Saturday, January 26, 2013

Protestantism and Economic Growth

I've been reading Niall Ferguson's Civilization: The West and the Rest, in which he argues that six powerful new concepts, embraced by the West, allowed the Western world to rise to global dominance: competition, science, the rule of law, modern medicine, consumerism, and the work ethic. He also argues that the "Rest" have now adopted these "killer apps" and are threatening the West's position.

Central to the chapter dealing with the work ethic is Protestantism. Ferguson doesn't adopt wholesale Max Weber's thesis in The Protestant Ethic and the Spirit of Capitalism, but does conclude that Weber was "right for the wrong reasons" as in post-Reformation Europe Protestant countries grew much faster in terms of per-capita income than Catholic ones. It's worth quoting Ferguson at length:

Because of the central importance in Luther's thought of individual reading of the Bible, Protestantism encouraged literacy, not to mention printing, and these two things unquestionably encouraged economic development (the accumulation of 'human capital') as well as scientific study. This proposition holds good not just for countries such as Scotland, where spending on education, school enrolment and literacy rates were exceptionally high, but for the Protestant world as a whole...The level of Protestant missionary activity has also proved to be a very good predictor of post-independence economic performance and political stability. Recent surveys of attitudes show that Protestants have unusually high levels of mutual trust, an important precondition for the development of efficient credit networks. More generally, religious belief (as opposed to formal observance) of any sort appears to be associated with economic growth, particularly where concepts of heaven and hell provide incentives for good behaviour in this world. This tends to mean not only hard work and mutual trust but also thrift, honesty and openness to strangers, all economically beneficial traits.

Religions matter...Perhaps the biggest contribution of religion to the history of Western civilization was this. Protestantism made the West not only work, but also save and read. The Industrial Revolution was indeed a product of technological innovation and consumption. But it also required an increase in the intensity and duration of work, combined with the accumulation of capital through saving and investment. Above all, it depended on the accumulation of human capital. The literacy that Protestantism promoted was vital to all of this. On reflection, we would do better to talk about the Protestant word ethic.
(Niall Ferguson, Civilization: The West and the Rest, London: Penguin Group, 2011, 163-164)

So does the continued economic vitality of the West depend on the health of Protestant churches, whether mainline or evangelical? And do the Protestant churches have a responsibility to contribute to economic growth, despite the antipathy of the Gospel message to consumerism and the excesses of capitalism?

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