Werner Sombart | 1911
Academic Significance and Reception
_The Jews and Modern Capitalism_ was published in German under the title _Die Juden und das Wirtschaftleben_,. At the time of its publication, the book was not regarded as an anti-Jewish work.
The treatise serves as a comprehensive refutation of the concept put forward by Sombart's colleague, Max Weber, in his 1905 work The Protestant Ethic and the Spirit of Capitalism.
The crux of Sombart’s counter-theory is that Protestant merchants, such as those who backed the violent overthrow of Charles I by Oliver Cromwell in the 17th century, held values on money and trade taken verbatim _from_ Judaism. In most instances, figures such as Oliver Cromwell and William of Orange were even directly financed by Jews.
The Jews and Modern Capitalism was not considered an anti-Jewish work at the time of its publishing nor was Sombart seen as an anti-Semite. Until his falling out with Jewish communist revolutionary Rosa Luxembourg, Sombart enjoyed deference from the international left as a pioneer of capitalist critique, authoring milestones in economics and even creating the popular meme of Late Stage Capitalism that circulates in anti-racist leftist circles today.
It was only in the 1930s and after World War II that Sombart’s works became controversial, but this was due to the fact that he later embraced National Socialism as an alternative to both Marxism and Capitalism, not any debunking of his academic work or studies.
In Sombart’s view, the major catalyst for the rise of the Jews that had taken Europe and later the Americas by storm since the 16th and 17th century derived from the discovery of the New World and the establishment of the world’s first stock exchange in 1602 in the city of Amsterdam.
According to Sombart, Jews laid the groundwork for mortgaging and modern investment banking, usurious loans (in contrast with the ancient Roman loan system, which dealt largely with personal borrowing), developed sophisticated strategies of commerce in the Talmud, and quite literally conjured up the concept of the modern stock market itself through the creation and command of previous financial instruments like the system of bills of exchange.
As global markets opened up through the discovery of the new world and a native European bourgeoisie began to develop, Jews found political allies among merchants who relied on them for their international connections and access to foreign exchanges, as well as kings and princes who needed loans from wealthy Jewish moneylenders, weapons from Jewish arms contractors and provisions to wage wars, expand their imperial economies, or wrestle titles from competitors.
Jews since ancient times mastered the art of moneylending, allowing them to build power blocs that caused unrest among the populations of Europe and led institutions such as the Catholic Church and absolutist monarchies to ban them from participating in political life.
The exploitative commerce practiced by Jews was seen as evil or socially destabilising by host peoples. There are many cases where Jewish practices provoked domestic unrest, leading to riots and full expulsions.
This began to change once the Spanish and Portuguese discovered the Americas. Though Jews were officially expelled from both nations in the late 15th century, the Jews who had amassed great fortunes as merchant elites under the Moorish occupation were often able to keep their money and stay in the country by converting to Catholicism. These individuals, despite being baptised, by and large retained their Jewish identity and practices, leading them to be described, at times pejoratively, as Conversos or Marranos.
Luis de Santángel, Spanish royal treasurer, was instrumental in financing Columbus’ 1492 voyage, which sought a trade route to China and India but discovered America instead. Following this breakthrough, Marrano Jews tied to Santángel grew wealthier and more powerful through funding New World voyages and establishing merchant colonies that returned to Spain and Portugal laden with gold and silver.
Before New York and London, there was Amsterdam. The growing power of these pseudo-Christian Jews through New World plunder caused antipathy in Iberia, triggering emigration to Amsterdam, then ruled by the anti-Spanish, philo-Semitic William the Silent. It is here that Jewish power as we know it began. Dutch contemporaries described the arriving Sephardic Jews as bringing immense wealth, including troves of precious metals in quantities never seen before.
After the Amsterdam stock exchange was created to fund the Dutch East India Company, Jews immediately snapped up a massive proportion of shares and effectively monopolized the floor.Exact figures for Jewish representation are extremely difficult to obtain—unlike smaller European markets that published shareholder lists. Larry Neal (1982) concluded the secrecy was meant to avoid controversy over Jewish overrepresentation, which dwarfed even 18th-century London: in 1739, 22 of 32 Amsterdam brokers were Jewish; in 1764, 36 or 37 of 41.
After Portugal expelled Jews from Recife, Brazil, they sailed to Dutch New Amsterdam. Governor Peter Stuyvesant petitioned to bar them, but in 1655 the Dutch West India Company ordered him to admit the refugees because Jews were major shareholders.In Amsterdam, Jews felt more at home in the stock market than the synagogue.
The first and most influential book on stock trading, Joseph de la Vega’s 1688 Confusión de Confusiones, was written by a Spanish Jew and explained bull and bear plots, futures, and index trades. Though barred from direct political office, Jewish merchants founded influential newspapers for Gentiles (e.g., the Amsterdam Gazette), ingratiated themselves with the bourgeoisie, and funded intellectuals like Menasseh ben Israel, who helped reverse Edward I’s 1290 expulsion edict under Cromwell in 1656; Cromwell’s army was supplied by the Jew Antonio Fernandes de Carvajal.
Here is the familiar pattern: dominance of high finance, business, and globalised trade as precursor to political and social influence and eventual full capture of institutions, often through frontmen, bribery, and violence. Very few of these Amsterdam bankers, merchants, and speculators were Ashkenazi (the supposed high-IQ branch). They were Sephardics, most baptized as Christians.
The Character of Modern Capitalism
Modern Capitalism is defined as an economic organisation in which two distinct social groups cooperate: the owners of the means of production, who oversee management and direction, and the workforce, who possess only their labour. The primary catalyst for this system is the intense pursuit of gain or profit, alongside economic rationalism, displacing traditional economic activities.
The shifting of the centre of economic activity, beginning in the sixteenth century, moved from Southern European nations such as the Italians and Spaniards towards the nations of North-Western Europe, including the Dutch, French, and English.
This geographic reorientation exhibited a notable parallelism with the dispersion and settlement patterns of the Jewish people. The influx of Jewish populations into various towns and countries often coincided with the beginning of their economic importance. The economic perspective espoused by Jews aligned entirely with the modern outlook, championing individual liberty in economic undertakings.
The importance of the Jewish contribution to modern economic life is considered twofold: fundamentally shaping both the outward structure and the inner spiritual essence of modern capitalism.
Structural Contributions to Global Commerce and Finance
The Jewish influence was paramount in conferring an international character upon economic relations. Jewish populations in Southern Europe, particularly the Marannos who faced expulsion from Spain in 1492 AD and Portugal shortly thereafter, scattered across the globe, establishing firms in disparate centres of economic activity.
This conferred instantaneous international "correspondence"—a prerequisite for international commerce and credit—which Christian houses could achieve only with considerable difficulty. Jews were central in directing colonial trade and the flow of precious metals towards North-Western Europe, enabling countries such as Holland, England, and France to benefit from these international connections.
Trade monopolisation extended across luxury items, including precious stones, silks, and jewellery. Jews were pioneers in the large-scale placement of staple articles on the world's markets, dealing prominently in textiles and colonial goods such as sugar and tobacco. They introduced new commodities into circulation, including indigo and various cotton goods, a practice viewed by some contemporaries as detrimental to indigenous labour. The ability of Jewish traders to sell more cheaply than others was attributed partly to frugality and contentment with smaller profits, accelerating turnover, a business principle foreign to the traditional fixed-profit system.
The modern Stock Exchange became the focus of economic activity, and its mechanisms owe their genesis largely to Jewish initiative. Jews occupied a predominant position in bill-broking, which was the origin of Stock Exchange dealing, especially in trade centres like Venice and Hamburg. Speculation in stock and shares in Amsterdam, commencing in the 17th century, was monopolised by Jewish parties soon after the Stock Exchange was established. The business of stock-jobbing was introduced into the London Exchange by Jews in the first half of the 18th century.
Securities represent the standardisation of personal indebtedness, converting it into an impersonal relationship. The modern form of credit instruments, specifically bearer bonds, derives chiefly from Jewish influences, underpinned by a Jewish legal system capable of conceiving of abstract and impersonal legal relationships. The firm of Rothschild played a critical role in later developments, internationalising the stock market and introducing the aggressive business of bringing out public loans and company promotion, which became a Jewish speciality.
Role in the Foundation of Modern States
The construction of modern States was significantly aided by Jews who served as financiers and army purveyors throughout the 16th, 17th, and 18th centuries, supplying resources such as weapons, munitions, and food, and providing financial backing to royal courts and governments. Figures such as Sir Solomon Medina acted as major contractors in the wars of William of Orange.
The position of Jews was generally one of "semi-citizenship". While laws restricting their economic activities existed, they often proved ineffective against capitalistic interests and were circumvented by privileges and special royal orders. However, the exclusion of Jews from public life, including military, governmental, and academic careers, forced concentration of their immense ability and energy solely upon commerce and industry. This enforced political detachment uniquely positioned them to become standard-bearers of international capitalism, allowing them to serve successive dynasties and governments regardless of political partisanship, thereby strengthening the capitalistic ideal of indifference to all interests except gain.
The ascendancy of Jewish financial power culminated in the backing of the Glorious Revolution of 1688 AD in England. The Bank of England, established in 1694 AD, was quickly dominated by Sephardic Jews who were its main proprietors and financiers. The preference of creditors shifted from autocracies to parliamentary democracies because the latter could commit the entire nation to repay public debts, providing greater security for lenders.
The Jewish Aptitude: Religion and Rationality
The fundamental ideas of Judaism are rooted in extreme intellectuality and rationalism. Rationalism, or intellectualism, which avoids the emotional and mystical, is characteristic of both Judaism and Capitalism. The structure of Judaism is based on a contract between God and Israel, necessitating obedience to the Law. This relationship demands constant moral bookkeeping, where sin and righteousness are calculated quantitatively based on commands kept versus neglected, paralleling the quantitative profit motive of capitalism.
The pursuit of wealth is not sinful, but rather a blessing from the Lord, provided possessions are used for divine ends. This religious sanction encouraged zealous economic activity among the pious. The rationalization of life is the core principle of holiness, aiming to replace natural instincts with considered, goal-oriented actions. Strict religious observance governed all aspects of life, including sex, food, and speech, cultivating qualities highly valuable to business, such as industry, circumspection, sobriety, and thrift. The rigorous rationalisation of sexual life, enforced by prohibitions against extra-marital connections and restrictions within marriage, diverted large reservoirs of physical and intellectual energy into economic channels.
Commercial Methods and the Nomadic Spirit
The inherent characteristics of the Jewish people, traced back to their origins as a desert and nomadic people, facilitated their unique success in capitalistic ventures. Nomadism, or Saharaism, fostered the qualities most antithetical to the feudal system: high intellectuality, energy, mobility, and teleology. Their economic activities constantly violated the established norms of the early capitalistic age, positioning them as pioneers of a new economic order.
Jewish commercial practices included relentlessly seeking out customers rather than passively waiting for them, a method deemed improper by traditional traders. The practice of cut-throat price competition, driven by a determination to seize customers, was condemned by contemporary merchants. The ultimate business aim was perceived as absolute gain, unscrupulously pursued beyond customary ethical or legal constraints that governed Christian competitors.
Anthropology and the Constancy of Jewish Genius
The Jews are an anthropological entity, distinct from the peoples among whom they dwell, and have maintained ethnic purity for thousands of years. This constancy is evidenced by the remarkable retention of their physiognomy throughout the ages. The constancy of Jewish intellectual qualities and capacity for money-dealing, traceable throughout Jewish history from the Exile until modern times, suggests they are rooted in the blood of the race.
The Jewish focus on intellectuality, rational thought, and abstraction is attributed to the historical demands of desert and urban life, rather than agricultural pursuits. This mental framework, combined with energy and teleology, fits precisely the requirements of the capitalistic system.
The entire economic development of the Jewish people led to an abundance of wealth, making Jewish riches proverbial throughout history, from the age of King Solomon to the modern day.