Acton Institute Powerblog

Did the Reformation lead to ‘economic secularization’?

In his famous work, The Protestant Ethic and the Spirit of Capitalism, Max Weber attempted to draw a clear link between the Protestant Reformation and the rise of capitalism, focusing mostly on the Puritans and their (faulty) connections between spiritual significance and economic prosperity.

But while Weber may have offered some significant observations on the developments of his day, his overall theory has long been dismissed and discredited on a number of grounds, whether historical, theological, or economic.

“Weber missed the ethical dimension of vocation, and so missed the ethical dimension that informed early capitalism,” writes Gene Veith in Acton’s Lutheran primer on faith and work. “…He failed to understand the people he was writing about. And, as a modern materialist agnostic, he could not enter into his subjects’ theological convictions and their spiritual life.” (See Veith’s recent Acton lecture for more.)

Weber was wrong on basic theory and theology. Yet while the origins of capitalism surely predate the Protestant Reformation (see here, here, and here), surely it wielded some influence on what was to come.

In a new empirical study, “Reformation and Reallocation: Religious and Secular Economic Activity in Early Modern Germany,” researchers Davide Cantoni, Jeremiah E. Dittmar, and Noam Yuchtman explore the “economic consequences” of the period, arguing that the Reformation either caused or accelerated the secularization of the European economy.

“The Protestant Reformation, beginning in 1517, was both a shock to the market for religion and a first-order economic shock,” they write. “…While Protestant reformers aimed to elevate the role of religion, we find that the Reformation produced rapid economic secularization.”

Assessing a wide range of empirical data on the human and physical capital of the day, they observe a significant disruptive effect in four key areas: (1) religious-economic institutions, (2) overall political economy, (3) labor markets, and (3) the (re)allocation of resources.

Their conclusion is as follows:

Religious organizations have been among the most economically important institutions in human societies throughout history (Finer, 1999). These organizations historically have accumulated financial capital, possessed land, attracted human capital, and ruled regions. Shocks to the market for religion thus have the potential to affect the underlying structure of economies. We find that the Protestant Reformation marked both a challenge to the incumbent monopolist in the market for religion and a broader economic shock. Not only did the Reformation result in a decline in the economic power of Europe’s most powerful institution at the time—the Catholic Church—it also produced a sharp shift in the allocation of economic resources toward secular uses.

Secular lords exploited the ideological shock to the Catholic Church to confiscate monastery resources. Highly skilled labor moved from church careers toward secular careers, including in expanding secular administrations, particularly in regions that adopted the Protestant religion. Consistent with economic theory, university students, anticipating lower and more uncertain returns to church-career-specific training in theology, began to accumulate more general human capital, studying the arts, law, and medicine. The shift in resources toward secular activity was made tangible in the new construction occurring in 16th century Germany, which shifted sharply toward secular purposes, particularly in Protestant regions.

While the Reformation’s effects would reverberate across Europe for centuries, and the culmination of Europe’s cultural secularization was centuries away, our findings suggest that the first steps toward the rise of a secular West were taken immediately after the Reformation, with the weakening of the Catholic Church and the strengthening of the secular state.

Given their emphasis on the empirical data, the researchers can be forgiven for their strong dichotomy between “sacred” and “secular,” missing some of the same underlying spiritual and moral realities as Weber.

For while a strain of actual “secularization” would surely accelerate across Western society, we should stay mindful that much of the shift had to do with more basic shifts in education and economic delivery. In the subsequent economic order, spiritual gifts and good works would still retain the same reach and influence, if not more, albeit via “secular” institutions.

That underlying confusion has come to be popular opinion, but it doesn’t survive scrutiny. Indeed, though the economy is now “common,” untethered from a religious monopoly, the same spiritual and moral activity continues.

As Veith explains later in his primer:

The cultural influence of the Lutheran doctrine of vocation has survived the secularism that now dominates what were once the Lutheran nations of northern Europe. Critics could say that the doctrine of vocation contributed to that secularism. Certainly some Scandinavians are crediting Lutheranism for their secularism…

These statements are themselves utterly confused in their theological naïveté and in leaving out the key Lutheran teaching that informs this “freedom from religiosity,” namely, justification by faith in Christ. In this version of the Lutheran breakdown of the barrier between the secular and the spiritual, the secular swallows up the spiritual, which is contrary to the position of confessional Lutheranism, in which the spiritual is hidden in the secular.

Whatever its other implications, the study boldly affirms that religious institutions have a profound impact on the economic sphere, and back and forth and back again.

As we reflect on what it all means, let’s remember what Veith graciously reminds us. “The spiritual is hidden in the secular.”

Joseph Sunde
