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Whites Invented Capitalism Based on Impartial Fairness and Trust — 11

Henrich's Historical Model of WEIRD Europe.

In both leftwing and dissident circles the idea prevails that capitalism is synonymous with greed and grounded in the lower instincts of man. Max Weber criticized “this naïve idea of capitalism” over a century ago. “Unlimited greed for gain,” he explained, “is not in the least identical with capitalism, and is still less its spirit.” To the contrary: “capitalism may even be identical with the restraint, or at least a rational tempering, of this irrational impulse.” Modern Capitalism is about “the pursuit of profit” in a rational, honest, fair, impartial, industrious, and frugal way. Merchants, loans of all kinds, foreign trade, colonial entrepreneurs, financiers, large scale speculators, have “existed everywhere” — in “Babylon, Hellas, India, China, Rome”. But it was only in modern times that the Occident developed “a very different form of capitalism which has appeared nowhere else”: the rational pursuit of gain through an ethos of  impartial fairness and trust.

The German Max Weber made this argument in his famous but not well understood essay, The Protestant Ethic and the Spirit of Capitalism, first published in 1904. To this day the left and the dissident right have remained under the influence of Karl Marx’s argument that capitalism makes humans rapacious and concerned only with their own interests in a zero sum system of exchanges. Weber saw this new capitalistic ethos primarily among Protestants.

He saw in Protestant capitalists a new type of personality no longer interested in the “undisciplined” acquisition of wealth “without reserve and as an uncontrolled impulse.” Protestantism brought “order into the conduct” of capitalists, “a cool self control and frugality,” freed “from the power of irrational impulses”. Weber highlighted Benjamin Franklin’s Autobiography as an exemplary expression of this new type of character. The virtues Franklin used to develop his character included temperance, order, resolution, frugality, industry, sincerity, chastity, moderation, and humility. These are the ideal virtues of the new capitalism created by Europeans.

Karl Polanyi

It was not enough that the ideas of Marx about capitalism came to prevail in Western culture. In the 1940s a new idea was added: the market capitalism invented by modern Europeans was uniquely “greedy” whereas the markets of traditional cultures were “reciprocative” and redistributive”.  This argument was articulated by the Jewish Hungarian Karl Polanyi in his widely read book, The Great Transformation: The Political and Economic Origins of Our Time (1944). When I was a student this was required reading in both undergrad and grad courses. The argument Polanyi made was endearingly attractive: “no economy ever existed that, even principle, was controlled by markets” prior to the rise of “self-sustaining markets” in Europe controlled by an independent class of merchants concerned only with profit maximization. The allocation of resources and goods in all societies before “the great transformation” was characterized by reciprocative and redistributive principles. There were no “self-regulating markets” operating according to profit-seeking principles with prices determined by the “free” interaction of supply and demand. The self-interested, income-maximizing Homo economicus was a modern European historical phenomenon.

Before modern Europeans came along, the economies of the world were similarly “embedded” in non-economic institutions, kinship, religious, and political institutions. Production for use and according to culturally specific principles dictated economic decision-making rather than “production for exchange” in which all things are for sale, including land and labor, and in which monetary gain is the chief aim.

Polanyi’s claims provoked a long debate, the so-called formalist–substantivist debate. I followed this debate, and, like almost every other academic, I sided with the substantive school. The formalist school seemed mean-spirited and unsocial with its argument that throughout history markets were driven by the maximization of utility in a world of scarcity which dictates finding the most efficient method of production to maximize returns and satisfy the natural human preference for gain. I preferred the substantive school argument that scarcity was a product of the maldistribution of resources and that people in the past were naturally humanitarian and socialistic with their “reciprocative” and “redistributive” markets.

Henrich’s Weberian Argument

Although Henrich does not mention Polanyi, and does not say much about Weber’s views on modern occidental capitalism, chapter 9, “Of Commerce and Cooperation,” can be read as a quasi-Weberian critique of Polanyi and the generally accepted Marxist view that modern European capitalism is based on greed and dishonest exchange. On the basis of ethnographic studies and behavioral experiments conducted with people from 27 societies across the globe, hunter-gatherers, herders, subsistence farmers, slash-and-burn horticulturalists, and wage laborers, Henrich shows that the motivations of those who are less integrated to market economies are actually more selfish and less concerned with fairness and equality. People from more market-integrated societies, with self-regulating markets, are more inclined to care about trust, fairness, and cooperation with members of their society at large and with strangers. Individuals can’t succeed in a self-regulating market unless they acquire a reputation for “impartial fairness, honesty, and cooperation with acquaintances, strangers, and anonymous others because it’s these qualities that will help them attract the most customers as well as the best business partners, employees, students, and clients”.

Individuals operating in markets “embedded” to kin-based institutions (in which trade occurs within a “densely interwoven network of interpersonal relationships”) are not inclined to be trustful, fair, and honest in their dealings with those outside these networks. Until the West saw the birth of impersonal competitive markets, trade across societies was controlled by merchant diasporas “linked by clan ties…and personal relationships”. The property was corporately owned by the clan, and rights over profits were dependent on ancestry and kin-based status. Only in the West do we see the rise of markets based on principles of fairness and impersonal trust.

Asian Kin-Based Markets

Henrich’s Weberian argument seriously undermines as well the currently popular multiculturalist argument, made by the two Jewish academics A.G. Frank and Kenneth Pomeranz, that as late as 1750/1820 China/Asia was more advanced economically than Europe with its highly productive agriculture and its extensive international networks of trade and larger urban centers. What matters is not the size of urban centers and international trade networks, but whether these markets were based on principles of fairness and trust, impersonal forms of credit, insurance, and long term agreements, rather than on “interpersonal relationships and kin-based institutions”. Market networks in Asia and the Islamic world remained rooted in a “different cultural psychology and family organization”. The Asian markets were ultimately controlled by large extended families, clan ties, interpersonal agreements.

It was very different in Europe. With the imposition of the Church’s family program from the early middle ages onwards, the prohibitions against polygamy, cousin marriage,  and clan ownership of property, coupled with the promotion of monogamy, neolocal residence, and individual ownership, Europeans were increasingly able to break away from kin-based relations and norms, choose their own friends, spouses, business partners, create their own voluntary associations, move freely into newly created chartered towns with their professional guilds, universities, and other associations, all rooted in a different individualistic psychology. Much has been made about Marco Polo’s excitement over the larger urban centers in China, but Henrich effectively shows that the rate of urbanization in Europe was accelerating from 1000 to 1800 (the number of people living in cities of over 10,000 increased 20 times) whereas China’s urbanization rate “remained relatively constant”. The freeing of individuals from kinship ties resulted in a sustained increased in residential and relational mobility across Europe.

While the cities of Asia remained structured by kin-based relationships, the chartered towns of Europe were a new phenomenon in history, based on representative institutions and open to people from all walks of life. Henrich provides data showing that those urban centers that were exposed to the Church’s family program (due to the presence of nearby bishoprics) grew and developed representative forms of governments faster. The inhabitants of these chartered towns, the merchants, artisans, and shopkeepers, were not “enmeshed in patrilineal, polygynous clans”. Therefore, their success did not depend on kin-based connections, but on “their reputation for impartial honesty and fairness, and on their industriousness, patience, precision, and punctuality”.

It has long been known that the medieval cities of Europe were fundamentally different from the otherwise larger cities of Asia, and even from the cities of ancient Greece and Rome, in their enjoyment of corporate autonomy, constitutional charters, and the presence of multiple self-governing associations, and a bourgeoisie that was politically autonomous from nonurban feudal lords and state authorities. But credit is due to Henrich for explaining that the ultimate roots of these unique cities lay in the fact that its inhabitants were rooted in a different type of family institution and a different cultural psychology.

The WEIRDness of Roman Law and Aristotle

Henrich mentions briefly the rise of universities as voluntary associations, and observes that about 50 such universities could be found in Europe by 1500, “all competing for students and professors”. The very first voluntary university was formed in Bologna by a group of law students who came from elsewhere, “in the wake of the rediscovery of the Justinian Code of Roman civil law in the 11th century”. These universities “trained lawyers, theologians, and other professionals in writing, logic, oratory as well as in math, music, and astronomy”. The professionals trained in these universities were “increasingly capable of deducing abstract principles from the mishmash of existing customs or laws and then formulating well-structured regulations and policies for their urban communities”. Europe would go on to develop new forms of commercial and contract law, which “other complex societies like China didn’t substantially develop until the 19th century, despite being more sophisticated in other forms of law and philosophy”.

Henrich does not tell us what were the more sophisticated forms of law and philosophy China had already developed. China never developed a concept of natural law and every major philosophical idea in China’s history occurred within the same Confucian outlook they articulated back in ancient times, with “new ideas” consisting of different interpretations and mixtures of this outlook with Taoism and Buddhism. What Henrich should have added, or asked, is why a Justinian Code of Roman civil law written many centuries before in the sixth century, in Byzantium when kinship ties were very strong, became so useful for the WEIRD development of voluntary associations in Europe based on new forms of commercial and contract law? Since the Justinian Code was based on Roman law, the question is: how did Romans (with their supposedly non-WEIRD psychology) develop a legal system characterized by a high degree of logical consistency in the classification of different types of law, the definition of terms, the formulation of specific rules, and in the way questions and answers from jurists were systematically collected? 

Some time ago Paul Vinogradoff posed a similar question in his influential book, Roman Law in Medieval Europe (1909). Why Europeans were so receptive to Roman law throughout the period from the eleventh to the eighteenth centuries?

Within the whole range of history there is no more momentous and puzzling problem than that concerned with the fate of Roman law after the downfall of the Roman State. How is it that a system shaped to meet certain conditions not only survived those conditions but has retained its vitality even to the present day, when political and social surroundings are entirely altered? Why is it still deemed necessary for the beginner in jurisprudence to read manuals compiled for Roman students who lived more than 1,500 years ago? How did it come about that the Germans, instead of working out their legal system in accordance with national precedents and with the requirements of their own country, broke away from their historical jurisprudence to submit to the yoke of bygone doctrines of a foreign empire?

The answer can be found in Henrich’s own argument — so long as we recognize that the Romans (and ancient Greeks) were already showing WEIRD traits, and that in the case of the Romans this was heavily reflected in their legal thinking. After the dissolution of their kinship groups, the Germanic peoples found Roman law to be congenial for the organization of their emerging voluntary associations. This is not to detract from the ways in which medievalists, as Henrich says in another chapter, went beyond the Roman preoccupation with consistency in the application of their laws, in search of “syntheses rooted in a set of fundamental principles, axioms, or rights” (404). What Henrich leaves out is the  importance of Aristotle’s logic in the development of legal principles and axioms in the Middle Ages and in the teaching of the key disciplines of logic and theology in the universities.

As R.W. Southern observed in his much praised book, The Making of the Middle Ages (1953)“the digestion of Aristotle’s logic was the greatest intellectual task of the period from the end of the tenth to the end of the twelfth century”. The translations of the Categories and On Interpretation had already been accomplished by Boethius in 510–12 when the Church’s family program had barely started. Boethius transmitted to Europe, before the full recovery of Aristotle’s work in the twelfth and thirteenth centuries, the analytical art of “classifying the objects external to the mind”. He taught them (via this ancient thinker) how to think analytically with “the terms genus and species, differentia, property and accident, and to apply these conceptions in argument and discussion”. He found in Aristotle’s Categories examples of what Henrich identifies as the rather peculiar tendency of WEIRD people to detach objects from context and think in terms of abstract rules  and universal categories, such as quantity, quality, relation, position, place, time, state, and action.

Henrich’s Historical Model

In Henrich’s theoretical model, kinship/family is the supreme variable, the major cultural force shaping human psychology and the deep structures of history. Kinship/family is the first institution, the longest surviving institution, within which humans are socialized from birth, around which most human relationships are formed, and out of which most institutions in history have originated. European thinkers noticed the crucial importance of kinship the moment they began to study early societies. This is why kinship is the central concept in the discipline of anthropology, a field that seeks to understand human nature by analyzing the earliest societies.

It is hard for Westerners socialized in WEIRD societies, where families have been nuclearized and a wide network of other institutions have been created independently of kinship ties, to appreciate the cardinal importance of kinship, even as they appreciate how significant the family remains in the ontogenetic development of humans. Westerners prefer to talk about the role of ideas, Malthusian demographic pressures, modes of production, technology, war, and religion. But Henrich, by combining his anthropological background/ethnographic field studies with cognitive/cultural psychology, and the rise of the West debate, has managed to uncover how the very absence of kinship relationships in the West since the Middle Ages fundamentally shaped the psychology of whites in a direction that led to the rise of the modern world.

As I indicated in an earlier commentary, “intergroup competition” is an important variable in Henrich’s model, a force that pressures humans to improve or “scale up” their kinship relationships or their kin-based institutions, and their “voluntary” institutions. Throughout most of history, kinship ties were extended, intensified, and altered to meet the pressures of external competitors. He takes it as a given of nature, as part of the struggle for survival, that humans, kinship groups, societies and civilizations, compete with each other. We will see in the next commentary how he views commercial competition as a “taming” or “domestication” of intergroup conflict.

Other factors play a role in Henrich’s model. Voluntary or informal institutions, made possible by the dissolution of kinship groups, act as agents in their own right nurturing a WEIRDer population. Henrich also recognizes how religious beliefs and ecological/geographical factors can “shape our social psychology in important ways”. In an earlier commentary we went over his observation that different types of farming growing out of different ecological settings (irrigation/wet rice farming versus rain fed farming) can affect the intensities of kinship ties. Chinese and Indians who came from areas where rice cultivation and irrigation had long prevailed tend to be less individualistic, more inclined to conform to the existing social norms, and less analytical.

Once you define humans as a “cultural species” it stands to reason that a wide variety of other cultural factors besides kinship will play some role in Henrich’s model. While human behavior is “anchored” in genetics, humans are different from other species precisely because they have a genetic capacity to learn and accumulate knowledge. Culture can alter the brains, hormones, motivations, and personalities of humans. Not everything identified as a “cultural factor” is bound to change the psychology of humans. Henrich identifies kinship, the absence of kinship, and the creation of monogamous nuclear families, as the most powerful cultural forces because these institutions are intrinsic to the ontogenetic maturation of humans, and the social relationships and norms they rely upon to construct their societies.

The spread of high rates of literacy, initiated by the rise of the WEIRD Protestant religion, has also affected the neurology of the brain, improved verbal memory and analytical thinking. Henrich observes at one point that “any factors that increase individuals’ geographic or relational mobility can tilt their psychology in particular ways”. By “relational mobility” he means the establishment of ties with people outside one’s kin-group. Individuals with weaker family ties are more likely to move geographically, and this migration reinforces WEIRD traits, weakens the in-group vs. outgroup distinction. He does not quite say that the sheer act of moving to another place and interacting with “strangers” alters the psychology of humans. His emphasis is on how the demolition of Europe’s kin based institutions increased residential and relational mobility and how this reinforced WEIRD behaviors.

Consciousness of Consciousness

In any case, and this is the point I am trying to conclude with, in the last paragraphs of chapter 9 he suggests that western Europeans were more prepared psychologically to interact with foreigners and establish impersonal contracts in a less in-group oriented way because they “had a geographical edge over many parts of the world in developing trade and commerce: this region possesses an unusually large number of natural ports and navigable waterways as well as inland seas in both the north (Baltic) and the south (Mediterranean). This geographic preparedness would have catalyzed the process of market integration.” Now, since we have seen that Europeans were already proto-WEIRD in ancient times, one has to wonder if there were certain environmental factors in Europe inducing Europeans to be more mobile and less kinship oriented.

Kevin MacDonald believes that the colder climes of northern Europe selected for monogamous relationships and individualist behaviors. It is not clear that the same environmental argument can be made about the origins of monogamy in ancient Greece. I observed in a previous commentary that monogamy in ancient Greece and Rome was culturally mandated, rather than environmentally selected. This does not mean we should ignore the many other ways in which the incredibly diverse ecology of Europe selected for different physical and behavioral traits. I wrote in Uniqueness about how the environment of Europe nurtured a people with a “pioneering spirit”.

But in the end the focus should be on the rise of self-conscious reason, how Europeans freed themselves from the grip of nature, and how the mind came to have communion with itself and thus became increasingly free, conscious of its consciousness, an ‘I’ for itself over against what is external, which means that one can’t explain European culture in terms of forces completely alien to this emancipated consciousness. It looks like Europeans became conscious of their consciousness in ancient times, building their institutions in a more intentionally conscious manner, culturally mandating monogamy, creating city states based on the new identity of citizenship to overcome tribal loyalties. Consciousness was freed to generate new forms of art, philosophies, architectural styles, and sciences, in truly creative ways, with an autonomous logic of their own, not explainable in terms of natural selection and “unintentional” actions. It is within this realm of free consciousness that Europeans fundamentally contrasted themselves from all the peoples of the world.

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