Reviewing The Jews and Modern Capitalism by Werner Sombart
by Zoltanous
Introduction
In the 20th century, few intellectual figures matched the compelling presence of Werner Sombart (1863-1941), a German Marxist economist and sociologist linked to the Historical School of Economics and the German Conservative Revolution. His scholarly pursuits illuminated the interplay between culture and economic systems, revealing the latent forces that shape human societies. It is noteworthy that Sombart coined the term "late-stage capitalism," a phrase that resonates with many of today's leftist thinkers, reflecting the evolving nature of capitalist societies under the strains of modernity. In fact, Friedrich Engels, Karl Marx’s equal in formulating modern-day communism, said this about Sombart:
“Werner Sombart is the only German professor who understood Das Kapital.”
— Friedrich Engels quoted in Sombart and German (National) Socialism by Abram L. Harris
A picture of Sombart
Yet, the trajectory of Sombart's thought was itself a microcosm of the times; he transitioned from Marxism to being an outspoken supporter of Nazism, albeit without formally aligning himself with the party. Among his most provocative contributions is The Jews and Modern Capitalism, a work that stands in dialogue with Max Weber’s exploration of Protestantism and its nexus with capitalist development. In this work, Sombart elucidates the role of Jewish traders and manufacturers, who, ostracized from the guilds of medieval commerce, cultivated a distinctive aversion to the fixed wages and prices prevalent in that era. In their place, these merchants became architects of a new economic order characterized by unbridled competition and evolving market dynamics.
As we embark on an exploration of Sombart's oeuvre, we shall endeavor to unravel the key themes that permeate his work: the evolution of economic life, the peculiar aptitude of the Jewish people for modern capitalism, and the origins of what he refers to as the "Jewish genius." It is a curious irony that, despite the profound insights contained within The Jews and Modern Capitalism, the work has largely receded from the contemporary discourse, prompting us to question the complexities embedded in its arguments and the historical context from which they arose. In this examination, we invite our readers to reconsider the enduring implications of Sombart's analysis and its relevance to our current understanding of the intricate relationship between culture and economics.
On The Jews and Capitalism
Sombart critiques the limitations of quantitative analysis and introduces his historicist approach, which is crucial for grasping the interconnections among various historical facts. Understanding this methodology enriches one’s appreciation of how these elements interact, a theme he will expand upon further in his work. He posits that while Jews may not have been the originators of all the essential components of capitalism, they demonstrated remarkable skill in leveraging the innovations of others. This notion parallels Alfred Crosby's assertion that, although the Chinese were the first to discover gunpowder, it was the Europeans who ultimately perfected its application. Sombart contends that the Jewish contribution to the emergence of capitalism is often underestimated, particularly due to the overlooked impact of crypto-Jews.
He identifies a pivotal geopolitical shift in the 17th century, noting the transfer of power from the Mediterranean region to Northwestern Europe, and presents intriguing explanations for this transition. Sombart illustrates his argument by citing instances where communities and cities inhabited by Spanish and Portuguese Jews experienced significant prosperity soon after their settlement. As a meticulous scholar, he does not accept mere correlation as adequate evidence; instead, he offers compelling examples from Venice, England, France, Antwerp, the Netherlands, and Hamburg to substantiate his claims. Through this analysis, Sombart thoroughly delineates the profound influence of Jewish communities on the rise of capitalism.
"I find in the Jewish Religion the same leading ideas as those which characterize capitalism: I see that the former is filled with the same spirit as the latter."
— Werner Sombart, The Jews and Modern Capitalism
Eventually Sombart explores the role of Jews in the development of international trade. Although the evidence is limited, he employs imaginative interpretations of the scant data at his disposal. He presents several instances where Jewish individuals and communities played a dominant role in commerce. Sombart emphasizes that a qualitative analysis can yield deeper insights into historical phenomena than a strictly statistical approach. His contemporaries acknowledged the distinct impact of Jews on international trade, coining the term "Jew commerce" to describe their unique contributions. Furthermore, Sombart examines the connections between European colonial expansion, the Americas, and Jewish involvement. He ventures into speculative territory, suggesting that Columbus may have secured funding for his voyages from wealthy Jewish financiers, positing that Columbus himself was a crypto-Jew. He highlights that Jews were pivotal in the sugar trade within the New World, which endowed them with significant influence in shaping the early economic landscape of the United States.
Sombart makes an audacious claim:
“I uphold my assertion that the United States (perhaps more than any other land) is filled to the brim with the Jewish spirit."
— Werner Sombart, The Jews and Modern Capitalism
Sombart supports his assertions with several examples, going so far as to claim that not only did Jews play a substantial role in shaping the United States, but their contributions were fundamental to the very establishment of the nation. He explores the emergence of the modern state as a crucial prerequisite for the rise of contemporary capitalism, emphasizing the essential part that Jews played in this transformation. Primarily, they served as financiers and merchants, exercising significant influence in the financial sectors of Holland, England, France, Germany, and Austria.
He then offers a historical perspective on financial instruments, highlighting how Jews were instrumental in their evolution. He begins by discussing the shift toward the impersonal nature of debt transactions, introducing the idea of standardization in financial instruments. This notion parallels Ferdinand Tönnies' concept of the transition from Gemeinschaft (community) to Gesellschaft (society), which Sombart sees as a pivotal moment in capitalist history. Historically, credit was rooted in personal relationships, but Sombart argues that it was the Jews who transformed this dynamic. He provides clear examples from historical records demonstrating that Jews were either the creators or the primary users of various credit instruments.
Sombart contrasts the era before credit became impersonal, emphasizing the significance of this change. He delves into the origins of Jewish innovations in credit instruments by examining Rabbinic law and other primary Jewish texts. As he navigates the intricacies of these new financial tools, he identifies a key external factor driving this innovation: the invention of the "open note," which Jews developed as a safeguard against persecution and piracy. This illustrates the adage that necessity is the mother of invention. He contrasts traditional credit forms with impersonal credit instruments, drawing parallels between Roman/German law and Jewish law.
It becomes evident that the development of Jewish and impersonal credit instruments was vital for the transition to a Gesellschaft. Sombart discusses the Jewish contributions to the stock exchange, providing pertinent examples. After detailing how European and New World capitalist enterprises relied heavily on Jewish financiers and merchants, he shifts his focus to what he terms the "commercialization of industry." This concept aligns with the modern idea of vertical integration, a phenomenon analyzed by economist Alfred Chandler in The Visible Hand. Sombart suggests that by the early 20th century, a managerial revolution was underway in Europe, with Jewish high finance exerting its influence to position Jewish individuals within large-scale capitalist enterprises that were just beginning to take shape.
Sombart also explores the more abstract or cultural contributions of Jews to Western economic systems. He suggests that there exists a fundamental clash in perspectives between Jews and Christians regarding their roles as economic participants. To understand this conflict, he traces its origins back to the Middle Ages. During this period, medieval Christians emphasized the individual’s role in economic interactions, where commerce was viewed as a personal endeavor shaped by tradition and social norms rather than profit-driven motives. In contrast, Jews adopted an approach that starkly contrasted with this viewpoint, often offending Christian sensibilities; for instance, promoting one’s own products or directly competing with others was regarded as taboo. Sombart goes on to argue that the archetype of the businessman, or homo economicus, was largely developed by Jewish individuals. He concludes this chapter and the first section of his book by asserting that modernization can essentially be seen as a process in which everyone becomes more aligned with Jewish ways of thinking.
Sombart then seeks to clarify his concepts. He posits that capitalism relies on two psychological and cultural elements: what Weber describes as 'acquisitiveness' and economic rationalism. Both of these factors are crucial to the functioning of a capitalist society. Sombart examines the distinctive traits of Jews as a group and how these attributes have contributed to their successes.
He identifies four key aspects, which he will elaborate on individually:
Sombart argues that the Jewish diaspora, combined with their high verbal intelligence, not only facilitated their achievements in finance and trade — fields that were becoming increasingly global — but also aided their prominence in diplomacy and conflict resolution. Despite their widespread dispersion, Jews were able to maintain what Ibn Khaldun referred to as "Asabiyyah," or a strong sense of group solidarity. This phenomenon is noteworthy, especially considering that dispersed communities often tend to assimilate, a point highlighted by Pierre van den Berghe in, The Ethnic Phenomenon.
Sombart contends that the modern era favored not only a global outlook but also those who could establish and cultivate new territories as cohesive groups. This aligns with the historical experience of Jews, who have often faced exile.
He notes that legal barriers imposed on Jewish economic activities — such as restrictions on guild membership or limitations on trading certain goods—ironically bolstered their economic and political standing.
Sombart devotes several pages to illustrating the relative wealth of Jews in comparison to their Christian counterparts. He argues that the existence of capitalism without the practice of money-lending, a field dominated by Jews into the 17th century, is unimaginable.
Sombart then delves into the theological foundations that he believes underpin the Jewish affinity for capitalist structures. This stands out as one of the most compelling parts of the book, where he challenges Weber's thesis in The Protestant Ethic and The Spirit of Capitalism. Sombart provocatively claims that what Weber characterizes as a new type of individual is, in fact, a reimagined version of the Jewish capitalist archetype. The similarities between Calvinists — particularly the Puritans — and Jews become more pronounced when one is familiar with the relevant literature, and Sombart aims to illuminate these connections.
He illustrates that Jews possess a fundamentally different understanding of spirituality and the concept of holiness than adherents of other faiths. Both the Puritan conception of God and the Jewish God are portrayed as wrathful and unpredictable, a theme that resonates with the views of nominalists who influenced both Luther and Calvin. The establishment of Episcopal authority in 17th-century New England mirrored the conditions Sombart discusses. Puritans viewed themselves as wanderers in search of their own Promised Land, a sentiment that figures like Thomas Jefferson sought to capture in symbolic representations for the new American republic. Sombart notes that the most devout Jews were often among the wealthiest and most skilled individuals. In Albion's Seed, David Hackett Fischer highlights that Calvinist settlers were typically affluent and had expertise in various trades prior to their arrival in New England. A further parallel emerges in their shared love of reading. Sombart quotes Heinrich Heine, who referred to the Jewish Bible as the Jews' "portable Fatherland," a notion echoed in the writings of Puritan leaders like Winthrop and Calvin, who frequently cited Scripture.
He continues by outlining Jewish theological principles that he believes align closely with capitalist ideals. He revisits the earlier discussed concept of "economic rationalism," noting that Jews have historically distanced themselves from the mystical — a characteristic Weber also attributed to Calvinists. Sombart argues that the intellectual nature of Judaism, with its emphasis on texts and scholarship, stems from the historical loss of their homeland, creating a parallel with early American settlers fleeing religious oppression. He posits that the modern legal contract, a crucial component of capitalism, can be traced back to the covenant between Jews and God. Similarly, Calvinists regarded themselves as having a covenant with God and identified as a Chosen People. This sense of divine commitment also included a responsibility to account for one’s actions, both good and bad.
It is probable that double-entry bookkeeping, a groundbreaking advancement that streamlined accounting processes, was developed by Jews. Sombart argues that this innovation fostered a more quantitative mindset among Jews, preparing them for capitalist endeavors. This perspective aligns with Alfred Crosby’s thesis in The Measure of Reality: Quantification and Western Society, 1250–1600, which further supports the idea of quantification as a key factor in the rise of Western economic practices.
“Money places us at the center of the capitalist economy and also ensnares us in everything that compromises the Jewish essence. Both capitalism and Judaism express their innermost essence through money.”
— Werner Sombart, The Jews and Modern Capitalism
Sombart then shifts to discuss another significant factor that contributed to the Jewish prominence in capitalist ventures: their inherent acquisitiveness. This term, used by Weber to describe Calvinists, encompasses the notion that wealth is inherently positive, a belief frequently echoed in Calvin's sermons. This context sheds light on why Sombart initially claims that America embodies the quintessential Jewish nation.
Another notable similarity between Jews and Calvinists is the belief that individuals are responsible for their own poverty. This represents a significant departure from the views held by many Christians of their time. After citing various examples from Jewish sacred texts that promote the pursuit of profit, Sombart contends that Jews found it easier to rationalize their participation in capitalist activities compared to Christians. Additionally, both Jews and Calvinists share a tendency toward iconoclasm, favoring written texts over visual representations, a point also observed by Paglia.
In contrast to Calvinists, Jews are not characterized by asceticism. While there are some exceptional hermetic Jewish sects, these do not represent the general trend. For Jews, the concept of holiness was linked not only to the pursuit of wealth, as emphasized by the Rabbis, but also to the act of consumption. Similar to Jews, Calvinists also highlighted the dualism between nature and mankind, viewing the taming of the wilderness as a religious obligation. Perry Miller’s Errand Into The Wilderness provides valuable insights into this theme. Virtues such as sobriety, moderation, and self-control were also heavily emphasized. Familiarity with Calvinist figures like Winthrop, Calvin, or even Benjamin Franklin in his Autobiography reveals clear parallels in their teachings.
Sombart notes that Jews had established guidelines for proper conduct in virtually every aspect of daily life. This characteristic parallels the Calvinist tradition, as documented by historian Martin Marty in A Nation of Behavers. The concept of civility can be seen as a clash between two distinct forms, where the American approach posed a challenge to the Jewish way of life, often resulting in notable social tensions. It is ironic that Jews, who played a pivotal role in shaping modernity, found themselves somewhat overshadowed by the developments in American society. Sombart shifts his focus to the Jewish perspective on sexuality, highlighting notable parallels with the Puritan mindset. Fischer, in Albion's Seed, notes that Calvinist authorities in Massachusetts actively pursued single men, subjecting them to legal scrutiny. Sombart elaborates on how Jewish cultural beliefs and attitudes contribute to the development of capitalism. This echoes Freud's idea that civilizations often define themselves by what they restrict; art and science emerge as a result of the repression of primal sexual and instinctual drives. Amy Chua's concept of "Middlemen Minorities" illustrates that these groups thrive in modern contexts due to their robust support networks amidst an increasingly fragmented society. Sombart identifies a similar phenomenon among Jews, suggesting that their historical experience with repressive norms makes them particularly well-suited to navigate the complexities of contemporary life, which can feel unnatural for many.
Next, Sombart addresses the theme of Jewish self-segregation, drawing parallels to the early American settlers. Fischer points out that the Massachusetts Bay Colony only accepted Calvinist settlers accompanied by their wives. Sombart highlights the striking similarities between the behaviors of Jews and Puritans, going so far as to assert that: "Puritanism is Judaism." It is well-documented that WASPs historically excluded Jews from elite social venues, such as country clubs, which served as important hubs for social networking. E. Digby Baltzell, a prominent historian of WASPs, attributed this exclusion to prevailing prejudices. WASPs did not require Jews in the same way that Europeans did. As descendants of the Puritans, WASPs excelled in the areas where Jews traditionally thrived. Mark Twain notably remarked that Jews were unable to achieve the same level of influence in America as they did in Europe, attributing this disparity to the superior intellect of Americans.
Sombart points out an interesting observation: Jews did not dominate American high finance as they did in cities like London and Paris. This can be seen as another example of WASPs outmaneuvering Jews in the capitalist arena. While Jews possessed exceptional organizational skills, they struggled to compete with figures like J. P. Morgan, who emerged as the primary lender to Europe and China in the aftermath of World War 1, J. P. Morgan's influence helped establish Wall Street as a leading global financial center, eclipsing London. Remarkably, Sombart, writing in 1911, foresaw the trajectory of America over the next several decades.
“If the conditions in America continue to develop along the same lines as in the last generations, and if the immigration statistics regarding the proportion of births among all nationalities remain the same, our imagination may picture the United States of 50 or 100 years hence as a land inhabited only by Slavs, Negroes, and Jews, with the Jews naturally occupying the position of economic leadership.”
— Werner Sombart, The Jews and Modern Capitalism