According to Weber, capitalism is a system of production, which provides human needs through a rational enterprise that focuses on making profits. A rational enterprise is an establishment that measures its ability to generate income through calculations based on modern bookkeeping techniques. Bureaucracy promotes rationalized capitalism by facilitating the use of systematic and predictable means of production and distribution. Predictability in a capitalist economy is achieved if all means of production are owned and managed by private entrepreneurs. In addition, the goods and factor markets must be free. For instance, labor must be free to shift from one industry to another in response to demand and supply forces. In the goods market, all irrational restrictions must be eliminated to facilitate efficient trade. These conditions can only be achieved in the presence of a bureaucratic state that eliminates barriers to trade and capital accumulation.
A bureaucratic state has a political system that supports the development of institutions that promote capitalism. In particular, bureaucracy has led to the establishment of a formal system of governance that promotes trade. For instance, governments secure large territories to ensure the peaceful production of goods and services. Moreover, bureaucracy has created effective regulatory agencies, which eliminate internal market barriers, promote fair competition, and standardize taxation. As a result, factors of production such as labor can move freely to enable capitalists to improve their productivity in the most efficient manner. Bureaucracy also promotes the adoption of a universal legal system by allowing states to hire professionals to oversee the enforcement of legal contracts in various jurisdictions. In this respect, a bureaucratic legal system promotes capitalism by providing predictable laws that allow entrepreneurs to acquire property and invest in various industries.
According to Weber, the secularization of religious calling led to the adoption of bureaucratic systems of production, which in turn promoted the growth and dominance of capitalism. Secularization required individuals to engage in methodical and rational actions in both business and private life. Businesses were organized based on impersonal and rational practices to ensure success. In this context, bureaucracy allowed capitalists to embark on rationalization in order to reduce the cost of production and increase profits. For instance, Marx argued that allowing workers to specialize in performing specific tasks would simplify production processes. Consequently, the cost of production would reduce, whereas output would increase. This shows that functional specialty was an important principle of bureaucracy that promoted capitalism by increasing productivity.