Have Protestant Religion Impacted the Economy

In 1905, German sociologist Max Weber wrote “The Protestant Ethic and the Spirit of Capitalism” which studied the correlation between the Protestant religion, and the emergence of capitalism or in this case the industrial development in north-western Europe. This study brought up many questions, with one of the main inquiries being if religion had any correlation with human capital and industrial development. In this paper, I will be examining this correlation, if any, by comparing and contrasting the economies of the effects of the Protestant Reformation which includes predominantly Protestant countries in north-western Europe versus those in which were not. I will also be examining the opportunities of education within those countries which will further justify if there is also a correlation with human capital. I will then conclude this paper by stating my opinion on whether or not I think that Christianity caused industrial development in north-western Europe.

Introduction

The Industrial Revolution occurred in the late eighteenth and early nineteenth centuries which forever transformed rural societies into industrialized ones. An introduction of new technology such as machines replaced the need for work to be done by hand, and therefore creating efficiency. The industrial revolution introduced many new developments which decreased human expenditure all the while increasing productivity. A main factor in the industrial revolution would be the idea of human capital. Human capital is defined as “the collective skills, knowledge, or other intangible assets of individuals that can be used to create economic value for the individuals, their employers, or their community (Dictionary)”. Education plays a huge role in human capital as it is a key factor in immersing technological advances and changes into society. The Protestant Reformation which occurred in Europe made economists wonder if religion had any impact on economic growth and development, due to studies that provided context in which predominantly protestant countries saw the first wave of industrial development. Although I believe there are correlations between religion, human capital, and industrial development, there is not enough evidence for it to be not only a main cause but a prominent cause in north-western Europe. There is also a lack of evidence that all three of those things are each in direct correlation with each other. There is however an understanding that the Protestant values and beliefs encouraged their people to thrive in the economy.

Before the Reformation

The Protestant Reformation was pivotal in changing the culture of the north-western European countries. “The Protestant Reformation was a major 16th century European movement aimed initially at reforming the beliefs and practices of the Roman Catholic Church. Its religious aspects were supplemented by ambitious political rulers who wanted to extend their power and control at the expense of the Church.” Max weber introduced the idea being that the Protestant Reformation was the important link which bridged the gap between religion and economic development as he stated, “and we shall therefore have to be prepared for the cultural effects of the Reformation to be in large measure perhaps even, from our particular point of view, predominantly unforeseen and indeed unwished for consequences of the work of the Reformers, often far removed from, or even in virtual opposition to, everything that they themselves had in mind (Weber,1958,pg.35).” The notion that implied the Protestant Reformation did indeed have outcomes such as capitalism but was not the driving force that contributed to economic development. What has not been taken into account was the era before the Protestant Reformation where economic development was still taking place and industries were growing. “The sixteenth century became the age of water-power; cranes, pulleys, pumps, coal for heating, gunpowder, and innumerable inventions in particular industries transformed the productive capacity of Europe (Walker, 1937, pg.10).” This disregards the statement being that the Protestant Reformation made way for capitalistic spirit to flourish, seeing that before the reformation, industrialization was occurring.

The Protestant Religion

In Max Weber’s “The Protestant Ethic and the Spirt of Capitalism”, Weber introduces the idea that there was a strong correlation between working in business and being a Protestant. This is especially true for the group of Protestants called the Calvinists. Calvinists believed in ‘Predestination’ which means that God has already determined where you will end up after you die. For example, the lucky ones would have a spot saved for them in heaven while the unlucky ones would not. This developed a drive in Calvinists which resulted in active contributions to their community through the task of working. “People’s jobs and standard of living helped shape their attitudes toward life and their sense of self-worth. In addition, industrial and economic unrest was producing continual strikes and repeated violence. Reformed leaders determined to advance what they considered a proper biblical understanding of economic tasks and relationships” (Smith,1981, pg. 481). This provided evidence for Weber being that Calvinists started building businesses during the time of industrialization which in turn generated income. What they did with that income was reinvest any surplus they had accumulated back into the business which fueled capitalism but also allowed them to obtain the best from their money. The idea that their work ethic, and drive was something that could be argued contributed to industrialization. However, there is no evidence of Calvinists having a higher human capital than non-protestants.

Religion and Literacy

Human capital and economic growth have been proven to share a high correlation with one another. An example of human capital discussed in the beginning of this paper is education. A measurement of education would be literacy; how well one can read and write. German theologian Martin Luther introduced the idea of, “to be able to read and interpret the Bible on one’s own, which through the establishment of elementary schools led to the accumulation of human capital both in cities and in the countryside all over Protestant territories (Cantoni, 2015,pg.7)” Also to be considered would be the comparison of education between predominantly protestant countries and predominantly catholic countries. “Using the 1871 Prussian census data, Sascha Becker and Ludger Woessmann (2009) showed that all-Protestant countries had a significantly higher literacy rate than all-Catholic countries. Moreover, they were able to show that this difference in literacy rates was caused by the Reformation (Sheremeta,2017,pg.7).” The evidence being that predominately Protestant countries had a higher literacy rate than predominately Catholic countries does insinuate that Max Weber’s idea of Protestant teachings such as being able to read the bible which in turn demonstrates literacy, is an advantage in which can translate to human capital. However, the whole idea is that religion as a whole is said to have caused industrial development in north-western Europe, which is contrasted in this case because Catholicism is also a religion.

Conclusion

In conclusion, although there is evidence that religion and human capital correlate with industrial development there is no factual evidence that suggests it is the main cause for industrial development in north-western Europe. There are several other factors that should be considered such as the geography of the predominantly Protestant countries which could have been more abundant in natural resources such as coal and iron which were imperative in the development of the industry. There was also advances in transportation of goods such as railways which demonstrated an increase in capital for countries. There is however evidence that suggests that the Protestant beliefs and values triggered a productive population that contributed to industrial development. Do I think they were the main cause? No. If religion was the only part that was played in developing the economy, why were Catholics not at the same productivity level as Protestants?