How the Reformation led to a reallocation of religious resources
Religion & Liberty Online

How the Reformation led to a reallocation of religious resources

Soon after Martin Luther nailed his ninety-five theses to the church door at Wittenberg (if he even did), Protestants began to be blamed for unleashing many of the destructive influences of Western Civilization.

As a Baptist, I think the criticisms are overstated (and that the good of the Reformation far outweighs the bad) but they aren’t wholly without merit. There is more than a grain of truth that an unintended effect of the Protestant Reformation was to increase the rapid expansion of secularization.

For example, a working paper published by the National Bureau of Economic research finds that the Reformation lead to the reallocation of resources from religious uses to secular ones. From the abstract:

Using novel microdata, we document an unintended, first-order consequence of the Protestant Reformation: a massive reallocation of resources from religious to secular purposes. To understand this process, we propose a conceptual framework in which the introduction of religious competition shifts political markets where religious authorities provide legitimacy to rulers in exchange for control over resources. Consistent with our framework, religious competition changed the balance of power between secular and religious elites: secular authorities acquired enormous amounts of wealth from monasteries closed during the Reformation, particularly in Protestant regions. This transfer of resources had important consequences. First, it shifted the allocation of upper-tail human capital. Graduates of Protestant universities increasingly took secular, especially administrative, occupations. Protestant university students increasingly studied secular subjects, especially degrees that prepared students for public sector jobs, rather than church sector-specific theology. Second, it affected the sectoral composition of fixed investment. Particularly in Protestant regions, new construction from religious toward secular purposes, especially the building of palaces and administrative buildings, which reflected the increased wealth and power of secular lords. Reallocation was not driven by pre-existing economic or cultural differences. Our findings indicate that the Reformation played an important causal role in the secularization of the West.

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Joe Carter

Joe Carter is a Senior Editor at the Acton Institute. Joe also serves as an editor at the The Gospel Coalition, a communications specialist for the Ethics and Religious Liberty Commission of the Southern Baptist Convention, and as an adjunct professor of journalism at Patrick Henry College. He is the editor of the NIV Lifehacks Bible and co-author of How to Argue like Jesus: Learning Persuasion from History's Greatest Communicator (Crossway).