Charles North on Religion, Economic Development, and Rule of Law (Encore Presentation)

We remain on sabbatical to catch up on a number of non-podcast related things.  Please stay tuned for new episodes coming in the near future.

Max Weber is famous for linking religion to economic outcomes in his monumental book The Protestant Ethic and the Spirit of Capitalism.  Since that time we have seen social scientific interest in linking religion to economic growth wane and then be resurrected.  Charles North, associate professor of economics at Baylor University, discusses his own work exploring the nexus between faith and economics.

Our conversation begins with a general survey of the literature that sees religion as a potential causal factor in economic development.  Chuck presents the basic Weberian model and then fast forwards to the present where there has been a renewed interest in including religious variables (whether belief or practice) into econometric models for explaining growth.  He covers the likes of Robert Barro & Rachel McCleary, Joseph Daniels & Marc van der Ruhr, Sacha Becker & Ludger Woessman, and sociologists such as Rodney Stark.  Most of these scholars are interested in explaining GDP growth and we cover what GDP is and what it doesn’t necessarily measure.

Prof. North then turns to his research, which focuses on the rule of law and the related concept of corruption.  He reasons that since a number of economists have pointed out the strong relationship between the rule of law (or absence of corruption) and long-term economic growth, it might be worthwhile to investigate whether or not religious variables help to explain these two things.  He lays out his reasoning noting that rule of law helps to lower transaction costs and reduce uncertainty when it comes to investing, and that religious individuals (or the norms they follow) may have an impact in promoting and living by the rule of law (and, conversely, mitigating corruption).  We then go over the measurements he used, talking about the database provided by the World Christian Encyclopedia and how he worked with that.  Chuck’s research (with Wafa Orman and Carl Gwin) indicates that nations that had Protestant, Catholic, and Hindu majorities a century ago have higher levels of rule of law than nations with other major faith traditions (e.g., Islam, Eastern Orthodoxy).

Our conversation closes out with some of the more micro-foundational reasons for these research findings, as well as thinking about possible confounding factors.  Interestingly, this conversation leads us back to the medieval era and Chuck’s work on the development of canon law around the time of the 11th century.  Arguing that the Catholic Church needed to develop rules to protect its “stuff and junk” from various princes and kings, Europe benefited from the rise of a system of rule of law that lasted for centuries.  Recorded: April 1, 2014 (no fooling).

RELATED LINKS

 Prof. Charles North’s bio at Baylor University’s Department of Economics (Hankamer School of Business).

Good Intentions: Nine Hot-Button Issues Viewed through the Eyes of Faith, by Charles North and Bob Smietana.

“Religion, Corruption, and the Rule of Law,” by Charles M. North, Wafa Hakim Orman, and Carl Gwin in Journal of Money, Credit, and Banking.

The Victory of Reason, by Rodney Stark (mentioned in podcast).

The Long Divergence, by Timur Kuran (mentioned in podcast).

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 Rodney Stark on the Triumph of Christianity, Part II.

Timur Kuran on Islamic Law and Economic Development.

Timur Kuran on Islamic Economics.

Joseph Daniels on Religion and Trust.

Jared Rubin on Christian and Islamic Economic History.

Religious Liberty & Economic Development: A Panel Discussion.

Robert Woodberry on Missionaries and Democracy.

More podcasts on Religion & Economics.