“Chapter 21: Interests in the Pre-Capitalistic Period” in “Classical Sociological Theory and Foundations of American Sociology”

Chapter 21. Interests in the Pre-Capitalistic Period

In the beginnings interest is a phenomenon either of international or feudal law. Within a tribal village, or clan community, there is neither interest nor lending, since transfers of value in consideration for a payment are unknown. Where outside resources are used in economic life it is done under the form of neighborly help, such as house building.

The prohibition in the Torah against taking interest or usury against a brother rests partly on military and partly on religious grounds. The prohibition of interest taking from a brother is also characteristic of early Islam and Brahminism. Interest everywhere arises in the field of lending to foreigners outside the tribe or that of loans between classes. In this connection the contrast between creditor and debtor was originally always a contrast between a town-dwelling patriciate and rural peasants; it was so in China, India, and Rome, and so it is in the Old Testament as well.

The occasion for breaking through the prohibition against interest was provided by the loan of concrete property. In northern Europe the prohibition against usury was broken up by Protestantism, although not immediately.

Questions for Contemplation and Discussion

Look up the standard dictionary meaning of “commerce.” What is the etymological root of this word? How does Weber’s explanation for its historical origin accord with this original meaning?
This section can be read as a long list of requirements for trade, as we understand it, to be possible. Many of these prerequisites, such as roads, we take for granted now. Write down the complete list of items mentioned by Weber here. Do any surprise you? Can you think of any advances since the time of this writing(1923) that have helped advance commerce?
Weber’s historical description of the rise of trade demonstrates that there has not been much “free” about this activity. What legal and political institutions supported the rise of commerce?
Why would the consumer want to buy directly from foreign traders, rather than the local merchant? (Chapter 16) Do you see similar struggles today? Which faction of the trading class is served by current economic policies?
What is the position system of notation? Why was this at first prohibited? What was so revolutionary/threatening about this system? Note that Weber claims this as one of the primary perquisites for the development of capitalism in PESOC.
This section ends with a short description of the traditional prohibitions against charging interest and a statement that these prohibitions were relaxed under Protestantism. For much more on why this was so, read PESOC. Consider the viability of currently existing capitalism had the prohibition never been lifted.

Concepts

Rational Commerce

Bookkeeping

Interest

Be careful here! Factories were originally places in which factors, representatives of the seller, were located. Only later did the term come to be associated with places of manufacturing. ↵

The Rational State