...Liberal capitalism was in effect man's initial response to the challenge of the Industrial Revolution. In order to allow scope to the use of elaborate, powerful machinery, we transformed human economy into a self-adjusting system of markets, and cast our thoughts and values in the mold of this unique innovation....
    ...our practical philosophy was overwhelmingly shaped by this spectacular episode. Novel notions about man and society became current and gained the status of axioms. Here they are: As regards man, we were made to accept the heresy that his motives can be described as "material" and "ideal", and that the incentives on which everyday life is organized spring from the "material" motives. Both utilitarian liberalism and popular Marxism favored such views.
    As regards society, the kindred doctrine was propounded that its institutions were "determined" by the economic system. This opinion was even more popular with Marxists than with liberals.
    Under a market economy both assertions were, of course, true. But only under such an economy. In regard to the past, such a view was no more than an anachronism. In regard to the future, it was a mere prejudice. Yet under the influence of current schools of thought, reinforced by the authority of science and religion, politics and business, these strictly time-bound phenomena came to be regarded as timeless, as transcending the age of the market....
    The birth of laissez faire [free, competitive market philosophy] administered a shock to civilized man's views of himself, from the effects of which he never quite recovered. Only very gradually are we realizing what happened to us as recently as a century ago.
    Liberal economy, this primary reaction of man to the machine, was a violent break with the conditions that preceded it. A chain-reaction was started --what before was merely isolated markets was transmuted into a self-regulating system of markets. And with the new economy, a new society sprang into being.
    The crucial step was this: labor and land were made into commodities, that is, they were treated as if produced for sale. Of course, they were not actually commodities, since they were either not produced at all (as land) or, if so, not for sale (as labor).
    Yet no more thoroughly effective fiction was ever devised. By buying and selling labor and land freely, the mechanism of the market was made to apply to them. There was now supply of labor, and demand for it. Accordingly, there was a market price for the use of labor power, called wages, and a market price for the use of land, called rent. Labor and land were provided with markets of their own, similar to the commodities proper that were produced with their help.
    The true scope of such a step can be gauged if we remember that labor is only another name for man, and land for nature. The commodity fiction handed over the fate of man and nature to the play of an automaton running in its own grooves and governed by its own laws.
    Nothing similar had ever been witnessed before. Under the mercantile regime, though it deliberately pressed for the creation of markets, the converse principle still operated. Labor and land were not entrusted to the market; they formed part of the organic structure of society. Where land was marketable, only the determination of the price was, as a rule, left to the parties; where labor was subject to contract, wages themselves were usually assessed by public authority. Land stood under the custom of the manor, monastery, and township, under common-law limitations concerning rights of  real property; labor was regulated by laws against beggary and vagrancy, statutes of laborers and artificers, poor laws, guild and municipal ordinances. In effect, all societies known to anthropologists and historians restricted markets to commodities in the proper sense of the term....
    This instrument of material welfare [the market] was under the sole control of the incentives of hunger and gain --or, more precisely, fear of going without the necessities of life, and expectation of profit. So long as no property-less person could satisfy his craving for food without first selling his labor in the market, and so long as no propertied person was prevented from buying in the cheapest market and selling in the dearest, the blind mill would turn out ever-increasing amounts of commodities for the benefit of the human race. Fear of starvation with the worker, lure of profit with the employer, would keep the vast establishment running.
    In this way an "economic sphere" came into existence that was sharply delimited from other institutions in society.... "Economic motives" reigned supreme in a world of their own, and the individual was made to act on them under pain of being trodden under foot by the juggernaut market.
    Such a forced conversion to a utilitarian outlook fatefully warped Western man's understanding of himself.

    ...Markets occur in all kinds of societies, and the figure of the merchant is familiar to many types of civilization. But isolated markets do not link up into an economy. The motive of gain was specific to merchants, as was valor to the knight, piety to the priest, and pride to the craftsman. The notion of making the motive of gain universal never entered the heads of our ancestors. At no time prior to the second quarter of the 19th century were markets more than a subordinate feature in society.

    ...there was the startling abruptness of the change. Predominance of markets emerged not as a matter of degree, but of kind. Markets through which otherwise self-sufficient householders get rid of their surplus neither direct production nor provide the producer with his income. This is only the case in a market-economy where all incomes derive from sales, and commodities are obtainable exclusively by purchase. A free market for labor was born in England only about a century ago. The ill-famed Poor Law Reform (1834) abolished the rough-and-ready provisions made for the paupers by patriarchal governments. The poorhouse was transformed from a refuge of the destitute into an abode of shame and mental torture to which even hunger and misery were preferable. Starvation or work was the alternative left to the poor. There was a competitive national market for labor created. Within a decade, the Bank Act (1844) established the principle of the gold standard; the making of money was removed from the hands of the government regardless of the effect upon the level of employment. Simultaneously, reform of land laws mobilized the land, and repeal of the Corn Laws (1846) created a world pool of grain, thereby making the unprotected Continental peasant-farmer subject to the whims of the market.
    Thus were established the three tenets of economic liberalism, the principle on which market economy was organized: that labor should find its price in the market; that money should be supplied by a self-adjusting mechanism; that commodities should be free to flow from country to country irrespective of the consequences --in brief, a labor market, the gold standard, and free trade. A self-inflammatory process was induced, as a result of which the formerly harmless market pattern expanded into a sociological enormity.

    ...Under such conditions the human world must appear as determined by "economic" motives. It is easy to see why.
    Single out whatever motive you please, and organize production in such a manner as to make that motive the individual's incentive to produce, and you will have induced a picture of man as altogether absorbed by that particular motive. Let that motive be religious, political, or aesthetic; let it be pride, prejudice, love, or envy; and man will appear as essentially religious, political, aesthetic, proud, prejudiced, engrossed in love or envy. Other motives, in contrast, will appear distant and shadowy since they cannot be relied upon to operate in the vital business of production. The particular motive selected will represent "real" man.
    As a matter of fact, human beings will labor for a large variety of reasons as long as things are arranged accordingly. Monks traded for religious reasons, and monasteries became the largest trading establishments in Europe. The Kula trade of the Trobriand Islanders, one of the most intricate barter arrangements known to man, is mainly an aesthetic pursuit. Feudal economy was run on customary lines. With the Kwakiutl, the chief claim to industry seems to be to satisfy a point of honor. Under mercantile despotism [=pre-capitalist Europe] industry was often planned so as to serve power and glory. Accordingly, we tend to think of monks or villeins, western Melanesians, the Kwakiutl, or 17th century statesmen, as ruled by religion, aesthetics, custom, honor, or politics, respectively....

    In actual fact, man was never as selfish as the [capitalist] theory demanded. Though the market mechanism brought his dependence upon material goods to the fore, "economic" motives never formed with him the sole incentive to work. In vain was he exhorted by economists and utilitarian moralists alike to discount in business all other motives than "material" ones. On closer investigation, he was still found to be acting on remarkably "mixed" motives, not excluding those of duty towards himself and others -- and maybe, secretly, even enjoying work for its own sake.
    However, we are not here concerned with actual, but with assumed motives, not with the psychology, but with the ideology of business. Not on the former, but on the latter, are views of man's nature based. For once society expects a definite behavior on the part of its members, and prevailing institutions become roughly capable of enforcing that behavior, opinions on human nature will tend to mirror the ideal whether it resembles actuality or not.
    Accordingly, hunger and gain were defined as "economic" motives, and man was supposed to be acting on them in everyday life, while his other motives appeared more ethereal and removed from humdrum existence. Honor and pride, civic obligation and moral duty, even self-respect and common decency, were now deemed irrelevant to production, and were significantly summed up in the word "ideal." Hence man was believed to consist of two components, one more akin to hunger and gain, the other to honor and power. The one was "material," the other "ideal;" the one "economic," the other "non-economic;" the one "rational," the other "non-rational." The Utilitarians went so far as to identify the two sets of terms, thus endowing the "economic" side of man's character with the aura of rationality. He who would have refused to imagine that he was acting for gain alone was thus considered not only immoral, but also mad.