Sacred Capitalism

My writing over the last few years has centred around a pattern that I picked up from the works of a number of scholars in seemingly unrelated fields. The anthropologist, Arnold van Gennep, called it the rites of passage. The comparative mythologist, Joseph Campbell, called it the hero’s journey. Comparative historians such as Toynbee and Spengler called it the cycle of history. In addition to these, I noticed the same pattern implied in various theological and psychological works.

The cycle begins in a state of holiness (wholeness), which is characterised by equilibrium, consciousness, and equanimity. We understand the world in which we exist and are at ease with our position in it.

Then something arrives which breaks us out of equilibrium. We transition into the state of sacredness (un-wholeness). We are thrust into a world we do not understand and forced back into a more fundamental mode of being that we might call instinct or will. The sacred state is irrational in nature. Our desire to enter it is also irrational. It requires a leap of faith.

It is because we must transition from the state of holiness to the state of sacredness that the beginning of the cycle is marked by a sacrifice. One way to think about it is that we sacrifice our old identity in order to attain a new one (where identity includes both external and internal dimensions). The most important turning points in life – puberty, marriage/childbirth, retirement, and death – all require a sacrifice of identity. Therefore, they are all Journeys into the Sacred.

From these brief considerations, we can see that the sacred cycle is about transformation, transcendence, and evolution. It is the process by which we incorporate something new into ourselves, a reconfiguration of our identity.

Although the sacred cycle is easiest to understand in relation to the life of the individual, one of the great insights of the comparative scholars of the 18th and 19th centuries was that it also seems to apply to collectives. I mentioned Leopold von Ranke a few posts ago. He believed each historical epoch to be guided by the divine, which is another way to say that each epoch is a Journey into the Sacred. His insight was taken to its logical conclusion later by Spengler and Toynbee.

But there’s a more famous example of a collective cycle that is obvious in hindsight but which I only realised after writing last week’s post. The work of Karl Marx also implies the sacred cycle, not just in relation to capitalism itself but the larger historical arc which Marx believed would end in communism.

It was the Austrian economist Joseph Schumpeter who fully explicated the cyclical nature of capitalism. He described it with the phrase creative destruction. But creative destruction is exactly what happens in a Journey into the Sacred. Destruction = sacrifice. Creativity = transformation. Therefore, capitalism is also a Cycle-Ending-in-Transcendence.

To show why that’s true, we can expand on the thought experiment I used in last week’s post, which is taken from the actual history of capitalism when England set about breaking the monopoly that Belgium and the Netherlands had on clothing manufacturing in the 16th century.

Every Journey into the Sacred begins in the state of holiness or equilibrium. Since clothing is a staple necessity of life, the market for it is relatively fixed. However, back in medieval times, there was an extra reason for the stability of the clothing industry. The market was dominated by guilds of craftsmen who regulated everything and were able to dictate the price by controlling supply. Enormous wealth accrued to those guilds which had cornered the market for luxury clothing, especially silk and high-grade wool. Venice, Florence, Bruges, and similar cities were built upon the profits of these monopolies.

The guilds were part of the network of social, political, and economic relationships that we call feudalism. That system had been in a stable (holy) state for centuries. At the time, it couldn’t have been known that the battle over clothing would eventually spiral into the destruction of the entire paradigm.

This leads to another crucial insight about the sacred cycle, which is that it is fractal in nature. There are cycles within cycles. Accordingly, there are sacrifices within sacrifices. The sacrifice of the clothing monopoly ended up leading to the sacrifice of the feudal system altogether. All that was also tied in with the religious shift from Catholicism to Protestantism, which was not just a theological change but also a financial one because the Catholic Church had been sucking money out of Northern European economies (it had also been abusing its monopoly position).

Within these larger abstract cycles, we can identify more fine-grained ones affecting various demographics. For example, the sacrifice made by the early entrepreneurs who challenged the authority of the guilds was to become social pariahs and to face whatever consequences were inflicted upon them by the authorities that were loyal to the status quo. Eventually, those entrepreneurs got the upper hand, at which point the guild workers had to sacrifice their livelihoods.

These different cycles were all related to the larger cycle that was forming. However, they were distributed unevenly over time and place. England and the Netherlands moved to democratic capitalism earliest, while other nations such as Germany and Italy waited until the 19th century.

The transition into capitalism was itself a Journey into the Sacred that involved a reconfiguration of societal relationships. As Max Weber pointed out, that reconfiguration was predicated on a new understanding of the sacred embodied in Protestant doctrines. More importantly from our point of view, however, we can see that capitalism is itself predicated on the sacred cycle. It follows the same pattern.

The starting state for the capitalist cycle is an equilibrium where monopolists extract profits and build wealth. This accumulation of wealth gives entrepreneurs the incentive to innovate. It is the innovation of the entrepreneur which breaks the equilibrium and ushers in the sacred part of the cycle. Note that this is the same pattern we see in the mythical stories of the dragon slayer. The monopolist is the dragon guarding his hoard. The entrepreneur is the hero.

The people who work for the monopolist will face unemployment as a result of the innovation that begins the cycle. Therefore, they also form part of the sacrifice. Each of them is thrust into their own Journey into the Sacred because their economic identity is lost. The consequences will depend on the individual but can span an arc from the mild inconvenience of looking for a new job through to long-term unemployment, marriage breakdown, alcoholism, crime, etc. The cycle is only sacred to the extent that catastrophic failure is a real possibility. The sacrifice must be real.

When viewed in this way, we might ask the question why anybody would willingly enter into the cycle. Why not just remain in holy state forever and take it easy? Ultimately, that is a theological question. Seemingly all religions promise that there does exist an eternal holy state which can be attained. The Christian tradition relegates the holy state until after death. While we are still down here on earth, we are sinners, meaning that we are liable to be thrust into the sacred at any time.

Another way to say the same thing is that we may always be called on to sacrifice everything to go through a process of transformation. There is no rest for the wicked. We must continually evolve. We have learned in the modern world to focus more on this positive side of the equation. The sacred cycle is dangerous, but it also has its rewards. The dragon slayer risks his life but, in the end, he gets the gold.

Looking back on the liquidation of the medieval guilds, it might be argued that the guild workers had the most to lose. However, when we take a broader viewpoint, we see that things did improve over time. Guild members worked very hard. The average medieval farm peasant worked between 30 and 40 hours a week. Guild members worked almost double that. It would take all the way till the 19th century for tradesmen to get the same hours of work via the 8-hour workday.

This comparison between guild workers and peasants shows an important fact about capitalist monopolies. Feudal lords had monopolies over their lands. However, they were not able to extract profit. Therefore, they had no incentive to try and get the peasantry to work longer hours. By contrast, clothing, and especially luxury clothing, was a profitable business. That is why many of the guilds, and the cities in which they were located, became fabulously wealthy.

It wasn’t really until the 18th century that agricultural produce started to become a profitable market due to increasing urbanisation and the consolidation of land holdings. Once the profit arrived, so too did the technological innovation. Capitalism expanded into the agricultural sector.

Marx and his followers emphasised that the profits were won at the expense of workers, and therefore it would be preferable to be a medieval peasant safely ensconced in a locality where a monopolist could not extract wealth. Perhaps that’s true. But there are at least two arguments in favour of the capitalist paradigm.

The first is the one we have already made: that, for manufacturing workers, hours of work did decline over time and conditions did eventually improve. However, the far more important point is the transformative nature of capitalism. It is this that really sits at the heart of the modern Western worldview.

The Journey into the Sacred is about change, adaptation, and transcendence. There can be no question that capitalism turbocharged this attribute of the sacred cycle. That was especially true in the 19th century as capitalism became dominant. While there have been many people who have objected to the destructive and extractive nature of the paradigm, there have been just as many who supported it on the basis of its dynamism and vigour.

In truth, both of these are properties of the overall cycle. The sacred cycle is destructive. It requires a real sacrifice. Those who prefer to stay in holiness and equilibrium resent being forced into the sacrifice. On the other hand, those who do not align with the equilibrium position see the cycle as an opportunity to break free. Capitalism has always favoured the latter group, and that is why the modern concept of “freedom” is very much related to the destruction of the status quo.

The secret to the success of capitalism was its ability to destroy existing monopolies and unlock wealth. What happens, however, when a majority of the population find their interests aligned with the status quo? What Marx and Schumpeter believed was that eventually capitalism would come to an end when monopolies become so powerful that they could prevent any competition from displacing them. Once that happened, the extractive power of these giant monopolies would create a state of affairs so intolerable that the only recourse would be to have the state take over as the über-monopolist.

We’re not quite there yet, but this is a pretty exact description of what has happened in the years after WW2. In every Western nation, the state retained most of the monopoly position it had exercised during the wars. Arguably, neoliberalism was about breaking those monopolies, but all that has happened instead is that the banks and multinational corporations have become monopolists extracting enormous wealth at a global scale. These monopolies are backed by the ultimate monopoly of the United States as the global superpower. In fact, the imperial system of the USA is predicated on monopoly control of global banking and multinational corporations.

The irony is that the USA was born out of a rebellion against the most powerful monopolist of the 18th century: the British East India Company. Still, that’s why capitalism is cyclical. The entrepreneur at the start of the cycle becomes the monopolist at the end. St George grows old and turns into a dragon. It’s not inevitable, but it does seem to be the most likely outcome.

The question before us now is whether the overall cycle of capitalism really is coming to a close as Marx and Schumpeter predicted. It’s telling that even so-called capitalists like Elon Musk are predicting that money and work will be a thing of the past soon and a utopia of leisure awaits us as robots and AI take over all the work. This is exactly what the Marxists were predicting in the late 19th century.

It’s also telling that so-called AI is a technology predicated on the extractive mentality of the monopolist. It sucks into itself all the innovations of all the entrepreneurs of history. But, of course, there’s nothing to stop it vacuuming up all future innovations. It would then become the exact kind of über monopolist that Marx said would usher in communism.

Of course, the so-called capitalists who are pushing it tell us that AI will somehow become an entrepreneur whose innovative power will supercede that of humans. Either way, capitalism comes to an end with a monopoly that cannot be broken, a dragon that cannot be slain.

These utopian fantasies theoretically portend a return to the holy state that ends the sacred cycle. Once we have passed through the uncertainty and confusion of the sacred phase, we once again return to equilibrium.

Does that sound like an accurate description of the world we live in? I don’t think so. On the contrary, our current state of affairs seems like it could collapse at any moment. History has not come to an end. There will be more Journeys into the Sacred tom come. Will they be capitalist in nature? Will Marx have the last laugh as capitalism collapses into communism? Or will some new paradigm take over? My money’s on the third option, but time will tell.