Weber begins this section by proposing to explain what he means by the “spirit of capitalism.” Weber says this term can only be understood in the context of the “historical individual.” By this, he means that a given person or concept cannot be understood in isolation, but must be considered instead in terms of their cultural context; this means that a given concept involves many different layers of meaning and implication. However, Weber also states that we cannot simply explain the historical individual according to his context. Rather, we must begin from the observation of specific characteristics, and then gradually move towards a broader explanation that links the individual to his context in order to arrive at an understanding of both.
Weber thus begins with an “illustration,” in the form of a document that, according to Weber, encapsulates the spirit of capitalism almost perfectly. The document consists of advice being given to a worker, who is counseled to remember that “time is money,” and “credit is money.” The author emphasizes that it is important to make full use of one’s time in order to turn the maximum profit, and that it is also essential to keep good credit in order to continue amassing money in a reliable way. The author claims that money is of a “generating nature,” meaning that the more money one has, the more one can make off of it.
After quoting this passage, Weber reveals that it was written by Benjamin Franklin, one of America’s most important early political figures. He claims that the main point of the sermon is to convey the idea of an individual’s duty to work for more money. Franklin believes that increasing wealth is an end in itself, and a worthy goal to aspire to for its own sake. Other thinkers, such as Ferdinand Kurnberger, denounced this attitude as a new and corrupt kind of American religion. However, Weber explains that Franklin was actually proposing a new ethical framework for structuring one’s life. It is this set of ethics, in which making money is thought of as a duty, that defines the “spirit of capitalism.”
Weber also explains that Franklin’s ethical framework is not just hedonistic. It is actually irrational, because it regards the accumulation of wealth—which, after all, is simply a means to purchase goods—as an end in itself. This line of thinking is similar to religious thought, in that it transcends personal enjoyment to encourage individuals to pursue a higher calling. For Franklin, “one’s duty consists in pursuing one’s calling,” meaning that an individual should feel compelled toward professional activities, no matter what they might be, as long as they make money. Weber explains that this sentiment defines the “social ethic” of a capitalist culture, meaning that the idea of pursuing work as a duty is one of the guiding ethics and social pressures of such cultures.
However, Weber also warns that this “capitalist spirit” is not simply produced by a capitalist system that is already in place. By Weber's time, well-established capitalist economic orders did already seem like an automatic, restrictive framework into which individuals are born. But, Weber points out, Benjamin Franklin came up with this “capitalist spirit” in a non-capitalist system. Though his ideas may seem like common sense in Weber’s day, they were fiercely challenged when they were first thought of. Anything that seemed like “greed” would have been denounced by most moral and religious establishments in ancient and medieval times, for example.
But Weber explains that, actually, the drive to pursue money is not brought about by the capitalist spirit. In fact, this drive is not associated with greater economic success. Moreover, the capitalist spirit also had to contend with traditionalism, which refers to an approach to work in which it is seen as simply a means to making enough money to get by. Economists have found that in traditionalist systems, when workers are paid higher wages, they aren't incentivized to work harder; instead, they produce less, because they can now get the same subsistence with less work. These kinds of people work only because they are poor, and need to work to get by. The spirit of capitalism cannot be brought about by raising or lowering wages, since this does not change the approach of people like this. Instead, it happens through a “process of education.”
Weber now steps back to explain that the “form” and “motivation” of capitalism are two different things. A society can be capitalist in form, meaning it has a capitalist economic system in place, but still involves people who act in traditionalist ways, meaning they work only to get by. Conversely, a society can be non-capitalist in form, and yet have people with a capitalist “motivation,” or spirit, meaning they approach work in the way that Benjamin Franklin advised. Weber provides the example of “putters-out." Putters-out were middlemen who bought homespun textiles from peasants, and then sold it to customers. Though the system was capitalist—they began with an investment in equipment (capital), paid others to do the work, sold goods on a market, and used systematized methods like bookkeeping to keep track of their business—their motivations were traditional, and so they traded only what was required to maintain their way of life. This changed, Weber said, when some individuals realized they could change how they approached it and gain a profit. "Some young man from one of the putting-out families went out into the country, carefully chose weavers for his employ, greatly increased the rigor of his supervision of their work, and thus turned them from peasants into laborers...He began to introduce the principle of low prices and large turnover. There was repeated what everywhere and always is the result of such a process of rationalization: those who would not follow suit had to go out of business. The idyllic state collapsed under the pressure of a bitter competitive struggle, respectable fortunes were made, and not lent out at interest, but always reinvested in the business. The old leisurely and comfortable attitude toward life gave way to a hard frugality in which some participated and came to the top, because they did not wish to consume but to earn, while others who wished to keep on with the old ways were forced to curtail their consumption." So, Weber asks, what accounts for this change? According to Weber, it is not the increase or decrease of money in a given system that leads to this new motivation, but rather a certain new “spirit.” While the structural "form" of the economy remains the same, the desire for a profit has transformed it from a system that maintains a "leisurely and comfortable attitude towards life" to one that demands a "hard frugality," and in which one either sinks or swims. Once again, he points out that this spirit is an irrational one, since it entails a man existing for his business, as opposed to vice versa.
Weber ends the section by describing the ideal type of man according to the capitalist spirit. This man often lives a relatively ascetic lifestyle, since he is so devoted to growing his business that he puts that above all else. He does not show off his wealth or spend on himself, but rather focuses only on making more money. Weber reemphasizes the fact that this attitude would have been viewed very negatively in earlier eras. He clarifies that in Benjamin Franklin’s time, it most likely flourished because the economy in New England was in need of growth, and so focusing on producing more wealth was seen as positive by the general society. He concludes this section by stating that, in the next part, he will be focused on the irrational element contained in this capitalist spirit.
Weber begins this section with a question that introduces a more lighthearted tone. He reminds readers that his title involves the “somewhat pretentious sounding expression, ‘Spirit of Capitalism’” and wonders, “What are we to understand by this?” He acknowledges the “pretentiousness” of his own terminology, and asks the question that a reader may be wondering to himself. This allows Weber to guide his reader more closely through the new and complicated terminology he will introduce in this section. He intends to lay his argument out carefully and accessibly, despite the necessity of new terminology that may at first seem confusing. This section will be concerned with defining the spirit of capitalism in more specific terms. Weber indicates that he will be explicit in laying the groundwork for what this important term actually means.
Weber quickly defines the term “historical individual,” which will be used to structure his analysis of the “spirit of capitalism.” Weber does his due diligence by laying out the terms of his analysis. By historical individual, he really means that the spirit of capitalism can only be understood as “a complex of configurations in historical reality which we group together conceptually from the point of view of their cultural significance to form a single whole.” In other words, the spirit of capitalism refers not to a single thing, but rather to a grouping of ideas that come together into one concept only through their collective influence on culture. This term allows Weber to introduce readers to the general outlines of the “spirit of capitalism” before giving more detailed examples of its application.
Weber notes that, actually, he will be speaking of the spirit of capitalism in more specific terms. Although he believes it is a historical individual, he will not speak of it in these terms because it would be impossible to clearly explain it to a reader. Instead of starting from the general cultural influence, he will be starting from specific details taken from “historical reality.” Weber intends to analyze the spirit of capitalism according to its individual elements, meaning that he will be providing readers with examples from history, theology, and literature in order to more gradually make his overall point. Readers should expect to piece together the examples to come by keeping in mind how they all ultimately tie together.
Weber’s first use of this kind of individual characteristic is a passage by Benjamin Franklin. He fulfills his promise to begin with specifics by not even making mention of the article’s author. He refers to the document only as an example of the spirit of capitalism, allowing readers to approach it neutrally, since they don’t know to attribute it to anyone in particular. This models the process Weber proposed for understanding the spirit of capitalism: readers begin by seeing only the details, and are only gradually given more historical context. Weber reveals the document’s authorship almost triumphantly, expecting readers to be surprised that such sentiments were espoused by Franklin. He does not automatically expect his readers to accept the concept of the spirit of capitalism. Instead, he plans to gradually convince his readers that this “spirit of capitalism” is as widespread as he claims it to be, starting with a document from Benjamin Franklin.
Weber’s analysis of the Franklin passage models his general approach to explaining the spirit of capitalism. He discusses the historical context for this document, which allows him to explain to readers that a capitalist spirit does not necessarily come out of a capitalist society. It also allows him to show how this particular time period allowed for an attitude that would have been heavily censored and condemned in previous periods, when what seemed like “greed” was viewed as immoral. Thus, Weber moves into a discussion of how Franklin’s attitude represents a new kind of morality, one which characterizes the capitalist spirit. From this one concrete example, Weber is able to explain many different facets of his general idea. Throughout his text, he will continue to link such specifics to his broader cultural argument.