Exactly 500 years ago, on October 31, Martin Luther posted the “95 Theses,” a.k.a. the Disputation on the Power of Indulgences, on the door of Württemberg Cathedral, commencing the Protestant Reformation. And 100 years ago, on November 7, Vladimir Lenin’s Bolsheviks stormed the Winter Palace in Petrograd, inaugurating the first communist regime.
These were watershed moments for capitalism, which most people may not like, but they do accord it grudging respect.
Technically, capitalism predated the Protestant Reformation, and Luther himself didn’t have much to say about business and economics. He was more concerned with salvation than stock options.
As for the Russian Revolution, it was supposed to mark the end of the end of the capitalist era. But a century later, you can shop for jewelry at a Cartier shop or a handbag at Hermes only a few tens of meters from Lenin’s own tomb. It wasn’t capitalism that he buried.
Nevertheless, the German scholar Max Weber got it right when he detected the roots of capitalism in the rise of Protestantism. In his path-breaking book “The Protestant Ethic and the Spirit of Capitalism,” (1905), Weber says that Luther started Europe down the road of capitalism when he extracted personal salvation from the supernatural world of sacraments and papal indulgences, and made it the personal business of each Christian. Your place in heaven now hinged on your personal faith.
But how could you know for sure you weren’t slated for damnation, especially after John Calvin averred that faith alone wasn’t sufficient, and insisted that salvation or damnation was predestined?
Calvinists and other Protestants answered that you should live like you were confident of being on the road to salvation by, among other things, working hard and disdaining luxury. Labor and enterprise became religious values, not something you did just to sustain yourself until heaven snatched you up.
The catch was that all the money that came from hard work and enterprise couldn’t be endlessly stuffed into a mattress. It had to go somewhere and that ended up being in investing in new enterprises, hence the rise of business and industry and with it continuous economic growth.
Read more at Good King News.