The worlds of the sacred and of the profane may seem direct opposites but in fact are intimately linked. It is the social bonds created by worship that have long made trade and commerce possible.
Religion and Trust
In modern societies goods are exchanged largely for profit, not honor, transactions are regulated by law, and compliance is ensured by courts. Religion is no longer required to underwrite commercial transactions and secular institutions seem to have taken over its role in maintaining the social fabric. But this is not really the case. The law, police and courts are invoked only as a last resort and their use imposes heavy transaction costs. The basis of all normal transactions, social or commercial, remains that of morality and trust.
Economists generally assume that the only human behavior relevant to their subject is self-interest. Their mantra has been Adam Smith’s well-known saying that “it is not from the benevolence of the butcher, the brewer, or the baker, that we can expect our dinner, but from their regard to their own interest.” But some economists and other social scientists have begun to take an interest in the moral underpinnings of economics, arguing that market exchanges only work because people tend to act virtuously. “In fact, our open, self-organizing economic system, which some of us describe in shorthand as ‘free enterprise,’ is effective only because most of the time most of its participants abide by internally motivated ‘positive’ values, such as trustworthiness, fairness, and honesty,” write Oliver Goodenough and Monika Gruter Cheney.
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Trust is of particular importance for large modern societies in which people deal frequently with strangers, not their kin or neighbors, and must routinely place themselves or their assets in unknown hands, hoping they will not be taken advantage of. When trust is high, social and economic transactions proceed easily and efficiently.
A major role of religion is to create trust between coreligioni
sts. In primitive societies trust is based on observance of a c
ommon moral code which is specified and enforced by the gods themselves. “God
is regarded as the guardian of the social order and his interve
ntion as a possible sanction for any rule of conduct,” the anthropologist E. E
. Evans-Pritchard wrote of the Nuer.
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The Nuer are “an unruly and quarrelsome people,” in Evans-Pritchard’s view, yet their religion makes them fearful of doing wrong and quick to apologize. “The Nuer,” he wrote, “have the idea that if a man keeps in the right—does not break divinely sanctioned interdictions, does not wrong others, and fulfils his obligations to spiritual beings and the ghosts and to his kith and kin—he will avoid, not all misfortunes, for some misfortunes come to one and all alike, but those extra and special misfortunes which come from
dueri,
faults, and are to be regarded as castigations.... Any failure to conform to the accepted norms of behaviour towards a member of one’s family, kin, age-set, a guest, and so forth is a fault which may bring about evil consequences.... Therefore, also, a man who is at
fault goes to the person he has offended, admits the fault, saying to him
‘ca dwir—
I was at fault,’ and he may also offer a gift to wipe out the offence.”
Reconciliation must then follow, further repairing the social f
abric: “The wronged man then blesses him by spitting or b
lowing water on him and says that it is nothing and may the man be at peace. He ther
eby removes any resentment he may have in his heart. Nuer say that God sees these ac
ts and frees the man from the consequences of his fault.”
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In modern societies, religions are not the only component of trust civic associations, custom, law and many other aspects of culture also contribute-but religious faith has surely not shed its role as the guardian of morality. Leaders from Washington onward have seen religion as an essential part of the social fabric. In his farewell address of 1796, George Washington said:
Of all the dispositions and habits which lead to political prosperity, religion and morality are indispensable supports. In vain would that man claim the tribute of patriotism, who should labor to subvert these great pillars of human happiness, these firmest props of the duties of men and citizens. The mere politician, equally with the pious man, ought to respect and to cherish them. A volume could not trace all their connections with private and public felicity. Let it simply be asked: Where is the security for property, for reputation, for life, if the sense of religious obligation desert the oaths which are the instruments of investigation in courts of justice? And let us with caution indulge the supposition that morality can be maintained without religion. Whatever may be conceded to the influence of refined education on minds of peculiar structure, reason and experience both forbid us to expect that national morality can prevail in exclusion of religious principle.
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Dwight Eisenhower, who seems to have had no great personal interest in religion, came to much the same conclusion. “Our government makes no sense unless it is founded in a deeply felt religious faith—and I don’t care what it is,” he is reported to have said.
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Though he had not attended church in his adult lifetime, on becoming president he joined the National Presbyterian Church in Washington and announced he would attend services there on his inauguration day and every Sunday thereaft
er, so as to set an example for others.
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The quality of the social fabric is hard to measure, and for that among other reasons is often ignored by economists. In their view, society is a collection of self-interested individuals who seek only to maximize their profit, subject only to a few laws safeguarding property rights and contracts. In his book Trust, the political scientist Francis Fukuyama argues that, to the contrary, economic life is deeply embedded in social life, and depends integrally on the network of norms, rules and moral obligations that knit a society together. The denser this network, the higher the level of trust, which he defines as “the expectation that arises within a communit
y of regular, honest and cooperative behavior, based on commonl
y shared norms, on the part of other members of that community.”
Trust may rarely figure in neoclassical economists’ accou
nts of society, but in Fukuyama’s view trust is what enables people to build s
ocial capital, the network of associations that bind a society together. Where trust
is highest, as in communities of shared ethical values, organi
zations are most effective. “A nation’s well-being, as well as its abili
ty to compete, is conditioned by a single, pervasive cultural characteristic: the le
vel of trust inherent in a society,” he writes.
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Of the many cultural factors that contribute to trust, few are more significant than moral values and the religions that shape them. In Fukuyama’s view, “Traditional religions or ethical systems (e.g., Confucianism) constitute the major institutionalized sources of culturally determined behavior.”
Social capital is easier to destroy than rebuild, and there is some evidence its level in the United States has decreased in recent decades. Asked if “most people” could be trusted, 58 percent of Americans said yes in 1960, but the percentage had declined to 37 percent by 1993. A diminution in social capital, as measured by membership in organizations like bowling leagues, has also been recorded by the political scientist Robert Putnam in his book
Bowling Alone.
Fukuyama traces the drop in social capital to a loosening of Protestant values. In the mid-twentieth century, the American corporate world was much more homogeneous than the population as a whole. Almost all the managers and directors were Anglo-Saxon Protestants who “knew each other through their interlocking directorates, country clubs, schools, churches, and social activities, and they enforced on their managers and employees codes of behavior that reflected the values of their WASP backgrounds. They tried to instill in others their own work ethic and discipline, while ostracizing divorce, adultery, mental illness, alcoholism, not to mention homosexuality and other kinds of unconventional behavior.”
As other ethnic groups went through the WASP school system, they assimilated the same values, particularly the Protestant art of forming associations of all kinds. But the balance between individualism and community-building has shifted dramatically toward the former in the last 50 years, Fukuyama says. A profusion of lobbyists and special interest organizations have put private concerns ahead of community. Groups demanding rights for specific sections of the population have also undermined community in unintended ways. The upshot is that “communities of shared values, whose members are willing to subordinate their private interests for the sake of larger goals of the community as such, have become rarer. And it is these moral communities alone that can generate the kind of social trust that is critical to organizational efficiency.”
Fukuyama’s conclusion is that the role of religion in generating social capital has been undervalued. “Given the close relationship bet
ween religion and community in American history, Americans need to be more tolerant of religion and aware of its potential social benefits,” he writes. “Many educated people have a distaste for certain forms of religion, particularly that of Christian fundamentalists, and believe themselves above such dogmas. But they need to look to religion’s social consequences in terms of promoting the American art of association.”
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Contemporary societies have developed many ingenious ways of establishing the trust that religious bonds once provided. Merchants on Amazon or eBay seek customers’ ratings as evidence of their trustworthiness. Credit rating agencies provide assessments of people’s finances and likely ability to repay loans. The sophistication of these procedures and their narrow goals contrast with the simplicity and effectiveness of the religious system—any observant coreligionist, at least in a demanding faith, is naturally trustworthy.
Religion and Economics
Beyond its general role in creating the conditions for morality and trust, religion affects economics directly in several aspects, some positive, some otherwise.
One of the best-known links between religion and economics is that posited by the German sociologist Max Weber in his book
The Protestant Ethic and the Spirit of Capitalism,
published in article form in 1904 and 1905. Weber asked why Germany’s managerial class—“business leaders and owners of capital, as well as the higher grades of skilled labour, and even more the higher technically and commercially trained personnel of modern enterprises”—were overwhelmingly Protestant, not Catholic. His treatment bore on the wider question, in which he was also interested, of why capitalism first arose in the West and not elsewhere in the world.
Calvinism, Weber suggested, worried the faithful no end with i
ts doctrine of predetermination, which held that some people we
re selected for salvation, others for damnation. In the Catholic view, salvation cou
ld be obtained simply by confession of sins and acceptance of t
he church’s authority, but how was a Calvinist to know to which fate he had be
en allotted? The idea developed that worldly success was a sign
of divine favor. Calvinists and their Puritan descendants deve
loped an ethic that combined hard work and asceticism—the accumulation of more
and more wealth along with an asceticism that forbade spending
it. Nothing could have been more conducive to amassing capital. The emphasis on suc
cess in a worldly calling as proof of faith “must have be
en the most powerful conceivable lever for the expansion of that attitude toward lif
e which we have here called the spirit of capitalism,” Weber wrote.
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Why did Western culture alone produce rational science out of alchemy and astrology and summon rational economics, meaning capitalism, out of the business of everyday life? In subsequent works Weber argued that in China, despite many factors favoring capitalism, Confucianist mandarins opposed new technology and other necessary institutions, while in India the Hindu caste system was inimical to the rise of a business class.
As a founder of sociology, Weber’s widely known thesis on the Calvinist ethic and capitalism has had broad influence, even though he provided almost no data to support it. Economists, however, have had little use for his ideas. Since people the world over are utility-maximizing individuals, in their view, the answer to questions about the rise of capitalism and why the Industrial Revolution started in England in 1790 must be sought in institutions, like education or the availability of capital, which differ from country to country, and not in the clonelike populations of identical human units that inhabit them.
Strange to say, the attempt by economic historians to find an institutional explanation for the Industrial Revolution has not yet produced any generally satisfactory answer. Could it be that Weber was right after all, at least to the extent that the answer to the origin of capitalism lies not in institutions but in people and their beliefs, attitudes and behavior?
Whatever the relationship between Protestantism and capitalism, religion in general performs an essential role even in modern economies, that of creating circles of trust, whether in society in general or among particular religious groups. Jews and Parsees have built businesses based on the ties between coreligionists in distant cities. Islam is said to have spread through Africa as a vehicle of trade and trust. Its high price of entry—the Ramadan fast, no alcohol, going on pilgrimage to Mecca-encouraged trust among its members.
“Today, as in the past, handshakes, Yiddish, and trust still close the multimillion dollar deals,” writes Renee Rose Shield of the diamond selling trade in New York.
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Centered on New York’s Forty-seventh Street, the business is run by a close-knit community, mostly Ultra-Orthodox Jews, among whom one’s word is one’s bond. A shared religion is a major component of establishing the trust that is necessary to let another dealer have a consignment of stones worth several million dollars and be confident he will not abscond with them.