Dr. Shannon is professor of economics at Clemson University.
Some 90 years have now passed since the German sociologist Max Weber published his famous study The Protestant Ethic and the Spirit of Capitalism. In it Weber argued that the areas of the Western world inhabited by people whose religious beliefs caused them to consider ordinary work—not just seclusion in a monastery or a career as a priest—to be a calling were those in which economic development was most rapid. Much ink has been spilled on this issue in the interim, including most recently Michael Novak’s The Catholic Ethic and the Spirit of Capitalism, in which the author suggests that entrepreneurial endeavors promoted by the Roman church also contribute significantly to extraordinary economic performance.
Now Stephen Innes, an historian at the University of Virginia, has entered the fray with a detailed and distinguished description of the Puritan settlement in Massachusetts during the seventeenth century. In his book, called Creating the Commonwealth, Innes shows how the New Englanders, who settled a relatively inhospitable land with no obvious cash crop such as tobacco, achieved a rate of economic growth that could only be called stunning.
Certainly, attitudes such as the work ethic were a crucial ingredient of the story. But so too were political institutions. Here, where labor was scarce, the regulatory crust of European mercantilism tended to crumble. Gone were the guilds whose rigid rules on apprenticeship and product quality hampered competition and diminished consumer options. Missing also was the notion of monopoly rights, which stifled much initiative back in England; in Massachusetts, it evolved into something akin to our modern idea of patents, which meant that monopoly powers were limited both in scope and duration.
Vigorous development of the fishing, ironworks, shipping, and timber industries, all essentially interrelated, laid a vital groundwork for rapid economic development. Innes suggests that our modern concept of synergy is applicable here, for each of these industries helped promote the development of the others, the whole exceeding the sum of its parts.
Yet, as Innes stresses, the capitalism of this era was not individual but communal. Development of the ironworks and shipbuilding industries was deliberately fostered by both the Massachusetts General Court (the governing body) and individual communities, which provided free land, tax exemptions, and exclusive rights to individuals and groups willing to invest in establishing factories—much as our states today seek to attract industries by offering tax advantages and other benefits. Sales of materials such as timber were likewise sometimes limited so as to encourage shipbuilding, which settlers believed would offer their community more long-run benefits than would accrue if the wood were used for more transitory purposes.
Of course, there was vastly more individual freedom than the settlers had enjoyed in their homeland, but the Protestant ethic also imposed a social discipline provided by community constraints which curbed what Innes sees as the myopic tendencies of short-run profit-seeking.
Expressed another way, Innes finds much evidence of civic engagement. He does not propose that our federal government should emulate this system, for in his account these are all local arrangements which tapped the energies and the far-sighted wisdom of local residents. It should also be remembered that modern institutions such as stock markets had not yet emerged. Nor were the settlers’ efforts always an unmitigated success: while they favored cattle raising over growing crops to economize on the use of scarce labor, the large expanses needed for grazing cattle forced the settlers to become more dispersed, thereby diluting the sense of community. And the technical difficulties involved in operating the early iron works forced the colonists to attract from Britain men and women who were highly skilled at their tasks but who were also given to armed robbery, rape, arson, assault, battery, lewdness, profanity, and chronic drunkenness—all distinctly non-Puritanical behavior.
Yet, by not resorting to slavery, as the plantation economies to the South had sadly done, the New England Puritans escaped the implied notion that hard work is degrading. On these principles of hard work, community concern, investment in the development of strategic productive facilities, and reduced regulation, the New England colonies set a standard for economic, social, and political development which was not only remarkable for its time but which has seldom been matched.