Max Weber on Law and the Rise of Capitalism

Max Weber Weber on law and the rise of capitalism Weber's We ber's discussion concentrated on three issues: 1. the causes for the creation of o f different legal systems. 2. the relationship between law and the rise of capitalism. 3. comparative analyses of law which he uses to verify his overall theory. Weber We ber was a lawyer and a legal historian. o understand Weber's Weber's theory of law re!uires understanding why capitalism as a distinct form of economic activity and organi"ation arose in #urope and not other parts of the world. Most organi"ed societies have $law$ but the #uropean legal system differs significantly from others. %e developed a typology of law as a conceptual tool to analytically differentiate #uropean law from other types of law. his distinct type of legal system is part and parcel a part of the rise of capitalism. hus& he argues the #uropean law played and important role in the emergence of the capitalist economic system. While law was critical for the development of capitalism& it was not en tirely caused by capitalism. Weber We ber argues other noneconomic nonecono mic factors were involved including: a. internal needs of the legal profession  b. necessities of political organi"ation (compromise) (compromise) Weber argues that the uni!ueness of capitalistic legal orders lies primarily not in its substance& Weber  but in its method of organi"ation. *apitalist legal order is distinct from all other legal systems in that the law: a. is separated directly from other aspects of political activity  b. speciali"ed legal groups (lawyers) exist

c. legal rules were consciously fashioned and rulema+ing was relatively free of direct interference from religious influences and from other sources of traditional values. d. specific decisions are based on the application of universal rules hus& the basis for legal decision ma+ing was 'formal rationality'. ,ther civili"ations (i.e.& *hina) lac+ed the legal heritage (-oman law tradition)& aspects of feudal organi"ation& the religious bac+ground& political structures& and economic interests particular to #urope. Weber argues that explains& in part& why #urope was the cradle of capitalism. Capitalism requires a legal order that is rational.

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*lass struggle generated the legal order of Western capitalism.  description of the commonwealths:  rising middleclass (third estate) which had to confront the reality of a moreorless absolute state that was controlled by the feudal land strata. his  political impotence of the third estate led them to stress formal and logical& rather than substantive techni!ues to constrain arbitrary state action. Weber argues that law has four central concepts: a. organi"ed coercion  b. /egitimacy c. 0ormativeness d. rationality a. coercion  an order is called law if it is externally guaranteed by the probability that  physical or psychological coercion will be applied by a staff of people to bring about compliance or avenge violation.  b  c. legitimate orders are: 1. socially structured systems which contain:  b. bodies of normative perceptions c. to some degree are subectively accepted by members of society as  bonding for their own sa+e without regard for purely utilitarian

calculations of the probability of coercion. We obey the law because of its legitimacy. ince law combines legitimacy and coercion& it has both power and authority. *ustom (norms)& conventions& and law are basic sources of normative guidance. 4*ontent of law co mes from normative content.5 d. rationality  measures the degree to which a legal system is capable of formulating&  promulgating& and applying universal rules. 6eneral overall definition of law /aw is a system of standards& maxims& principles& or rules of conduct& to some degree accepted as obligatory by the persons to whom it is addressed& and bac+ed by a speciali"ed enforcement agency employing coercive standards. o the extent that sanctions are applied in accord with a system of rules& law is said to be rational. Max Weber's Typology

 Lo! Degree of Generality of Legal Norm  High Degree of Generality of   Legal Norm (like cases=like decisions) la!finding"

(like cases ≠  like decisions) la!finding"

7ormal -ational (1&1)

ubstantive -ational (2&1)

7ormal 8rrational (1&2)

ubstantive 8rrational (2&2)

he purpose of Weber's typology is to differentiate the dimensions of legal organi"ation of the lawsociety relationship. he different types chart differences among the way in which legal

systems handle the problems of formulating authoritative norms 4law ma+ing5 and applying such norms to specific instances 4law finding5. Weber analy"es the structure of law ma+ing to show the differences between consciously constructed law and sacred law. *onsciously constructed law can be seen as the instrument to achieve some set of extrinsic set of goals. nd this is obeyed only to the extent that the goals are met. acred law can be seen as a specific set of social purposes and should be obeyed for their own sa+e. naly"ing structures of lawfinding shows the different ways laws are applied. ccording to Weber's typology& law finding can be rendered in many ways. 9ecisions can be rendered through soothsayers and followed because people believe in their magical powers. 9ecisions can be  based on secular grounds. 9ecisions can result from a resolution of specific conflicts. o& Weber was primarily concerned with the extent to which decisions are: 1) 9etermined by prior existing general rules of universal application& 2) #stablished by differentiated legal organs. /ogical 7ormal -ational (1&1): states that all human action is ordered by law. Whatever cannot be constructed rationally is legally irrelevant. he law is or must be perceived as a gapless system. #very concrete legal decision is the ap plication of an abstract proposition to a concrete factual situation. 8t must be possible in every case to derive the decision from abstract propositions by means of legal logic. hese decisions are not based on  political& economical& and social factors (#) and li+e cases get li+e decisions. n example of this is the ;.. *onstitution. ubstantive -ational (2&1): employs a set of general rules& but these are of some body of thought extrinsic to the legal system (religion and or po litical ideology). o the extent to which the external ideology is understood& it is possible to understand how the legal order  generates decisions.
 Discussion topic# 7or Weber& the capitalist legal order facilitated the expansion of the growth of capitalism as an economic orderwhy and how= ;se Weber's analysis of the laws surrounding contracts to show why and how capitalism needs a formal rational legal order. *ompare and contrast Weber and 9ur+heim's analysis 48nverarity *h. >5 of contracts. gain& it can  be argued that an analysis of law is a means by which one can understand how social order is created and maintainedexplain. hat is& through Weber's analysis of contracts he develops a very critical approach of the conse!uences of a formal legal order and capitalism as an economic systemexplain. 8s this perspective similar or different from 9ur+heimwhy or why not= 4Must read 9ur+heim to answer5 The rise of the Western legal order

;nder what conditions did #uropean law arise= Why only in #urope= 8ts existence was intimately lin+ed to the rise of the modern bureaucratic state. ?et& the state itself was dependant on the rise of a new legal order.  dialectic relationship. o understand this historical transition& Weber created another typology (besides the formal rational one). his typology measures political systems or forms of domination (legitimate authority). hat is& how different societies ustified their power to command. here are 3 ideal or pure forms of legitimi"ation: a. raditional  commands are legitimate because they are issued in accordance with custom.  b. *harismatic  because they are issued by and individual with extraordinary or exemplary characteristics (9avid @oresh). c. /egal enactment  when law becomes rational law it becomes its own legitimi"ing  principle and the basis of all legitimate domination. his is the nature of $modern$ law and thus the $modern state$. he modern state created formal rational legalism and vice versa. 47ocus on state& not economy.5 /egal domination occurs under the following conditions: 1. there are established norms of general application 2. there exists a belief that a body of law is a consistent system of abstract rules that administration of law consists in the application of these rules to particular cases and is limited to these rules. 3. the 'superior' is subected to this impersonal order.

>. obedience is to the law and not to some other form of social ordering. A. obedience is owed only within rationally determined spheres (urisdiction). he ultimate ustification for 'formal rationality' is a clear differentiation of law from other sources of normative ordering. 8t must be supersede other systems that might dictate  policy. /aw must be autonomous and supreme. /aw must separate itself from power and religion. -ulers will constantly be tempted to sacrifice universal principles for particular substantive go als. imilarly& where law is mixed with religion& pressure will emerge to sacrifice generality for concrete ethical ends. uch legal autonomy entails a differentiated legal structure. ;ni!ue s+ills& roles& and modes of thought are necessary if a society is to create and maintain rules.  highly speciali"ed profession must exist to maintain these !ualities (lawyers  udges). *onditions which specifically caused the rise of legalism in the West are: 1. religious and secular law were separated thus allowing a divorce of legal and ethical norms. 2. bureaucrati"ation of the -oman *atholic *hurch and its -oman law heritage led canon law to become significantly more rational than most theocratic legal orders. 3. #uropean +ings in their struggles for power found it necessary to create bureaucratic staffs. >. the emergence of a merchant class. A. the argument of 'natural law'. B. (created by 2) universities trained individuals on the science of law.

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Weber emphasi"es the importance of the creation of separate 'status groups'  lawyers as an essential condition for the growth of legal realism.  status group is an organi"ation founded on the basis of formal education& prestige& and style of life. 48nsulated from political& economic& and social concerns5 ince law is autonomous& it then can be perceived as a medium to resolve social conflict and since the legal  profession is also autonomous& they are the status group loo+ed to become responsible for  the resolution of social conflict.  ny group that is selfpolicing is a status group. 

=Why does capitalism and legal realism need each other=

1. capitalism needs a legal order which has a relative degree of calculability. 2. its capacity to develop substantive provisions  principally those relating to freedom of contractessential to a free mar+et system. /egalism supported the development of capitalism by providing a stable and predictable atmosphereC capitalism encouraged legalism because the bo urgeoisie (capitalist class) were aware of their own need for other types of government structure.  capitalist class is necessary but not sufficient for the emergence of legal rationality. 

/aw assures rational prediction through contractual obligation& restrains selfishness (failing to perform some agreement for personal gain). What is the relationship between law and the economic form or the structure of capitalism= Weber argues that $law$ is an economically neutral  structure of state action that is necessary to the effective functioning of a mar+et system. 8t facilitates but does not determine economic action. /aw ideally leaves the economic activity of individual households and enterprises entirely free and confines its regulations to the formal foundation o f settling disputes connected with the fulfillment of free contractual obligators. he state does not regulate economic activity. he decline of +inship organi"ation is essential for the use o f 'contract'. Criticisms  of Weber 

here is a potential conflict between legal rationalism of logically formal types and a legal system's creative capacity to generate new substantive concepts and institutions re!uired by a changing economic structure. *ontradiction between the values of a democratic order and the re!uirements of formal rationality. 0o substantive social ustice& conse!uently legal rationality legitimates the ine!ualities of modern capitalism. Some contributions of Max Weber

o Weber& rationality refers simply to the application of general rules to the facts of a case in reaching decisions.  $rrational : li+e cases ≠ li+e decisions %ormal : distinct legal procedures used.

ubstantive 8rrational: there is no systematic rules which ustify particular decisions. /itigants are seldom able to anticipate the outcome of their caseirrational. Duvenile court system (before 8n re 6ault). 7ormal 8rrational: it is formal in the sense that distinct legal procedures are used to reach a decision. his type of procedure is irrational because n o general rules guide the decision. he outcome in most instances are unpredictable and inexplicable. *entral authority is wea+& and this leads to the central authority being unable to impose a solution to legal problems& the outcome is placed in the hands of supernatural forces. ubstantive -ational: principles of a decision may be based on political& economic& social& religious& or ethical standpoint. /egal decisions encounter gaps between the rules employed and the situation encountered. 4he
Modern capitalist enterprises rest on calculation. he problem with uries is their unpredictability. *apitalistic enterprises cannot calculate unpredictability. -ationality in the legal system (application of general rules in reaching a decision) was a  precondition for the emergence of rational capitalism. he roots of formal rational law lie not in eco nomic transformations& but in the centrali"ation of political power. ;nifying the legal system was importantadded  predictability. *hanges in the legal system did not result from previous modifications of the economic system. /egal change was a conse!uence of the #nglish @ing's (%enry 88) effort to consolidate their power.
Marx was ust the oppositehe said the mode of production will determine the social relations.