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The Intersection of Religion and Economic Behaviour

The Intersection of Religion and Economic Behaviour

The World Bank published two years ago a study conducted by two Bulgarian economists, Simeon Djankov and Elena Nikolova, which shows major differences in attitudes toward state authority and the adoption of new ideas between Orthodox, on the one hand, and Catholics and Protestants, on the other hand. Differences in attitudes between Orthodox and Protestant Catholics are rooted in major theological differences between these branches of Christianity. Western Christianity (which gave rise to Catholicism and Protestantism) emphasizes reason, individualism, and questioning authority, while Eastern Christianity is associated with mysticism, affection, and community spirit, with less emphasis on law, reason, and questioning authority. [1]

The first to make a comparison of the relationship between different religious currents and economic prosperity was the German sociologist Max Weber in his famous book Protestant Ethics and the Spirit of Capitalism, published in 1904. It is undoubtedly one of the first works to pave the way for institutional analysis in the frame of economic science.

Thus, institutional economics does not aim to analyse the superiority of any religious cult from an ecclesiastical perspective, but seeks to identify factors important for prosperity unintentionally determined by differences in the religions, traditions, culture and morals of different groups. These studies and explanations are purely descriptive, analyse a real phenomenon which is easily observable and should not be perceived as an attack on a church, being an analysis of culture and mentalities. For example, the atheist in the Protestant cultural space thinks differently from the atheist in the Orthodox space, being influenced by the morals and traditions of the dominant religion. 

Comparison between dominant religion and economic performance 

Many explanations for the obvious differences between Western and Eastern Europe refer to recent history, namely the imposition of the Communist system in Eastern countries. Undoubtedly, centralized planning and the abolition of private property were catastrophic institutional changes for economic well-being, but the transition from the absolutist monarchy in the Orthodox space to Communism have not been very long. Neither have I found the answer to the question of why Communism was more aggressive in Orthodox countries than in Catholic ones, where it was imposed after the Second World War?

Communism did not appear in the states where Marx and Engels lived, but imposed itself in the Tsarist empire, with an absolutist monarchy which was highly centralized, with a landed property cartelized by a politically privileged nobility and a large mass of people who would be considered politically and economically disenfranchised by any objective standards. Communist leaders took over the institutions of the country and the changes were formal rather than in substance. The place of the Tsar was taken by the Communist leader, the place of the nobility was taken by the Communist nomenclature, and the ordinary citizens kept their status as slaves of the new “red monarchs”, who also had no restraint in the use of force against those who challenged their authority. We could contend that Communism was successful in the Orthodox space precisely because traditional institutions were compatible with centralized and authoritarian systems.

Figure 1. GNP per capita in PPP over time in key countries and regions

Source: Bairoch, Paul, Economics and World History, 1995 

Figure 2. GDP per capita in 2016

Source: IMF, 2016 

In Hungary, the Czech Republic and Poland, Communism was different from that in the culturally Orthodox countries (the Soviet Union, Romania and Bulgaria), with citizens of Catholic/Protestant countries captive in the sphere of influence of the USSR opposing the Communist system through strong revolts and a permanent attitude of disobedience. There was no collectivization in Poland and people kept their farms, in Hungary the small private entrepreneurs never disappeared. After the change in 1989, the Czech Republic, Hungary and Poland adopted deeper and more far-ranging reforms, while Romania and Bulgaria lagged behind. The Baltic countries (Estonia, Latvia and Lithuania) are the countries in the ex-Soviet space that have prospered, being the only countries with a Christian cultural tradition within the former Soviet Union that are not predominantly Orthodox.

On the other hand, the poorest countries in free Europe (countries that did not have Communism) are Greece and Cyprus, both of which Orthodox countries. Even within Yugoslavia we have interesting examples: Macedonia, Serbia and Montenegro have Christian Orthodoxy as their dominant religion and they are the poorest, while a significantly more prosperous state is Croatia, where the dominant religion is Catholicism, and the most prosperous ex-Yugoslav country is Slovenia, a country that in the interwar period was predominantly Protestant and even today is strongly culturally influenced by Protestantism.

It could also be objected that the Orthodox countries in the Balkans were under Ottoman rule, but Belarus, Ukraine and Russia (being Orthodox countries) were never conquered by the Ottomans (though they had their own “scourges” with Mongols and Tatars) and yet they were just as poor.

An interesting case to analyse is the difference between Transylvania and the Old Romanian Kingdom. In 1918, Transylvania, which until then had been part of the Austro-Hungarian Empire, was annexed to Romania, already an independent state since 1877. Theories regarding the exploitation of a territory by foreigners as the main cause of the return are not confirmed at all. Romania had been independent for four decades, but was much poorer than Transylvania, a province subjugated (in Romanian rhetoric) by the Austro-Hungarians. The difference, however, is that in the Old Romanian Kingdom (consisting of Wallachia and Moldavia) the dominant religion was Orthodoxy, but in Transylvania Catholicism and Protestantism were widespread and socially ascendant, being the religion of the enfranchised and prosperous population groups (mainly non-Romanians). 

Figure 3. Distribution of dominant religions by regions in Europe

Source: My country? Europe. (mycountryeurope.com)
By comparing the maps that show us on the one hand the dominant religion and on the other hand the economic prosperity expressed in the form of GDP/inhabitant, it becomes obvious that the most prosperous countries are the Protestant ones (especially the Calvinist ones, followed by the Lutheran ones), then the Catholic ones, and the poorest are and always have been (in modern times at least) the Orthodox ones. [2]

The empirical data is eloquent, the real challenge is to identify those particularities of each religious current that have generated types of behaviour favourable to economic prosperity.

Religious differences that cause economic behavioural differences 

We observe empirically that Orthodoxy is correlated with lower economic prosperity relative to the Western religious traditions of Christianity. The strict social hierarchy it promotes with the placing on the pedestal of the priest as a sole arbiter of wisdom created in the collective mind the idea that a wise man must centrally manage problems and decide on solutions. In the Orthodox collective mind, it is not the rules that are wrong, but the problem is only the identification of a providential leader.

On the other hand, in the Protestant space, the priesthood is universal, and the priest can be any member of the community (being called “brother”, while in the Orthodox religion he is “father”). Thus, in the Protestant space the idea that people have equal rights (isonomy) led to a culture of debate in society and the rule of law, essential conditions for economic prosperity. And this different attitude compared to the Eastern cultural space also led to differences in the education system.

The first to participate in the literacy of rural children were the priests and teachers of the churches. Later, teachers trained in pedagogical schools appeared, but the image of the demigod was also transmitted to them. One often hears the sentiment that “in this country there is no more respect! Well, before the priest, the teacher and the mayor were respected, people kissed their hand on the street when they met them!”.

One of the characteristics of Orthodox culture is the power of the shepherds who lead the flock, with the sheep having no say. Hence one of the important causes of the educational disaster: parents and, even less so, students are not allowed in any way to disagree with the teacher, any disagreement being perceived as an impertinence or at best a disrespect for the teacher’s sacred mission.
The parents have in mind such a leader (or “shepherd” as the priests say) and they want their offspring to occupy that place from the top. In the last century, many mothers wanted their child to become a priest then, as society developed, they began to want their offspring to become politicians, doctors, engineers, and so on, and this tradition has as an effect another characteristic of the eastern cultural space: arrogance. As one happens to hold a leadership position, he suddenly has the impression that he is part of a class of elites on which the fate of the entire nation depends. It is the direct effect of the idea that the existence of a leader is essential for the survival of the community.

What the study of the World Bank reveals to us more precisely is that in Orthodox culture strict obedience to authority is more intense and is cultivated since childhood. The state is confused with the nation and ends up being seen as a sacred entity, not as an association in which we are all shareholders entitled to equal rights. The culture of passivism in normal times that this attitude instils is summarized in the Romanian phrase “The sword does not sever the bowing head”.

Photo: A farmer kisses the hand of a former Romanian Prime Minister, Emil Boc, during his premiership

This is not simple servility, since it also masks a hypocritical, disguised hatred, but not against the wrong rules. It is in fact an expression of envy and the desire to be in the lord’s place and to be revered. The transition from kissing the priest’s hand to kissing the boss’ hand is a natural transition in the Eastern cultural space.

Russia is an example in which religion has dominated society throughout history, and the apparent conflict between the followers of collectivist Christianity and those of socialism could be seen also as fratricidal war between religious and secular dispositions of the same cultural inclination. While Christians may venerate relics, there are also nostalgic Communists who weep besides Lenin’s mummified remains kept on display. These reflexes in behaviour, rooted in common human predispositions, and appearing in culturally mediated forms regardless of political or technological change, are the subject of the institutional analysis.

Another determining factor for the cultural differences between the Protestant and the Orthodox space was presented polemically in the public forum by historian Răzvan Theodorescu, being in fact an extension of an argument presented by Weber:

 

[…] Calvinists are richer than Lutherans everywhere, Lutherans richer than Catholics, here Max Weber’s analysis stopped. Extending the theory, Catholics are richer than Orthodox and Orthodox, richer than Islamists, with the artificial exceptions: Luxembourg and Qatar. This is because of a type of education that Orthodoxy gives you, which is not that of a Protestant. I believe that Orthodoxy is linked to a certain economic backwardness. The Protestant knows that he is a piece, a nothing in the hands of the deity, he is born of the sin of Adam and Eve, and he must work continually to please God. He must be a follower of "Time is money" and even enjoy the pleasures of the body a little. The Easterner, from the Holy Fathers of the fourth century, knows that man is a part of God, he is made like Him, that is why when he marries in the Church a crown is put on his head because, for a moment, he is the King of the world. And because he is like God, God helps him. God does everything for them, and he sits, watches, prays, plays with some rosaries, here he is related to the Islamic. It’s another education.” [3]

 

What Weber observed in the early twentieth century is still valid today. Any attempt to reform the Orthodox space by leaders has always failed. The reforms of Peter the Great in the Tsarist Empire, the imposition of a foreign king on the throne of the Romanian Principalities etc., they have never solved the structural problems of those countries, as the institutional causes have not changed, the change of mentalities cannot be done by decrees, and the institutional factors that generate unintended effects on economic prosperity are difficult to identify and even impossible to build arbitrarily (see F.A. Hayek’s Fatal Conceit).


Conclusion

Often, when I talk to different people in our country about solutions to solve some of the social problems, I try to talk about (semi)direct democracy, local autonomy, the rule of law, the free market and public debate. The reaction is almost always: “This is a naive vision! Only a dictatorship takes us out of disaster!”, which indicates to me a belief rooted in this cultural space in the providential leader, authoritarianism and militarism, hierarchically coordinated collectivism and so on…

Figure 4. Switzerland and Romania, over the years  

Finally, I propose a brief comparison between Switzerland, a predominantly Calvinist Protestant country, and Romania, a predominantly Orthodox country. Around the middle of the 19th century, the Swiss and Romanians were extremely poor, the former being a pastoral people (cattle based) from the Alps, the latter a pastoral people (predominantly shepherds) from the Carpathians. Both peoples gained their independence around the same time, but while the Romanians chose to be led by a monarch, in a centralized system, to cede power to politicians (representative democracy) and create a unitary state, the Swiss have chosen exactly the opposite: semi-direct democracy (almost without politicians), extreme confederation-type decentralization and a permanent concern not to allow the emergence of political leaders. Switzerland is now the richest country in Europe, Romania among the poorest.

Notions such as isonomy, debate (which also involves challenging the decisions of state leaders), decentralization and the authentic free market are so foreign to most Orthodox that sometimes the mere reference to them provokes aggressive reactions. Schematically, it can be said that Orthodoxy is compatible with Communism, Catholicism promotes corporatism, and the free-market system has found its place in the Protestant space. 

Notes:


[1] Simeon Djankov, Elena Nikolova, Communism as the Unhappy Coming, World Bank-Journal of Comparative Economics, April 3, 2018, link: https://cdn.g4media.ro/wp-content/uploads/2018/04 /Studiu-Banca-Mondiala.pdf

[2] CIA, GDP – per capita (PPP), The World Factbook, accessed April 30, 2018, link: https://www.cia.gov/library/publications/the-world-factbook/rankorder/2004rank.html

[3] Razvan Theodorescu, E o enormitate a afirma că ne-am născut ortodocşi, Revista Historia, accessed on April 30, 2018, link: https://www.historia.ro/sectiune/general/articol/e-o-enormitate-a-afirma-ca-ne-am-nascut-ortodocsi

 

 
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OEconomica No. 1, 2016