described abstractly by various characteristics or if it is rather an historical entity.361 This is additionally exacerbated by the fact that the usage of the scientific term is different from that in everyday language, where it is less a means to gain insights but rather an accusation that is more intended to address value judgments and preconceptions.362 In English speaking countries it is considerably less burdened and less political than in Germany, where the term Capitalism was a popular ideological instrument, especially at the beginning of the 20th century. Today Capitalism is on the one hand the selfdesignated term for the economic modernity, on the other a concept to analyze economic structures.363 The common ground of all definitions is the association of Capitalism with an economic system for which capital is central for all economic activities, together with a liberal economic order with ‗free‘ work(ers) and freedom of property and the accumulation of money and wealth as a common objective.364 Capitalistic economic orders are often seen as the ―eternal shape of an economy‖, a ―realization of economic rationality‖ and ―the means for the end of satisfaction of needs‖365; others see Capitalism merely as a special case of a raHeilbroner, 1953, p. 24.
The term 'Capitalism‘ is of French origin, and is used in Germany from the 1870s in critical descriptions of the negative development of society. It achieved its terminological breakthrough in Sombart‘s ―Modern Capitalism‖. For a detailed discussion see Brunner; Conze and Koselleck, 1982, ‗Capital, Capitalist and Capitalism‘ and also Köster and Plumpe, 2007, p. 4.
Pohle, 1910, p. 6.
See Dobb, 1947, p. 1ff.
Pohle, 1910, p. 6.
Plumpe, 2007, p. 363, Bog, 1978, p. 419.
Heimann, 1931, p. 14ff.
Heimann, 1931, p. 33, my own translation.
tional economy.366 On the other hand, Capitalism cannot only by ―identified with a system of unfettered individual enterprise: a system where economic and social relations are ruled by contract, where men are free agents in seeking their livelihood, and legal compulsions and restrictions are absent‖, because it would reduce it to a synonym to ―a régime of laissez-faire‖.367 To the contrary, Capitalism is more than a market economy, as it also includes social relations as part of the economic system, it is thus non-technological.368 Most definitions of the 19th century associate with Capitalism a machinery gobbling up all aspects of society from which no one can escape.
Probably due to its imprecise definition the term Capitalism was not included in many encyclopedias for a long time. It was not integrated into the ―Handwörterbuch der Staatswissenschaften‖ until its 4th edition in 1923, and Palgrave‘s ―Dictionary of Political Economy‖ did not contain an article named ―Capitalism‖ until 1926. Today it is left out of many mainstream encyclopedias again because it is not considered a scientific term. One reason for this could be its ideological and political connotation. Some authors dismiss it on the grounds that Walter Eucken‘s theory of economic orders replaced the elusive and imprecise term ‗Capitalism‘ with its analytical instruments after the Second World War. It is argued that the creation of a hierarchy of economic systems such as the market and the planned economy made the term ―Capitalism‖ obsolete for scientific discussion.369 It has been reactivated within the Varieties of Capitalism (VoC) approach to compare different forms of economic systems, which will be discussed in detail below (see chapter 4.5.) In this book Studies in the Development of Capitalism Dobb distinguishes three different meanings of Capitalism.370 The first is the one coined by Max Weber, who creates the notion of a ―spirit‖ of Capitalism, also inspiring the writings of Werner Sombart. Their approach links culture and economy, showing their interdependency, contrasting the more material approach of Marx (see below) who regarded Capitalism as the inevitable result of technological progress.371 Weber‘s notion of Capitalism and the capitalistic spirit is closely related to Sombart‘s. He distinguishes between modern and pre-modern Capitalism. He defines pre-modern Capitalism as a purely economic phenomenon, existing in any exchange of products with the purpose of making profit. The modern Capitalism instead reHeimann, 1931, p. 42.
Dobb, 1947, p. 3.
Appel, 1992, p. 77.
See Bog, 1978 for details.
Schefold, 1994a, p. 75. Joseph A. Schumpeter could be cited as third proponent of this approach, who, for example in Schumpeter, 1942, also combined historical understanding with economic theory, although he was also an advocate of ‗methodological individualism‘, and thus an ambiguous figure.
lies on a rational capitalistic spirit inspired by the religious assurance of salvation of Calvinism. Weber creates an ideal-type of Capitalism that requires a certain attitude towards the economy, which is inevitably accompanied by rising rationalization, bureaucratization and professionalization within a homogenous institutional framework. An autonomous system of large-scale enterprises under rational, bureaucratic management emerges, which does not leave space for outdated socio-cultural structures like small family businesses.
Local economies are standardized to fulfill the objectives of ―individual maximization, rational-legal principles and private accumulation‖.372 Capitalism is described by a systematic combination of characteristics and imposes a unique institutional structure on the existing traditional society, with obsolescent cultural idiosyncrasies being replaced.373 Weber and also Sombart regard the capitalistic development as an ongoing struggle. Keeping up with it and not going to rack and ruin in the evolution of events is another essential attribute of modern economy.374 In their view, social institutions serve as mere accessories to the economic system instead of the economy being embedded into society. The certain attitude needed for modern, rational Capitalism is described by both Weber and Sombart but justified in different ways. It will be shown that both authors consider Capitalism to be an age of separation, by which not merely separating the pre-modern traditional economy from the modern, capitalistic one is meant, changing the notion of what economy is forever, but also the separations taking place in people‘s private lives. Both authors and their works on Capitalism will be discussed and compared in detail below (see chapter 4.2. and 4.3.).