Both Carl Marx and Max Weber wrote extensively on capitalism, its origins, and its future. Although, they agreed on a few very small points, for the main part, they strongly disagreed. Only through the analysis of their main differences in the two ideologies can a stronger and broader understanding of capitalism be reached.
Marx believed strongly in what he called dialectical materialism, that is, that everything is material and that change takes place through the struggle between classes. He believed that men make their own history and transform their natural habitat to fit their changing needs.
Men begin to distinguish themselves from animals as soon as they begin to produce their means of subsistence. . . In producing their means of subsistence men indirectly produce their actually material life.
Throughout history men transform nature to make it better serve their own purposes. According to Marx, all societies go through five stages of history and capitalism is simply a necessary stage between feudalism and the final step of communism. The way in which men create their social organization is based on modes of production. Changes within these societies occur because as the mode of production changes, it no longer fits the present social organization (p. 157). Therefore, a new class and hence a new form of society emerges. During Feudalism merchants were inferior. Nevertheless, as cities grew the number of merchants grew as well. With their increase in number came an increase in economic power. When the state was unwilling to change to their needs, they formed a revolution resulting in capitalism.
Weber has a different perspective on why and how capitalism came about. Rather than just focusing on how capitalism came about, he focuses on finding an answer to the question of why capitalism happened where and when it did. When he looked for differences in the capitalist cultures and non-capitalist cultures at the time he found that capitalism occurred at the same time as the Protestant reformation.
The obvious next question for Weber was why was it the Protestant culture that led to capitalism. He found a large explanation within the difference between Protestants and Catholics. For Catholics, priests had the power to forgive you of your sins. Therefore, all that was necessary for you to do to get absolution was to confess your sins. For Protestants this was much more difficult. Because Protestant priests were only teachers, they did not have the luxury of simply confessing their sins. Protestants also believed that their souls were predestined to go to either heaven or hell. Nonetheless, Protestants felt that they could determine the status of their souls through their calling. As Weber describes on page 80,
The only way of living acceptably to God was. . . solely though the fulfillment of the obligations imposed on the individual by his position in the world. This was his calling.
As Protestants worked in their callings, their God given field of study in which to work, the amount of success that they achieved was a sign from God as to the predestination of their souls (p. 162). For this reason, Protestants developed a wonderful work ethic. However, they were not allowed to spend the money that they earned. Instead they saved and invested it. Weber found this to be strong evidence that,
Ones duty in a calling is what is most characteristic of the social ethic of capitalistic culture, and is in a sense the fundamental basis of it (p. 54).
Weber also found that this work ethic was strong throughout all economic classes no matter what their individual callings were (p. 40). He found the division of labor that came naturally through capitalism to be a good thing. It did not lead to the separating of society into two very different and conflicting classes. Instead, it formed a number of different classes that were related to each mans life style and calling. Each mans God given calling was different from that of his fellow man because God intended it to be so. The division of labor led to the specialization of occupations and increased development of skills, which in turn caused an improvement in production. The division of labor therefore serves the common good (p. 161).
Marx had a completely opposite opinion of the division of labor. In his eyes, the division of labor is what leads to the formation of hostile and conflicting classes. These classes are distinguished by their access, or lack thereof, to the means of production and consequently, their level of power. However, similar to Webers view that your position within these classes is determined by an outside source, in Webers case God, Marx believed that you were born into your social class and that you could not change your position. According to Marx though, this division of labor is what leads to the vicious cycle of capitalism. The division of labor allows for work to become very machine like. Which, in turn, alienates the worker from his work and his product. This alienation leads as well, to the estrangement of man from himself and from his fellow man because mans identity becomes his work. The division of labor and mechanization of labor also standardizes jobs as well as the workforce. Thus making workers easily replaceable like parts of a machine. This is not a problem when profits are high and the economy is growing. During times of good economic conditions wages will increase as well. In turn, the profit margin on labor will decrease leading to layoffs and increased unemployment. This will cause small businesses to collapse and wages to once again decrease. However, at this point, consumption will have fallen because there is less disposable income. Companies will again hire more of these standardized workers who will work for lower wages because they are unemployed. This will again increase the capitalist profit and the cycle begins again.
This alienation of the working class is not at all natural and therefore causes great problems. As said by Marx, men are naturally productive creatures. The fundamental nature of man is his consciousness and his ability to control that which surrounds him. During the process of standardizing labor workers themselves become part of the end product and thus,
Labor produces not only commodities; it produces itself and the worker as a commodity (p. 71).
Because man is naturally productive, his labor is an expression of himself. By alienating himself from his labor as well as the product and turning himself and his labor into a commodity, his is in turn being alienated from himself. Man is also naturally a social being (p. 157). However, through the commodification of man and his labor, capitalism also causes the commodification of human relations. This is the estrangement of man from his fellow man. This causes men to treat each other in instrumental terms. Now, acquaintances are made simply under the thought of, What can you do for me?
Because of the vicious cycle described above and the capitalistic drive for more profit which causes it, the working class will grow in size due to the increased demand for workers. However, through this struggle the commodification of human relations will diminish and the unity within the working class will increase as well therefore increasing and strengthening the class consciousness. The working class becomes increasingly disgruntled which leads to a struggle between the lower and upper classes which, because history is dialectical and not static, will lead to a revolution that will cause capitalism to fall. These specific conditions of capitalism are what caused the alienation and exploitation, and thus, they are the specific conditions which must be changed. Accordingly, the working class will take over the means of production and bring into being the final stage of society, that being communism. Within communism false consciousness and alienation do not exist. Once the people recognize that we all depend on each other people will work more freely and voluntarily. Production will increase because man will no longer be alienated from his work and will once again be naturally productive.
Weber is not so optimistic about the future of capitalism. He believes that the history of the future cannot be predicted but that it is cyclical with not end, rather than a linear progression with a definite end as Marx predicts.
No one knows who will live in this cage in the future, or whether at the end of this tremendous development entirely new prophets will arise, or there will be a rebirth of old ideas and ideals. . . (p. 182).
However, like Marx, Weber does not see capitalism as an idealistic form of society. When it began, the Puritans chose to live their life through their calling and therefore through capitalism. Weber agreed with Richard Baxter that,
The care of external goods should only lie on the shoulders of the saint like a light cloak, which can be thrown aside at any moment. But fate decreed that the cloak should become an iron cage (p. 181).
The Puritans were able to chose how they wanted to live their live but now we must live as if we were Puritans locked within this iron cage.
Although Marx and Weber do agree that capitalism is not the best social or economic system they differ very strongly in their views of the formation, aspects, and future of capitalism. By examining the philosophies of both men a better understanding of capitalism as a whole can be reached.