In the century since Max Weber published The Protestant Ethic and the Spirit of Capitalism , the book has been subject to severe and sustained criticism, much of it justified. Yet reflecting on its thesis in the light of worldwide economic developments during the past several decades reveals that, for all of his errors, Weber grasped something crucially important about the spiritual wellsprings of capitalism”something that has been neglected by capitalism’s radical critics no less than by many of its most enthusiastic champions.


As Weber began to contemplate a study of capitalism’s emergence in the early modern world, he pondered a fact that many others, including Adam Smith, had noted before him”namely, that there are many areas of the world in which people”even dedicated, persistent, industrious people”tended to work only to a target they set for themselves, after which they stopped. Yet Weber also noticed that some groups were gripped by what he perceived as a new and different work ethic, such that they felt motivated to earn as much as they could and go constantly beyond their earlier gains. What accounted for this difference in values? As generations of readers are well aware, Weber concluded that a complex psychological dynamic”rooted in a Protestant (and specifically Calvinist) religious experience”leads certain individuals to perceive a duty to increase their store and better their condition.


Weber’s critics have often complained that he radically misunderstood Reformed theology. They point out that for the crucial details of his thesis Weber relied not on creedal statements or formal treatises, but rather on the pastoral writings of such practical thinkers as Richard Baxter. Passages in the Institutes demonstrate that Calvin himself quite sincerely believed that the ultimate purpose of human life is not tireless devotion to an earthly calling, but rather faith in the revelation of Christ. Any suggestion of an innate affinity between Protestant theology and capitalism, they said, must therefore be dismissed.


Yet in finding fault with Weber’s reading of Calvinism, these critics have frequently ended up misreading Weber himself. What Weber tries to demonstrate is not that the capitalist spirit was born of Calvinist theology purely and directly, but rather that it arose from psychological tensions that Calvinist theological commitments tended to trigger in the minds of believers, especially when those commitments were articulated in a pastoral setting. Consider the doctrine of predestination as Calvin elaborated it. For Calvin, the absolute sovereignty of God means that God not only foreknows, but actively wills the salvation of some and the damnation of others. When the sheer unmeritedness of the gift of friendship with God for all eternity was promulgated among ordinary people, those people became quite anxious over the state of their souls and began to seek signs by which they might reassure themselves. For Weber, the Calvinist doctrine of predestination issues in “a feeling of unprecedented inner loneliness” and is thus responsible for enormous psychological suffering among the faithful.


As a result, Reformed ministers began to advise ordinary people to dedicate themselves to a calling as a way to overcome “normal” anxieties about their election. Even if such advice consisted solely of such words as “just continue being conscientious in your work, and do the best you can,” it was quite enough to inspire a huge increase in economic industriousness. Here, then, is a classic and powerful instance of the Law of Unintended Consequences. A formal doctrine whose original intention was to remove all concern with works-righteousness ended up propelling its adherents towards an unprecedented, almost painful, obsession with works. And this totally unforeseen and negative psychological consequence had extremely beneficial economic effects”in fact, economically revolutionary effects.


Weber’s account of capitalism is far from uniformly positive. Whereas others have emphasized the market’s ability to create wealth and foster technological innovation, Weber understood capitalism primarily in terms of duty, asceticism, and self-denial”and he stressed its tendency to encourage instrumental calculations of cost and benefit, as well as to employ a purely formal mode of thinking and reason. Most ominously, once capitalism becomes divorced from its original religious impulses, it turns into iron cage” from which we are unable to extricate ourselves. The Puritan wanted to work in a calling; we, by contrast, are forced to do so. The “inexorable power” of the capitalist ethic rests upon “mechanized foundations.” Weber discerns in this atheistic, secular system a “mechanical petrification.” He describes the fate of modern man in terms as bleak as those found in the writings of such poets as Matthew Arnold, T. S. Eliot, and Ezra Pound. For Weber, modern capitalists are “specialists without spirit, sensualists without heart.”


Which raises an important question: Is Weber’s outlook justified by the reality of life under capitalism? Or is it instead the result of his mistaking certain aspects of capitalism”aspects that ultimately derive from secularized Reformed Protestantismthe capitalistic order as a whole? The Protestant ethic may issue in hard work, asceticism, and an always unsatisfied striving for material betterment, but doesn’t capitalism also foster ingenuity and inventiveness? Put theologically, the Protestant ethic tends to emphasize conversion and change of life that can be wrought only by divine grace. An alternative but no less important ethic”one that can be described as a “Catholic” ethic”has historically worked to emphasize that, despite the wounds inflicted on creation by sin, the world retains marks of God’s goodness. If Protestant striving has inspired economic dynamism, Catholic delight in the goodness of creation has, by comparison, encouraged economic creativity.


Weber was blind to this distinctly Catholic contribution to the development of capitalism because he erroneously assumed that the Benedictine ideal of worldly withdrawal remained the only mode of Catholic asceticism. Indeed, as early as the eleventh century, the regular canons of towns and villages throughout Europe began to adopt the Rule of St. Augustine and live the monastic life while ministering to growing urban populations. Western monasticism moved still closer to the life of the laity with Robert of Molesme and the establishment of the Order of Citeaux in 1098. As sociologist Randall Collins has shown, one of the primary causes of the great revival of European commerce in the twelfth century was the rise of Cistercian monasteries:


These monasteries were the most economically effective units that had ever existed in Europe, and perhaps in the world, before that time. The community of monks typically operated a factory. There would be a complex of mills, usually hydraulically powered, for grinding corn as well as for other purposes . . . . The Cistercians were the cutting edge of medieval economic growth. They pioneered in machinery because of their continuing concern to find labor-saving devices. Their mills were not only used by the surrounding populace (at a fee) for grinding corn but were widely imitated. The spread of Cistercian monasteries around Europe was probably the catalyst for much other economic development, including imitation of their cutthroat investment practices.


And then there was the influence of the mendicants. The Dominicans and the Franciscans, in particular, introduced lay Catholics to the rhythms of apostolic life, taught them to cherish holiness in their daily work, and inspired them to perform that work perfectly for God. More, of course, could be said. The point is not to deny that the Protestant Reformation unleashed a special dynamic energy, but rather to note the crucial contribution of other religious and cultural influences to the development of the capitalist order, in its unique blend of dynamism and creativity.


Nowhere has this potent combination been more fully realized than in the United States. In unexpected ways, the distinctive experience of economic life in America falls as much within the Catholic view of things as it does within the Protestant outlook described so vividly by Weber. The joy of discovery, the delight in novelty, the love of risk and surprise, the frequently experienced disproportion between effort and reward”Alexis de Tocqueville points to all of these qualities in his discussion of the United States. The typical American, Tocqueville observed,


lives in a land of wonders; everything around him is in constant movement, and every movement seems an advance. Consequently, in his mind the idea of newness is closely linked with that of improvement. Nowhere does he see any limit placed by nature to human endeavor; in his eyes something which does not exist is just something that has not been tried yet . . . . Choose any American at random, and he should be a man with burning desires, enterprising, adventurous, and, above all, an innovator.


While Americans retain a strong notion of human imperfection and affirm the need for checks and balances”in other words, they hold to a nonutopian understanding of human nature”they also take an almost Catholic delight in the goodness and possibilities and wonders of creation. “Chance,” Tocqueville notes, “is an element always present to the mind of those who live in the unstable conditions of a democracy, and in the end they come to love enterprises in which chance plays a part. This draws them to trade not only for the sake of promised gain, but also because they love the emotions it provides.”


In such a tumultuous nation, marked by extraordinary social and economic fluidity, people began to understand”perhaps for the first time in human history”that poverty was not necessarily a natural condition. The age-old class structure”not to mention the seemingly inevitable premodern cycle of prosperity and economic decline”could be broken. And if such progress were possible in the United States, why not in other countries? The chains of poverty could be systematically broken”and if they could be broken, there was a moral imperative that they must be broken.


And so they were”first in the United States, and then slowly, progressively, around the world. Little by little, people began to understand that it need not be the case that “you always have the poor with you” (Matthew 26:11)”that it is a moral obligation of societies as well as individuals to overcome poverty. Whereas poverty had previously been taken to be the natural condition of most human beings everywhere, through the workings of capitalism it came to be considered as counter to nature, immoral, and the result of inadequate social planning and effort. In America, the process of moving up and out of poverty, generation by generation, came to be called fulfilling the “American dream.”


Weber’s Calvinists, but also Catholics in the cities of France and Northern Italy, as well as skeptics and freethinkers throughout Europe”all of them shared a strong spirit of enterprise and a talent for organization and practical execution. To put it in Weberian language, they participated in a new moral sensibility that longed to bring new worlds and new wealth into existence.


Many spiritual impulses fed this new sensibility, not only the Calvinist doctrine of predestination. One of them was the sense of new possibilities launched into history by the romantic stories emanating from the New World in America, South and North. The sheer newness of America fueled the European imagination; here was soil barely trod by human feet, full of wonders and untapped potential. Nobody describes this encounter better than Tocqueville:


It was then that North America was discovered, as if God had held it in reserve and it had only just arisen above the waters of the flood. There, there are still, as on the first days of creation, rivers whose founts never run dry, green and watery solitudes, and limitless fields never yet turned by the ploughshare. In this condition it offers itself not to the isolated, ignorant, and barbarous man of the first ages, but to man who has already mastered the most important secrets of nature, united to his fellows, and taught by the experience of fifty centuries.


Upon such a stage, men might dare to dream the impossible. This continent opened new vistas, offering wholly new perspectives. It invited its inhabitants to participate in creation as they never had before, to delight in discovering the workings of nature. No less an authority than Abraham Lincoln saw this tendency among his countrymen:


In anciently inhabited countries, the dust of ages”a real, downright old-fogyism”seems to settle upon and smother the intellects and energies of man. It is in this view that I have mentioned the discovery of America as an event greatly favoring and facilitating useful discoveries and inventions.


Columbus’ achievement was, to Lincoln’s mind, “most favorable”almost necessary”to the emancipation of thought, and the consequent advancement of civilization and the arts.” It is this element of discovery”so natural, indeed so central, to the American experience”that is manifestly missing from Weber.


And yet, Weber’s legacy is richer than this summary might lead one to believe. In the century since the publication of The Protestant Ethic , the world has seen more than a hundred nations undergo massive economic and political transformations. Such transformations have put Weber’s thesis to the test. Toward the end of the last century, in particular, several scholars were struck by the number of disparate nations in which something very much like a Weberian development seemed to be taking place: an enormous transformation of attitudes toward work and wealth, preceded or accompanied by a profound religious conversion. Scholars today have a wealth of data to collect and reflect upon from the “economic miracles” we have experienced since the end of World War II. Nation after nation, region after region, has entered upon a process of rapid economic growth and political transformation. Since 1980, in a story largely still untold, China and India have between them raised more than half a billion of their citizens out of poverty in their rapid adoption of economies of enterprise, relatively free markets, low taxation, and global trade. In a fascinating study of emerging globalization, former leftist Jagdish Bhagwati observes that in China poverty has declined “from an estimated 28 percent in 1978 to nine percent in 1998,” while official Indian estimates report that “poverty fell from 51 percent in 1977-78 to 26 percent in 1999-2000.”


Weber may have unnecessarily limited himself by focusing exclusively on the role of Calvinism in the emergence of capitalism; no doubt his thesis would benefit from a broader, more generalized restatement. Yet in our newly dynamic world, Weber’s identification of necessary spiritual and moral conditions for successful economic activity continues to be a source of wisdom. Weber rightly teaches us that success in economics is largely dependent on the spiritual and moral qualities embodied in the practice of economic agents. Moral and spiritual flaws, in other words, have economic consequences. In economic transactions, a failure of insight, determination, perseverance, honesty, respect for law, or cooperativeness with one’s fellows can be self-defeating. Even entire worldviews can be self-defeating”when, for instance, they employ supposedly divine taboos to stifle economic innovation or curtail economic growth. Max Weber was among the first thinkers to draw our attention to these crucial moral and spiritual dimensions of economic behavior”and for that reason his work remains as vital and important today as it was a century ago.


Michael Novak holds the George Frederick Jewett Chair at the American Enterprise Institute. This paper is adapted from a lecture delivered at Cornell University and is published with the university’s permission.