The Societal Prerequisites of Capitalism: Disembedding Economy and the Role of Rationalization

If capitalism is identified as the engine of modern economic growth, the central historical question becomes identifying the specific societal conditions that give birth to it. Economic activity is fundamentally embedded in social relationships. The treatment of crucial elements—particularly land, labor, and money—as pure commodities, and the rigorous separation of household from firm, represent a revolutionary break from traditional societies. This process of disembedding the economy from its social matrix is a foundational characteristic of capitalist development.

In the neoclassical interpretation, fostering development simply requires removing obstacles that prevent individuals from acting as rational homines oeconomici (economic men). This removal is seen as both necessary and positive, with the assumption that rational actors will naturally generate growth. The primary impediment to this autonomous economic functioning is rent-seeking—the pursuit of unearned income through manipulation of the political or social environment. Historian E. L. Jones conceptualized global economic history as a struggle between a universal propensity for growth and a powerful propensity for rent-seeking.

The search for the social arrangements enabling this disembedding has produced a catalogue of characteristics differentiating the modern West. A powerful synthesis is found in the work of Max Weber. For Weber, the West’s distinctiveness stemmed from a fundamental, long-term process of rationalization or ‘disenchantment’ of the world. Capitalism, as a system where private entrepreneurs seek profit through peaceful market exchange, requires pervasive rational action. This entails methodical calculation and measurement, extending beyond the economy to pervade a society's political, social, and cultural life.

The ideal state counterpart to this capitalist economy is what Weber termed a rational-legal bureaucracy. This state is predictable, rule-bound, and powerful, with limited arbitrariness. Its trustworthiness and efficiency provide the stable framework necessary for sustained capital accumulation and market exchange. This bureaucratic rationality is a key institutional prerequisite for a mature capitalist system.

Capitalism’s emergence is also linked to rationalized social patterns, including individualism, the centrality of the nuclear family, and the separation of household and firm. Demographically, the European ‘late marriage pattern’ is often cited as a rational adaptation influencing capital formation. Furthermore, high degrees of social and geographical mobility, along with the political leverage of a bourgeoisie, are presented as distinctive Western features. This mobility extended globally, making Europeans explorers and colonizers who acquired new markets, institutions, and knowledge.

Rationalization also manifested in Western culture through an inquisitive, manipulative orientation toward nature and society. While not always领先 in theoretical knowledge, the West is argued to have uniquely fostered an environment where invention was protected and inquiry became autonomous and methodical, allowing science and technology to flourish systematically. This created a feedback loop between rational culture and economic innovation.

Given Europe’s Christian history, scholars have attempted to link religious faith to economic modernity. Weber’s thesis connecting the Protestant ethic to the spirit of capitalism is the most famous. Others have argued that Catholicism, by envisioning an orderly, law-governed world divinely sanctioned for human dominion, also provided a foundation. More concrete connections cite monastic organization as a prototype for factory discipline, the Church’s role in shaping modern marriage, and its function as a provider of social trust.

Underlying these characteristics, and often presented as the ultimate cause of European dynamism, is a pluralistic distribution of power. As scholar Michael Mann outlines, the sources of social power—political, ideological, economic, and military—were never monopolized by a single entity in Western Europe. This created a competitive landscape among states and within societies, preventing imperial stasis. Individuals experienced relative freedom and protection alongside intense competition, a paradox that arguably fueled the continuous innovation and restructuring central to capitalist development.