Adam Smith's analysis of religion from an economic standpoint surprisingly did not encourage further work on the same subject by classical economists and their direct descendants, despite the fact that some of the early economists, such as Thomas Robert Malthus and Phillip Henry Wicksteed, were religious prelates (at a time when taking holy orders was one of the surest ways to get a university scholarship). Some writers, such as Karl Marx and Thorstein Veblen, argued that religion was an impediment to economic development, calling it an "imbecile institution." For Marx, religion hindered the emergence of a proletarian class; for Veblen, it retarded the emergence of technocracy. The great neoclassical economist, Alfred Marshall, while seeking to preserve a clear delineation between the economic and the religious in human affairs, nevertheless hinted at a connection between Protestantism and economic development.21 But the one author whose name is linked above all others with religion and economics in the social sciences is Max Weber.22
Weber, a sociologist, is such a towering figure in this field, and his ideas are so enduring, that we reserve a full chapter later on for a detailed analysis of his famous thesis. Here we merely wish to place his ideas in the broad timeline that established the economics of religion, and to expose some myths surrounding his ideas. Weber's famous hypothesis, that the advent of Protestantism encouraged the development of capitalism, as laid out in The Protestant Ethic and the Spirit of Capitalism, has come to mean several things, some by misinterpretation rather than by careful exegesis. Generally it is interpreted to mean either that Protestantism encouraged a "pursuit of gain'' that encouraged capitalism, or that Protestantism caused capitalism, neither of which is entirely correct. Weber went to great lengths to argue that the pursuit of gain was a feature of all ages, including the Middle Ages, during which he charged society with the "lowest forms of avarice.''23 Furthermore, a fair interpretation of Weber belies the argument that the Protestant ethic caused capitalism. At the end of his famous essay Weber admits the possibility that causality may run the other way, that is, that economic conditions may influence Protestant asceticism.24 While Weber has remained open to criticism on a number of issues,25 he did not argue, as some have supposed, for some single causal explanation for the emergence of capitalism. Indeed, he emphasized the importance of other factors leading to its development, such as free labor, the invention of double-entry bookkeeping, and the separation of business from household accounts. Nevertheless, his brilliant study of institutional change and the role of culture in fomenting such change captured the fancy of social scientists for centuries to come.26
We are concerned here with the fact that Weber's central argument employs a preference-based explanation of Protestantism's impact. Declaring his interest in "the influence of those psychological sanctions which, originating in religious belief and the practice of religion, gave a direction to practical conduct and held the individual to it,'' Weber propounded the idea of a "calling," a focus of human activity ordained by God.27 According to Weber:
The earning of money within the modern economic order is, so long as it is done legally, the result and the expression of virtue and proficiency in a calling____[The idea] of one's duty in a calling, is what is most characteristic of the social ethic of capitalistic culture, and is in a sense the fundamental basis of it. It is an obligation which the individual is supposed to feel and does feel towards the content of his professional activity, no matter in what it consists, in particular no matter whether it appears on the surface as a utilization of his personal powers, or only of his material possessions (as capital).28
Acceptance of life and toil in this world is the task that God sets out for man. This worldly goal was not part of Catholic psychology.
The God of Calvinism demanded of his believers not single good works, but a life of good works combined into a unified system. There was no place for the very human Catholic cycle of sin, repentance, atonement, release, followed by renewed sin. Nor was there any balance of merit for a life as a whole which could be adjusted by temporal punishments or the Churches' means of grace.29
"Ascetic ideals'' were not achieved by withdrawal from the world but by pursuit of worldly goals in everyday activities. This Protestant psychology was buttressed by Calvin's doctrine of predestination. There was much uncertainty about who the elect would be. Calvin seemed to entertain no doubts about himself, but the doctrine (initially) caused consternation among his followers. Eventually the doctrine evolved into a belief that success at one's calling was a manifestation of God's favor and a sign of eventual salvation. In discussing the religious foundations of worldly asceticism, Weber concluded that "the complete elimination of salvation through the Church and the sacraments (which was in Lutheranism by no means developed to its final conclusions) was what formed the absolutely decisive difference from Catholicism.''30 The Calvinists wanted to be saved by faith alone, and Calvin offered a creed that promised just that.
Weber's link between religion and economic growth—too intricate to probe in great detail at this juncture—has, until recently, probably remained the single most popular investigation in the field of the economics of religion. The central supposition of Weber's analysis—that Protestantism changed preferences from the otherworldly concerns of Catholicism to the economic activities of this world—introduces a clearly defined change on the demand side of religious (and economic) behavior. The basic tenet of Roman Catholicism is that earning salvific merit in this life through good deeds gets one closer to heaven. The causal arrow runs from deeds in this world to rewards in the next. Protestantism bent the causal arrow so that salvation in the next world is foreshadowed by rewards in this world. This is an important shift that deserves careful, in-depth consideration, which, for purposes of continuity, we must defer until chapter 8.
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