In Chapter 3, I address religion as a moral foundation for capitalism by discussing the lives and writings of Max Weber and R. H. Tawney. Classical economists after J. S. Mill limited the motivations of economic man to narrow self-interest and increased the mathematical formalism of their discipline, which tied their hands in arguing for capitalism. I begin by discussing the narrowing of arguments for capitalism in the nineteenth century by classical economists and the resistance to this narrowing by historical economists in Germany. Next, I discuss Max Weber and his broad critique of capitalism which included important social and moral issues as well as economic considerations. Given their opposing views, I contrast Weber’s critique of capitalism with that of Karl Marx. I then discuss the British economist R. H. Tawney and his critique of capitalism as a devout Christian on the political left. Tawney’s attempts to address the social injustices of the British industrial revolution led him to support the British Labour Party, but he rejected Marx’s anti-religious views and his emphasis on class division. This sets up a discussion of the role of religion in the development of capitalism based on Weber and Tawney’s two seminal works.

This chapter traces three grand transformations of the North American economy. The first process – the shift from a rural agricultural economy to an urban industrial economy and the emergence of ‘modern economic growth’ – began before 1870. The second process – the shift from growth based on increasing factors of production per person to growth based on enhancing the productivity of the factors – began at the turn of the twentieth century. It was tied to the emergence of the United States as a global economic leader. The third process – the shift from an internally focused industrial economy to a globally integrated, information-based economy – began after 1970. Focusing on these transformations complicates the story of balanced growth common in macro-growth accounts, but is crucial for our understanding of the growth of the North American economy.