December 25, 2005
ï¿½It is easier for a camel to go through the eye of a needle than for a rich man to enter the kingdom of heaven.ï¿½
This is one of the few Bible parables I remember from school. The image jumped – or rather waddled – out of the page at me.
The picture of the fat, rich man is powerful, however, like many other images, it has now been turned on its head because these days, the rich are thin while the poor are fat.
Yet, the picture of the fatty struggling to get through the eye of a needle, while the lithe, penniless pauper limbo-danced through effortlessly was always going to stick with me.
The sentiment was quite simple: being rich could well be a hindrance in the hereafter. Material possessions said nothing about your spiritual status. In fact, the more you had in this world, the harder it would be to do well in the next. Catholicism held that there was an explicit inverted relationship between being rich and your moral status on earth.
With the emergence of Protestantism in Europe, the idea that the rich were in some way morally suspect or the notion that wealth should be shared by the community and given to the poor was challenged. A new idea – Protestant in nature – contended that there was virtue in commerce, in materialism and in individual activities.
As Article 39 of the 39 Articles of the Anglican Faith sets out: ï¿½Contrary to what some Anabaptists claim, the wealth and possessions of Christians are not common, as far as the right, title, and possession of them is concerned.ï¿½
Thus, within Christianity, two competing economic philosophies emerged that had enormous implications for the evolution of countries, societies and peoples.
This religious element to economics has often been neglected. Christmas gives us an opportunity to reassess the role of religion in economics. Despite the best efforts of many in academia, economics is not just about remote concepts, such as money supply, elasticity and current accounts. Crucially, it is about deep culture.
As the two conflicting stories – the Protestant and the Catholic ones – on wealth above indicate, the economy of a country ï¿½ how it performs, where it invests and how it works ï¿½ sheds much more light on its culture than many realise.
Just as a huge part of culture and self-identification is about religion, economics is also about religion. Which religions perform best economically? Why did Catholic countries fall behind financially in the 17th century? Why did Protestant countries go into relative decline in the second half of the 20th century?
Why have Europe’s traditionally laggard Catholic states been economic dynamos in the last decade?
In Ireland, is it merely a coincidence that the economy took off in the 1990s at the same time as the Catholic Church fell from grace? How can we explain the enduring relative poverty of Muslim countries?
These questions are fundamental, yet rarely find their way into the business pages or the financial press in general. To try to explain the link between economics and religion, the best place to start is with Galileo.
He was no saint and was partial to a fair bit of carousing. But he was the father of experimental science, the sharpest thinker of his time, a great debater and a dismissive polemicist.
In 1663, he was condemned by the Vatican for heresy. The Vatican’s charge against Galileo read: ï¿½The opinion that the sun is at the centre of the world and immobile is absurd, false in philosophy and formally heretical because it is expressly contrary to Holy Scripture.ï¿½
Galileo’s big mistake was, not so much taking on the Vatican, but rather how he did it. He made a fatal error by publishing his heretical views in Italian, rather than Latin. At a stroke, he put his views beyond the Church and disseminated them to the public.
Popularising heresy – rather than the heresy itself – was the greater sin, as it could do greater damage to the reputation of the sitting Pope.
Ultimately Galileo retracted, but was heard to say at the end: ï¿½Eppure, si mouve’ï¿½ (ï¿½Say what you want, it moves’ï¿½).
The vilification of Galileo sparked a massive migration of cosmologists, scientists and mathematicians to the north – if not physically, then at least spiritually.
In 1670, a French priest visiting Amsterdam wrote of Galileo’s paradigm: ï¿½They are all for it here.ï¿½
From then on, the die was cast. In general, Protestant countries embraced scientific discovery, allowed refugees to mingle among their own, encouraged trade and discourse and, more than anything else, fostered individualism.
Thus, it was fine to embrace Newtonian physics and be a good dissenter. This tolerance (as opposed to encouragement) of irreverence, questioning and enquiry allowed innovation to flourish.
Innovation made the Protestant merchants rich and this permeated through society. A French count concluded: ï¿½The English are rich because they make things, not for the rich, but for the people.ï¿½
Throughout the Protestant world, trade surged. Commerce and the pursuit of trade and riches was enshrined in the 39 Articles, which put the profit and loss account on sound theological ground.
In contrast, the Catholic world went backwards.
The Church’s obsession with control and its fear of scientific enquiry, plus its alliances with the gentry, meant that the system of land-based (rather than trade-based) wealth endured.
The stronger the central control, the less likely it was that tradesmen would innovate and the more likely that a corrupt system of licence-based trade and clientelism would emerge.
Nowhere is this more evident than in the economic history of America.
Obviously there were huge differences to begin with when the first Spaniards and the first Puritans arrived in South and North America. In 1600, Spanish Catholic Mexico was ten times richer than Massachusetts. By 1800, it was twice as poor. By 1900, it had fallen back much further.
The gap in economic performance can be explained by the different cultural and religious approaches to trade, innovation, enquiry and finance.
Starting from a much lower base and a much harsher environment, the Protestant settlers out-thought, out-traded and eventually overwhelmed the conquistadors of Mexico, Texas and California.
Weber wrote about the Protestant work ethic in the 1930s, and, although it had historical resonance then, as a forecasting model it has not stood the test of time very well.
This is because the economic history of Europe and Asia since 1945 has been one of the collapse of a Protestant economic hegemony in the face of resurgent Catholic wealth in Europe – most evident in France, Italy and Catholic south-west Germany from 1945 to 1985. Traditional Protestant powers – such as Holland and, especially, Britain fared badly.
On the global stage, the emergence of Confucian capitalism in south-east Asia in the 1980s and 1990s and Japan’s lasting dominance in trade knocked Weber’s theories on the head.
Back home, the difference between the performance of the Republic versus the North made a mockery of Weber, while the stellar growth rates of Catholic Spain and Portugal reinforce the emergence of Catholic nations as economic models.
Maybe the crux of the theocratic dilemma is that Catholic nations have achieved economic vibrancy by becoming more ï¿½Protestant’ in the traditional trading sense. By opening up to ideas, trade and immigration, we have not only taken off, but overtaken the traditional Protestant European powers.
Some would go as far as to say that, in Ireland at least, the Catholic south now looks more like the tolerant, mercantile, reformed Holland of the 18th century than the Protestant north, which is a dead ringer for the atavistic, protectionist, unenlightened, suspicious Vatican of Galileo’s day.
Rome Rule, how are you? We have become a nation of Protestant Catholics.