I'm presently reading Jerry Muller's Capitalism and the Jews. It is a fascinating book, and I expect to blog more about it shortly. But for today, I thought I'd highlight this insightful passage where Muller is summarizing the ideas of sociologist Georg Simmel (1858-1918).
While Simmel could at times echo the complaints of cultural pessimists and of cultural critics of capitalism, at his most creative he upended their assumptions. Unlike Marx and Engels, who decried the competitive process so central to capitalism as intrinsically evil, Simmel pointed out the integrative effects of competition. For competition was not a relationship between those who competed only, it was a struggle for the affection – or money – of a third party. To compete successfully, Simmel noted, the competitor must devote himself to discovering the desires of that third party. As a result, competition often "achieves what usually only love can do: the divination of the innermost wishes of the other, even before he himself becomes aware of them. Antagonistic tension with his competitor sharpens the businessman's sensitivity to the tendencies of the public, even to the point of clairvoyance, regarding future changes in the public's tastes, fashions, interests." And the competition for customers and consumers had a highly democratic aspect as well. "Modern competition," Simmel observed, "is often described as the fight of all against all for all." Thus, he concluded, competition forms "a web of a thousand social threads: through concentrating the consciousness on the will and feeling and thinking of fellowmen, through the adaptation of producers to consumers, through the discovery of ever more refined possibilities of gaining their favor and patronage."
In The Philosophy of Money and in his other works, Simmel explained that the development of the market economy made for new possibilities of individuality. Simmel suggested that the limited-liability corporation was a model for many characteristic forms of association under advanced capitalism, in which individuals cooperate with a limited portion of their lives for common but limited purposes. Compared to the precapitalist past, in which individuals lived most of their lives in a single, circumscribed community, modern life was based upon looser, more temporary associations, founded to pursue economic, cultural, or political interests, and demanding of the individual only a part of himself, sometimes only a monetary contribution in the form of dues. As a result, the modern individual can belong to a greater range of groups, but groups that are looser and less encompassing. Thus Simmel concluded that "money established incomparably more connections among people than ever existed in feudal associations so beloved by romantics. In contrast to earlier forms of association, modern groups allow for participation without absorption. They make it possible for the individual to develop a variety of interests and to become involved in a wider range of activities than would otherwise be possible, yet to do so without surrendering the totality of his time, income, or identity to any particular association, from the family to the state. For Simmel, the eclipse of "community" was not a source of nostalgic lament: it presented new possibilities, along with potential pitfalls. He highlighted the development of a new form of individuality promoted by the market economy, an individuality based on choice from among the many cultural spheres and social circles created by the capitalist market. (48-50)
This dovetails with what Adam Smith wrote about more than a century earlier. In one of his most misunderstood statements (about the butcher, brewer, and baker) from The Wealth of Nations, Smith wrote:
… A puppy fawns upon its dam, and a spaniel endeavours by a thousand attractions to engage the attention of its master who is at dinner, when it wants to be fed by him. Man sometimes uses the same arts with his brethren, and when he has no other means of engaging them to act according to his inclinations, endeavours by every servile and fawning attention to obtain their good will. He has not time, however, to do this upon every occasion. In civilized society he stands at all times in need of the cooperation and assistance of great multitudes, while his whole life is scarce sufficient to gain the friendship of a few persons. In almost every other race of animals each individual, when it is grown up to maturity, is entirely independent, and in its natural state has occasion for the assistance of no other living creature. But man has almost constant occasion for the help of his brethren, and it is in vain for him to expect it from their benevolence only. He will be more likely to prevail if he can interest their self-love in his favour, and show them that it is for their own advantage to do for him what he requires of them. Whoever offers to another a bargain of any kind, proposes to do this. Give me that which I want, and you shall have this which you want, is the meaning of every such offer; and it is in this manner that we obtain from one another the far greater part of those good offices which we stand in need of. It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages. Nobody but a beggar chuses to depend chiefly upon the benevolence of his fellow-citizens. … (Book 1, chapeter 2, Paragraph 2. Emphasis is mine.)
This highlighted portion has been misinterpreted as Smith saying we should pursue our self-interest above all else. But if you read closely, you see that Smith is saying that we should appeal to the self-interest of others to get our needs met. Smith elsewhere emphasized that benevolence is the highest human sentiment, but here argues that you cannot build an economy on benevolence. Market exchange would create interdependence and expand the community you might serve and the community that might serve you.
(Smith and Simmel were, in some ways, just updating what had been observed by John Chrysostom. See the post I wrote last Spring.)
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