Review of Max Weber, Markets and Economic Sociology at the University of Warwick

Review: Max Weber, Markets and Economic Sociology. University of Warwick
(7th May, 2014)
by James Addicott
The Department of Sociology: University of Cambridge

Coffee of the train

What follows is a by-part review of the Max Weber, Markets and Economic Sociology conference at Warwick University. It is a “by-part” review because I made it to the conference late due to the extortionate price of train tickets on Virgin trains. To reach the conference by the time it started I would have had to have paid £118 (!) to get there on time. Being a student, the obvious option was to pay £39 but miss the morning’s proceedings. Thanks Maggie!
AAAAs a result I missed out on Linsey McGoey’s ‘Gods of Giving: Charismatic Authority and the Rise of the 21st-Century Philanthrocrat’, which other attendees told me was a fascinating insight into the charity donations in a neo-liberal age. Apparently George Bush was offered, as an example of someone who achieved increased levels of what Max Weber would term “charisma” by making charity donations – “Charisma” was defined by Weber as ‘a certain quality of an individual personality by virtue of which he is set apart from ordinary men and treated as endowed with supernatural, super-human, or at lease specifically exceptional powers or qualities’ (Weber, 1964: 329) – and subsequent levels of symbolic capital, as the result of such charitable acts. It was unfortunate to miss this talk.
AAAIt is never a nice feeling having to sneak in at the back midway through someone’s talk. Unfortunately this is what I had to do during Scott Lash’s ‘Weber and Markets: From Neoclassicism to Neoliberalism’. I had been warned that Lash could be a bit “abstract” in his sociological theorization but I found his take on Weber most inspiring. Again, unfortunately this impression was only formed “by-part” due to my lateness. What I managed to get from Lash’s discussion of Weber’s ideas was a sense of changing temporality. Lash related Weber’s ideas to Kantian theories of time and memory, and Aristotle’s ideas of phronesis (practice or praxis), techne (technique, craft, art or a way of doing things) and epistêmê or knowledge.

IMG_2893AAAFrom what I gathered, Lash theorised a shift into an age of “Silicon-Valley-Capitalism” and a transition from a priori and a posteriori instrumental rational and reasoning. In the latter mode of creative thinking deconstruction and creativity become the dominant mode of production, Lash argued. It was a real shame to miss the full presentation because here Lash begins to theorise a similar transition to what neo-Marxists call “cognitive capitalism” (Dean, 2014; Dickens, 2009; Moulier Boutang, 2011). His Aristotelian ideas about human wellbeing or ‘flourishing’ began to tie in particularly well with Kathryn Dean (2014) who also draws on Aristotle’s ideas of practical wisdom and theoretical knowledge. There are theories of increased alienation, an increasing sense of ambiguity, and increasing dehumanization in the digital age and there are obvious parallels to be drawn between Weber and Marx in these areas. There is “warmth” or humanitarian side to be found in Weber’s works, a concern with human wellbeing that McDonaldisation theorists have managed to adopt and utilize well. Lash argued that for Aristotle practical knowledge is the most essential part of human flourishing and this is the point that my own research is currently trying to investigate: how embodied, lay or tacit knowledge is effected in the information age. It would be great to see a lot more theorization and practical research being done within a Weberian and Marxian common-ground in the face of information economies, cognitive or Silicone-Valley capitalism.
AAADavid Woodruff’s ‘A Weberian View on Money as an Economic Institution’ kicked off with a fairly simple quote from Weber: “Money”, ‘is a chartal (legally defined and numerically denominated) means of payment which is also a means of exchange’. He pointed out how Weber was adverse to making generalisations about almost anything. Only when a good understanding of a person’s motivations and their context has been achieved should a sociologist begin to speak in more general terms at the level of meaning, Woodruff stated about Weber’s theory. He then proceeded to expand a little on Weber’s ideas about money and exchanges. In developing his own theory he gave an example of cars on a motorway. Firstly, there is a shared convention: in England we drive on the left-hand side. We all understand this to be the norm and Woodruff calls this kind of conventionality a ‘broadcast order’. Secondly, we all have our own motives for being on the motorway: “I need to get work,” “I’m visiting friends,” “We’re going to a game,” etc. This he calls the ‘cellular order’, which expresses the individual motivations for exchanging money. The cellular and broadcast metaphors are likened to radio transmissions and mobile phone usage. There are similarities here with what Simmel would have called objective and subjective cultures, or what conventional understandings of structure and agency in sociology.

IMG_2900AAAWoodruff then proceeded to give an example of a Russian factor that had accepted several thousand liters of paint in exchange for debt by a company who had gone out of business. Normally, paint is not considered a conventional unit of exchange and a company would have problems in accounting or declaring paint as income over money. However, given the circumstances, the paint had value in exchange, it was used as a means of payment. The important point in all of this is the legal order, or the broadcast order, that oversees and conventionalises the mediums of exchange (e.g. money), the mode of accounts (e.g. book keeping or Microsoft Excel), and the units of accounts (e.g. $, £, ¥, €, etc.). Without this broadcast order, the cellular order finds it difficult to operate within a stable system. Overall, Woodruff offered a very coherent argument that managed to stand up as it was interrogated by questions afterwards.
AAANext Sam Whimster gave a more classical Weberian talk on ‘The Economics of Power: Max Weber on Central Banks’. His focus was on national debt and the historical development of central banks. He turned to the Bank of England in and outlined how private debt had historically become public debt. The big question being addressed here was: where does money (or credit and debt) come from? The peculiarity is that, in England, private banks have fulfilled a state function. The Bank of England has fulfilled a collision of combined interests between The Crown and city merchants. When The Bank of England was established an important decision had to be made: where would the capital come from to provide money its value? Some of the options available were land (“rooted capital”), assets or trade (“mobile capital”). Against the will of the then aristocracy, the English government decided on the latter option: trade. With sugar, slaves, rum, coco, etc. being imported and exported from the colonies, that was the most lucrative option. There were, therefore, political disputes between agrarians and merchants. Whimster’s thesis is that in the 2008 financial crisis what had actually happened is that the coalition of powers or forces (banks, monarchy, government, etc.) had ‘lost central control’ of money. Shifts in economics and power meant that longer was The Bank of England the HQ for global finance. Capital had allied with neo-liberalism: financial control was lost. The debt has shifted, and like all debts of the past it has moved from the private sphere into the public sphere. Whimster’s talk inspired a great discussion in the following tea break about the origins of money and questions revolving the issue: who (in the contemporary world) owns the capital from where money originates?
AAALastly, Geoff Ingham from the University of Cambridge gave his talk on ‘Money, Capitalism, and the West’. His focus was on the ‘Great Divergence’ debate. The central question here is: why did the industrial revolution take place in Europe and not China? I had attended a talk given by Michael Mann a week earlier entitled: “Have Societies Evolved?” which raised the same issue – Mann arguing that the conditions of emergence for the European industrial revolution were just too complex to abstract any general sociological theory. The oddity that has historians and sociologists scratching their heads is that China had advanced levels of science, mathematics, technology, astronomy, etc. and was wealthy in social power, capital, population, labour power etc. so why was this oriental industrial revolution delayed?
AAAIngham’s first argument is that money is not just a veil, mythology or illusion but is the expression of real objects (land, stock, capital, etc.). Money is therefore a value, an abstract value that is reassured by way of accounting. Secondly, although all money is credit, all money originates in debt. If you take a pint of ale from a bar, the exchange of an “I owe you” in a paper form will compensate for this debt. Money, or debt, is then transferable. This “I owe you” can be transferred to a third party. Money, therefore, became a convenient medium of exchange (another example offered of a medium of exchange would be cigarettes in prison). This is where Ingham’s reading of Weber complimented Whimster and Woodruff. The important point is that private, collective social debt is routinely transformed into public money. And, this debt needs to be spent via a regulating institution or authority. This ‘transferability of debt’ creates a causal mechanism of private debts transformed into public money, consolidated into private debts and again transformed into public money, and so on.
AAADrawing from Weber’s ideas, Ingham made two points. Firstly, calculations need to be made prior to capital exchange. Weber stated that the ‘important fact’ is always ‘that a calculation of capital in terms of money is made, whether by modern book-keeping methods or in any other way, however primitive or crude. Everything is done in terms of balances: at the beginning of the enterprise an initial balance, before every individual decision a calculation to ascertain it probable profitableness, and at the end a final balance to ascertain how much profit has been made’ (1964:18, italics added). Secondly, accounting for profit (e.g. creating budgets or conducting market research) was an important part of Weber’s concept of occidental, modern capitalism.
Referring back to this concept of the ‘transferability of debt’ and the interests of both the public (the state) and private spheres, it is in the interest of the state of regulate such transactions in the interest of taxation.
AAAAt this point Ingham offered a great example of the monetization of Chinese silver. This was taken from an English (economist I think) who had observed how silver had been converted into money. The problem had been that the silver tiles had been passed from hand to hand throughout China through a ‘patchwork’ of different local economies. Within each economy the price of the silver either fluctuated or decreased. Over the entire Chinese empire there was no fixed or stable monetary value for the silver. There existed unregulated economic chaos or an economic anarchy. What was needed, and what had been achieved in England, was a stable monetary system: a union between the state and private companies and individuals. There are obvious eurocentric undertones in such an argument and Ingham pointed these out from the start – why should we consider our English or occidental systems more superior to the Chinese or orient? Control, nevertheless, over money and capital was not centralised: and this stabilization and rationalisation of calculability secured economic prosperity and lead to early industrialisation. The problem here, and I am sure many Marxists have challenged Ingham and other Weberian sociologists on the point over the past one hundred years, is that the Western wealth that rational calculability was used to process had been generated through colonisation and imperialism. Nevertheless, Ingham managed to construct and deliver a highly convincing Weberian perspective to Western, industrial modernisation by adopting Weber’s theoretical ideal types of rationalisation, bureaucratic authority and calculability.

As a PhD scholar who is reasonably new to Weber I felt greatly inspired by the speakers. If I could have asked for more it would have been a much more of a comparison between modern ‘book-keeping-capitalism’ and the digital, information or knowledge economy or economies. Lash quickly swept through these topics but I felt that overall the speakers could have related classical Weberian economics to these contemporary issues. In this sense I did feel that neo-Marxists have the upper hand in bring classical Marxist economics into the digital economy. My research so far has only revealed a little Weberian research into digital economics – e.g. Albrow (1987); Kreiss et al. (2010). While Marx’s idea have been and are being greatly deployed in the development of “The Network Society” (Castells, 1996) or “hyper-reality” (Baudrillard, 1994) and of course “cognitive capitalism”. What would Weber have to say about digital assets? How do we understand the pixel and a unit of accounting? These are some of the questions I felt I wanted to know more about after leaving the conference. Nevertheless, I felt inspired in my own research to turn back towards Weber’s economics and address these issues.

Thank you to the University of Warrick and all the speakers.

This review has been typed up using my notes, with scruffy handwriting on coffee-stained paper, and should not be taken as exact recollections of the speakers’ ideas. Apologies in advance, therefore, for any misinterpretations.

Albrow M. (1987) The Application of the Weberian Concept of Rationalization to Contemporary Conditions. In: Whimster S and Lash S (eds) Max Weber, Rationality and Modernity London: Allen & Unwin Ltd. .

Baudrillard J. (1994) Simulacra and Simulation, USA: The University of Michigan Press.

Castells M. (1996) The Rise of the Network Society: The Information Age: Economy, Society and Culture Vol. 1, Oxford: Blackwell Publishers Inc.

Dean K. (2014) Capitalism, Citizenship, and the Arts of Thinking: a Marxist-Arisotelian Linguistic Account New York: Routledge

Dickens P. (2009) Congnitive Capitalism and Species-Being. In: Moog S and Stones R (eds) Nature, Social Relations and Human Needs. Hampshire: Palgrave Macmillian, 107-127.

Kreiss D, Finn M and Turner F. (2010) The limits of peer production: Some reminders from Max Weber for the network society. New Media & Society 13: 243-259.

Moulier Boutang Y. (2011) Cognitive Capitalism, Cambridge: Polity Press.

Weber M. (1964) The Theory of Social and Economic Ortanization, New York: The Free Press.