Sunday, April 02, 2006

Are Belief in Hell and Economic Growth Linked?





Gavin Kennedy

Religion is good for business: economists like strong economy, firm beliefs”

“The fear of eternal damnation may be the key to a robust economy.
In fact, where a large percentage of a country's population believes in hell, some economists have found a link to less corruption and a higher standard of living, according to a recent report by the Federal Reserve Bank of St. Louis. The idea is nothing new. Adam Smith, the 18th century Scottish economist and philosopher, argued that a society infused with religious beliefs would be less inclined to devote its resources to determining an individual's or firm's business ethics — "what economists call the credit or default risk associated with lending to an unknown individual," according to Kevin Kliesen, author of the report and an economist at the St. Louis Fed.
The bottom line, Kliesen said, is that the greater the belief in hell, the less corrupt a country's public and private institutions tend to be perceived. "This perception, in turn, can affect economic growth."

From, Salt Lake City, Utah, USA 2 April by Dave Anderton

CommentNo reference is given for the alleged statement of Adam Smith that religious belief in ‘Hell’ is correlated with strong economic growth. He wrote quite a bit about religion in “Wealth of Nations” (WN V.i.g.1-42: pp 788 – 814), and much of it critical in terms of Established Churches and their ecclesiastical establishments (Church of England, Church of Scotland, Church of Rome) as well as the independents, such as the Quakers, Methodists and the many protestant sects – the Latter Day Saints did not exist in the 18th century.

Two points should be made here (there is no time today to elaborate on Smith’s most interesting analysis of the role played by religion in society or the economy). First, Smith divides ‘systems of morality’ into two kinds, the ‘liberal’ and the ‘austere’ and he explains while the austere is admired by the ‘common people’ and the liberal by the ‘people of fashion’ current at the same time.

The distinction between them is marked by the relative disapprobation that ‘mark the vices of levity, the vices which are apt to arise from great prosperity, and from an excess of gaiety and good humour.’ In the ‘liberal or loose system, luxury, wanton and even disorderly mirth, the pursuit of pleasure to some degree of intemperance, the breach of chastity, at least in one of the two sexes, &c., provided they are not accompanied with gross indecency, and do not lead to falsehood or injustice, are generally treated with a good deal of indulgence, and are either easily excused or pardoned altogether. In the austere system, on the contrary, those excesses are regarded with the utmost abhorrence and detestation’. (WN V.i.g.10: p 794).

Almost all religious sects have begun among the common people, writes Smith, and start with an austere moral system, sometimes carrying it to ‘some degree of folly and extravagance. But Established Churches are staffed largely from the middle and upwards ranks of people, whose living conditions, behaviours and morality strays from the austere to towards the liberal kind (he clearly has the Church of Rome before the Reformation in mind, and perhaps his own observations of his Oxford tutors – always remember he went to Oxford University to train for Holy Orders, but changed his mind about a career in the Church of England).

Second, the question arises, not should a belief in Hell lead to an austere morality, but does it do so in practice? Smith gives no evidence that it does. The moral poor were not in a financial position, in the main in 18th-century Scotland, to be tested for their proclivity to creating strong economies. And while there is some scholarship arguing for linking protestant sects to business (R. H. Tawney, Religion and the Rise of Capitalism; Max Weber, The Protestant Ethic and the Spirit of Capitalism), which may well have some merit (apologies for being vague here; it’s a long time since I studied in this area as an undergraduate), there is also a need to explain why, for example, belief in Hell among the priesthood and the congregation of the Roman Catholic Church is not so clearly linked, to capitalism, and why, today, other religions, such as Islam, with relatively fanatical beliefs about Heaven and Hell, do not seem to be immune in countries where they dominate ,and have a monopoly of religious beliefs, have produced degrees of corruption in business and social life that cannot be said to be the aberrations of a few individuals.

I think the thesis advanced in the report by the Federal Reserve Bank of St. Louis is problematic. More to the point here, is that I think the almost obligatory reference to Adam Smith is misleading. His views on religion in practice were far more complex than implied by Kevin Kliesen.

Dave Anderton, the report in Deseret News meets the requirements of a competent journalist. He ends his report with a reference to contrary views, and is to be congratulated for his objectivity:

Steve Kroes, executive director of the Utah Foundation, a nonprofit public policy research group, said he would not dismiss research showing a correlation between religious beliefs and economic growth, but he puts more stock in other factors, like low land costs, low tax burdens and reasonably priced labor. "Nevada is the fastest-growing state in the nation, and it's right next door to Utah, and I don't think you could say that Nevada and Utah are morally equivalent," Kroes said. "I really don't think the morality issue is really what is driving the economies in the West."
[Read the report at:,1249,635195960,00.html]


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