Tuesday, June 19, 2012

Sombart's driving forces of capitalism

Werner Sombart considers capitalism as a kind of historic coincidence, in which factors are brought together by a whole range of circumstances. Economic wealth is a result of its being willed, a result of a conscious policy. the driving forces of capitalism, which create both the foundation and the conditions for the system, are, according to Sombart:
  1. The entrepreneur, who represents what Nietzsche calls the 'capital of human wit and will', the human agent who takes the initiative to have something produced or traded.
  1. The modern state, which creates the institutions enabling improvements in production and distribution, and creates the incentives that make the vested interest of the entrepreneur coincide with the vested interests of society at large. Institutions encompass everything from legislation to infrastructure, patents to protect new ideas, schools, universities, and standardization of units of measurements, for example.
  1. The machine process, i.e. what was long called industrialism: mechanization of production creating higher productivity and technological change with innovations under economies of scale and synergies. This concept is very close to what we today call the 'national innovation system'.

-- "How Rich Countries Got Rich" by Erik S. Reinert p. 120 - 121

"It is worth noting that, according to Sombart's definition, agriculture was not part of capitalism. The colonies were also kept out (a main criterion for a colony was to keep manufacturing out) and for that very reason they were doomed to stay poor." 
-- "How Rich Countries Got Rich" by Erik S. Reinert p. 124


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