The Story of the West: IV – The Rise of Capitalism

Sean O’Conaill © Reality Jan 2007

Until fairly recently, as we have seen, historians have favoured a view of history that praises ancient Greece and Rome, and then extols the modern period beginning about 1450. And they have depicted the period in between – from about 476-1450 – as a period when nothing happened. Very often they associate the supposed stagnation of these ‘Middle Ages’ with the ‘dead hand’ of the Catholic church.

Secularist writers often take this approach because they are committed to a view of history that gives little credit to Christianity for anything. Greek ‘reason’ and the rise of secularism explain everything that is good about the modern world, they suppose. As we have seen, this is a blinkered view that ignores much recent historical research. We now know that the Middle Ages, in comparison to ancient times, were enormously progressive, and were in fact the cradle of the very best features of our own era.

And this applies to economic development also. The unprecedented wealth produced by modern methods of economic management derives historically also from the Middle Ages.

To admire the architecture of the ancient world – of Athens or Rome – is usually to forget that these buildings were the result of extraordinary human misery. Slavery in the ancient world was unimaginably brutal. Slaves mostly worked the land, and it was their produce that went to finance and feed and build the cities, where only the landowning elites lived in anything like luxury. Most people lived in nauseating slums that fostered disease. So focused were the wealthy on the consumption of surplus wealth that there was very little reinvestment, which meant that there was very little economic progress either.

Slavery also meant that there was very little technical development in Ancient Greece and Rome. Why spend money developing water power, for example, when Rome’s wars brought slaves who could provide the power needed for milling or paper-making?

So the fall of the Roman empire was not a global disaster, as was once thought. The collapse in the supply of slaves meant that now for the first time there was an incentive to innovate. Out of this incentive arose, for example, the overshot water wheel – powered by water directed onto the top of the wheel to give added impetus. The padded horse collar was another such medieval development, allowing horses to pull far heavier wagons, and, for the first time, ploughs capable of turning the heavier soils of northern Europe.

These technical developments waited only upon secure conditions for the investment of surplus wealth. We now know that this happened first in Medieval monasteries, not in Protestant Europe after the Reformation of the 1500s. Such monasteries were often enormously productive as a result of centuries of land development. Some became giant complexes in which water power was applied to the making of paper, metal working and the milling of grain.

This fact alone is enough to undermine the old belief that it was the ‘Protestant work ethic’ that began the economic miracle of the modern world. R.H. Tawney argued in 1926 that it was hard-working Protestants, whose pleasure-hating moral code condemned luxurious living, who first amassed the capital necessary for continuous reinvestment in economic enterprises. In fact this had begun to happen many centuries earlier in the monasteries of that supposed enemy of all progress – the Catholic church.

Furthermore, it was the steady development of Catholic theology that allowed this economic development. St Augustine began the reconsideration of ancient taboos against the raising of prices to meet demand by arguing that the monetary value of an article could legitimately relate to whatever a customer would be willing to pay. Later, scholastic theologians in the monasteries and universities of Catholic Europe came to argue that the charging of reasonable interest on loans was also morally acceptable. Banking, a vital source of credit for investment, could not have progressed otherwise.

And this development in Christian theology too was directly related to the growing economic power of medieval monasteries.

It was Catholic theology also that first gave real security to what we now call the ‘entrepreneur’ – the would-be capitalist considering investing his wealth in, say, a mining enterprise or the building of a dam to produce water power. The problem with doing that in a society ruled by landowning aristocrats was that the political power, added to the jealousy, of the ruling classes could all too easily lead to the confiscation of any productive enterprise – without compensation to its founder.

This was why China, for example, fell behind medieval Europe in enterprises like mining. A thriving Chinese metallurgical industry was at one point totally destroyed by state and aristocratic interference.

In medieval Europe, on the other hand, scholastic theologians developed a sophisticated theory of property rights, which gave entrepreneurs unprecedented security when it came to investment. Just as Catholic theology undermined slavery, so did it also create a favourable climate for risk-taking economic enterprises.

For all these reasons it is now recognised by leading economic historians that the ‘Protestant work ethic’ had absolutely nothing to do with the origins of western capitalism – the systematic reinvestment of surplus wealth – for the simple reason that capitalism emerged centuries earlier in the most unlikely setting – medieval Catholic Europe.

And it was Catholic centres of medieval trade in Italy – especially Venice and Genoa – that pioneered modern systems of book-keeping and banking that allowed for sophisticated international trading relationships and business practices to develop. The later development of great Protestant trading nations such as England and Holland owed everything to this earlier economic development in southern and Catholic Europe.

The deepest ignorance continues to prevail, however. In a recent letter to the Irish News a proponent of the cause of secularism as the font of all progress again referred to the Middle Ages as the ‘Dark Ages’ – because they were ages of faith. We now know beyond doubt that this misconception is based entirely upon ignorance and prejudice. When all of Western Europe was wholly Catholic it was also progressive in many ways.

And the central key to all this progress was Christian theology, which was itself always in development. Arguing consistently for the dignity of the individual human being, it fostered a progressive mindset. It brought an end to the slavery of the ancient world. It inspired the setting up of great medieval universities and the development of true science.  It led to modern theories of human rights, and it created the conditions for the unprecedented economic progress of modern times.

Now, of course, Christian theology is on the defensive at the very time that western capitalism and science – unshackled from Christianity – threatens our world with nuclear terror, mass addiction and environmental catastrophe. In two final articles in this series I will argue that Christian theology has yet another contribution to make to the history of our world – the understanding and overcoming of all the major dangers that now threaten the human family.

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