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How Christianity Created Capitalism
The Acton Institute ^ | May 2000 | Michael Novak

Posted on 08/09/2003 9:18:41 PM PDT by jfreif

Capitalism, it is usually assumed, flowered around the same time as the Enlightenment–the eighteenth century–and, like the Enlightenment, entailed a diminution of organized religion. In fact, the Catholic Church of the Middle Ages was the main locus for the first flowerings of capitalism. Max Weber located the origin of capitalism in modern Protestant cities, but today’s historians find capitalism much earlier than that in rural areas, where monasteries, especially those of the Cistercians, began to rationalize economic life.

It was the church more than any other agency, writes historian Randall Collins, that put in place what Weber called the preconditions of capitalism: the rule of law and a bureaucracy for resolving disputes rationally; a specialized and mobile labor force; the institutional permanence that allows for transgenerational investment and sustained intellectual and physical efforts, together with the accumulation of long-term capital; and a zest for discovery, enterprise, wealth creation, and new undertakings.

The Protestant Ethic without Protestantism

The people of the high Middle Ages (1100—1300) were agog with wonder at great mechanical clocks, new forms of gears for windmills and water mills, improvements in wagons and carts, shoulder harnesses for beasts of burden, the ocean-going ship rudder, eyeglasses and magnifying glasses, iron smelting and ironwork, stone cutting, and new architectural principles. So many new types of machines were invented and put to use by 1300 that historian Jean Gimpel wrote a book in 1976 called The Industrial Revolution of the Middle Ages.

Without the growth of capitalism, however, such technological discoveries would have been idle novelties. They would seldom have been put in the hands of ordinary human beings through swift and easy exchange. They would not have been studied and rapidly copied and improved by eager competitors. All this was made possible by freedom for enterprise, markets, and competition–and that, in turn, was provided by the Catholic Church.

The church owned nearly a third of all the land of Europe. To administer those vast holdings, it established a continent-wide system of canon law that tied together multiple jurisdictions of empire, nation, barony, bishopric, religious order, chartered city, guild, confraternity, merchants, entrepreneurs, traders, et cetera. It also provided local and regional administrative bureaucracies of arbitrators, jurists, negotiators, and judges, along with an international language, "canon law Latin."

Even the new emphasis on clerical celibacy played an important capitalist role. Its clean separation between office and person in the church broke the traditional tie between family and property that had been fostered by feudalism and its carefully plotted marriages. It also provided Europe with an extraordinarily highly motivated, literate, specialized, and mobile labor force.

The Cistercians, who eschewed the aristocratic and sedentary ways of the Benedictines and, consequently, broke farther away from feudalism, became famous as entrepreneurs. They mastered rational cost accounting, plowed all profits back into new ventures, and moved capital around from one venue to another, cutting losses where necessary, and pursuing new opportunities when feasible. They dominated iron production in central France and wool production (for export) in England. They were cheerful and energetic. "They had," Collins writes, "the Protestant ethic without Protestantism."

Being few in number, the Cistercians needed labor-saving devices. They were a great spur to technological development. Their monasteries "were the most economically effective units that had ever existed in Europe, and perhaps in the world, before that time," Gimpel writes.

Thus, the high medieval church provided the conditions for F. A. Hayek’s famous "spontaneous order" of the market to emerge. This cannot happen in lawless and chaotic times; in order to function, capitalism requires rules that allow for predictable economic activity. Under such rules, if France needs wool, prosperity can accrue to the English sheepherder who first increases his flock, systematizes his fleecers and combers, and improves the efficiency of his shipments.

In his 1991 Encyclical Letter Centesimus Annus, Pope John Paul II points out that the main cause of the wealth of nations is knowledge, science, know-how, discovery–in today’s jargon, "human capital." Literacy and study were the main engines of such medieval monasteries; human capital, moral and intellectual, was their primary economic advantage.

The pope also praises the modern corporation for developing within itself a model of relating the gifts of the individual to the common tasks of the firm. This ideal, too, we owe to the high medieval religious orders, not only the Benedictines and the Cistercians, but the Dominicans and Franciscans of the early thirteenth century.

Jump-Starting a Millennium of Progress

The new code of canon law at the time took care to enshrine as a legal principle that such communities, like cathedral chapters and monasteries before them, could act as legal individuals. As Collins points out, Pope Innocent IV thereby won the sobriquet "father of the modern learning of corporations." In defending the rights of the new Franciscan and the Dominican communities against the secular clergy and lay professors at the University of Paris, Thomas Aquinas wrote one of the first defenses of the role of free associations in "civil society" and the inherent right of people to form corporations.

The Catholic Church’s role helped jump-start a millennium of impressive economic progress. In ad 1000, there were barely two hundred million people in the world, most of whom were living in desperate poverty, under various tyrannies, and subject to the unchecked ravages of disease and much civic disorder. Economic development has made possible the sustenance now of more than six billion people–at a vastly higher level than one thousand years ago, and with an average lifespan almost three times as long.

No other part of the world outside Europe (and its overseas offspring) has achieved so powerful and so sustained an economic performance, raised up so many of the poor into the middle class, inspired so many inventions, discoveries, and improvements for the easing of daily life, and brought so great a diminution of age-old plagues, diseases, and ailments.

The economic historian David Landes, who describes himself as an unbeliever, points out that the main factors in this great economic achievement of Western civilization are mainly religious:

• the joy in discovery that arises from each individual being an imago Dei called to be a creator;

• the religious value attached to hard and good manual work;

• the theological separation of the Creator from the creature, such that nature is subordinated to man, not surrounded with taboos;

• the Jewish and Christian sense of linear, not cyclical, time and, therefore, of progress; and

• respect for the market.

Capitalism Infused with Caritas

As the world enters the third millennium, we may hope that the church, after some generations of loss of nerve, rediscovers its old confidence in the economic order. Few things would help more in raising up all the world’s poor out of poverty. The church could lead the way in setting forth a religious and moral vision worthy of a global world, in which all live under a universally recognizable rule of law, and every individual’s gifts are nourished for the good of all.

I believe this is what the pope has in mind when he speaks of a "civilization of love." Capitalism must infused by that humble gift of love called caritas, described by Dante as "the Love that moves the Sun and all the stars." This is the love that holds families, associations, and nations together. The current tendency of many to base the spirit of capitalism on sheer materialism is a certain road to economic decline. Honesty, trust, teamwork, and respect for the law are gifts of the spirit. They cannot be bought.

TOPICS: Business/Economy; Constitution/Conservatism; Culture/Society; Government; News/Current Events; Philosophy
KEYWORDS: capitalism; christianity; economics; michaelnovak; religion

1 posted on 08/09/2003 9:18:42 PM PDT by jfreif
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To: jfreif
Wonderful post! If one looks around the world, one can see this is dead on right. Which is why the monopolists, the sleaze merchants, the con men, the lawyers and all the other parasites are so intent on driving the Christian faith out of the public square.
2 posted on 08/09/2003 9:34:53 PM PDT by DPB101
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To: jfreif
God is in favor of the productive. The parable of the pounds ends thusly:

Luke 19:24 And he said unto them that stood by, Take from him the pound, and give it to him that hath ten pounds. 25  (And they said unto him, Lord, he hath ten pounds.) 26  For I say unto you, That unto every one which hath shall be given; and from him that hath not, even that he hath shall be taken away from him.

3 posted on 08/09/2003 9:41:16 PM PDT by ovrtaxt ( Support real tax reform - HR 25! See
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To: ovrtaxt
And it holds for everyone. That is what was and is revolutionary about the Christian faith. Anyone can join. Just like America.
4 posted on 08/09/2003 9:51:28 PM PDT by DPB101
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To: jfreif
Look, I dunno what the position of the Church concerning capitalism was 250 years ago, but I know what its position is today. And it sure ain't pro-capitalist.

Here's a few selections from Pope Paul VI's encyclical "Populorum Progressio" (On the Development of Peoples)

"But it is unfortunate that on these new conditions of society, a system has been constructed which considers property as the key motive for economic progress, competition as the supreme law of economics, and private ownership of the means of production as an absolute right that has no limits and carries no corresponding social obligation....But if it is true that a type of capitalism has been the source of excessive suffering, injustices and fratricidal conflicts whose effects still persist, it would also be wrong to attribute to industrialization itself the evils that belong to the woeful system that accompanied it."


"No one is justified in keeping for his exclusive use what he does not need, when others lack necessities."


"Individual initiative alone and the mere free play of competition could never assure successful development. One must avoid the risk of increasing still more the wealth of the rich and the dominion of the strong, while leaving the poor in their misery and adding to the servitude of the oppressed. Hence programs are necessary in order 'to ecourge, stimulate, coordinate, supplement and integrate' the activity of individuals and of intermediary bodies. It pertains to the public authorities to choose, even to lay down, the objectives to be pursued, the ends to be achieved, and the means for attaining these, and it is for them to stimulate all the forces engaged in this common activity."

There's lots more of the same. The Church a friend to Capitalism? Don't make me laugh. Ask yourself -- does all this sound more like Adam Smith or Karl Marx?
5 posted on 08/09/2003 9:54:16 PM PDT by The Radical Capitalist
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To: jfreif
Rebuff: Religion and Capitalism Are Antithetical - Andrew Bernstein

Funny, he specifically mentions Novak. Gee, I didn't know Gary Baur was cheering for Janet Reno while she attacked Microsoft...
6 posted on 08/09/2003 10:14:16 PM PDT by Rate_Determining_Step (US Military - Draining the Swamp of Terrorism since 2001!)
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To: The Radical Capitalist
"No one is justified in keeping for his exclusive use what he does not need, when others lack necessities."

Whooa Sammy... we gotta little Marxes going on there.
7 posted on 08/09/2003 10:16:22 PM PDT by Rate_Determining_Step (US Military - Draining the Swamp of Terrorism since 2001!)
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To: The Radical Capitalist
Thanks for injecting some sense into this silliness.
8 posted on 08/09/2003 10:33:31 PM PDT by gcruse (
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To: The Radical Capitalist
As a Catholic and a capitalist, I must sadly agree with your assessment of the Church's current position on capitalism. But keep in mind, as I try to do, that the original capitalists were Catholic, and that there have been periods of error in the Church regarding other issues that have ultimately been reversed over time. As long as the Church's position is not a question of dogma, but policy, then the popular opinion of clergy and lay people can be changed.
9 posted on 08/09/2003 10:48:25 PM PDT by vanmorrison
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To: jfreif
Next thing you know Christianity invented sliced bread.
10 posted on 08/09/2003 11:20:28 PM PDT by CanadianFella
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To: jfreif
Actually it took the reformation and Martin Luther to break feudalism, something the Church was supporting since it was a source of income. The Princes that supported Luther were more for breaking the financial hold of the church than the new faith. But the peasants looked at the faith that said they did not need to go to the church for salvation but directly to God. You are saved by faith, not works. Since the church was taken out of the picture and shown to be corrupt, all its authority, including its support of the feudal system, was challenged and weakened. It started the age of revolution.

Capitalism and Christianity are linked since they support the individual's independence. Protestants also recognized the need for the separation of church and state, that they not be linked and impose a double tyranny.
11 posted on 08/10/2003 3:18:33 AM PDT by KeyWest
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To: ovrtaxt
I do agree with your assertions, however,
How does this explain the extravegant wealth of the Rockefellers/Morgans and others that still manage to cling to their wealth with no strings attached?
Granted, you can say they will be damned,
But they have already produced a series of offspring that have enjoyed this opulance and have died by it.
In other words, the tune marches on at this time. I see no production from the wealthy privileged masses to the the inoppurtune poor.
Ain't gonna happen.
The rich remain rich and enjoy 'clams casino'.

The poor remain poor and enjoy nothing as physical beings, they do however acheive great status when they pass into the heavens.

12 posted on 08/10/2003 3:50:45 AM PDT by joanil
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To: The Radical Capitalist; gcruse
The church is definitely screwed up on the theology of wealth. But the Bible is a different story. This is typical of a number of subjects.
13 posted on 08/10/2003 4:56:25 AM PDT by ovrtaxt ( Support real tax reform - HR 25! See
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To: CanadianFella
It didn't?
14 posted on 08/10/2003 4:58:32 AM PDT by verity
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To: joanil
The reason is that God doesn't do stuff automatically. He needs a believer inthe earth to implement His plan. Go back to Genesis, and you will find that Adam was His agent, and the entire race of man was His intended conduit of authority in the Earth. The only thing God ever did by Himself, without a human involved, was speak everything into existence. (The 'only' thing- ha!)

After that, Adam was to be the one. But of course, he blew it. Now, we are at the point where Jesus has restored the position of Adam. He defeated sin, sickness and poverty, the scope of Adam's fall. So, 'whosever who will believe' has all the provision and abundance of God at their disposal in Christ.

The trouble is, the understanding of the church has been sadly lacking in this area. So God can't do much until someone is willing to cooperate with Him. This theology that poverty is holy, or pleasing to God, is a load of crap. He died to destroy it.

The other side is this- He is not willing to allow any of His children to be destroyed by the love of money, so He will only release to us what we can handle. (See the fate of Solomon.)

For more teaching on this, check out
15 posted on 08/10/2003 5:07:05 AM PDT by ovrtaxt ( Support real tax reform - HR 25! See
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