Forms of Capital and Moral Legitimation of Capitalism

by Ivan Light*

The class system routinely provides people with resources they need to enact their inherited status. These resources are Pierre Bourdieu’s four forms of capital: financial, human, cultural, and social. A coal miner’s son will not need and is unlikely to receive a college education, uncles on Wall Street, and a trust fund. He will need and will receive expert instruction in use of a pickaxe and in the supreme value of manly strength. With only slight modification, Bourdieu’s “forms of capital” theory can be applied equally successfully to becoming an entrepreneur and, doing so, Bourdieu’s ideas ingeniously generalize Max Weber’s cultural approach to capitalism. Individually and ensemble, the non-monetary forms of capital are resources that enhance a business owner’s chances in the marketplace quite apart from and in addition to financial capital.
Successful business owners start with the most abundant resources already on hand in order to acquire the less abundant. Most commonly, they have all four, but if they have even one resource on hand, they have a superior chance of getting the others. The resources on hand are the ones the class system routinely provides young people like them. A lifetime career progression usually requires business owners to start with non-monetary resources they already have in order to get money rather than the other way around. Indeed, without some supporting non-monetary resources, the wealthy cannot make money in business. After all, a rich person who lacks business skill, business knowledge, business culture, business networks, and business reputation lacks the capability to run a business firm. In Benjamin Franklin’s acid phrase, “a fool and his money are soon parted.” A fool may, of course, invest in someone else’s firm but even that option requires some personal resource. The class system normally (but not invariably) guarantees that those who inherit money are not fools.
The existing literature in both business and sociology contains abundant archival support of the value of these non-commodity resources in business enterprise. Business owners with education, skill, reputation, social networks, and generalized aptitude outperform those who lack them, and the more resources one has, the better one’s chances for financial success. From that point d’appui, Entrepreneurs and Capitalism Since Luther: Rediscovering the Moral Economy addresses two more advanced questions. If they do not contribute equally, which of these non-monetary resources is more important for business owners to control? Putting it very crudely, is ‘who you know’ more important than ‘what you know’, or the other way around? And whatever is the answer now, has it always been that way or did it change?
In order to lodge those novel questions in the entire history of capitalism, rather than only in the fleeting present, the book presents six contrasting case studies that illustrate the importance of business-supporting ideas and business-supporting communities for business owners, now and in the past. Each chapter is an independent case study but together they display suggestive historical continuity. The case studies addresses the economic ethic of Protestant “ethnics” in the Reformation, Jewish merchants in early modern Venice, business-disdaining Aleutiiqs on a remote Alaskan island, an Islamic business caste in metropolitan Karachi, Korean immigrant entrepreneurs in Los Angeles, and the unsuccessful business career of Donald J. Trump. All the chapters converge around that claim that, without both social and cultural capital in place, business owners are handicapped, and their enterprise cannot flourish even when money is abundant. However, the case studies also suggest that, although both resource types are still and always have been important, the balance of relative importance shifted over historic time from business-friendly ideas to business-supporting communities. That is, during capitalism’s start-up phase, the most important business-supporting resource was cultural aptitude for business, which was scarce, whereas community was abundant. That balance historically shifted from aptitude to community because the very success of capitalism diminished the supply of community in society while enhancing the supply of business skill and aptitude. Explaining and illustrating this transition is the main concern of part 1.
Without changing the book’s guiding theoretical orientation, Part 2 expands the book’s focus from business management to the moral legitimation of capitalism now and in the past. The themes are related. Ideas that legitimate entrepreneurs legitimate capitalism; and ideas that legitimate capitalism legitimate entrepreneurs. By legitimation is meant culturally shared ideas that enable people to understand business as a morally acceptable livelihood, which is an essential part of willingness to undertake it. To the surprise of most students, in the history of mankind, business ownership has not usually been understood as morally legitimate. Quite the opposite was usually the case. Capitalism entered the world stage under an inhibiting cloud of moral suspicion which it had somehow to dissipate.
Following Max Weber and Werner Sombart, who pioneered this line of research a century ago, our review starts with religious ideas. Early modern Jews could legitimate profit-making business to their own religious satisfaction but not to the satisfaction of early modern Christians. As a result, primitive resistance to capitalism assumed the form of moralistic anti-Semitism. Capitalism was immoral and its immorality tainted Jews who practiced it. Theorists of the Protestant Reformation, John Calvin and Richard Baxter first convinced skeptical Christians that running a profit-making business was fully compatible with Christian morality and, indeed, exemplified it. Two centuries later, abandoning the religious domain, Adam Smith and Benjamin Franklin, both Enlightenment savants, theorized naturalistic components of action that tended to assure that business owners would understand the advantages of moral behavior and that the resulting market economy would channel human choices into morally acceptable behavior. Greed would supplant war and commerce would replace thievery.
By the late nineteenth century, optimism had vanished from the debate. In the Gilded Age, confronting big business, William Graham Sumner and Thorstein Veblen abandoned all expectation that entrepreneurs would display moral rectitude. Veblen theorized that long-term cultural change would ultimately extirpate vestiges of barbarism that enabled a dysfunctional “pecuniary culture.” Equally critical of business morality, Sumner was more pessimistic. Sumner believed that a market economy was a realm of nature in which survival of the fittest was enacted. In this realm, fraud, deceit, and violence played as essential and irrevocable a part as they did in real jungles. Therefore, instead of preaching cultural change as had Veblen, Sumner sought to convince readers that the moral misbehavior of big business leaders would result in long-term economic benefit for everyone and so should be tolerated. A generation later, Joseph Schumpeter advanced an economistic version of Sumner’s idea as “creative destruction.” Schumpeter conceded that entrepreneurial capitalism outraged social morality but observed that it also created unparalleled economic growth. Ordinary people rejected capitalism but craved the wealth that trickled down because of it. Either way, in Sumner’s version or Schumpeter’s, twentieth century theorists relieved big business entrepreneurs of the necessity for moral conformity that still applied to small business owners. As a result, the moral legitimation of capitalism now derives from small business owners who, embedded in the social structure, import conventional moral ideas into their business practice. Lacking that embedded context, big business is tolerated for its results, but morally mistrusted.
This intellectual history is not an exercise in antiquarianism. In contemporary America, one does not have to frequent libraries to access these ideas. In the mid-twentieth century, the moral exoneration and idealization of elite entrepreneurs moved from textbooks into comic books through the Batman superhero. Originally created in 1939, and subsequently released on toys, television, and video games, Batman has been featured in 13 Hollywood movies since 1943 and most recently in Batman: The Dark Knight Rises (2005) and Batman vs. Superman (2012). The Batman thematic depicts the fictional Bruce Wayne as a billionaire entrepreneur obsessed with glamorous women and conspicuous consumption of luxury. Wayne is a playboy celebrity whose meretricious lifestyle the public tracks, envies, disapproves, and tolerates. Unbeknownst to the public, when disguised as Batman, Bruce Wayne uses his vast wealth, superior intelligence, and jungle cunning to destroy evil doers whom the legal order condones. To a startling extent, Donald Trump resembles that billionaire playboy, and there is evidence that Trump consciously promoted his resemblance to Batman during both political campaigns. This resemblance was advantageous to Trump because the American public already understood that immoral billionaires are hidden benefactors of society.
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* Ivan Light is professor emeritus of sociology at the University of California, Los Angeles and author, together with Léo-Paul Dana, of Entrepreneurs and Capitalism Since Luther (2020). Among his previous books are Deflecting Immigration: Networks, Markets, and Regulation in Los Angeles (2006), Ethnic Economies (2000), Immigration and Entrepreneurship: Culture, Capital, and Ethnic Networks (1993), Immigrant Entrepreneurs: Koreans in Los Angeles (1988), and Ethnic Enterprise in America: Business and Welfare among Chinese, Japanese, and Blacks (1972).