Financial History 141 Spring 2022 | Page 16

Religion and the Rise of Capitalism

By Benjamin M . Friedman
Where do our ideas about how the economy works , and our views on economic policy , come from ? Most people in the Western world , and especially in America , simply take for granted that we organize one of the most essential aspects of human activity — the economic sphere — primarily around private initiative channeled through markets . But where did that presumption come from ? And why do so many people , again especially Americans , often see any challenge
The Protestant Reformers painting , circa 1700 – 1750 , modeled after the engraving series titled “ The Candle is Lighted , We Cannot Blow Out .” to our market-centered conduct of economic affairs as a fundamental threat to our way of life ?
The economist John Maynard Keynes famously suggested that the thinking of even the most practically minded people , who believe they are exempt from any influence from the world of ideas , is nonetheless the product of what economists and other academic thinkers said some time before . This may be true , but if so it merely raises a further question : where did the economists ’ ideas come from ? The European historian Fritz Stern once reflected that why historians think as they do may be just as important as what they think . Why economists think as they do matters as well .
Our ideas about economics and economic policy have long-standing roots in religious thinking . Most are unaware of how religious ideas shape our economic thinking , and when such links are occasionally suggested they are mostly misunderstood . But religion — not just the daily or annual cycle of ritual observances , but the inner belief structure that forms an essential part of people ’ s view of the world in which they live — has shaped human thinking since before there were written words to record it . The influence of religious beliefs on modern Western economics has been profound , and it remains important today . Critics of today ’ s economics sometimes complain that belief in free markets , among economists and many ordinary citizens too , is itself a form of religion . It turns out that there is something to the idea : not in the way the critics mean , but in a deeper , more historically grounded sense .
14 FINANCIAL HISTORY | Spring 2022 | www . MoAF . org