Introduction
Social activist have been trying to determine the relationship between religion and economic growth especially during the medieval times in Europe and America. It has been argued that the emergence of Protestants from the Catholic Church had a positive effect in the economic growth. This is because Protestants had a capitalist ideology while the Catholics still held on to the socialist ideologies, which hindered economic growth.
England and Netherlands for example attribute their economic growth during the 17th and 18th century to the change in their religion from the traditional Catholic beliefs. At the same time Spain and Italy saw a decline in their economy and political stability during the same period. Many scholars speculate that this fall might be due to the fact that these empires still held on to the traditional Catholic beliefs.
Max Weber theory
Many scholars have come up with theories which have tried to explain the relationship of Protestantism and economic growth during the medieval times. One of the strongest theories was put forward by Max Weber in his essay which was released in 1905 called Protestant Ethic (Cantoni 1).
To this date historians, scientists and sociologists have never come to an agreement on the correct meaning of Weber’s ideas. However, during the early days, the essay was understood in its simplest terms where people believed that economic growth was tightly related to the changes in religion which were experienced during the sixteenth and seventieth century. With time, different people had different interpretation of the essay which brought about arguments as a result of difference in ideologies that people had.
The sixteenth century is a period where Europe and America experienced a lot of economic changes. Much of these changes had already been experienced even before the period of reformation. However, it is during the reformation period that drastic changes occurred in the economy. That is why many scholars like Weber believe that the change in religion might have changed people’s ideologies, triggering economic growth.
When people started to embrace the new religious ideologies they also developed the concept of capitalism, a key factor that led to economic growth over the years. This led to the development of trade on a credit system and the development of companies and trade unions. The western civilization was engaged in mass importation of sugar, silver and gold. There was also a massive increase in the Trans-Atlantic slave trade which involved large amounts of money that led to the development of the Atlantic coastal cities.
This led to a shift in trade from the Mediterranean to the Atlantic as a result of the good market that the Atlantic region was offering. As a result some merchants became very rich thus spread their businesses to new regions defying the rules which were set up by the state or the church most of which were governed by catholic beliefs. During these times many people enjoyed monopolies and thus imposed high lending rates to the loans which they offered to people.
In his essay Weber assumed that the western civilization was distinguished from other societies by its spirit of capitalism. This is because most of the people in these societies were Protestants and they embrace the worldly asceticism a reaction to the doctrine of predestination. He believed that greed and the love of making money were the key elements behind capitalism.
Supporters of Weber’s Work
Kemper Fullerton was one of the people who defended the works of Weber. He said that people have been having the element of greed all their lives but the constraints in the society suppressed this feeling. He believed that the elements of capitalism had been present in all societies but lacked the right of environment to sprout out.
This is because the traditional religion and the early church were against the activities which would have led to the development of capitalism in the society. Weber also discovered that there was a difference between the lifestyles of the people who were Catholics and Protestants and that this difference could not have been just a matter of chance but it held some elements of truth behind it all.
Therefore, Calvinism ethos resulted in the emergence of capitalism in the medieval societies. That is why Weber referred to Benjamin Franklin as the father of capitalism. Franklin most famous phrase was; time is money. People therefore needed to work hard all the time and make as much as they can because once time is gone it cannot be bought back. Therefore to capitalists, making money is more of a passion.
As stated earlier, Weber believed that Protestantism had a direct influence to capitalism. In his thesis Weber looked at two villages in ancient Germany (during the sixteenth century). One village had Catholic believers while the other had protestants, mainly Lutherans. These two villages therefore offered extreme conditions for his studies. He managed to notice that Protestants earned more income as compared to the Catholics.
He also noticed that the Protestants attended technical schools while Catholics attended liberal art schools. He therefore concluded that Calvinism was successful in instilling the notion that work and moneymaking was a vocation. This attitude thus could have been the avenue through which capitalism rose through into the modern society during the medieval times which later led to industrialization and economic growth in Europe and North America.
As a matter of fact, many religious scholars also point out that Calvinism was a means through which bourgeois and urbanization developed from which finally led to the growth of businesses, the economy and industrialization.
People thus became rational and developed industrious spirits since they knew that hard work led to success at the end of the day. People therefore dedicated much of their time in commercial activities and accumulation of capital. Calvinists cities also approved imposition of interest rates on money borrowed especially for commercial purposes, a thing which the catholic cities had refused to approve.
Interest earned from money earned made the lender to feel the value of his money and also gave them extra money to invest in other businesses. This made the economy of protestant cities to be much stronger compared to catholic cities. One should thus expect as a result of these theories that protestant cities had a stronger economic growth as compared to catholic cities especially if the cities had a strong potential in commerce and trade.
Other theories suggest that the rise in Protestantism changed people beliefs and ideologies. These changes had a positive impact in the development of the spirit of commerce in individuals. This is because these beliefs had a form of economic teachings to the people who believed in them. Some branches of Protestantism like the puritans and pietists might have led to the emergence of modern science.
The protestant teachings also stressed on individual freedom and flexibility in life which might have made individuals to be open to modern ideas. If these theories are true then Protestantism might have played a huge role in economic development and industrial revolution during the medieval times.
Other scholars suggest that trust is a major element in the development of strong economic ties and market exchange. In ancient civilization when cities were under the catholic rule there was lack of trust even among the leaders of the society.
This is because the hierarchical leadership under Catholicism discouraged horizontal ties among people leading to lack of trust in these individuals. Hierarchical states thus performed in a somewhat poor manner in terms of political stability, economic development, civic participation, development of infrastructure and corporations.
Further studies on the issue show that Protestants are not likely to lie on taxes, take a bribe but might easily trust a stranger unlike Catholics who do not easily trust strangers, teach their young ones thrift and do not deal well with competitions. This might be reasons why Protestant states grew stronger in terms of development as compared to Catholic states.
To expound further on the theory, it is believed that Protestants Cities taught their people how to read and write thus they were literate unlike the people living in catholic cities. They therefore could read and interpret the bible on their own which may have lead to the accumulation of human capital.
This may have led to the development of the industrial economy by the Protestants especially during the nineteenth century. A classical example of this was in the Prussian communities who were mainly Lutherans and were taught how to read and write while they were in elementary schools. They thus became literate and acquired much wealth both in the cities and on the countryside which gave them a strong base of economic capital.
Historians have gone on to analyze deeper the work of Weber and discovered that his work had a global and universal application. They say that he might have invented the term rationality as a key aspect to the development of modern capitalism. In his thesis, the term rationality distinguished modern capitalism from other forms of development. According to these historians, rationalization in an individual can be measured as the degree which magical thoughts and beliefs are replaced.
These thoughts and beliefs are strong in individuals who believe in ancient religion such as Islam, Catholicism and other ancient religions. This is because the orientation of religion contemplates on magical beliefs which hinder economic development. That is why dominant religions of the world during the medieval times did not have a strong economic base.
The people who believed in the doctrine of predestination, the bible was seen as a sole authority which put an individual directly before God. This had the effect of displacing the magical beliefs which were the key elements of the ancient religion giving an individual the chance to get in touch with God directly and to make his own decision.
This is the point at which individuals started to become rational in their thoughts and behavior. It came as a result of them being able to decide what they want and what they did not want. In the end capitalism emerged as the people had the thirst of making money and gathering capital. Calvinism thus led to the spirit of capitalism to develop in the people who believed in this new religion.
Critics of Weber’s work
However, not all historians and scholars were in line with Weber’s thoughts and beliefs of the development of capitalism. This is because Weber believed that capitalism developed as a result of the reformation that led to the development of Protestantism.
Some scholars and historians argue otherwise since they believe that capitalism had long been experienced in the western civilization before the period of the reformation. It is just during this period that much of the development of capitalism was experienced and that is why Weber and other scholars think that capitalism may have been related to Protestantism.
A theory which was advanced to critic the work of Weber was referred to as Leuthy Thesis (Wright 5). It was advanced by Herbert Leuthy, an Italian politician. This theory is in line with Weber’s thesis that the western civilization is characterized by the ideology of rationalism amongst individuals.
However, it rejects the fact that capitalism and economic development during this period is related to Protestantism. According to Leuthy, the development of all sectors of the economy such as technology, economy, development of the mind and the liberation of man’s personality were related to the spirit of wealth accumulation which preceded the reformation in all parts of the western civilization. However, the other half of Europe did not experience these developments because of inquisition and trials based on heresy.
In Calvinist Europe on the other hand, spiritual liberation was connected with the dropping of submission and fear, factors which led to the development of the modern culture that embraced capitalism. As a result, radical changes took place in the society. People started to apply and pursue scientific knowledge while the need of democracy in the society started to emerge.
Meanwhile, a move to counter the reformation that was led by catholic scholars discouraged a free market which the forces of demand and supply determined the price of goods and services; a market which the Calvinist had established. These catholic scholars followed the beliefs of Aristotle which stated that an ideal market should be composed of natural goods which were mainly agricultural in nature. Businesses such as loaning money for interest and selling of goods for a profit were discouraged.
The people who believed in the Roman Catholic religion were unable to adjust to the changes which had hit the market. They saw that this new culture was against the beliefs and practices of their religion. They therefore rejected to be involved in the market and economic activities leaving those who were actively involved to wallow in sin.
All these events had taken place even before the reformation and led to casuistry. According to Leuthy, Calvinism did not favor casuistry and led to its decline after the reformation started to be experienced. Protestantism only legitimatized capitalism which made people to have a true and natural economic spirit.
It also clearly differentiated between private charity and acquired economic activities, things the Catholic Church was against. Due to the poor beliefs of the Catholic Church, many merchants and liberal Erasmian fled the religion and joined Protestantism bringing in their talents and skills. In their previous societies, merchants and Erasmians worked as subjects of the rulers, but in these new lands they actually earned money from their services leading to a rise in their living standards.
Another scholar who differed with the works of Weber was Luther. He did not encourage avarice or greed. Avarice makes money to be deemed as the most necessary thing in life even though it cannot be eaten. It should be noted that Luther did not attack the development of trade and commerce.
However, he was against their incorrect usage where one individual took advantage of the other in the name of trade. He also complained about usury especially in the advancement of loans where the lenders usually looked for loopholes to make the law to be in their favor. He believed that in the event of loan advancement, a security should be used. If a profit was earned in the process it should be shared between the two parties and losses should also be shared in the same manner.
Impact of the Reformation on the Social and Economic Realm
This whole argument can be summed up by looking at the impacts of the reformation on the social and economic realm. The works of Weber where the aspect of Calvinism was expounded on and the works of Luther both had a common feature of controlled begging as a means of discouraging poverty in the society.
Through these concepts, lending of money started to follow certain stipulated laws and procedures which other economical sectors also started to follow. Drastically with time, capitalism emerged from these practices and beliefs in the society.
This therefore led to the establishment of a rational society. Private and individual needs were abandoned and people started to focus on community issues and problems using a secular and rational approach to solve these issues. They people therefore recognized poverty as a bad thing and wealth to be a good thing in the society. That is why almost all communities in the world even at the present moment strive to eradicate poverty from their society and try to attain economic stability so that they can have a stable lifestyle.
Conclusion
The reformation had drastic impacts on the development of the economy. Although many contrasting theories have been advanced to explain the phenomena, they all have some common elements. During this period people were rebelling against the Catholic Church and started protestant religions which gave the people the freedom to think and choose what is right. The ideologies of rationalism and capitalism developed in them. As a result, the economy of the states which believed in the protestant religion started to grow.
This was a positive change in the lifestyle of man and his society. Thanks to the reformation people could now earn from their hard work. This made them appreciate their efforts. People could also engage in numerous economic activities which if carefully planned would earn them a good profit.
The increase in income improved their living standards, gave them a chance to expand their businesses and also gave them the chance to come up with new ideas and innovations. In the end the general economy of these societies and of the entire world as a whole grew, revolution in the industrial and scientific world occurred leading to where the world is at the present moment.
Works Cited
Cantoni, Davide. The Economic Effects of the Protestant Reformation: Testing the Weber Hypothesis in the German Lands. 2011. Retrieved from www.econ.upf.edu/docs/seminars/cantoni
Wright, William. Economic Impact of the Reformation. Age of Reformation. (2003): 1-9. Retreived on 17 March 2011 from www.utc.edu/Faculty/Bill-Wright/ecoimp.pdf