Far from disappearing into the unholy mists of science, godless sectarianism, and secular humanism, religion and magic have never been more prevalent than in modern society. According to some estimates of American experience, admittedly self-reported, 96 percent believe in God, 71 percent in an afterlife, and 75 percent in some kind of heaven. Weekly church attendance rates are higher in the United States than in most countries of the world.52 Further, if the number of palm readers, TV mediums, and fortune tellers are any indication, forms of religion, magic, and mysticism also proliferate. In the United States alone, there are more than 2,500 distinct types or varieties of religions. Like it or not, modern economics has extended into this new and crucial domain of social behavior. The economics of religion uses the principle of rational behavior as well as interest-group analysis, public choice analysis, industrial organization analysis, and the theory of clubs to develop and evaluate the following propositions:
• Religion as the rational behavior of individuals may be expressed in terms of the supply and demand for varieties of Christianity.
• The principles of monopoly, competition, and market entry provide insights into critical episodes in the evolution of Christian religions.
• The Protestant Reformation may be depicted as lower full price entry into the market for Christian beliefs; the lower price was both monetary and doctrinal in nature.
• The Roman Catholic response was perfectly analogous to that predicted by the theory of industrial organization, attempting to regain market share by (some) reforms of the retail side of the church but maintaining a doctrinal monopoly of interpretation, by the simultaneous imposition of violent repression, and by the establishment of missions in what has become the third world.
• The subsequent development of Protestantism was predictable in that the essence of the breakaway was the elimination of intermediaries of doctrinal interpretation, opening the door to the competitive evolution of thousands of forms of Christian belief.
• In addition to the doctrinal monopoly maintained at the Council of Trent and at the First Vatican Council in 1871, which proclaimed the Pope infallible in matters of faith and morality, subsequent developments have led to a pyramidal structure of Roman Catholic Church organization.
• The traditional Weberian view of the emergence of capitalism as based on altered preferences may be supplemented with an economic argument emphasizing the cost savings from the supply side of all Protestant sects (with the possible exception of the Episcopal version).
• The economic principles of competitive entry, full price, and supply and demand for forms of religion set in motion by the Protestant Reformation and its aftermath may offer insights into current practices and policies of contemporary religious forms; and these policies may lead to emerging schisms in a number of denominations—splits that produce continuous product development in the market for Christian religion.
More than one hundred years ago (1898), the economist-anthropologist Thorstein Veblen (1857-1929) argued broadly that what he called "ceremonial institutions" (government, the church, property rights structures) were unique to a particular form of science and technology ("technological institutions"). His argument created a kind of evolutionary theory based on Darwinian precepts—as invention, labor technology, and hard science evolved, ceremonial institutions such as religion did also. Our theory and the analysis of historians and sociologists are similar to Veblen's in some important respects.53 Clearly, the Enlightenment and the scientific world that it ushered in overturned long-established beliefs concerning the operation of the world and humankind's place in the universe. These changes helped create an acceptance of a religion (Protestantism) that was less rule-based, less ritualistic, and had less dogmatic certainty concerning the interpretation of Holy Scripture. But, if we are correct, even extreme advances in science have not and will not fully alleviate metaphysical dread for the great mass of humanity.
There is what appears to be an innate demand for the services of magic, religion, and spiritual experience. This may be hardwired for individuals due to evolutionary factors. The anthropological and psychological literature clearly suggest that some mythological system is self-induced as a "spontaneous operation of the psyche'' for each and every sentient individual. Indeed it is through an individual's definition of chaos and a development of a means of keeping it at bay that the dimensions of reality are defined. This means that, so long as this problem exists, religion, magic, spiritual, and philosophical activity will be a permanent part of human societies. Despite the skepticism that sometimes challenges religious markets, evidence is that such markets are thriving. They are thriving even where temporal survival constraints are less binding (e.g., in the United States). Existential terror will not disappear no matter how far science takes Homo sapiens.
Modern science will alter the forms of religion but it will never be a perfect substitute for religion. Modern science, particularly the biological revolutions responsible for birth control, test tube babies, the possibility of a "gay gene,'' cloning, and so on, will ultimately affect the form of theology as Veblen would have predicted. But a modern microeconomics must be imposed on the Veblenian dynamic for the evolution of religious forms to be fully understood. High income societies, sophisticated in science and technology, are undergoing evolutionary changes in the forms of religion, its interpretations, and rituals. It is perhaps worth remembering that the Roman Catholic and other Christian churches initially rejected and then later accepted all manner of technological advances: the printing press, vaccination, dissection and autopsy of human bodies, organ transplants, and so on. Cloning, woman priests and ministers, married priests, gay clergy, gay civil rights, and many other issues are all candidates for debate and resolution within particular forms of Christian religion today. Where religious tolerance and forms are constitutionally protected, splintering within particular religions due to acceptance of progress on sex and life issues is expected and those expectations are being realized. But fundamentalist, time-intensive forms of religion and magic are inversely related to income and level of scientific and economic development. A movement away from fundamentalism in the third world and the less developed parts of the advanced world may come at some point.
While the prospects for human survival in the advanced parts of the world help reduce human dread and the uncertainty associated with existence, this is not the case for large segments of humanity. For all societies, due to the intimate connection between psychology and economics, markets for magic and religion of some form will continue to exist. The great historian Arnold Toynbee, in a somewhat romanticized statement, put it this way: "No human soul can pass through This Life without being challenged to grapple with the mystery of the Universe. If the distinctively human impulse of curiosity does not bring us to the point, experience will drive us to it—above all, the experience of Suffering.''54 But, as usual, William Shakespeare has the brilliant final word concerning the fate of human existence. In what are regarded as some of his last written lines in his final play, he considered play writing in particular and human existence in general. In the words he gave Prospero in The Tempest (Act 4, Scene 1), Shakespeare mused, "We are such stuff as dreams are made on; and our little life is rounded with a sleep.'' For such eternal and immutable reasons, markets for magic and religion of all forms, including Christianity, are here to stay.
Our research not only accepts this general proposition, but adds that the course of Christianity and its continuous evolution cannot be fully understood outside the context of Adam Smith's conception of economics and competition. All great and important revolutions in the course of humanity have been supply-side revolutions. The agricultural revolution of approximately 10,000 BCE, the Industrial Revolution that carried on the wave of Enlightenment science and scientific methods, and the digital-biological revolution currently underway are examples of watersheds in human progress. No less a watershed is the competitive revolution in Christianity unleashed by the successful entry of Protestant competitors in the sixteenth century. Just as free and open competition increases the utility to consumers of goods and services, the open and extremely competitive market for Christian and other religious products and product forms creates a variety that maximizes satisfaction for individuals whose demand for such services is limitless and, as Shakespeare knew, is a matter of eternal concern and curiosity for all.
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