Subtitle: Capitalism in Western Thought, Random House, NY., 2002, 487
pgs., index, notes, paperback
I learned a great amount from reading this book. And it complements Dr.
McCloskey's three volumes. Here - Dr. Muller refers to his selected authors as
'intellectuals' and of course they are. But for me they are a particular group,
a component of them, not all those who can be classified as 'intellectuals' are
of the 'intelligentsia' - Rather they are what many others (including me) call
the 'intelligentsia' - or Dr. McCloskey calls the 'clerisy'. That is, smart and
well educated people who self-determine that their personal roles are to change
society to what they consider 'the better'. Dr. Muller credits these
individuals, as do many other commentators as well, as among the elite
influencers of 'public opinion'; which was a growing power source in Europe as
a larger and larger segment of the population gained political power. The more
the masses could vote, the more critical it was (and is) to insure that they
vote acccording to the enlightened thought of their intellectual betters.
Moreover, when they do not, or ignorant politicians seek votes, the envious
intelligentsia must interveen.
As his subtitle indicates, this is not a study of capitalism itself nor of the
economic history of Europe during which capitalism became the driving force.
Rather, it is a study of the thoughts of a selected group of these
intelligentsia about not only or mainly the economics of capitalism but its
interrelationship with culture, morality, and ethics. Or as he writes in the
introduction: "That is why this is a history not of economic ideas, but of
ideas about the capitalist economy." However, he cites his methods as an
historian which enable him to place the individuals' thoughts in both the
context of their personal biographies and the historical setting in which they
lived. And he does have to outline their views on economics in order to place
their published pronouncements on the cultural and social results of capitalism
in to context. Dr. Muller describes the personal biographical background of
each author in sufficient detail to demonstrate the connection between each
author's life experience and his thoughts - theories - on capitalism.
The chapter titles indicate the names of these individuals. Most are well known
to general students, but several are almost unknown and not usually included in
such compendiums as Thomas Neill's Makers of the Modern Mind, or Robert
Heilbroner's The Worldly Philosophers. Dr. Muller includes critics of
capitalism as well as its supporters, but mostly critics. For my purpose the
chapers on the most recent authors such as Schumpeter, Keynes, and Hayek are
As is common about many philosophical issues contention over these same issues
remains central to the political agendas of adversaries today. Definitions of
'capitalism' itself are contentious. Even more so are opposing concepts about
the definition and nature of 'money' and its role in capitalist and other
economies - a topic for another discussion. I include Dr. Muller's book with
others in a general survey of current thought about capitalism, markets, money,
and 'social justice'. The reader may notice that much of the criticism and
opposition to 'capitalism' is based not on economics but on concepts of
morality and ethics or about claims that 'capitalism' degrades culture. But
this is a response to the promoters of economic theory who early on viewed
economics in a purely materialistic way, even positing their subject as the
actions of 'economic man' - that is one whose desires and actions are motivated
by purely materialistic goals. Thus the two groups are talking past each other
McCloskey, Deirdre - Volume I - The Bourgeois Virtues
McCloskey, Deirdre - Volume II - Bourgeois Dignity
McCloskey, Deirdre -Volume III - Bourgeois Equality
The author starts out directly, writing: "We live in a world shaped by
capitalism"... and, "It (the book) is based on the assumption that
capitalism is too important and complex a subject to be left to
economists." Further, "That is why this (book) is a history not of
economic ideas, but of ideas about the capitalist economy."
He notes the development about which I have objected for years, namely, the
separation of economics as a separate academic and professional discipline and
subject matter from its real context as an integral component of
'political/economy'. This, he notes "have come at the expense of
marginalizing many of the issues about the market that are likely to concern
reflective people." But he also notes that 'the moral, cultural, and
political ramifications of capitalism' have recently become the subject of
serious concern and attention for commentators. The resulting losses of the
'forces of commerce' have included civic virtue and the "willingness to
defer gratification upon which capitalism depends.". "Individualism
and selfishness were destroying any sense of collective purpose."
Dr. Muller cites his interest in our contemporary conflicting analysis of the
'virtue' or not, of capitalism and of its manifestation in 'the market' on the
grounds of moral, cultural, and political criteria, of which he mentions many.
He decided to investigate the historical background of these theories and found
that they all have lengthy pedigrees starting from the very origin of
intellectual recognition that something causing radical change in human
relations was taking place.
Recognizing all this, he undertook to research the history of thought about
capitalism as found in the writing of major Western - European - intellectuals
back to the early 18th century. He writes: "I found that reflections on
the cultural, moral, and political effects of capitalism had been central not
only to intellectuals often treated as 'economists' such as Adam Smith and
Joseph Shumpeter, but to figures not usually thought of in connection with the
market, from Voltaire through Hegel, from Edmund Burke through Matthew Arnold
and beyond." The result is this book in which each chapter is focused on
one or several writers. In connecting their views he has found several general
themes, which he has addressed. Among then: "Among the issues that recur
throughout this study is the question of poverty and wealth." "Then
there are questions of capitalism and culture." "How the market
economy affects the family has been another long-standing focus among the
analysts of capitalism." "The relationship between capitalism and
equality is another recurrent theme." "A larger theme, uniting
several of those mentioned so far, is the effect of the market on pre-market
institutions - political, religious, cultural, economic, and familial."
"Because the rise of the market to its position of centrality in modern
European societies coincided with the rise of intellectuals as a distinct
social group, another recurring theme is how the thinkers in question conceived
of the role of intellectuals within a capitalist society."
He writes, "The Mind and the Market moves between practical,
concrete capitalism, and intellectual reflection on capitalism - between what
the Viennese satirist Karl Kraus in his Magical Operetta, called
'tachles' and 'shmonzes'." He continues with a discussion of his
methodology for historical research and his selection of the writers and their
thoughts that he considers most significant. A feature of his method is to
place each author and their thought in the context of their time.
Chapter 1 - Historical Backdrop: Rights, Righteousness, and Virtue
The content of this chapter is an important confirmation of the very same
appraisal Dr. McCloskey presents in her three books on the Bourgeois role in
modernization and expansion of market capitalism. Dr. Muller cites the most
influential authorities going back to Plato and Aristotle and the Bible. All
the intellectual preconditions on which capitalism; modern ideas about money,
markets, competition; and roles of individuals in society are based were
opposed by both civil and religious opinion and institutions. Some of the same
concepts appear, such as honor, dignity, trade, markets and liberty. As he
notes, the fundamental debate is "about the moral worth of a society
organized around markets" Societies were structured on a hierarchal basis
in which everyone had a status and knew what it was. Work, especially artisan
and merchant activities were disdained. Making 'money' was denounced. There was
great 'hostility toward trade and money- making' in both the religious and
civil traditions. He continues: "The most suspect form of commerce was the
making of money from money." Lending money which generated interest was by
definition 'usury'. Wealth itself was 'disparaged' by moralists. Dr. Muller
traces published views on all this from classical and Biblical times through
the middle ages. One powerful classical authority he does not mention is
Cicero, who dismissed all forms of commerce out of hand and preached that
politics was the only really honorable way of life.
He cites the admonitions of St. Bernard of Clairvaux warning about Jewish
influence in money making, even though the Cistercians were noted for their
development of profitable marketing activities. Moreover, he writes: "Thus
began an association of money-making with the Jews, an association that would
further taint attitudes toward commerce among Christians, and that, as we shall
see, would survive in transmitted forms in the reflections of modern
I see a 'feedback loop' here. Jews were denounced because they were
'money-makers' and 'making money' was denounced because it was considered a
Luther was "hostile to commerce in general and international trade in
particular." not to mention usury. And. "That trade was inimical to
communal cohesion was a staple of the civic republican assumptions of early
modern political thought." He cites Machiavelli as a proponent of the
classical view on 'virtue' and self-sacrifice in favor of the community - the
'public good'. "Republican 'liberty was the freedom to take part in
preserving the freedom of the commonwealth from foreign domination." - A
classical Greek conception of the meaning of 'liberty'. Dr. Muller then
discusses the development of civil law in contrast to Christian and classical
Chapter 2 - Voltaire: "A Merchant of a Noble Kind"
In this short chapter we learn a great deal more about Voltaire's personal life
and activities than one finds in the usual essay about his political opinions
and influence. As is his objective with all these intellectuals, we find that
Dr. Muller identifies the way in which Voltaire's personal life agenda and
activities corresponded with his public political pronouncements and how his
theories subsumed his views on economics (especially capitalism) beneath his
theories on culture and social issues. And we learn also about Voltaire's
advocacy for an increased role and power for intellectuals (of a certain sort)
in creation of public political policy.
Chapter 3 - Adam Smith: Moral Philosophy and Political Economy
Dr. Muller devotes much more space here for a fuller description and analysis
of Smith's thought (and real meaning) especially in his two main books. The
Wealth of Nations, and The Theory of Moral Sentiments, but also
other publications, letters, and lectures. Smith's full range of opinions is
revealed to be much deeper and richer than one finds in the typical quotation
about 'the hidden hand'. In fact much of the standard concepts today about
Smith's theories about economics are shown to be misleading at best. He was a
moral philosopher before he was an economist.
Chapter 4 - Justus Moser: The Market as Destroyer of Culture
This German gentleman was a contemporary of Smith's who vehemently opposed
capitalism mostly on cultural and social grounds. But this was in support of
his own class position in medieval society, in other words special interest.
Moser's attack on 'capitalism', 'the market economy', and industrialization was
based largely on his view that these were disrupting established society, which
of course they were. He favored the 'status quo' of feudalism, manorialism,
guild control, hierarchy and 'honor' based on status. In other words, he was a
staunch defender of the conceptions about the superiority of medieval life and
society. But he, himself, was a member of the intelligentsia determined to
advance this category into running the state.
Chapter 5 - Edmund Burke: Commerce, Conservatism, and the Intellectuals
Burke was a British politician whose influence waxed and waned on Parliament.
He is best known to students today for his Reflections on the Revolution in
France, but his speech Thoughts on the Cause of the Present
Discontents brought him to public attention. And his speech Vindication
of Natural Society and lengthy attack on the misconduct of the British East
India Company for its greedy exploitation of India generated much contention in
Parliament and Royal politics.
Chapter 6 - Hegel: A Life Worth Choosing
We learn quite a bit about Hegel in this chapter. Again, it is clear that his
philosophical theories were the outgrowth of his personal experience. He was
another member of the intelligentsia, but a supporter of Hardenberg in the
reform campaign to concentrate power in the bureaucratic state. He stressed
study of history to find the true nature of 'liberty' as opposed to the
excesses of the French revolutionaries. Dr. Muller writes: "Hegel sought
to explain that, rightly understood, the institutions of the modern world were
worth affirming, for modern institutions have their own ethical
dimension." And further: "For Hegel, the fundamental fact about man
is that he is capable of being free." Dr. Muller continues with much more
on Hegel's views of civil society and such important features as private
property. And Hegel believed in the positive role of the entrepreneur in the
expansion of consumers. Dr. Muller writes: "The market, that is to say,
did not just satisfy wants, it created them." And: "The market was a
want-creating machine." And all this was good as it promoted the sense of
individuality as long as the consumer has the self discipline to control his
desires. There is much more valuable expansion of Hegel's philosophy in this
chapter. Dr. Muller concludes with this: "Hegel's influence upon later
intellectuals was formidable, and reached well beyond German-speaking
Chapter 7 - Karl Marx: From Jewish Usury to Universal Vampirism
As usual the author provides a brief but excellent biography of Mars and Engles
that links their thought to their life experiences. This is a lengthy chapter
with a rich content that defies a brief summary. The title indicates Dr.
Muller's exposition of Marx's core belief in the antisocial essence of the Jew.
From an elaborate critique of all the evils that Jews were supposed to embody,
Marx expanded to claim that the central social problem was the extension of
'Jewishness' to all of modern 'capitalist' market economy.
Chapter 8 - Matthew Arnold: Weaning the Philistines from the Drug of
This author was another of those who denounced capitalism on cultural, moral,
ethical grounds but from a practically opposite position to that of Marx. He
favored 'high culture' considered that of the aristocratic class and bemoaned
its being downgraded by the pretensions of the middle class of business and
industrial society. He was an example of the intelligentsia cited by Dr.
Chapter 9 - Weber, Simmel, and Sombart: Community , Individuality, and
Dr. Muller considers all three of these sociologists together because they were
of one generation and addressed the same issues related to 'capitalism' but
from different points of view.
"Setting the terms"
In this introduction he writes, "What is capitalism" as the important
philosophical and academic subject of the age. And further, "Perhaps never
has capitalism received the level of intellectual attention and illumination as
it did in Germany during the reign of Kaiser Wilhelm, in the two decades before
the Great War" "At the center of those debates were three academics:
Max Weber, Georg Simmuel and Werner Sombart". "It was an era when
German universities, research institutions, and museums - paid for by the state
and by state-solicited donations from newly wealthy capitalists - were widely
regarded as the best in the world, and when the prestige of professors within
Germany was at its peak".
Indeed, and the results has been a political, social, academic disaster. This
is the era in which the 'treason' of the intelligentsia as Dr. McCloskey terms
it spread from Germany throughout western Europe and America. This is the time
in which American academics flocked to Germany for graduate study and returned
to the U.S. with 'enlightened' visions of total change of society via educating
the youth to German ideas. That these ideas were promoted by the Prussian
'State' to further its conquest of the rest of Germany did not matter, if it
was even noticed. Thus in economics we have the conflict between the German
Historical School and the Austrian economists - Georg Knapp versus Carl Menger
and Ludwig von Mises. And this Georg Simmel is the intellectual beacon whom
Herbert Frankel singles out in his devastating critique in -
Two Philosophies of Money. of the
'Chartalist' theory of the nature of money. Thus this chapter is a very
significant reference source for understanding the academic situation today.
For the sociologists, Dr. Muller notes: "The debate focused on the
question 'which human type is promoted by modern capitalism'" He addresses
the influence of Ferninad Tonnies. "There were two fundamental forms of
social life, (Tonnies) asserted. In community, individuals shared a basic
solidarity. They were united by an 'organic will,' by cultural assumptions so
deeply shared that they became virtually second nature, leaving little room for
conscious choice". "He, (Tonnies), saw community in its broadest form
in the way of life of the guilds and villiages championed a century earlier by
Justis Moser". (see above).
And this also is the theme of Polyani.
The other 'human type' was that occupying a 'market economy society'. And
Tonnies was very pessimistic about the future of society created in this
Muller writes that Tonnies' book "presented a fundamentally pessimistic
vision of historical development, depicting modern man as moving from the
solidarity of shared aims and beliefs into a calculating society without shared
ideals". "Tonnies' description of modern society and of its central
institution, the market, was heavily influenced by Marx, and though he regarded
himself as a man of the left, his portrait was steeped in the prejudices of the
new integral German nationalism of Paul de Lagarde". "Tonnies
repackaged romantic anticapitalism at a time when Germany was once again being
transformed by the market".
Dr. Muller describes the transformation of German industrial and economic power
prior to WWI.
"Germany was also at the forefront of the development of the most
characteristic feature of the twentieth century capitalist economy: the
In his excellent book, Capitalism,
Goeffrey Ingham goes into more detail, showing the significant
differences between 'capitalism' as it developed in Germany and its development
in Great Britain and Anglo-Saxon countries. But Muller does note one of the
significant differences, that German industrial production remained largely in
ownership by families, but with professional management, with financing by
banks rather than by widespread ownership of stocks.
He continues: "The division of labor, once evident primarily in
production, now became characteristic of management as well". He cites
other results as well.
"Weber: Efficiency and Disenchantment"
Dr. Muller writes his characteristic brief but incisive biographical background
of Weber and notes that "Weber's analysis and policy prescriptions flowed
from his political commitments". Muller notes that Weber was a 'liberal
nationalist'. Weber "was a nationalist because he thought that in the
modern world the nation-state was the broadest framework that could exert real
power, but also because he felt that ultimately Germans ought to put the fate
of their own society and culture above those of other peoples".
Do you see the image of Hitler appearing in the mists? Dr. Muller continues for
many pages with his insightful appraisal of Weber's thought and publications.
"Simmel: Money and Individuality"
Dr. Muller writes: "The theme of capitalism as the triumph of means over
ends was elaborated by Weber's contemporary, Georg Simmel, who in 1900
published one of the most fertile works of reflection on capitalism and its
cultural ramifications, The Philosophy of Money. In this and other
works, Simmel explained how the development of the market economy made for new
possibilities of individuality". Muller again gives us Simmel's biography
and how that influenced his thought.
"Life in a modern money economy, Simmel stressed, is characterized by even
greater distances between means and ends. Determining how to attain our ends is
a matter of intellect, of calculation, weighting, comparing the various
possible means to reach our goals most efficiently".
Dr. Muller describes Simmel's ideas that with the money - market economy
involving more and more complex means that require decisions the ends sought
become more and more displaced. The exposition of this concept with many
explicit examples of practice requires many pages.
"The Dialectics of Means and Ends"
"To Simmel, money was an example, perhaps the quintessential example, of a
larger pattern in the relationship between men and the objects they
created". This concept, too, requires pages of exposition. But the topic
and its analysis by Simmel is still very important today. As we see in
Frankel's references to Simmel.
"Sombart: Blaming It on the Jews"
"If Weber and Simmel were ambivalent but predominately positive about the
prospects presented by capitalism, Werner Sombart viewed it with despair".
Dr. Muller's biographical sketch indicates that Sombart was a very influential
intellectual figure who published many widely read and influential books.
He "combined economic history with romantic anticapitalism" "He
portrayed the precapitalist economy of the artisan and peasant as 'natural' and
the modern capitalist economy as 'artificial'. "Sombart shared the
romantic prejudice that identified the archaic with the authentic".
Again, see Polyani for a 20th century version of this romantic idealism.
"Sombart began to draw attention to what was to become a leitmotif of his
writing and lecturing for the next decade; the link between capitalism and the
"The World War as Turning Point"
Dr. Muller notes that all three authors supported the war and its German aims
but also had different views about it and their expectations of its results for
societies. He writes that Sombart's "'greater bombast and national
chauvinism... argued that the war had given back meaning and collective purpose
Chapter 10 - Lukas and Freyer: From the Quest for Community to the
Temptations of Totality
Dr. Muller follows the standard academic classifications in considering Lukas
as a 'left wing' communist and Freyer as a 'right wing' National Socialist
(Nazi). But the Nazi's were every but as much revolutionaries (and leftists) as
were the Communists. And, as Dr. Muller shows, both are representative of the
anti-Capitalist thought and critique. He gives us excellent, brief,
biographical backgrounds that show clearly the origins of their ideas. They
were influenced by Weber and Simmel (not Sombart) - showing how the theories
progressed through the generations.
He writes, "Lukas and Freyer provide examples of intellectuals whose
analysis of the cultural effects of the market led them to reject liberalism
altogether and, like so many European intellectuals, embrace totalitarian
solutions to the cultural dilemmas created by capitalism." They were among
the intelligentsia 'traitors' whom Dr. McCloskey describes. Lukas was a Jew,
although not practicing. But he was one of those who was a convenient target
for popular attack.
Dr. Muller writes, "The identification of Jewry with capitalism, which in
much of Europe was a metaphor and elsewhere polemical hyperbole, was close to
exactitude in Hungary. Lukas became a leading Communist theoretician, thus was
an example of both opposite sources of public hatred".
"Capitalism was Jewish, Communism was Jewish" - both were sources of
all social problems. Dr. Muller devotes considerable attention to the growing
animosity against the Jews in Central Europe prior to World War One. With
Communism Lukas was expecting and advocating the eventual elimination of the
'state'. Fryer had a similar view of the cultural and social disaster caused by
capitalism but took an opposite position and developed theories that made the
'state' the ultimate and central power.
Thus they are Muller's excellent examples of the opposite solutions in
totalitarianism. Along with the 'state' Freyer extolled the role of war,
"War for Freyer was the essence of politics." The 'state' was created
to wage war. The 'state' could not exist without 'war'.
There is much more fascinating detail in this chapter discussed with the
following section topics But these German authors have less authority now than
those in the following chapters.
"From Intellectuals to Revolutionaries"
"Capitalism as a System of Illusion"
"Education of the Revolution"
"The Party as Community"
"Freyer: Alienation and the Quest for Community"
"The Particularist Critique of the Market"
"War, the State, and the Preservation of Cultural Particularity"
"Revolution from the Right"
Chapter 11 - Schumpeter: Innovation and Resentment
Schumpeter remains a very influential source of economic theory today.. Dr.
Muller begins by citing his most important book -Capitalism, Socialism and
Democracy published in 1942 by which time Schumpeter was a professor at
Harvard. Shumpeter disagreed with the growing number of socialists who were
using the Depression as ammunition for Marxism.
As Muller writes: "Schumpeter made some startling claims. He argued that
capitalism had been a great source of economic betterment for the mass of the
population, and that despite the current depression there were excellent
reasons to believe that it was capable of alleviating material want. Yet his
paradoxical conclusion was that 'capitalism is being killed by its
achievements'". It was that, "The forces that have made capitalism
the most creative and dynamic economic system in history are creating a social
and psychological backlash that will bring it down".
Again, Muller relates Schumpeter's thinking to his personal biography.
The section topic headings are these.
"Creativity and Resentment in Schumpeter's Early Writings"
In this section Muller describes Schumpeter's early life in Vienna during which
he studied under Eugen von Bohm-Bawerk the original founder of 'Austrian Sch