C

CAPITALISM

NOTE: Although the following article has not been revised for
this edition of the Encyclopedia, the substantive coverage is
currently appropriate. The editors have provided a list of
recent works at the end of the article to facilitate research and
exploration of the topic.

Sociology has no complete, formal consensus
on a specific definition of capitalism. The disci-
pline of sociology itself arose as an attempt to
understand and explain the emergence and na-
ture of modern capitalist societies. Sociology’s
founding theorists were very much concerned
with the development of capitalism. Émile Durkheim
sought to find the bases of new forms of morality
and social solidarity in the division of labor, which
capitalism both expanded and accelerated (Durkheim
1984). Karl Marx, of course, spent his adult life
analyzing and criticizing capitalist society. Marx’s
project was guided by his hope and expectation
that capitalism would be displaced as history moved
toward a socialist, and then communist, future.
Max Weber, too, devoted considerable attention
to the origins of modern capitalism and the histori-
cally specific character of Western society under
capitalist expansion. Contemporary sociology’s
treatment of capitalism is grounded in the works
of these theorists. The works of Marx and Weber,
insofar as they more explicitly focused attention
on the dynamics of capitalism, provide a point of
departure for discussing modern sociology’s ap-
proaches to capitalism.

The term capitalism is sometimes used to refer
to the entire social structure of a capitalist society.

Unless otherwise indicated, it is used here with

specific reference to a form of economy to which

multiple social institutions are effectively bound in

relatively compatible ways. Weber used the term

capitalism in a very general way: ‘‘wealth used to

gain profit in commerce’’ (Weber 1976, p. 48).

This understanding of capitalism permits the dis-

covery of capitalism in a wide variety of social and

historical settings. Weber describes this general

form of capitalism in traditional India and China,

ancient Babylon, Egypt, and Rome and in medie-

val and modern Europe. However, Weber also

constructs a more specific typology that pertains

to the form that capitalism has taken in more

contemporary Western society. This form of capi-

talism is referred to as modern, or Western, capi-

talism. In The Protestant Ethic and the Spirit of

Capitalism, Weber (1958 pp. 21–22) contends that

this is ‘‘a very different form of capitalism which

has appeared nowhere else’’ and that it is unique

in its rational ‘‘organization of formally free la-

bor.’’ Other important characteristics of modern

capitalism, such as the separation of business from

the household and rational bookkeeping, derive

their significance from this peculiar organization

of labor. In this emphasis on the importance of

free labor, or the creation of a labor market,

Weber’s definition of capitalism moves much clos-

er to Marx’s use of the term.

For Marx, it is the creation of a market for

human labor that is the essence of capitalism.

Marx wrote that capitalism can ‘‘spring into life

only when the owner of the means of production

and subsistence meets in the market with the free