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From the Reformation to Austrian Economics

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Tags History of the Austrian School of EconomicsPhilosophy and Methodology

[This article is adapted from a talk delivered at the Austrian Student Scholars Conference in February 2017.]

The beginning of the Protestant Reformation is commonly dated to Martin Luther’s nailing of “95 Theses on the Power and Efficacy of Indulgences” on the door of All Saints’ Church in Wittenberg on Oct. 31, 1517, 500 years ago this year. The church door was a sort of community bulletin board, and Luther’s list was a way of opening a public debate. Within a year, a German-language version (the original was in Latin) had gone viral throughout the region, and other pamphlets and books soon followed. Today, many people may think of the 16th century Reformation as an internal dispute among Christians over arcane theological concepts that have lost their relevance and force. But the implications of the Reformation are more than ecclesiastical or theological. They include shifts in economic thought as well, and Protestant ideas have had a lasting impact on our way of thinking about markets and liberty.

There is, of course, no one religious—or irreligious—group that can claim to have birthed Austrian economics, and certainly Protestants, Catholics, Jews, atheists, and others have had a part in its development. However, it is also clear that discussing the history of this school of economic thought would be dreadfully incomplete without consideration of the many contributions that Protestants—and specifically Protestants in the tradition of Luther and Calvin—have made over the last 500 years. Some who are better known as theologians contributed to economic thinking simply by treating merchant activity as morally benign, rather than vilifying market activity. And, while it would be an error to think of someone like Luther or Calvin as a libertarian, we do see Reformation thought contributing to moral boundaries on the authority of the State. This counterpoise to the divine right of kings bore fruit in Europe, certainly. Calvinists like Samuel Rutherford, author of Lex, Rex (The Law and the Prince), and Philippe du Plessis Mornay, author of Contra Vindiciae Tyrannos (A Defense of Liberty against Tyrants) pushed back against the supposed unquestionable authority of the monarchy. The impact was also felt on this side of the Atlantic in the American War for Independence—a conflict labeled by the British “The Presbyterian Rebellion.”

A philosophy of liberty, of course, is not economics. But effective moral constraints on the State leave room for the blossoming of markets and other interactions of free men, and so the spread of the theology of Luther, Calvin, and others in that tradition has been coincident with the spread of an economic revolution. Contemplation of that revolution spurred the (rather overrated) Adam Smith to pen his Inquiry into the Nature and Causes of the Wealth of Nations. Much later, the sociologist Max Weber considered the possibility that Protestant thinking had led to a “spirit of capitalism” by elevating ascetic stewardship to a virtue for all Christians in their callings. By creating a moral encouragement to saving and reduced personal consumption, capital accumulation would increase in Protestant areas.

There are some common criticisms of the Weber thesis. Much progress in economic thought was made by Scholastic Catholics such as Biel, Cajetan, Eck, and Summenhart, and history shows that for hundreds of years, some Catholic areas like Antwerp prospered while some predominantly Calvinistic areas like Scotland remained relatively poor.

Ekelund, Hebert, and Tollison have addressed the latter criticism by adding supply-side considerations to the demand-side argument of Weber. In The Marketplace of Christianity, they write:

Whereas Catholic areas that were isolated, (e.g., Spain, Portugal, and Italy) did not progress quickly to capitalism, those areas contiguous to countries that became Protestant bumped up against vibrant economic activities and were forced to respond in order to remain competitive. For example, merchants in Catholic countries were forced to borrow at market interest rates once Protestantism eliminated usury constraints. (p. 210)

There are aspects of the Reformation that undeniably accelerated the progress of economic freedom and prosperity in Europe. Sascha Becker, economics professor at the University of Warwick, studied German tax records and census data, and “confirmed a longstanding economic gap—German Protestants out-earn German Catholics.” Even 500 years later, the gap persists. He suggests that this was largely a byproduct of Luther’s theological reformation—in the process of spreading his ideas, Luther encouraged literacy among the common man. (And common woman. Martin Luther argued that every town should have a girls’ school, and the gender gap in literacy consequently declined in areas dominated by Protestants.)

So I would say that the Reformation did two things:

  1. It had the effect of encouraging liberty, promoting non-ecclesiastical work as a potentially virtuous calling, and boosting capital investment, either directly or indirectly.
  2. It encouraged economic scholarship as people observed and tried to explain the rapidly expanding merchant activity that flourished throughout Europe in the years following the Reformation.

I want to spend some time looking at the economic ideas of Luther, Calvin, and one or two more modern Protestants. Let us begin with Martin Luther.

Martin Luther (1483-1546) We do not find a consistent free market advocate in Martin Luther, and certainly not an economist. Luther’s thought on markets was medieval, with frequent objections to free exchange. In his Greater Catechism of 1529, Luther condemned one who “makes use of the market in his own wilful way, proud and defiant, as though he had a good right to sell at as high a price as he chose, and none could interfere,” But elsewhere, he wrote, “anyone may sell what he has for the highest price he can get, so long as he cheats no one,” cheating being the use of false weights and measures.

Gary North observed, “Given this willingness on the part of Luther to reverse many earlier pronouncements that he formerly had penned, it is not surprising that his economic utterances should display an overall lack of coherence through the years.”1 Luther “opposed free pricing. Merchants may not follow the rule of buying low and selling high. ’On such a basis trade can be nothing more than robbing and stealing the property of others…. The rule ought to be, not “I may sell my wares as dear as I can or will,” but, “I may sell my wares as I ought, or is right and fair.”’” (North, p. 79.) There was, for Luther, a separation between the market price and the “just price”: “Now it is fair and right that a merchant take as much profit on his wares as will reimburse him for their cost and compensate him for his trouble, his labor, and his risk.”2 Luther was generally opposed to borrowing, and even today the German word for debts (Schulden) is the same as the word for guilt. Yet he said that loans were valid contracts. Rothbard pointed out Luther’s view on debt contracts: “Interest is ‘a common plague that all have taken upon themselves. We must put up with it, therefore, and hold debtors to it.’”3 Luther did, however, argue for a maximum five percent interest rate. A five percent contract became known as ”the German contract.” Later, Calvinist Geneva would follow this rule, though the maximum was eventually raised to 6 2/3 percent. When various Protestant communes arose that denied the right of private property, Luther objected in the strongest of terms. One of these groups was led by a man named Thomas Muntzer, who was an early follower of Luther but then adopted stranger and stranger views. He began to say that he was “becoming God,” and was expelled from city after city, wandering around central Europe for several years. He finally landed in Muhlhausen in 1525, and began to impose a communistic regime. Those who wanted something would simply go to a wealthy man and force him to hand it over. Luther responded forcefully, going so far as to recommend killing such thieves:

Therefore let everyone who can, smite, slay, and stab, secretly or openly, remembering that nothing can be more poisonous, hurtful, or devilish than a rebel ... For baptism does not make men free in body and property, but in soul; and the gospel does not make goods common, except in the case of those who, of their own free will, do what the apostles and disciples did in Acts 4 [:32-37]. They did not demand, as do our insane peasants in their raging, that the goods of others—of Pilate and Herod—should be common, but only their own goods. Our peasants, however, want to make the goods of other men common, and keep their own for themselves. Fine Christians they are! I think there is not a devil left in hell; they have all gone into the peasants. Their raving has gone beyond all measure.4

Rothbard describes Luther as “a confused, contradictory, and unsystematic thinker at best,” adding that he was least consistent in economics. But the Protestant Reformation that Luther kicked off had some powerful long-term effects on economic thought and economic development.

His theology had implications for all parts of life, including the relationship between the individual and the State. Kenneth Underwood notes that from Luther’s

religious convictions, [he] elaborated ideas of considerable political influence. These ideas had to do with the limits of personal responsibility and freedom in public actions and with the inadmissibility of attempts by ecclesiastical or political authorities to use coercion to compel assent. For Luther, agreement so obtained is stripped of all spiritual value; only free adherence qualifies as faith and morality. Of even broader cultural significant has been the Lutheran conviction that the personal dimensions of conscience and commitment, of guilt and forgiveness, of family and kin affections, are a more basic or primary reality than political structures of office, status, and power.5

John Calvin (1509-1564)

Calvin’s economic thought is a mixed bag. As with Luther, Calvin’s emphasis was theology and ecclesiology, not economics. He certainly retained some of the errors of his time. But I will argue that the overall impact of Calvinism was liberating. Murray Rothbard, not a fan of Calvinism, blamed Calvin in part for the labor theory of value. Adam Smith, following David Hume, came close to the labor theory of value himself, and later Karl Marx incorporated it into his own work. Calvin’s “calling” idea, Rothbard said, glorified labor, and may have contributed to the labor theory of value.

Calvin and his disciples placed work at the center of their social theology…. All work in this society is invested with divine approval. Any social philosopher or economist exposed to Calvinism will be tempted to give labor an exalted position in his social or economic treatise, and no better way of extolling labor can be found than by combining work with value theory, traditionally the very basis of an economic system. Thus value becomes labor value, which is not merely a scientific device for measuring exchange rates but also the spiritual tie combining Divine Will with economic everyday life.6

Rothbard was also not particularly pleased with Calvinism’s emphasis on personal asceticism and frugality.

As I have said, there may have been an encouragement to education in Lutheran and Calvinistic areas, so that earnings among Protestants are in fact higher in the home territory of the Reformation. Corruption may have declined as well. Studies have found that adherence to Protestantism and corruption are negatively correlated, while adherence to Catholicism is positively associated with corruption.7 Perhaps the less hierarchical Protestant faith is more tolerant of challenges to authority—translating into a willingness to challenge abuses from the State. Or maybe compared to Protestantism, Catholicism downplays the importance of personal responsibility for one’s economic situation, and emphasizes collective responsibility for the poor. The resulting redistributionist regimes could provide fertile ground for corruption.8

Ekelund, Hebert, and Tollison, in The Marketplace of Christianity, suggest that Protestantism also led to economic growth relative to Catholicism by reducing the number of religious holidays and time-consuming pilgrimages. (p. 190)

Also, Calvinism’s encouragement of capital accumulation produced interest groups that were supportive of property rights. H.M. Robertson suggests that these groups then put pressure on Protestantism to further emphasize property rights in later iterations. The “doctrine of the ‘calling,’” Robertson writes, “did not breed a spirit of capitalism. The spirit of capitalism was responsible for a gradual modification and attrition of the Puritan doctrine….”9

Calvin on Mercantile Activity

Gary North argued that Calvin “had little respect for businessmen in general,” to whom he referred as “’those robbers’ who hope for a catastrophe in order to raise the prices of their goods.” But Ronald Stone points out that in comparison to others of his time, he took a benign posture toward merchant activity:

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 that of urban commerce and he affirmed it. The exchange of money and goods was affirmed. The institution of money itself was not suspect.10

E. William Monter observed that Calvin’s Geneva hosted a burgeoning merchant class, with 50 merchants in the city in 1536 and 180 by the late 1550s.11 Alister McGrath adds: “A culture of free enterprise flourished in Geneva, in large part thanks to Calvin’s benign attitude toward economics and finance.”12

Calvin grasped some of the essentials of economics that allowed business to prosper. McGrath explains,

Although he did not develop an “economic theory” in any comprehensive sense of the term, he appears to have been fully cognizant of basic economic principles, recognizing the productive nature of both capital and human work. He praised the division of labor for its economic benefits and the way it emphasizes human interdependence and social existence. The right of individuals to possess property, denied by the radical wing of the Reformation, Calvin upheld.13

In response to the radical Protestant communists, Calvin defended private property. In the Four Last Books of the Pentateuch, he wrote:

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…. [P]olitical government requires, that each should enjoy what belongs to him….14

Calvin’s idea of Christian liberty may have contributed to his relatively laissez-faire attitude. The doctrine, elaborated on at some length in chapter 19 of Calvin’s Institutes of the Christian Religion, left wide swaths of human activity unencumbered by external restrictions.15 As Gary North wrote, “Calvin… favored the general principle of the covenant; covenanting men should be limited by consciences unrestricted by multitudinous legal pronouncements. [C]onscience had more responsibility and fewer guidelines to direct human action.”16 In provision for the poor, Calvin again relied on moral persuasion toward private charity (mostly) rather than coerced welfare. Françoise Dermange writes,

Calvin… reminds us that charity does not dispense with justice. His purpose is to condemn judges who want to “depart from equity in favour of the poor,” in the name of the gospel, and “follow out a foolish idea of mercy” by favoring the poor. In the name of justice, there should not be any question of providing for the needs of the destitute by causing harm to the wealthy. The Reformer agrees with Paul: while the wealthy have a duty to give alms, one must not compel them to share their possessions. Whatever may be the merit of charity, and the concern to free the poor from tyranny, one should not become less upright by even a hair’s breadth.17

But Calvin was too inconsistent to be an icon of laissez-faire economic policy. The Geneva municipal government supported a hospital (which also served as an orphanage, welfare office, and public health service), provided public education, and regulated some prices. Fires and chimneys were regulated, and citizens were forbidden to hire themselves out as mercenaries. Calvin also objected on moral grounds to labor contracts that did not provide what we would call a “living wage,” but did not support any kind of minimum wage.18

Calvinism and the Limits on the Civil Magistrate

On the matter of limited government, Calvin was less radical than his followers. Toward the end of his Institutes of the Christian Religion, Calvin writes that it was “foolish” and “harmful” even to think of changing the form of government under which one lived.19 In Commentaries on Romans, he wrote that the victims of oppressive monarchs had only themselves to blame: “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.”20

Douglas Kelly explains,

Calvin… was determined to show that true Protestants were loyal to the civil magistrate and were in no sense political revolutionaries. This 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. …Calvin eagerly dissociated himself from John Knox’s more radical stand for civil resistance in Scotland in the late 1550s. Calvin’s thought underwent some evolution on this point in the 1560s, however, during the religious wars in France.21

While Calvin had held, early on, that the king was above the law, Calvin gradually reversed himself. Though he took a dim view of the capacity of ordinary individuals to think about civil matters, he advocated restraints upon the king through a separation of powers. In the Institutes, Calvin wrote,

…I will not deny that aristocracy, or a system compounded of aristocracy and democracy, far excels all others, not indeed of itself, but because it is very rare for kings so to control themselves that their will never disagrees with what is just and right; or for them to have been endowed with such great keenness and prudence, that each knows how much is enough. Therefore, men’s fault or failing causes it to be safer and more bearable for a number to exercise government, so that they may help one another, teach and admonish one another; and, if one asserts himself unfairly, there may be a number of censors and masters to restrain his willfulness.22

Lesser civil magistrates, Calvin hoped, would protect the people against a tyrannical king. His followers, such as Bucer, Ponet, Goodman, Hotman, Beza, Buchanan, Mornay, Languet, and Rutherford, were far more willing to advocate civil resistance, some even defending the assassination of tyrants.23 Furthermore, there are some interesting caveats—or at least inconsistencies—in Calvin’s view of law. In the Institutes, Calvin wrote,

For I do not think that those barbarous and savage laws such as gave honor to thieves, permitted promiscuous intercourse, and others both more filthy and more absurd, are to be regarded as laws. For they are abhorrent not only to all justice, but also to all humanity and gentleness.24

Calvin appears to do away with the difficulties of his asserted “duty to show ourselves compliant and obedient”25 by allowing for the possibility of deciding that bad laws are not really laws. And later, the authors of the Calvinistic Westminster Confession of Faith inserted the same qualifier when they wrote (XXIII, “Of the Civil Magistrate”) that “it is the duty of people to… obey their lawful commands” [emphasis added].

Calvin and the Calvinists on Usury

Let us next consider usury, from the perspective of Calvin and his followers. Usury, properly defined, is the charging of interest of any amount where it is forbidden. The Old Testament biblical restriction is: no interest charged to fellow Jews, apparently for charitable loans. The medieval argument was that money was “sterile” and could not produce a return. It led to the conclusion that any payment on the use of money necessarily made the borrower worse off. Calvin saw that having money for a time would allow the borrower to buy and sell at a profit before returning the money: “The profit is not in the money itself, but in the return that comes from its use.” Calvin did want restrictions on interest, such as not charging interest on loans to the poor and capping interest rates at 5 percent (later, 6.67 percent). He did not think anyone should be a professional moneylender. But, as Rothbard said,

Calvin’s bold break with the formal ban was a liberating breakthrough in Western thought and practice. It also threw the responsibility for applying teachings on usury from the Church or state to the individual’s conscience. As Tawney puts it, “The significant feature in his [Calvin’s] discussion of the subject is that he assumes credit to be a normal and inevitable incident in the life of a society.”26

 Calvin’s followers removed more restrictions: the Dutch Calvinist Claude Saumaise (1588–1653) justified not only professional moneylending, but also interest-bearing loans to the poor. More moneylenders meant more competition, producing lower rates, so having more professional moneylenders would help the poor.

Calvin’s Main Contributions

Calvin contributed several insights to economics and policy:

First, a doctrine of total depravity, which led to separation of powers and limits on the civil magistrate.

Second, an emphasis on vocational success and saving. This created capital, and a group interested in the protection of property. Third, Christian liberty and freedom of conscience, which removed some of the barriers to freedom of contract. Moral objections to terms of contracts did not lead automatically to intervention. A manifestation of this is the aforementioned erosion of the usury prohibition.

The Reformation and Economics Since Calvin

Let us skip ahead three or four centuries form Luther and Calvin and look vbriefly at several reformed thinkers who gave economics and public policy a great deal of though. Of course, there are many scholars, some of them significant, whom I am leaving out. 

Francis Wayland 

Francis Wayland (1796-1865) was a Calvinistic Baptist minister in New England. He described himself in 1861 as a “moderate Calvinist.”27 Between pastoring churches in Boston, Massachusetts and Providence, Rhode Island, Wayland served as president of Brown University and, while there, wrote The Elements of Moral Science, a very influential textbook of the mid-19th century. Later, he wrote The Elements of Political Economy.

Wayland was essentially libertarian in his political thinking, holding to laissez-faire economic ideas and an antiwar stance. Laurence Vance wrote, “Whether he is discussing usury laws, money and banking, internal improvements, or trade restrictions, the detrimental effect of government intervention is a theme that appears throughout The Elements of Political Economy.”28 And Wayland didn’t just mention these things in passing. Vance points out that his discussion of money and banking is a full 100 pages. 

J. Gresham Machen

Gresham Machen (1881–1937) was a Calvinist theologian who taught at Princeton Seminary in the early 1900s before leaving with other conservatives to form Westminster Theological Seminary in Philadelphia. In 1936, he and a small group of fellow Presbyterians left the increasingly theologically liberal Northern Presbyterian Church to form the Orthodox Presbyterian Church. Machen was more systematically theological than Wayland, but like Wayland was a “Christian libertarian” of the first rank. According to Gary North,

Machen was a believer in limited civil government, non-intervention in foreign policy (one view he shared with Bryan), and private charities rather than tax-financed institutions of coercive wealth redistribution. He opposed Prohibition as an unwarranted incursion into people’s freedom of action by the civil government [which got him into hot water with some “dry” Presbyterians]. He testified before a joint Congressional committee in 1926 against the proposed U.S. Department of Education. He opposed the proposed amendment to the Constitution, the child labor amendment of 1935. He opposed military conscription. He opposed the New Deal’s Social Security legislation and its anti-gold standard monetary policy, which, he said, undermined contracts. He opposed Bible reading or the teaching of morality in public schools, since he recognized that the teachers were predominantly atheistic, deistic, or liberal in their theological opinions. (https://jgmachen.org/2011/04/11/machens-political-and-economic-views-and-w-j-bryans/ From Crossed Fingers: How the Liberals Captured the Presbyterian Church, ch. 8)

Machen did not write as much on political or economic matters as Wayland, or some of the others I’ll mention. Most of his writing was theological. But the short collection of essays entitled Education, Christianity, and the State is excellent, and there is related material in other work of his as well.

Frederick Nymeyer

Frederick Nymeyer (1897–1981), was a kind of unsung hero during the mid-20th century low point for Austrian economics. He was a Chicago businessman who supported Austrian scholarship through his publication and marketing of work by Mises and Böhm-Bawerk.

Nymeyer read Mises’s Theory of Money and Credit in 1946 and began a correspondence with Mises that led to a personal friendship and material support of Mises’s work.

In the 1950s, Nymeyer founded Libertarian Press and hired Hans Sennholz as a translator in order to republish some of Bohm-Bawerk’s works. A Calvinist in a Dutch Reformed denomination, the CRC, Nymeyer was very upset by the growing affinity for socialist ideas in his denomination and elsewhere. So he self-published a large number of articles applying economic thought to ethical issues in an effort to combat this trend. In a 1959 letter to Howard Pew, Nymeyer wrote:

If there is to be a re-Reformation, it will have to be, in my opinion, on the basis of what the praxeological and the natural sciences have contributed to human knowledge since the days of the reformation. In regard to questions of ethics, I have come to the conclusion that the economics of Dr. von Mises constitutes by far the most satisfactory means to modernize the ethics of the Hebrew-Christian religion. (Hülsmann, 2007, pp. 915, 916)

The journal Nymeyer published went by the name Progressive Calvinism, and then First Principles in Morality and Economics. Nymeyer saw close connections between Misesian ideas and biblical law, which he elaborated upon in his journal and 1964 book Minimal Religion. In 1968, Nymeyer wrote, “Mises influenced me more than any other man in my intellectual development. I was his protégé.” He referred to Mises as “the greatest living champion of the innermost rampart of Christianity.” After Nymeyer’s death, Sennholz took over Libertarian Press.

There are many others of the Reformed tradition who have contributed either to the dispersion or to the substance of Austrian economics, and its outworkings in matters of collective action.

The Reformation’s Viral Spread

As a side note, I will add that the relatively new technology of the printing press was a great aid in communicating the ideas of the Reformation. Luther and his followers used the technology, along with woodcut images and catchy songs for the illiterate, to spread his ideas in the common language. The masses copied and distributed Luther’s pamphlets quickly, reading them aloud in workplaces, inns, and pubs. The social network outcompeted the impenetrable Latin-language pamphlets of the academic elite, written by the friars and bishops of the Roman Catholic church. The Economist magazine pointed out that “some 6m-7m pamphlets were printed in the first decade of the Reformation, more than a quarter of them Luther’s.”29 While many Europeans may have been dissatisfied with the prevailing Catholic doctrines and practices, the circulation of so many pamphlets gave individuals confidence that they were not alone. While uncoordinated opposition could be easily defeated, the rise of many in a near-simultaneous response to the flood of pamphlets served to protect Luther and other leaders of the Reformation.

This conveys a lesson that should be encouraging to advocates of individual liberty—those who are followers of the Reformation and those who are not. The cost of spreading the written word has dropped immensely, as the pamphlets of the medieval period have evolved over 500 years. In the last century, while Mises had few advocates in elite academic circles, printers and proto-bloggers like Nymeyer circulated his ideas in newsletters and inexpensively printed books. Now, short web articles and blog posts are circulated through e-mails, Facebook posts, and tweets. Various memes, gifs, Instagram photos, and short YouTubes communicate visually to those who—unlike the viewers of medieval woodcuts—are quite literate but have no time or patience for a longer article. Libertarian musicians—like Eric July of Backwordz and dubstep artist Porter Robinson—reach groups that will not read hyper-mathematized articles in elite economics journals but can understand the appeal of liberty.


What Martin Luther started 500 years ago was a revolution in theology and ecclesiology that had ripple effects throughout social thought. We do not see in Luther himself a giant of thinking on economics. Far from it. And many of his followers were likewise confused and inconsistent.

However, the Protestant Reformation’s emphases were important to the spread of liberty, and those who call themselves Reformed have improved the quality and the appeal of Austrian economics.

The doctrine of total depravity led to a separation of powers and limits on the civil magistrate, while Reformed teaching concerning the individual’s own ability to interpret the Bible and select civil and ecclesiastical leaders reinforced constraints on the State. Other insights of the Reformation urged those of many vocations—not just clergy—to see God’s favor on their labors in the marketplace. These workers were assured that farming, brewing, printing, or—eventually—even moneylending were all legitimate professions. And the Reformation encouraged productivity and capital accumulation: it reduced the number of church holidays and reduced payments to the church for elaborate and monumental cathedrals, clerical sinecures, pilgrimages, and of course indulgences. The idea of Christian liberty and freedom of conscience removed some of the barriers to freely contracting. And indirectly, the Reformation encouraged economic scholarship as people observed and tried to explain the rapidly expanding merchant activity in Europe in the years after the Reformation.

In more recent times, since the development of a distinctive Austrian School of economics, the Reformation’s influence is still felt. Those of all religious backgrounds—and the irreligious—have helped to advance Austrian economics in some way. But the participation of Reformed thinkers—Luther, Calvin, Wayland, Machen, and many more—has been important in improving the school of thought in its substance and carrying the ideas farther than would have been possible otherwise.

  • 1. Gary North, “The Economic Thought of Luther and Calvin, Journal of Christian Reconstruction 2, no. 1 (Summer, 1975), pp. 76, 77.
  • 2. Pelikan and Oswald, Luther’s Works, p. 249
  • 3. Murray Rothbard, History of Economic Thought, vol. 1, p. 140
  • 4. Jaroslav J. Pelikan, Hilton C. Oswald, Luther's Works, 55 vols. (St. Louis and Philadelphia: Concordia Pub. House and Fortress Press, 1955–1986), 46: 50–51.
  • 5. Kenneth Underwood, “Protestant Political Thought,” in International Encyclopedia of the Social Sciences, Thomson Gale, 2008. Available at http://www.encyclopedia.com/social-sciences/applied-and-social-sciences-magazines/protestant-political-thought
  • 6. Emil Kauder, A History of Marginal Utility Theory (Princeton, NJ: Princeton University Press, 1965), p. 5; quoted in Murray N. Rothbard, Economic Thought before Adam Smith, vol. 1 (London: Edward Elgar), 1995, p. 142.
  • 7. See Treisman, Daniel. 2000, “The Causes of Corruption: A Cross-National Study,” Journal of Public Economicshttp://www.sciencedirect.com/science/article/pii/S0047272799000924 and Seymour Lipset and Gabriel Lenz, “Corruption, Culture and Markets,” In L. E. Harrisson and S. P Huntington, Eds., Culture Matters, New York, 2000.
  • 8. See also Keith Hylton, Yulia Rodionova, and Fei Deng, “Church and State: An Economic Analysis,” University of Michigan Law School Law and Economics Workshop, 2004. Available at https://www.law.umich.edu/centersandprograms/lawandeconomics/workshops/Documents/Fall2004/hylton.pdf
  • 9. H.M. Robertson, 1933. Aspects of the Rise of Economic Individualism: A Criticism of Max Weber and His School,” New York: Kelley & Millman, 1959. Available at https://archive.org/stream/aspectsofriseofe00robe/aspectsofriseofe00robe_djvu.txt
  • 10. Ronald H. Stone, “The Reformed Economic Ethics of John Calvin,” in Robert L. Stivers, ed. Reformed Faith and Economics (Lanham, MD: University Press of America), 1989, pp. 41, 42.
  • 11. E. William Monter, Calvin’s Geneva (New York: John Wiley & Sons), 1967.
  • 12. Alister McGrath, “Calvin and the Christian Calling,” 1999 First Things 94 (June/July 1999): 31-35.
  • 13. Alister McGrath, “Calvin and the Christian Calling,” 1999 First Things 94 (June/July 1999): 31-35.
  • 14. John Calvin, Harmony of the Law vol. 1, Exodus 16:17. http://www.ccel.org/ccel/calvin/calcom03
  • 15. John Calvin, Institutes of the Christian Religion, ch. 19. Philadelphia: Westminster Press (1559 [1960], p. 838–839). The doctrine may also be found in the statements of the 1646 Westminster Assembly (Williamson, 1964 [2004], p. 194). The 19th century Presbyterian theologian Charles Hodge’s more recent explication (1872 [1997], p. 265) is also useful.
  • 16. Gary North, “The Economic Thought of Luther and Calvin,” The Journal of Christian Reconstruction, vol. 2, no. 1 (Summer, 1975), p. 98.
  • 17. François Dermange, “Calvin’s View of Property: A Duty Rather Than a Right,” in Edward Dommen and James D. Bratt, eds., John Calvin Rediscovered: The Impact of His Social and Economic Thought (Louisville, KY: Westminster John Knox Press), 2007, p. 43.
  • 18. “Humanity is recommended to us in general lest, while the poor labour at our service, we should arrogantly abuse them as if they were our slaves, or should be illiberal and stingy towards them, since nothing can be more unjust than that, when they have served us, they should not at least have enough to live upon frugally.” John Calvin, Old Testament Harmony, 3:114, on Deuteronomy 24:14-15, quoted in François Dermange, “Calvin’s View of Property: A Duty Rather Than a Right,” in Edward Dommen and James D. Bratt, eds., John Calvin Rediscovered: The Impact of His Social and Economic Thought (Louisville, KY: Westminster John Knox Press), 2007, p. 39.
  • 19. John Calvin, Institutes of the Christian Religion. Philadelphia: Westminster Press (1559 [1960], p. 1494).
  • 20. John Calvin, Commentaries on Romans. Trans., ed., John Owen, http://www.ccel.org/ccel/calvin/calcom38.xvii.ii.html
  • 21. Douglas Kelly, The Emergence of Liberty in the Modern World: The Influence of Calvin on Five Governments from the 16th through 18th Centuries (Philadelphia: Presbyterian and Reformed), 1992, p. 11.
  • 22. John Calvin, Institutes of the Christian Religion (Philadelphia: Westminster Press), 1960, pp. 1493, 1494.
  • 23. David Hall provides a listing of eight important works that “legitimized the idea of citizen resistance against governmental expansion that exceeded proper limits,” largely from those who had direct contact with Calvin:
    Martin Bucer’s De Regno Christi (1551), John Ponet’s A Short Treatise of Political Power (1556), Christopher Goodman’s How Superior Powers ought to be obeyed of their subjects; and wherein they may lawfully by God’s word be disobeyed and resisted (1558), Peter Viret’s The World and the Empire (1561), Francois Hotman’s Francogallia (1573), Theodore Beza’s De Jure Magisterium (1574), George Buchanan’s De Jure Regni Apud Scotos (1579), and Languet’s Vindiciae Contra Tyrannos (1579). (David W. Hall, The Legacy of John Calvin [Phillipsburg, NJ: Presbyterian and Reformed], 2008, p. 24.)
  • 24. John Calvin, Institutes of the Christian Religion (Philadelphia: Westminster Press), 1960, pp. 1503, 1504.
  • 25. John Calvin, Institutes of the Christian Religion (Philadelphia: Westminster Press), 1960, p. 1495.
  • 26. Murray N. Rothbard, Economic Thought before Adam Smith, vol. 1 (London: Edward Elgar), 1995, p. 141.
  • 27. Wayland [Jr.] and Wayland, A Memoir of the Life and Labors of Francis Wayland, I, p. 125.
  • 28. Laurence Vance, “Francis Wayland: Preacher-Economist,” https://mises.org/library/francis-wayland-preacher-economist
  • 29. “How Luther Went Viral,” The Economist, Dec. 17, 2011, http://www.economist.com/node/21541719

Timothy Terrell is professor of economics at Wofford College in Spartanburg, South Carolina. He is assistant editor of the Quarterly Journal of Austrian Economics and is an Associated Scholar with the Mises Institute.

Note: The views expressed on Mises.org are not necessarily those of the Mises Institute.
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