This blog post examines the mechanism linking the formation of Western modern law to the development of capitalism, specifically exploring the significance of legal predictability for economic activity.
Upon the enactment of Germany’s unified civil code, Weber evaluated it as the supreme form of Western modern law, focusing his attention on elucidating the affinity between Western modern law and capitalism. He saw the interests of capitalists as the driving force propelling Western modern law forward. Modern capitalist enterprises operate on the premise of calculability, demanding a legal and administrative system that allows for the rational prediction of business activities through definite and general norms, much like the operation of a machine. Furthermore, on the political front, the administrative technical interest of monarchs and the utilitarian rationalism of bureaucratic administration, necessitated by the absolutist state to handle its expanding administrative tasks, also facilitated the emergence of Western modern law. Weber particularly emphasized the role of bureaucracy, stressing that bureaucracy, within its inherent necessity, creates rational administrative means, and consequently, new laws are demanded.
Beyond political and economic factors, Weber identified the growth of a professional legal class as playing a crucial role in the emergence of Western modern law. The training of this legal class occurred through theoretical legal education at universities on the European continent and through empirical legal training provided by practitioners in England. Among these, the development of modern European law was particularly accelerated by the modern legal education that unfolded on the European continent, grounded in the tradition of Roman law. The legal concepts employed in modern legal education were formed based on strict, formalistic interpretation of codified general rules. Legal theory gradually detached itself from the demands of religious and ethical stakeholders, developing into an independent logical system. As this legal class, governed by such legal theory, grew, the predictability of legal reasoning was also ensured.
Weber also provided a detailed explanation of how Western modern law promotes capitalist economic activity. First, the rights and obligations between contracting parties are explicitly defined through modern law, ensuring the reliable enforcement of rights. Consequently, contracting parties gain significantly expanded scope for free activity based on legal certainty. Second, the development of capitalism was spurred by the provision of new legal instruments that increased the predictability of economic outcomes. For instance, the introduction of the legal concept of the corporation contributed to greatly expanding the scope of individual economic activity by clearly defining the limits of personal liability.
The so-called English problem appears to be a case that contradicts Weber’s explanation. This is because English common law did not possess the characteristics of Western modern law as described by Weber. Common law was an unwritten legal system pursuing empirical definitions based on specific precedents, lacking a logical or abstract structure. Nevertheless, Western capitalism began and developed most rapidly in Britain. Regarding this point, Weber explained that Britain’s legal profession served the interests of their clients, the capitalists, and that judges, in particular, were strictly bound by precedent, ensuring a certain predictability in judicial outcomes.
In short, it is an indisputable fact that the British common law lacked systematic scientific rigor, and it is equally undeniable that Germany during Weber’s time was an economically backward society compared to Britain. Therefore, what Weber’s discussion on the British case implies is that the level of legal predictability necessary for capitalist development is not necessarily achieved solely through the systematization of law; it can be sufficiently secured through other means as well.
