Do Christian Principles Influence Economics Today?

New book looks at how religious ideas influenced the founders of economics, including Enlightenment leaders Adam Smith and David Hume.

Religion and the Rise of Capitalism
By Benjamin Friedman, Random House, 2021, 560 pages

The influence of religious principles still underpins much of Western society – including topics as seemingly far from religion as economy policy.

This is the central thesis of Benjamin Friedman’s Religion and the Rise of Capitalism, published in January this year.

Friedman, a Professor of Political Economy at Harvard, focuses heavily on those ideas which influenced the founders of economics, including the leading Enlightenment thinkers Adam Smith and David Hume.

The author is careful to emphasise that the issue at hand is not Smith or Hume’s personal beliefs – neither were devout – but the broader intellectual climate in which they lived; one where “religion was both more pervasive and more central than anything we know in today’s Western world”.

Over a century ago, the German sociologist Max Weber wrote his influential book, The Protestant Ethic and the Spirit of Capitalism, which argued that Protestantism (and Calvinism in particular) had played a crucial role in encouraging believers to practice industriousness and thrift, thus helping to create the free-enterprise system.

Friedman, however, has a different theory about the shift which occurred in economic thinking from the 17th and 18th centuries onward, suggesting that a conscious rejection of some Calvinist beliefs and the adoption of a more positive view of humanity helped change the course of history:

I argue that what opened the way for the early economists’ insight into the beneficial consequences of individually motivated initiative carried out in competitive markets was the expanded vision of the human character and its possibilities that the movement away from predestinarian Calvinism fostered.

Further, this benign sense of our human potential, enabled by the historic transition in religious thinking that first preceded and then accompanied it, has continued to influence the trajectory of modern Western economic thinking ever since.

Friedman’s argument is complex, involving a lengthy and meandering journey through the history of theology and religious thought.

John Calvin occupies most of the author’s attention, given the greater intellectual influence he exerted compared to Martin Luther, particularly when it came to questions around the essence of human nature.

Calvin espoused harsher views than Luther about humanity’s inborn depravity, writing that “[o]ur nature is not only destitute and empty of good, but so fertile and fruitful of every evil that it cannot be idle”.

Calvin’s strong emphasis on the doctrine of predestination resulted in a much more limited focus on human agency, as he argued that God “established by his eternal and unchangeable plan those whom he long before determined…to receive into salvation, and those whom, on the other hand, he would devote to destruction.”

Calvinist teaching spread very far, and influenced the Church of England, especially in the Civil War era in the mid-17th century when the authors of the Westminster Confession of Faith declared that from the Fall onwards humans “are utterly indisposed, disabled, and made opposite to all good, and wholly inclined to do all evil”.

Eventually though, Calvinist thinkers began to question these views about human depravity and predestination.

The Dutch theologian Jacob Arminius, who came to believe that an act of human will was involved in receiving God’s grace, was an important figure in this process, as were others – including some of the Jansenist thinkers in the French Catholic Church, who shared a less than positive view of humanity.

Over time, other religious and political thinkers expanded on this – indeed Friedman stresses that, in previous centuries, religious and political thinkers were often closely aligned, with clerics playing a much larger role in intellectual arguments.

Christian political philosophers like John Locke began to place renewed emphasis on individual reason and dignity, while the work of Christian scientists like Isaac Newton made it clear that the universe was systematic and accessible to human understanding, which ran counter to the notion that God acted in an arbitrary manner, damning some and saving others without giving individuals a chance to influence their own fate.

Clergymen, even in Presbyterian Scotland, eventually moved further and further from traditional Calvinist theology, while developing close ties with rising thinkers like Smith and Hume.

Although the link to the rise of a new set of beliefs about the economy may seem tenuous at first, Friedman insists that:

…these religious ideas – the natural goodness of man in contrast to inborn depravity, the central role of free human choice and action in contrast to predestination, and the design of the universe not solely for the glorification of God but to promote human happiness too – by extension carried implications for how to think about the secular world.

He adds:

[I]n their thinking about both philosophy and what we now call economics, Smith and his contemporaries were secularising the essential substance of their clerical friends’ theological principles.

People could make choices freely, and this – in the economic sphere – could result in outcomes beneficial to broader society. In time, the benefits of this new school of thought were clearly observed in the United States, where an intellectual and theological debate over Calvinist thinking had also raged before the more optimistic viewpoint won out.

The second half of Friedman’s book focuses on political and economic developments in America and is less satisfying, as the author moves further from his original thesis while attempting to draw links to various issues up to the present day, including the way in which Americans view economic policy in the 21st century.

In so doing, Friedman takes an already complicated subject and broadens its scope enormously, to the disadvantage of the reader, and to the detriment of his central argument.

Clearly though, there are links between religious beliefs and economic and political thinking, and Friedman performs a service by insisting that “[t]aking account of the influence of religious thinking is essential to a full understanding of one of the great areas of modern human thought”.

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