The economy is society's base structure. This does not mean, however, that everything that occurs in history stems from the economy. Finally, the "materialism" of "historical materialism" is rooted in the idea that the capitalist mode of production is largely contingent on the behavior of participants in the market economy.
To sum up, historical materialism is based on a series of principles. The first of these is how humans interact with nature in order to produce what they need to subsist on. Then there is the division of labor, which creates social classes; this division is always based on ownership, wherein some people live off of other people's work. The entire system of class is based on the mode of production. Finally, historical materialism recognizes that society moves through different historical stages, wherein a new emerging class will eventually replace the dominant class.
In his work the Protestant Ethic and the Spirit of Capitalism, Max Weber linked Protestantism to what he termed the "spirit of capitalism." In the past, religious devotion always entailed a renunciation of worldly affairs - particularly the acquisition of material wealth. Why was it, then, that Protestantism never did so? This is a question that Weber set out to answer; in the course of which, he discovered the spirit of capitalism.
Weber identifies the spirit of capitalism as those habits and ideas that privilege the rational pursuit of economic wealth and gain. On an individual level, the spirit of capitalism is not limited to the West; on a collective level, however, it indelibly is. It would never be possible for a few scattered individuals to establish a new economic order on their own. Thus, Weber sets out to answer how the spirit of capitalism managed to captivate the masses.
Weber links the origins of the spirit of capitalism to the religious ideas of the Reformation. Certain forms of Protestantism have traditionally privileged the rational pursuit of economic gain, thus endowing worldly activities with a justificatory spiritual or moral meaning. This was not the central goal of Protestantism, however - it was merely a by-product. Certain forms of Protestantism simply encouraged both planning and self-denial in the pursuit of economic wealth and gain.
As the Reformation effectively removed the Church's assurances for salvation in exchange to total submission, many people had difficulties adjusting to the new worldview. Protestants needed some sort of assurance from the external world that they were "saved," so they began searching for signs. The double predestination doctrine of Calvin, in which certain people were automatically saved while others were automatically damned, was also troubling for a lot of people. Since there was no way to determine which was which, people had to assume total self-confidence that they were saved; the inability to manifest total self-confidence in one's powers revealed that the person was damned. The amount of success one attained in life was thus taken to be a measure of one's self-confidence. Even Martin Luther was to make an endorsement of the early labor divisions emerging in Europe during that period. Weber has assured that the Protestant notion of a "vocation" soon came to signify not merely a calling in the church, but a calling in any trade or occupation.
The Protestant ethic was not to be found in Lutheranism, but in Calvinism. The paradox unearthed by Weber was that, according to the new forms of Protestantism, people were meant to respond to their calling in life with as much fervor as possible in order to show that they were saved and honor God. As a result of living according to this worldview, one would naturally make a lot of money. At the same time, these new religions forbid the wasteful usage of hard earned money; the purchase of luxuries was considered to be a sin. A lot of Protestant religions rejected icons, so there was a limit to how much money you could donate to your congregation. Giving money to the poor was also frowned upon, as it was seen to affirm people who do nothing but beg for a living rather than work. Weber suggests that this paradox was resolved through investing money. Investment thus gave a boost to nascent capitalism.
Karl Marx believed that the capitalist mode of production first evolved in Europe at the point when labor became a commodity in and of itself. This was the moment when peasants became free to sell their own power of labor. They had to do this, because they were no longer in possession of their own land. They would thus sell their labor power and accept whatever compensation they could get for it in a given amount of time. They were not selling the product of their labor, but their ability to do work during a specified amount of time. In return for this, they would get money, which they needed to survive. Those who are in the position of having to sell their labor are known as "proletarians." The individual who buys their labor power is known as the "bourgeois" or the "capitalist." Inevitably, there are more proletarians than there are capitalists.
There is tremendous growth potential in the capitalist mode of production, as the capitalist has the power to reinvest his profits in new technologies. The capitalist class was thus recognized by Marx as the most revolutionary class in the history of the world, as they had the potential to constantly upgrade the means of production. At the same time, Marx felt that capitalism was subject to occasional crises. Over time, Marx felt that capitalists would begin investing more of their capital in new technologies and less of it in labor. As the surplus value that is appropriated from labor is the source of profit, Marx felt that the rate of profit would eventually fall as the economy began to grow. When this happens, a recession will occur - or certain parts of the economy would collapse altogether. During such a period, the price of labor would also fall. This makes possible the investment in new technologies and growth in new sectors of the economy.
Thus, Marx theorized a cyclical growth-collapse-growth notion of capitalism. Each ring of this cycle, however, would be punctuated by increasingly severe crises. Marx also felt that the long-term consequence of this cycle would be the empowerment of the capitalists at the expense of the proletariat, who would become poorer over time.
Marx believed that the only way to put an end to this process would be for the proletariat to seize the means of production. When that occurred, social relations would come to benefit everyone on a more equal basis. Marx also felt that such an occurrence would stabilize the economy and reduce the periods of crises.
In order for something like that to occur, however, Marx felt that a revolution was necessary, as the ruling class would not voluntarily give up their power. In order to put an end to capitalism and organize a socialist system, a dictatorship of the proletariat would have to be established as a temporary solution. This period would be contingent on the needs of the working class, rather than on capital.
Between capitalist and communist society there lies the period of the revolutionary transformation of the one into the other. Corresponding to this is also a political transition period in which the state can be nothing but the revolutionary dictatorship of the proletariat.
Marx, Karl. "Comments on James Mill," 1844. Retrieved on 13 March 2008 at http://www.marxists.org/archive/marx/works/1844/james-mill/index.htm.
Weber, Max. The Protestant Ethic and the Spirit of Capitalism. New York: Scribner, 1953, p. 181.
Marx, Karl. Preface, a Contribution to the Critique of Political Economy, 1859. Retrieved 13 March 2008 at http://www.marxists.org/archive/marx/works/1859/critique-pol-economy/preface.htm.
See, for example, Habermas, Jurgen. Legitimation Crisis. Thomas McCarthy, trans. Boston: Beacon Press, 1975.
Marx, Karl. "Critique of the Gotha Program." Retrieved 14 March 2008 at http://www.marxists.org/archive/marx/works/1875/gotha/ch04.htm.