2. The Meaning of Capitalism

It is often asserted that the decisive feature of capitalism is that the means of production are controlled by a small group called capitalists, and that the majority of the labor force is forced to sell its labor power to the owners of the means of production in order to earn a living. Thus capitalism means the separation of the worker from the means of production. However, one may ask whether an approach that focuses on the conflict of capital and labor is not too simplistic a conception of the fundamental change that occurred during the "great transformation" (Polanyi 1957). Even if one accepts the notion that the control of the means of production is the decisive feature of the capitalist economy, it is still not clear that this description is a complete characterization of the structure of modernity. In practice the sociological theory of modernity may be read as a critique of the attempt to root the theory of society in a theory of the economy (Luhmann 1986). Taking these objections into account, I interpret the rise of the capital-labor relationship as an essential factor within the broader process of modernization. But what are the main features of this broader process?

Marx himself described modernization as a process in which the economy is set free from traditional bounds and gains autonomy. His successors did little more than work out the different aspects of this Freisetzungsprozess (process of setting free) that are constitutive for modernization. In traditional societies "the economic system was submerged in general social relations … the self-regulating market was unknown; indeed the emergence of the idea of self-regulation was a complete reversal of the trend of development" (Polanyi 1957, 67). The autonomy of the economy from the rest of society is essential for modernization. To be sure, other spheres of modern society—the state, law, science, etc.—also became relatively autonomous. For this reason I believe it is unnecessary and futile to look for a dominant structure in history. The separate spheres of politics, law, economic science, and the like cannot be deduced from the "principle of

value" (cf. Sieferle 1984, 22). But these spheres differ in the degree to which they achieved autonomy from the rest of society.

Three features characterize the rise of the capitalist economy as a process of Freisetzung: first, the separation of society into an economic and political sphere, second, expanded reproduction (that is, ceaseless accumulation), and third, the dissolution of "communities" and "worldviews."

1.     The characteristic feature of capitalism as an economic order is the liberation of economic activities from political patronage. In the course of the transition from feudalism to capitalism the economy is detached from the social order, the core of which is political authority. The separation of economic functions from the broader social context has become the model of modernization as a whole. In sociological systems theory this process has been called "functional differentiation." Western Marxism also treats this differentiation as the separation of the economic from the political sphere. The economy did not exist as an independent structure, that is, as a sphere of trade and acquisitive activities, until this separation. The emerging acquisitive society was a "free" society in the sense that economic activities were no longer fused with political concerns, as had been the case in mercantile societies. Producers in the economy were now free to focus entirely on their economic functions. This freedom meant that capitalist firms no longer based their production decisions on external (political) interests. Rather their production decisions were based on the norms of economic rationality (Weber 1972, 79).

2.     Rational capitalism is not characterized by the pursuit of profit as such. We also find this in traditional societies. It is also not characterized by the appropriation of a surplus, which occurs in earlier modes of production, too. Rather, capitalism is characterized by the reinvestment of the appropriated surplus. "What is different about capitalism as a surplus-generating system is that it is the only system that invests its surplus, not in articles of personal or public luxury and adornment, but in the means to achieve more wealth" (heilbroner 1982, 35). The business of the entrepreneur is to invest this surplus. The wealth of the societies dominated by the capitalist mode of production is entirely based on the fact that capital accumulates. If the reinvestment of surplus is to take place continuously and in a rational manner, then wage labor is needed as a precondition of accumulation. Marx described this built-in coercion of capitalist systems to accumulate as a self-determining process. In the chapters on expanded reproduction in capital, Volume 2, Marx (1970) analyzed the economy of modern society as a closed, self-referential system

     reproducing its elements by means of those same elements (cf. Luhmann 1984b, 315; Maturana 1979). Marx chooses the commodity as that basic element, unlike Luhmann, who designates payments to be the basic elements of the economy. If Marx is correct, the essence of a capitalist economy can indeed be characterized as the "production of commodities by means of commodities" (Sraffa 1960). Such a system is self-referential: accumulation takes place for the sake of accumulation, and it is closed in the sense that it reproduces the elements of which it consists. Thus the coercion to accumulate characterizes the mode of operation of an "autopoietic" system, that is, a system whose reproduction is based on the production of its elements with the help of a network of those elements.

3.     The dissolution of existing worldviews and communities is a manifold process. At least three different aspects should be distinguished.

(a)     The rationalization of worldviews (see Habermas 1981a) is a process that leads to the end of a unified metaphysics in the transition from the old to the modern world. As a result of this rationalization, the cultural value-spheres of science, morality, and art became separated. Since this time, there has been no unified belief system; at least three different belief systems have taken the place of the former metaphysics. "Since the 18th century," Habermas writes, "the problems inherited from these older worldviews can be arranged so as to fall under specific aspects of validity: truth, normative rightness, authenticity, and beauty. They could then be handled as questions of knowledge, or of justice and morality, or of taste" (1981a, 8). Whereas the philosophy of old Europe accommodated a "uniform" and "closed" society, capitalism is characterized by diverse, complex systems of belief, quite different from the unified ones in old Europe. Perhaps Lukács, in his theory of the novel ([1920] 1971) delivered the most impressive description of the "compact" world of classical antiquity and the Middle Ages. This compactness disappears when capitalism invades premodern societies. The rise of capitalism effects an opening of those closed worlds in both spatial and, above all, temporal respects. Before the rise of capitalism there is no open future.

(b)     Modernization is not limited to the emergence of separate subsystems, such as the economy, with specific functions. Of equal importance is the tendency for the "system" and the "life-world" to diverge (Habermas 1981b). In the course of modernization the sphere of (bourgeois) society is set free from "communal" ties. But in the very same process the meaning of "community" changes. Habermas's life-world concept stands for the same phenomenon

     that Parsons referred to as "societal community" and that Tönnies was trying to get at in his distinction between "society" and community." Tönnies remarked that not social life per se but communal social life vanishes and a new social life develops (1982, 38). In sociological systems theory this process has been described as the uncoupling of society from its interactions (Luhmann 1984a). Undoubtedly there is already some difference between society and its interactions in primitive society, but the gap increases in the course of development; with the French revolution the existence of the gap became obvious. Since that time the belief that society is controlled by personal interactions has turned out to be illusory (Luhmann 1984a, 577, 579). The communications that are part of daily life are subject to principles and normative orientations that differ from communications in the functionally differentiated subsystems of society. In modern society normative orientations, which may be predominant in interactions, diverge as a rule from the dominant values and orientations of actions in the field of science, the economy, and politics (Luhmann 1975). In the modern economy the separation between society and its interactions amounts to the detachment from normative contexts the market becomes an "impersonal order"; it is not an accident that such different thinkers as Marx and von Hayek use term to describe the essence of the market order. Markets are distinguished from other realms of society by the fact that they only need a minimal morality to function. In Streissler's words, the market is an economic mechanism that could function even among devils (1980).

(c)     Capitalism leads to the disintegration of all forms of communal life. The classical description of this process can be found in Marx's Grundrisse (1973). In the famous chapter on "forms which precede capitalist production" (1973, 471–79, 483–514) Marx outlines a discontinuous view of historical evolution that differs radically from the evolutionary scheme he posits in the Foreword to a Critique of Political Economy (1969), which places capitalism on a continuum of forms of society that stretches from slavery to socialism. Capitalism involves a fundamental structural break in history. This break may be characterized as a switch from a "natural" (naturwüchsig ) to a "pure" mode of social integration (Breuer 1983). Through this decisive shift in the mode of social integration, all social structures become contingent. Because each social phenomenon in modernity is "made" or "produced" (gesetzt ), it can in principle be arranged differently (see Touraine 1977).

Having distinguished between the three essential features of modernity, the question arises whether these features have a common root. I believe that this common root is the "liberation from the past," which results in the autonomy of the components of a modern society. A modern society differs from a premodern one in that there is no longer a social bond that keeps the parts of society from drifting apart. In premodern societies community acted as that social bond. Certainly community has not vanished in modern society but it has become another subsystem. To belong to a community today is not an all-embracing process that leaves little room for individuality. On the level of individual behavior this change in the "status" of community is reflected in an increase in the number of "options" and a decrease in "ligatures" (Dahrendorf 1979). During the transition of modernity the cultural net that held together different activities in traditional societies starts to disintegrate. In modern societies a comparable core of normative values that restricts the range of options does not exist.

In the economic realm Marx's concept of the "self-valorization of value" as a "ceaseless movement" had already formulated the fundamental process by which the economy was being freed from traditional life-orders. "All that is solid melts into air." This short sentence from the Communist Manifesto captures the essence of modernization (Berman 1982). But it would be misleading to regard this process exclusively as a negative one; on the level of society as a whole modernization means not only disintegration but also the development of productive forces, the increase of adaptive capacity, and the like. Moreover, on the level of the individual it means emancipation and self-development.