Economic pieties

Book review of Religion and the Rise of Capitalism

What does an esoteric concept like Calvinist soteriology have to do with the rise of modern econ­omics? Does laissez-faire have its roots in the arcane Quinquarticular Controversy? Can one find the origins of the welfare state in postmillennialist eschatology?

Questions like these, according to the Harvard economist Benjamin M Friedman, are essential to understanding his discipline today. This is anything but self-evident; economists, especially of the mathematical sort, are unlikely to be transfixed by the writings of St. Augustine. But once theological questions are rendered into secular language, their relevance, and thus the importance of Friedman’s Religion and the Rise of Capitalism, becomes clear.

Soteriology refers to the question of salvation, and few thinkers made a greater contribution to it than John Calvin (1509-64), the founder of one of the stricter forms of Protestantism to emerge during the Reformation. Calvin’s theology is frequently summarised by the acronym TULIP. T reminds us that we are totally depraved. U stands for the fact that salvation is unconditional;  God and God alone chooses the elect and we cannot influence his choice. Atonement, moreover, is limited; God saves only those so chosen. God’s grace, in addition, is irresistible ; if he calls, we have no choice but to respond. Finally, the doctrine of the preservation of the saints reminds us that God is never whimsical; once he grants salvation, he grants it forever.

Calvin’s highly pessimistic view of human nature, Friedman argues, was destined to give way before a science insisting on the centrality of markets could emerge. As it happens, Calvinism attracted numerous followers in Scotland, the same place in which Adam Smith wrote The Wealth of Nations. Smith himself was indifferent toward religion and his close friend, the philosopher David Hume, was actively hostile. Nonetheless, it was the religious atmosphere in which they wrote, Friedman believes, that would shape their ideas, even if mostly as a foil: Inherently depraved people whose fates are predetermined by a Supreme Being need no “invisible hand” to coordinate their behaviour, while the citizens of newly emerging market economies do.

In contrast to Calvin, the Dutch theologian Jacobus Arminius (1560-1609) found strict Calvinism insulting to God. Like their rivals, Arminius and his followers summarised their positions in five points; hence the term Quinquarti­cular Controversy. The essence of those points held that God’s glory could not be fully appreciated if the people who worship him lack the freedom to choose him. If humans have free will, it follows, the concept of predestination must be modified and the idea of a limited elect be expanded. Naturally orthodox Calvinists fought back against what they considered outrageously heretical ideas.

The debates initiated by the Arminians were at first confined to Holland, but it was not long before they were exported to England and Scotland. Ultimately, Friedman concludes, the new science of economics secularised Arminian ideas, foreshadowing a world in which the market and other secular institutions would take over from God the task of improving human prospects.

Religion and the Rise of Capitalism

Author: Benjamin M Friedman

Publisher: Alfred AKnopf

Price: $37.50; Pages: 560

Arminian theology made its most lasting mark in the US. The Puritans adhe­red to the stricter varieties of Calvinism; no one could accuse them of holding an optimistic view of human nature. Their theology increasingly came to seem obsolete to a vibrant new nation. As America expanded so did Arminianism, this time taking the form of Methodism and all the variants that came in its wake. By the mid-19th century, strict Calvinism had become mostly a memory.

Except among those who called themselves fundamentalist. Fundamentalism is associated with what theologians call a premillennial eschatology. Jesus will initiate his Second Coming at some point, most Protestants agreed, but when and how is still a matter of considerable dispute. Premillennialists subscribe to the belief that our inherently sinful nature will lead us into a tumultuous epoch, only after which Jesus will make his appearance and whisk away the remnant of the truly righteous.

Liberal Protestantism emerged out of postmillennialism and had its own overlap with economics; Richard T Ely (1854-1943), one of the founders of the American Economics Association, offers a leading example. Ely’s reformist inclinations played a major role in establishing the Social Gospel movement, which ultimately came to fruition during the New Deal. Friedman argues, correctly, that although Social Gospel economics raised serious questions about the efficacy of laissez-faire, it was very much in line with the conception of human progress found in Smith and Hume.

This overview cannot even begin to pay homage to the prodigious research informing Friedman’s analysis. As one reads Friedman, words like “magisterial,” “masterpiece” and “magnificent” floated through my thoughts. In the final analysis, such words do not quite hit the mark; let me settle on “major.” For one thing, this book is mistitled; its overwhelming concentration is on the Protestant religion. By confining himself mostly to the Protestant countries of England, Scotland and Holland, Friedman, for all his range, narrows his focus too much.

What is more, economics and theology may have intertwined in the past, but they rarely do now. If anything, someone could write a contemporary work on atheism and the resurgence of free-market economics. The 19th-century economic thinkers Herbert Spencer and William Graham Sumner, both influenced more by Darwin than Calvin, were quite hostile to religion. The 20th century’s most widely read advocate for laissez-faire, Ayn Rand, was a militant nonbeliever. Milton Friedman was Jewish by birth but non-observant.

Secular writers have begun to discover theology. Michael Massing, a journalist once concerned primarily with social problems, wrote a fascinating book, Fatal Discord, on Erasmus and Luther. Employed by a Catholic university, I found theology a far more humanistic discipline than political science. And if someone had told me that a former chairman of the Harvard economics department would write a major work on Calvinism and its influence, you would have had to consider me a sceptic. Nonetheless Benjamin M Friedman has, and the result is an awakening all its own.

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