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«Inaugural-Dissertation zur Erlangung des Doktorgrades des Fachbereichs Wirtschaftswissenschaften der Johann-Wolfgang Goethe-Universität Frankfurt am ...»

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Theory in Sombart‘s sense is defined as ―consistent and unified system of concepts to be used in the analysis of social phenomena‖, not merely the system of (general) equilibrium of the orthodox theory.452 It is also derived from cultural sciences, which for Sombart also included the so-called ‗interpretative or hermeneutic economics‘ [verstehende Nationalökonomie, see below chapter 4.5.2] and which for him were ―the expression of the only aristocracy of which the bourgeois culture is capable‖. Sombart, 1950 [1929], p. 341, translation taken from Schefold, 1995, p. 222.

Parsons, 1928, p. 643 f.

Sombart, 1987 [1908-1927], Vol. I, 1, p. 17f., 21ff. Translation taken from Schefold, 1995, p. 224, Gottschalk and Broyer, 2004, p. 39.

Gottschalk and Broyer, 2004, p. 40.

entrepreneur, state intervention and bureaucratization.456 This especially in the ‗last phase‘ of Capitalism points to a socialist, planned economy.

With the coinage of the phrase ‗Capitalism‘ modeled after the ideas of Marx, he categorizes the development since the medieval times.457 He uses a dichotomic approach within the three main components attitude, organization and technology to characterize a specific economic system and the separation of traditional from modern economies. He contrasts the ―satisfaction of needs‖ (Bedarfsdeckung) with the ―principle of acquisition‖ (Erwerbsprinzip), traditionalism with rationalism and solidarity with individualism to describe the economic mentality and continues with similar dichotomies for the other two elements.458 In his work Modern Capitalism459 Sombart follows the trace of Karl Marx, who ―only occasionally specified one or two elements of this concept‖.460 Like him, Sombart evaluates Capitalism as an inexorable, even instinctive historical process motivated by capital utilization.461 He writes Modern Capitalism with the aim to present a ―systematic, genetic treatment of the development of European and American economic life as a whole‖.462 Sombart characterizes Capitalism as defined by the principle of acquisition, individuality and competition and governed by economic rationality. This includes the freedom of trade, private property and organization of the economy by the private sector as well as an aristocratic structure of society.463 It is an exchange economy with two different classes of people: those who own the means of production and the ―unprosperous only-workers‖. The first, the entrepreneurs, are also responsible for the management and are therefore economic subjects, whereas the latter are only economic objects. Both groups are interconnected by the market and motivated by the principle of profit-seeking and economic rationalization‖.464 Sombart also tries to both historically and theoretically define the essence of Capitalism, which for him can be found in his creation of the term ―spirit‖ (Geist) that also inSombart, 1987 [1908-1927], Vol. I, 1, p. 319f., Gottschalk and Broyer, 2004, p. 44f.

Appel, 1992, p. 33.

For a further discusscion and details, please refer to Gottschalk and Broyer, 2004, p. 39f.

Whereas the first edition of Modern Capitalism following Marx‘ arguments in emphasizing the material aspects of the emergence of Capitalism closely hardly gained recognition of the scientific community, the 2 nd edition had a much greater impact. It is differentiated from the 1st edition by more stressing the immaterial, hence spiritual, factors with rationalization, objectivation, contractualization as forming elements. Appel, 1992, Backhaus and Sombart, 1996, p. 11f.

Sombart, 1909, p. 690, my own translation.

Appel, 1992, p. 9, 14.

Parsons, 1928, p. 643.

Sombart, 1971 [1922], S. 365ff.

Sombart, 1987 [1908-1927], Vol I,1, p. 319.

spired Max Weber when writing his Protestant Ethic. This attitude towards the economy, an ―economic mentality‖, is found in the moral concepts and setting of goals of economic actors.465 Sombart wants to understand the historical development that led to the creation of the capitalistic economy, because ―Capitalism has to be there first before there are capitalist motives. And I can only understand these if I know what Capitalism is‖.466 This is in contrast to Weber who assumes that the spirit of the entrepreneur is the prerequisite for Capitalism, not its result.467 Thus, the spirit of an epoch is a unique phenomenon of this particular period of time.

Sombart believes that ―at different times different economic attitudes have always reigned, and that it is this spirit which has created the suitable form for itself and thereby an economic organization‖, which for him is the fundamental idea of his work.468 Sombart‘s spirit is therefore a mixture of an adventurous entrepreneur and a rational bourgeois. The first can either be a conqueror, inventor, explorer, organizer or merchant. Only when this dynamic entrepreneurial spirit is combined with a morally upright bourgeois spirit that guarantees a well-ordered, rational management modern Capitalism can develop.469 The organization of capitalistic production needs the help of certain techniques of which Sombart describes double-entry book-keeping as the most important symbol. This method separates capital stock and the managing person and so enables production to become abstract and thus unlimited.470 The virtues of tenacity and perseverance needed to be merged with business ethics and accountability to be able to create a rational, well-planned management.

This means that the origin of Capitalism for Sombart lies in the human mind and the creation of conditions suitable to generate the institutional environment of a modern marSombart, 1987 [1908-1927], p. 13.

Sombart, 1950 [1929], p. 227, my own translation.

Weber, 1976 [1930], p. 193.

Sombart, 1987 [1908-1927], Vol. I,1, p. 25, my own translation.

Schneider, 1996, p. 37ff. The term ‗bourgeois‘ is a complicated construct and is connotated with different meanings in different national contexts and is differentiated from the terms ‗citoyen‘, ‗citizen‘, ‗Bürger‘ and ‗middle class‟. In this dissertation it is used in the sense of the German term ‗Bürger‟ and is differentiated from the notion of the citizen. The German Bürger is member of a small class (Schicht) with a distinct set of values and characteristics (also: bourgeoisie and middle class) but at the same time a Bürger of a state has certain rights and duties towards a collective entity (also: citizen, citoyen). It refers to the new social formation that was shaped during the late 18th and early 19th century, a socially ascending class of propertied and/or educated members. This new formation is called ‗bürgerlich‘ or bourgeois in the sense that they are part of the ruling or capitalist class because they either belong to the intelligentsia or to the wealthy, owning classes.

A summarizing definition of the complex and changing meaning of the term ‗Bürger‘ can be found in Kocka, 2008 for the Bielefeld School. See Gall, 2000 for an alternative approach to the term of the Frankfurt research group on ‗Bürgertum‘. Please refer also to chapter 6.4.1. on the German Mittelstand, chapter 8.1.1. for the role of the bourgeois entrepreneur in the economy and chapter 8.2. on his interaction with the state. In this work, instead of using the German terms ‗Bürger‘ and ‗bürgerlich‘ the words ‗bourgeois‘ and ‗middle class‘ will be used in the same sense. If applied to another context, it will be pointed out in the text.

Lenger, 1995, p. 122.

ket economy.471 ―Out of the bottom of the European soul Capitalism arose…It is the spirit which since the middle ages tears men away from the quiet, organically grown love and community relationships and forces them onto the way of restless selfishness and selfdetermination‖.472 Sombart believes that the notion of Capitalism always existed, but that in precapitalistic times the ―living man‖ was the most important element and production was only for the purpose of satisfaction of human needs.473 Those needs were limited and fixed.

The capitalist ―rooted up‖ this ―natural man‖ and ―turn(ed) topsy-turvy all the values of life‖, who now regarded the accumulation of capital as major incentive to engage in economic life.474 The rationality of Capitalism becomes the most important issue, subordinating everything in life to this end with the unlimited multiplication of wealth connected with sober and precise calculations, orderliness and expediency.475 As already indicated above, Sombart therefore distinguishes between ―satisfaction of needs‖ and the ―principle of acquisition‖476, where the aim of the first case is the ―attainment of the goods necessary to meet personal needs‖ in a traditional economy, the ―latter a struggle for profit free from the limits set by needs‖, therefore merely the acquisition of money.477 The economy of satisfaction of needs is built upon craftsmen working in a static, feudal system which is always in equilibrium. The economy based on the principle of acquisition of money is characterized by unlimited material pursuit.478 The greed for money he defines as the objective aim of a capitalistic economy, which may not need to coincide with the subjective goal of individuals.479 Similarly, Werner Sombart described the change of attitude towards the conduct of business during the process of industrialization. Related to this, the tendency towards juridification complemented the rationality of capitalism in replacing personal connections by contractual relations quite early during the process of industrialization.480 On the one hand this involved an increase of personal freedom; on the other hand it made relations less perAppel, 1992, p. 17.

Sombart, 1987 [1908-1927], Vol. I, 1, p. 327, my own translation.

Sombart, 1987 [1908-1927], Vol. I, 1, p. 62.

Sombart, 1978 [1930], p.13-21, 239.

Sombart, 1971 [1922], p. 383f.

See Sombart, 1971 [1922].

Weber, 1976 [1930], p. 64.

Sombart, 1987 [1908-1927], p. 328.

Kromphardt, 1991, p. 39.

Heilbroner, 1993, p. 50, Pohl, 2002, p. 115.

sonal and took away the security of traditional social formations.481 In the beginning of industrialization a good citizen had to show a certain morally defined behavior towards the outside world, including the behavior in doing business, whereas in a mature capitalistic system the sphere of private life and business were separated. This included the image of the ‗good citizen‘ that had to show a certain morally defined behavior towards the outside world in the beginning of industrialization, including the behavior in doing business. Sombart describes this notion was overcome in the matured capitalistic system, when the spheres of private life and business were conceived as and actually were separated. Traditionally, only a morally sound lifestyle could lead to success in doing business in creating trust in the persona of the entrepreneur. Only a person who overall exhibits moral behavior was regarded as trustworthy in a business context.482 This is complemented by the establishment of transaction with the help of contracts and by the juridification of hitherto unofficial norms and thus the emergence of the state as regulative authority. The West has a long tradition of contracts, originating from Roman law, which regulates the relationships between individuals (ius est ad alios).483 Thus, the behavior in private and in business was separated. This created a specific set of manners for entrepreneurs, which have often been described as necessary for the development of a mature Western capitalistic system. In this environment, it is not the character or the individual personality of an entrepreneur that is important for doing business, but merely his actions in the process of business transactions. The private life of businessmen is not of interest anymore; it is regarded as totally detached from the actions conducted in the role as entrepreneur and underlies different rules.484 The success and the reputation of a firm do not depend on the personality and connections of one specific individual but on the quality of its products.485 This means that ―business relations in the West are more technical and company orientated with early recognition of the possible need for contractual formality.‖486 Additionally, the increase in productivity of labor relieves economic life ―from its dependence upon the natural organic limitations of the human individual‖.487 Economic activity in a modern, capitalist surrounding is characterized by rationality and orderliness, Groppe, 2010, p. 289.

Sombart, 1978 [1930], p. 121f., Groppe, 2010, p. 53.

Tilly, 1995, p. 41.

Sombart, 1909, p. 709 and Sombart, 1978 [1930], p. 187.

Sombart, 1978 [1930], p. 186ff.

So and Walker, 2006, p. 7. For a discussion of the role of the entrepreneur in Capitalism, please refer to chapter 7 and 8.

Weber, 1976 [1930], p. 75.

separating it thus from the traditional feudal economy. Its major rationale is the need for capital to be utilized in a competitive environment created through a market, in a competition that can be called a fight with only formally peaceful means. Capitalism has also developed individualism in the sense that entrepreneurs compete with each other, seeking advances for themselves.488 This is also true for the propertyless workers, who however also express solidarity in creating a group of people they belong to and feel responsible for.

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