The Influence of John Calvin on Economic Thought

0:00I gave this paper at a theology conference earlier this week in Greenville, South Carolina. And it was a conference on Calvin. I had not been to the conference except to show up and give my paper. And so I don't know for sure what the other topics were. But my general impression was that this was a conference intended to extol the virtues of Calvin. And although I am myself a Calvinist in the theological sense, I do have a few things to say that are not so laudatory and I think I barely escaped some egg throwing at the end of the conference or at the end of my talk. I said, and I'll say here, Calvin on economics was often inconsistent. He was often wrong, and sometimes he was shockingly wrong.

0:59But he was occasionally right, and he often had an inadvertent positive impact, mainly via his theology. His intellectual descendants expanded on and improved and corrected his views on economics, and if we look at some of the outcomes of Calvinism, it has turned out better than Calvin's writings themselves, at least as far as economics. Max Weber in The Protestant Ethic and the Spirit of Capitalism says that Protestantism led to capitalism by elevating an ascetic stewardship to a virtue for all Christians and their callings.

1:51Of course, he missed a few things, or at least under-emphasized a few things. Of course, we do have Calvinistic areas of the world that have been historically relatively undeveloped. Scotland would be an example. That didn't win me any points with the Scottish Calvinists either. And then, of course, you can certainly find financial innovation and a capitalist spirit and business success in Roman Catholic areas and other non-Calvinist areas. And then, of course, you can be Calvinist without being ascetic. Murray Rothbard has argued, and I'm so pleased to find that the two-volume history of economic thought is now online.

2:41It cost me, or rather cost the person who gave it to me as a gift, $200 back when Edward Elgar had it, and it was not online. And I'm just so pleased that that's there. It's such an immensely valuable work. Rothbard says that Calvin's calling idea glorified labor and may have contributed to the labor theory of value. Saving, of course, does lead to capital accumulation, but saving per se is no virtue. H. M. Robertson has argued that Calvinism's encouragement of capital accumulation produced an interest group supportive of property rights, and that this group then put pressure on Protestantism to further emphasize property rights in later iterations. So Robertson would say that the The doctrine of the calling did not breed a spirit of capitalism, but the spirit of capitalism, he says, was responsible for a gradual modification of and attrition of the Puritan doctrine.

4:01Ernst Trelsch has argued that the Protestant Reformation resisted modernization but inadvertently promoted it that its contribution toward that end was in providing a competitor to the Roman Catholic Church. And Robert Nelson, certainly no friend of Calvin, argued that ecclesiastical competition led to other kinds of social and intellectual competition. I'm not saying that that is not the key point of my paper, but it's certainly something that needs to What was the actual impact of Calvin? Market-friendly ideas were certainly developing elsewhere, and Calvin may have contributed in some general ways to the errors of Adam Smith, but overemphasis on saving did promote a capital accumulation which may have been self-reinforcing.

5:07I think one of the most important contributions and impacts of Calvinism was his theology, which promoted some limitations on government. I think he was inconsistent on this, and I'll show why in my paper, but he certainly furthered the elimination of some rather terrible prohibitions on usury, I did not know at the time I was writing this that Gary North would be on the same panel with me while I was giving this paper, but Dr. North has said that Calvin had little respect for businessmen in general, to whom he referred as those robbers who hoped for a catastrophe in the future.

5:54Dr. North has said that Calvin had little respect for businessmen in general to whom he referred as those robbers who hoped for a catastrophe in order to raise the prices of their goods. And yet again, Calvin was inconsistent and Dr. North recognizes that as well. Robert Stivers has said that Calvin's real world involved shopkeepers, traders and craftsmen as well as clerics and academics. He was relatively free of the medieval distaste for commerce. His world was out of urban commerce and he affirmed it. The exchange of money and goods was affirmed. The institution of money itself was not suspect.

6:40And we see this, if you look at the history of Geneva, in 1536, there were 50 merchants. In Geneva, by the late 1550s, there were 180. It's kind of hard to see how that could have happened if Calvinism was inherently detrimental toward merchant activity. North also has said that Calvin favored the general principle of the Covenant, that covenant men should be limited by consciences unrestricted by multitudinous legal pronouncements. So the conscience under Calvin had more responsibility and fewer guidelines to direct human action. The graph has said that a culture of free enterprise flourished in Geneva in large part thanks to Calvin's benign attitude.

7:33And, as I've said, Calvin defended private property against the radical Protestant sects, including the Anabaptists. Rothbard has this fascinating account of the Anabaptists and some of their communist experiments in his first volume, and I encourage you to get a hold of that and read it. For it is necessary, for the preservation of human society, that each should possess what is his own, that some should acquire property by purchase, that to others it should come by hereditary right, to others by the title of presentation.

8:23But he was, as I've said, inconsistent. We see in Geneva, and I can't link this precisely to Calvin yet, although I've had a source suggested to me that might prove of some help in a later version of this paper, we do see Calvin's Geneva supporting a hospital that was paid for largely by tax funds. also public education, regulations on prices including limitations on printer's prices, regulations on fires and on chimneys, regulations on the recruitment of mercenaries from Geneva to other parts of Europe. This kind of thing does not suggest a laissez-faire icon.

9:14Calvin objected on moral grounds to labor contracts that did not provide a living wage. The one thing we can say is that he did seem to stop short of making that a legal obligation. I've got a section I won't get into here because of the constraints on time, on social justice. is Calvin's arguments that the wealthy need not be compelled to give to the poor, although they do have a general obligation or duty to give alms, they should not be required under law to share their possessions. And I have read from the Calvinist left people arguing that Calvin was essentially a socialist, He may not have been consistently in favor of laissez-faire policy, but neither was he a socialist, and I think that's very clear.

10:18The only way you can get around that is by selectively pulling from pieces of Calvin's and things that do sound, indeed, socialist. And in the same way I think that people who are on the right who are Calvinists have also selectively quoted Calvin to try to show that Calvin was the father of capitalism or something of that nature. Calvin did have some interesting things to say on the limits of the civil magistrate. He had this doctrine as is well known of total depravity and that led him to say that the The civil magistrate's power should be carefully circumscribed. He advocated a separation of powers because of a skepticism of the civil magistrate.

11:07He seemed to favor a government by the enlightened elite, an elite which would be put into office by a democratic process. He did not reject monarchy, but he seemed to favor popular election. He taught non-resistance to government, at least early on, although the wars in France starting around 1560 may have led him to modify his views somewhat on the subject. And certainly his followers were much more inclined to resist a tyrannical government. But Calvin himself is just shocking on this point. I would say shockingly wrong.

11:52He says that in the Institutes of the Christian Religion, one of his best known works, that even to think of changing the form of government under which one lived was foolish and harmful. And he says later in his Commentaries on Romans, he says, For since a wicked prince is the Lord's scourge to punish the sins of the people, let us remember that it happens through our fault that this excellent blessing of God is turned into a curse. So if you have a tyrant over you, it's your fault. So keep that in mind. Douglas Kelly, a Calvin scholar, has said that Calvin was determined to show that true Protestants were loyal to the civil magistrate and were in no sense political revolutionaries.

12:44This desire to vindicate fellow evangelicals from the charge of political radicalism is undoubtedly part of the reason why Calvin was exceptionally conservative all of his life in strongly opposing revolutionary movements against bad rulers. He says, Kelly goes on to say that Calvin eagerly dissociated himself from John Knox's more radical stand for civil resistance in Scotland in the late 1550s and that Calvin himself did begin to change toward the early 1560s. Calvin on usury. I haven't got a lot of time here to talk about this but again Rothbard's got an excellent section on this and also Dr. North has a I think underappreciated article in a journal which is now out of print as far as I know but is well worth going back and looking at an article on the economics of Luther and Calvin in which there's an excellent treatment of views of both of these The biblical restriction, as far as I can tell, is that no interest should be charged to fellow Jews, and at the time of the Mosaic Law, this was talking about the relationship of Jews to one another economically, that this had no interest for charitable loans.

14:13And yet Calvin, while he did see that there was a point to charging interest, that money was not sterile, he saw that having money for a time would allow the borrower to buy and sell, make a profit, and then return the money to the lender. Calvin did want some restrictions on interest. You want to cap interest rates of 5%. No mention of this in the Bible. I don't know where he gets this. Later on, that was raised to six and two-thirds percent. Maybe this is in some part of the Bible I don't have. I'm a Protestant. I don't have as many books in the Bible as some people do.

15:04He said, no one should be a professional money lender, but if you look at one of Calvin's followers, Claude Salmes, Salmesius, who lived from 1588 to 1653, Salmes, he's terrific on this point, he must have been a real curmudgeon because of the way he acted, he said, I would rather be a taler, sorry, I would rather be called a usurer than be a taler, and he pointed out that if you really don't like high interest rates, The Theory of Money and Credit

16:04The liberal scholastics had taken a prohibition of usury and qualified it away. They began to converge in their positions. Nevertheless, Rothbard, certainly no friend of Calvin, said that Calvin's bold break with the formal ban was a liberating breakthrough in Western thought and practice. So in conclusion, what did Calvin contribute to economics and policy? First, I think the doctrine of total depravity, which led to some limits on the civil magistrate, and those limits were expanded by his followers. You see the emphasis on vocational success and saving, which created capital, created a group interested in the protection of property.

16:57You see Christian liberty and the freedom of conscience, which removed some of the barriers to the freedom of contract, and also the moral objections to the terms of contracts under Calvin did not automatically lead to a legal restriction. And then you see the limits on usury prohibition. So, Calvin's a mixed bag on economics and I hope if you ask for my paper I'll be happy to send you a copy. There's a lot there in the bibliography that I've not had time to cover here and some sources that you might want to follow up on. Thanks.