Entrepreneurs, Capitalism and the Moral Economy

Narrowly construed, the purpose of this website is to promote understanding of how social theory relates to business ownership by branching off the concerns that animated Entrepreneurs and Capitalism Since Luther: Rediscovering the Moral Economy. More broadly, the website provides a continuing forum that expands awareness of the extent to which “purely economic” results depend upon socio-cultural context rather than just greed vs. fear in markets.


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Who you know and what you know are both important, but which is more important? Addressing that question to business history, six case studies illustrate contrasting relationships between social networks, vocational culture, and entrepreneurship. The cases support the conclusion that in capitalism’s early stages, cultural capital is scarcer than social capital and for this reason more crucial for business owners to control. Conversely, when capitalism is well established, social capital is scarcer than cultural capital and, for this reason, becomes more crucial to control. With these conclusions as its starting point, Part 2 traces moral legitimations of capitalism from the Reformation to the Enlightenment, to the Gilded Age, and finally to Joseph Schumpeter whose concept of “creative destruction” freed elite entrepreneurs from moral restraints that still encumber routine business owners. After examining the availability of social and cultural capital in the contemporary United States, the final chapter shows that small business owners’ social capital enforces conventional morality in markets, facilitating commerce, but also tending to legitimate small business the old-fashioned way. Elite entrepreneurs cannot obtain that moral legitimation and so depend upon beneficial economic results to retain societal toleration.


The class system routinely provides people with resources they need to enact their inherited status.  These resources are Pierre Bourdieu’s four forms of capital: financial, human, cultural, and social.  If a baby boy is going to become a coalminer, he will not need and will not receive a college education, uncles on Wall Street, and  a trust fund. He will need and will receive instruction in proper use of  a pickaxe and the supreme value of manly strength.  With only slight modification, Bourdieu’s “forms of capital” theory  can be applied equally successfully to becoming a business owner and, doing so, Bourdieu’s ideas ingeniously generalize Max Weber’s cultural approach to capitalism.  Individually and ensemble, the non-monetary forms of capital are resources that enhance a business owner’s chances in the marketplace quite apart from and in addition to financial capital.

Successful business owners start with the most abundant resources on hand in order to acquire what they lack. Most commonly, they have all four on hand, but If they have even one resource, they have a superior chance of getting the others. Resources on hand are ones the class system routinely provides young people like them.  A lifetime career progression requires business owners to start with non-monetary resources they already have in order to get money rather than the other way around. Indeed, without some supporting non-monetary resources, the  wealthy cannot make money in business. After all, a rich person who lacks business skill, business knowledge, business culture, business networks, and business reputation lacks the capability to run a business.  A fool may invest in someone else’s business, but successful investing requires personal resources. The class system normally but not invariably guarantees that those who inherit serious money are not fools.      

The existing literature in both business management and sociology contains abundant archival support of the value of  these non-commodity resources in business enterprise. Business owners with education, skill, reputation, social networks, and generalized aptitude outperform those who lack them, and the more resources they have, the better their chances for financial success.  From that point d’appui, this book addresses two more  advanced questions in business ownership. If they do not contribute equally, which of these non-monetary resources is most important for business owners to control?  Putting it very crudely, is who you know more important than what you know, or the other way around?  And whatever is the answer now, has it always been that way or did it change?

In order to lodge those questions in the history of capitalism, rather than only in the fleeting present, the book  presents six contrasting case studies that illustrate the importance of business-supporting ideas and business-supporting networks for business owners, now and in the past. Each chapter is an independent case study but together they display suggestive historical continuity. The case studies addresses the economic ethic of Protestant “ethnics” in the Reformation, Jewish merchants in early modern Venice, business-disdaining Aleuts on a remote Alaskan island,  an Islamic business caste in metropolitan Karachi,  Korean immigrant entrepreneurs in Los Angeles, and the unsuccessful business career of Donald J. Trump.  All the chapters converge around that claim that, without both social and cultural capital in place, business owners are handicapped, and their enterprise cannot flourish even when money is abundant.  However, the case studies also suggest that,  although both resource types have always been important, the balance of relative importance shifted over historic time from business-friendly ideas to business-supporting communities.  That is, during capitalism’s start-up phase,  the most important business-supporting  resource was cultural aptitude for business, which was scarce, whereas solidarity was abundant.  That balance historically shifted from aptitude to solidarity because the very success of capitalism diminished the supply of solidarity in society while enhancing the supply of skill and  aptitude. Explaining and illustrating this transition is the main business of part 1. Without changing the book’s guiding theoretical orientation, Part 2 redirects the book’s focus from business management to the moral legitimation of capitalism now and in the past.  The themes are related. Ideas that legitimate entrepreneurs also  legitimate capitalism;  and ideas that legitimate capitalism also  legitimate  entrepreneurs.  By legitimation is meant culturally shared ideas that enable people to understand business as a morally acceptable livelihood, which is an essential part of willingness to undertake it.  To the surprise of most students,  business ownership has not usually been understood as morally legitimate. Quite the opposite was usually the case. Capitalism entered the world stage under an inhibiting cloud of moral suspicion which it had somehow to dissipate. Following scholars who pioneered this line of research a century ago, our review starts with religious ideas. Early modern Jews could legitimate profit-making business to their own religious satisfaction but not to the satisfaction of early modern Christians. As a result, primitive resistance to capitalism assumed the form of moralistic anti-Semitism. Capitalism was deemed immoral and its immorality tainted Jews who practiced it.   Theorists of the Protestant Reformation, John Calvin and Richard Baxter first convinced skeptical Christians that running a profit-making business was fully compatible with Christian morality and, indeed, exemplified it.  Two centuries later, Adam Smith and Benjamin Franklin, both Enlightenment savants, theorized naturalistic components of action that tended to assure that business owners would understand the advantages of moral behavior and that the resulting market economy would channel human choices into morally acceptable behavior. Greed would supplant war and commerce would replace thievery.

By the late nineteenth century,  optimism had vanished from the debate.  In the Gilded Age, confronting the corrupt misbehavior of big business, William Graham Sumner and Thorstein Veblen abandoned all expectation that entrepreneurs would display moral rectitude. Veblen theorized that long-term cultural change would ultimately extirpate vestiges of barbarism that  animated the dysfunctional “pecuniary culture” he deplored.  Equally critical of business morality, Sumner was more pessimistic. Sumner believed that a market economy was a realm of nature in which survival of the fittest was enacted. In this natural realm, fraud, deceit, and violence played as essential and valuable a part as they do in any jungle.  Therefore, instead of anticipating cultural change as had Veblen, Sumner argued that the moral misbehavior of big business leaders would result in long-term economic benefit for everyone and so should be tolerated. A generation later, Joseph Schumpeter advanced an economistic version of Sumner’s idea as “creative destruction.”  Schumpeter conceded that entrepreneurial capitalism outraged social morality but observed that it also  created unparalleled economic growth. Ordinary people rejected capitalism but craved the wealth that trickled down because of it. Either way, in Sumner’s version or Schumpeter’s, twentieth century theorists relieved big business entrepreneurs of the necessity for moral conformity that still applied to routine business owners. As a result, the moral legitimation of capitalism  now derives from small business owners who, embedded in the social structure, import conventional moral ideas into their business practice. Lacking that embedded context, big business is tolerated for its results, but morally mistrusted.

In contemporary America, one does not have to frequent libraries to access these arcane and seemingly antiquarian ideas. In the early-twentieth century, the moral exoneration of immoral entrepreneurs moved from textbooks to comic books.  Originally created in the 1930s as a comic strip, the Batman superhero now appears in three Hollywood movies. The Batman thematic depicts the fictional Bruce Wayne as a billionaire entrepreneur obsessed with glamorous women and conspicuous consumption of luxury. Wayne is a playboy celebrity whose meretricious lifestyle the public envies, disapproves, and tolerates. In reality, however, and unbeknownst to the public, when disguised as Batman, Bruce Wayne uses his vast wealth, superior intelligence, and jungle cunning to destroy evil doers. To a startling extent,  Donald Trump resembles the comic book character that emerged before his own birth from centuries of theological and scholarly debate. There is even evidence that Trump consciously promoted his resemblance to Batman during both political campaigns.

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Ivan Light

Ivan Light earned a bachelor’s degree in history from Harvard University (1962) and a doctor’s degree in sociology from the University of California, Berkeley (1968).  Ivan Light is professor emeritus of Sociology from the University of California, Los Angeles. He is the author of nine academic books of which seven address ethnic minority and immigrant entrepreneurship, a subject he pioneered. He received the “Distinguished Career Award” from International Migration Section of the American Sociological Association in 2000 and was elected president of the section in 2002. His Deflecting Immigration received the “best book” award from the International Migration Section in 2006. He has published many articles in refereed journals in business and social science.  Many articles and two books  are available for free downloads. His only work of fiction is Deadly Secret of the Lusitania, published in 2015.

Links and Publications

Ethnic Enterprise in America
This historical monograph compares the experience of Chinese, Japanese, and African Americans in self-employment between 1880 and 1940. It concludes that the two Asian immigrant communities benefitted from the availability of rotating credit associations.

Cities in World Perspective
This general textbook on urban sociology pays unusual attention to the role of internal and international migration.

Immigrant Entrepreneurs: Koreans in Los Angeles
Korean immigrants in Los Angeles were frequently self-employed in the 1970s and 1980s. This pioneering book addressed the cultural and social resources that enabled this proliferation.

Immigration and Entrepreneurship
Immigrants are more frequently self-employed than non-immigrants. Contributors address the self-employment of immigrants in different countries. Chapter 2 by Ivan Light, Parminder Bhachu, and Stavros Karageorgis discusses the link between migration networks and immigrant small and medium business.

Race, Ethnicity and Entrepreneurship in Urban America
An early effort to test the popular “interaction” theory of self-employment. This census-based monograph showed that cultural effects do not wash out with extensive control variables.

Ethnic Economies
This textbook synthesizes the existing research on immigrant and ethnic-minority self-employment around the concepts of social and cultural capital. It can be uploaded free at this web address: https://www.sscnet.ucla.edu/soc/faculty/Light/Ethniceconomies.pdf

Deflecting Immigration
A combination of regulatory policies and migration networks deflected Latino immigration from Los Angeles to the American South and West in the 1990s.

Many publications can be downloaded for free in the Publications section of the website below:

Email address: entrepreneursandcapitalism@gmail.com

Radio interview:

“Trump as Messiah,” full text:


Léo-Paul Dana

Léo-Paul Dana earned a bachelor’s degree in political science  (1980), followed by an MBA, in international business (1983), both from McGill University, and after some years in the workforce a doctor’s degree in administration (1995) from  the HEC-Montreal business school. He he has served as Marie Curie Fellow at Princeton University and Visiting Professor at INSEAD and is currently professor  of entrepreneurship at Montpellier Business School and also at Dalhousie University. He is the author/co-author of 15 academic books and editor/co-editor of  25 volumes. He has published extensively in many refereed journals.

Links and Publications

World Encyclopedia of Entrepreneurship
Now in its 2nd edition, this is a great reference work with contributions from leading scholars.

Qualitative Methodologies & Data Collection Methods: Toward Increased Rigour in Management Research
This is a textbook teaching doctoral students about research methodologies and methods, with examples from the literature. It is ideal for a scholar embarking on thesis work, and also useful for young academics wishing to publish rigorous work.

Entrepreneurship in Western Europe: A Contextual Perspective
This volume provides a survey of entrepreneurship in every country across Western Europe, richly illustrated in National Geographic type of style.

Asian Entrepreneurship
Commissioned by SAGE, this is a 5-volume compilation of articles from major academic journals, showcasing research about entrepreneurs and entrepreneurship in Asia.

Asian Models of Entrepreneurship – From the Indian Union and Nepal to the Japanese Archipelago: Context, Policy and Practice, Second Edition, Singapore & London: World Scientific, 2014.
This is a popular textbook for undergraduate courses about entrepreneurship.

News & Views

News:  Will Wright, “New York accuses egg producer of price gouging in pandemic.” New York Times 11 Aug. 2020. “A lawsuit filed  by Attorney General Letitia James of New York contends that the producer, Hillandale Farms, at times quadrupled the price of eggs to cash in on a surge in demand  resulting from the pandemic.  In particular, Hillandale targeted distributors in New York City, as well as the military installations at West Point, Fort Hamilton and Fort Drum, according to the lawsuit. The company was not raising prices to offset increased costs, the suit says, but “simply to line its own pockets and profit off New Yorkers during a time of crisis.”

Views: Price gouging is exactly what economists predict market producers will do when given the opportunity. Hillsdale earned an extra four million dollars by doing just that. Martin Luther considered price gouging immoral. In this case, price gouging  was both illegal and immoral. We might say that the market collided with conventional morality written into law.


For an intellectual history of the concept of moral economy, see:
Norbert Götz (2015) ‘Moral economy’: its conceptual history and analytical prospects, Journal of Global Ethics, 11:2, 147-162, DOI: 10.1080/17449626.2015.1054556

The Art of the Deal by Donald Trump contains “the obvious falsehood” that “his father loaned him a mere million dollars” when in reality he gave him much more.  Mary L. Trump, Too Much and Never Enough: How My Family Created the World’s Most Dangerous Man. New York: Simon & Schuster, 2020), p. 197.

Habiba Ibrahim,  “Structured Savings and Asset Ownership: The Role of Rotating Savings and Credit Associations among African Immigrants in the United States.”  Journal of Sociology & Social Welfare, June 2020, vol. 47, no.  2, pp. 29-57. 29. Abstract: Rotating Savings and Credit Associations are commonly practiced in developing countries across the globe. The practice is also common among immigrants in developed economies. This study uses survey data collected from African immigrants in the United States to examine whether saving in ROSCAs is associated with asset ownership among the participants. The results found that after receiving the ROSCAs savings, asset ownership among participants increased. Home ownership increased by 13.6%, small businesses increased by 27.2% (including taxi and commercial trucks) and car ownership increased by almost 20%. In conclusion, ROSCA participation increased asset ownership.

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