Does Religion Impede Economic Development?

Does Religion Impede Economic Development?

Rumy Hasan
Rumy Hasan

In the 500th anniversary of Martin Luther’s 95 theses that propelled the Protestant Reformation, it is timely to recall that the shockwaves were not just confined to Christian doctrinal matters but were central to the rise of industrial capitalism that transformed the whole world. This thesis was set out in the most famous link between religion/ethics and economic development by Max Weber in The Protestant Ethic and the Spirit of Capitalism, published in 1904. I should like to make the claim that it has relevance in the present day in regard to the development of the Global South. In the introductory chapter, Weber makes some forceful observations that are of considerable importance to the goal of global development: “Only in the West does science exist at a stage of development which we recognize today as valid … A rational chemistry has been absent from all areas of culture except the West … [A] rational, systematic, and specialized pursuit of science, with trained and specialized personnel, has only existed in the West in a sense at all approaching its present dominant place in our culture”

Why these advances took place in Western Europe is what Weber sought to explain and provides the foundational reason as to why capitalism – which so enormously developed productive capacities and capabilities and transformed the world at extraordinary speed – originated among Protestants in Western Europe: “business leaders and owners of capital, as well as the higher grades of skilled labour, and even more the higher technically and commercially trained personnel of modern enterprises, are overwhelmingly Protestant”.

Weber’s thesis was striking and compelling; the rise of capitalism was rooted in Protestant (especially Calvinist) ethics and attendant cultural dispositions that stressed the importance of hard work and wealth creation (for the glory of God) and thriftiness. It was this trinity of factors that fomented a new economic system characterised by accumulation of capital – rather than wasteful expenditure – that financed investment and further expansion of enterprises. Hence, the Protestant ethic engendered the ‘spirit of capitalism’.

Protestantism was a movement of protest against the Catholic Church and the severing of ties with its centralised, hierarchical institutions. Accordingly, primacy began to be accorded to the individual’s relationship with God without recourse to institutions and clergy and it is this that arguably nurtured individual economic and political freedoms. Nascent capitalist enterprises in an increasingly marketised economy originated in initiatives by such individuals; a capitalist class imbued with a Protestant ethic was thus born.

Might this foundational hypothesis of Weber’s provide helpful insights for the present-day developing world? That is to say, those countries and societies that are characterised by a Protestant-type culture offer a more conducive environment for economic development than those that are not. Consider the large tracts of the world where development has been stagnant or sluggish in the post-colonial era. Can we argue that they are characterised by ethics and norms that are decisively at variance with the Protestant work ethic? If so, might the culture and religion of such societies powerfully militate against such an ethic?

The Weberian thesis is that those religions and cultures (Catholicism and even more so, Hinduism, Buddhism, and Islam) that stress anti-materialism and ‘other-worldliness’ and focus on spiritualism, discourage entrepreneurship and wealth creation, act as a brake on economic development.

A reasonable riposte is that while the Protestant work ethic may well have been a decisive factor in the origins of capitalism in Western Europe that is of little relevance now. Other, non-Protestant societies have also attained high levels of economic development by acquiring requisite institutions and skills. This is indeed true but a rejoinder to this argument is that this has entailed the overcoming or even rejection of their non-productive legacies; in other words such countries and societies, and cultures therein, have markedly changed.

In an edited collection Culture Matters: How Values Shape Human Progress, Samuel Huntington makes a striking comparison between South Korea and Ghana: in the early 1960s both had very similar economies and comparable levels of GNP per capita. Thirty years later, South Korea had become the 14thlargest economy in the world with a powerful manufacturing base whereas Ghana had not undergone anything like such a transformation and, accordingly, its GNP per capita was one-fifteenth of South Korea’s. Huntington concludes that “South Koreans valued thrift, investment, hard work, education, organization, and discipline. Ghanaians had different values. In short, cultures count”.

Ronald Inglehart and Christian Wetzel show that the worldviews of people living in rich societies differ systematically from those of people living in low-income societies across a wide range of political, social, and religious norms. The differences run along two basic dimensions: “traditional versus secular-rational values and survival versus self-expression values. The shift from traditional to secular-rational values is linked to the shift from agrarian to industrial societies. Traditional societies emphasize religion, respect for and obedience to authority, and national pride. These characteristics change as societies become more secular and rational”.

The inference here is clear: economic and social development requires a move to more secular and rational values. The question naturally arises as to whether enlightened governments can speed up development by implementing political, social, and religious reforms so as to lessen the ‘drag effect’ of traditional values. And is it possible for high levels of development to proceed without the concomitant move away from traditional values?

International institutions such as the UN and World Bank have neglected to explore the link between religion and development. In stark contrast, W Arthur Lewis argued that some religious codes are more compatible with economic growth than others. If a religion lays stress upon material values, upon work, upon thrift and productive investment, upon honesty in commercial relations, upon experimentation and risk bearing, and upon equality of opportunity, it will be helpful to growth, whereas in so far as it is hostile to these things, it tends to inhibit growth. Given that throughout the world, above all in the Global South, religion is profoundly important to many aspects of society, and strongly moulds people’s lives, the prevalence and intensity of religious belief will, accordingly, have a great impact on the trajectory of society in terms of growth and development.

The decline of religion in modern societies is termed the ‘secularisation thesis’ where economic development and rising living standards lead to a fall in the adherence to religious beliefs and practices. Importantly, if attributes of a religion and attendant cultural norms affect the attitude towards work, saving, investment, propensity to innovate, that is, the workings of an economy, as posited by Weber, then the secularisation thesis argues that the resulting economic and social advancement has a feedback effect on religious belief, that is to say, reduces it. Where a religion militates strongly against rising productivity and innovation, it has a dampening effect on the economy so, in turn, reduces such a feedback on the belief system. This suggests a curious result: cultures and religions that most effectively protect themselves against economic advancement are best able to ensure that their hold on a population is little diluted.

In the absence of rigorous research on this issue, there is nevertheless good reason to think that both the levels of believing and belonging are significantly greater in the Global South than in the developed world. Moreover, the intensity of religious belief is also likely to be greater given its imposition from a very young age. That being so, and in the absence of a secular state, institutions, and laws, religion and its cultural accoutrements permeate every vestige of society and, by so doing, profoundly impact the determinants of development and growth. True, these are strong claims and generalisations but they are worthy of extensive investigation and empirical research – in particular by international development institutions, especially the World Bank and UNDP which have never done this.


Rumy Hasan is a senior lecturer at the University of Sussex and author of Religion and Development in the Global South (Palgrave Macmillan, 2017).

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Rumy Hasan

Rumy Hasan is the author of Multiculturalism: Some Inconvenient Truths (2010) and Religion and Development in the Global South (forthcoming 2017); and a member of the EU’s Radicalisation Awareness