Linking Liberties

Theodore Roosevelt Malloch

Economics and Religion

Freedom of religion and free economies go together like—well, fill in the blank. One is not possible without the other because they emanate from the same source. They not only gravitate in a similar and related direction, they originate from the same basic truths and exist as two sides of the same coin.

We are in the twenty-first century becoming increasingly aware of a fact: nations and economies with religious liberty have greater economic freedom. We also see the obverse—namely, that countries with the most economic freedom also engender more religious liberty. The reason for this can be summed up in a single word: competition.

Freedom of religion in the Western tradition, and practiced in Western nation-states, is generally considered to be a fundamental right. As such, it is underscored by a guarantee of respective sovereign governments to allow the freedom of belief for individuals, including women and children, as well as the freedom of worship for all persons and groups. Logically, freedom of religion also includes the freedom not to follow any religion at all.

The 1948 Universal Declaration of Human Rights addresses freedom of religion in these words (Article 18):

Everyone has the right to freedom of thought, conscience and religion; this right includes freedom to change his religion or belief, and freedom, either alone or in community with others and in public or private, to manifest his religion or belief in teaching, practice, worship, and observance.

This definition makes it abundantly clear that freedom of religion is a concept related to but not identical with toleration, diversity, or the separation of church and state. Indeed, throughout history even states that allowed for freedom of religion have often abrogated or limited that theoretical freedom by such acts as punitive taxation, repressive social legislation, or even political disenfranchisement.

Two freedoms and prosperity

In the last three decades the concept of economic freedom has grown out of the writings of notable economists, mostly from the neo-classical school. The agreed cornerstones of economic freedom are personal choice rather than collective action; voluntary exchange coordinated by markets rather than allocation via the political process; freedom to enter and compete in markets; and protection of persons and their property from aggression or harm by others.

While people debate which precise policies best promote economic freedom, we find general agreement that controlling the size, expenditures, and taxes of government and ensuring the right to form enterprises within a legal structure that also ensures the security of property rights are most essential to its flourishing. Also important is access to sound money and transparent capital markets, the freedom to trade internationally, and minimal regulation of credit, labor, and business.

Accordingly, we find that the nation-states and economies with the most economic freedom have individuals who are free to work, produce, consume, and invest in the way they please. This freedom is both protected by the state and generally unconstrained by it. In locations where economic freedom can be measured we also find free public and private companies. In other words, enterprises flourish as a result of the protection both of the rule of law and of enforced codes of business. Business law and capital market access are twin pillars that allow entrepreneurs the freedom to start, merge, and sell businesses without political interference or undue regulation.

The Center for Religious Freedom at the Hudson Institute recently conducted a survey of religious and economic freedom. Analysis of these new data demonstrates that the countries with the least religious liberty also suffer the worst economic freedoms and are lacking in political rights. Who are they? Let’s name names: Burma, China-Tibet, Eritrea, Iran, Iraq, Maldives, North Korea, Saudi Arabia, Sudan, Turkmenistan, and Uzbekistan come in as the worst of the worst. Not far behind are Afghanistan, Bangladesh, Belarus, China, Cuba, Mauritania, Pakistan, Palestine, and Vietnam. When you look at religious freedom and economic freedom in comparison to civil liberties ratings, a number of countries pop out as especially problematic, including Bangladesh, India, Maldives, Serbia, and Turkey. When compared to overall religious liberty ratings, another country sticks out as far worse—Kosovo.

The data are there for all to see, and they permit us to broach a question: Why do those countries with the greatest degree of religious liberty also exhibit the greatest measure of economic freedom? Why do those same places give rise to, and apparently encourage, entrepreneurs, those who grow enterprises as engines of development from which all benefit—not only themselves but their companies, employees, shareholders, consumers, other stakeholders, and entire communities?

We can also approach the data and argument from the other side: Those states that fail to allow economic freedom are universally those that also forbid religious liberty. While many of them have mineral or other resources, and large and productive workforces, these same states almost always fail to develop free and prosperous economies. They cannot sustain economic growth.

Why? It circles back to the link between religious and economic freedom. Competition for religious activity is as healthy as is competition for economic activity. If you desire more economic freedom, you need to begin by insuring religious freedom. If you want economic growth and development, you need to permit religious groups and persons to do largely as they choose.

Spiritual capital

But competition is not enough to explain this correlation. The other connection might be called “spiritual capital.” For economic growth to take place, capital is necessary. Capital funds buy tools, pay labor, and build infrastructure. Obviously, to this is added human capital, mostly in the form of education, creativity, and personal betterment. But for countries and economies to make efficient use of their reserves, spiritual capital is also required, for it is also critical to engage questions about the ultimate ends of social and economic activity. The economic productivity of corporations and industries depends, after all, on the innovations, ideas, and habits of individual people, which themselves depend on their sources of personal commitment, belief, and action.

Like all forms of capital, the formation of spiritual capital depends on delayed gratification, where projected future benefits are weighed against the benefits of immediate consumption. In the same way monetary capital accumulates in savings accounts and investments, spiritual capital is built up over time through “habits of the heart” and realized in such mediating structures as families, churches and religious institutions, social groups, schools, and the wider culture.

Lord Keynes once remarked that for centuries we have kept religion and business in “different compartments of the soul.” By breaking apart that artificial division with the concept of spiritual capital we can overcome one of the persistent dilemmas of modernity and build a model with more explanatory power. As secularization theories and modernization models have been overcome or contradicted by factual reality, a truth has become more apparent: freedom and responsibility lead to capital formation. Responsibility grows from a sense of purpose—particularly moral purpose, which is primarily established in conditions of religious freedom—and this gives rise to economic freedom and the formation of every kind of capital.

Religion affects outcomes by fostering religious beliefs that influence individual traits such as thrift, a work ethic, honesty, and openness to strangers. Beliefs about the afterlife affect these traits by creating perceived rewards and punishments that relate to behavior in this life. These are facets of spiritual capital, stored up over time in a culture. Critics who complain about a lack of capital or its unequal distribution often forget that spiritual capital is as important as any other form to restore communities and build nations.

In the West an understanding of natural law has evolved from Aristotle’s notion of private property, going through Grotius and on to Locke’s trinity of life, liberty, and estates, to the Scottish Enlightenment’s “moral sense” tied to benevolence and self-love and the right to contract with others. Adam Smith argued compellingly that the desire to engage in mutually beneficial voluntary exchange of private property is an innate propensity of man. Modern commerce grew out of this rich religious and philosophical tradition and at its best is still sustained by it in a spirit and morality of democratic capitalism.

In the twenty-first century the abiding question for an integrated global economy in a world of increasingly democratic political systems may well be: does your religious liberty match your economic freedom and vice versa? If not, why not? And if so, how so? Closed religious systems foul economic development and stunt growth. Closed economic systems are unkind or worse to religious sentiments and practice. You need both to sustain human flourishing.

Implications

The promotion of spiritual capital requires that a robust variety of religious—and secular—ideas and practices be permitted in society. It requires the give and take of discourse and practice between and across different religious groups, including the “non-religious.” So what are the implications, then?

For companies: Corporations—small or large, national, multinational, or digital—exist and operate on the basis of trust. Contracts are honored, relationships continued, and sales increased only to the extent any given company lives up to its word and on the basis of its earned reputation. Companies must therefore more than any other actor in society uphold economic freedom and see that it is linked to religious liberty. They should do business only and to the extent that a society opens up economies and ensures religious freedoms. Businesses need to step forward with moral courage and say to the worst regimes, change your ways or do without our business. Business that would not accept immoral practices or prejudices at home or internally should muster the courage to say when something is wrong and back it up with words, muscle, and hard cash. They should be willing to do this alone and in groups or blocs, while coordinating and announcing efforts to bring about good.

For governments: Governments who have made religious liberty and economic freedom a priority—and there are an increasing number of them across the whole world, not only in the developed countries—need to establish a policy in their foreign affairs called linkage. This same policy has worked in the past against the Soviet Union and apartheid South Africa. Bilaterally and regionally countries need to speak, back-up, and enforce their words with real policy, investment, trade flows, and development assistance based on hard criteria.

Too much of the effort in this area has been humanitarian work, which is surely good, but what is needed is foreign policy, not some stand-afar office to take care of complaints or rescue individuals. A pact among collaborative countries rooted in such convictions makes great sense. Multilaterally this linkage should move front and center in the United Nations, the Human Rights Commission discussions, and in every nook and cranny of foreign policy. It should be on the agenda of the G-9 and at summits wherever they take place.

For international financial institutions: For too long these groups, namely the World Bank Group, the International Monetary Fund, and the regional development banks, have ignored both economic freedom and religious liberty. Rarely if ever have they linked them. They neither study the cultures they operate in or the religious faith traditions of their clients and members. That should change. Loans should be made on the condition of certain standards of both economic freedom and religious liberty. If standards are not met, the countries will suffer until they amend their ways. The World Bank should establish a unit in its research department not only on corruption but on this critical linkage and then put the results in operation. Donor countries should insist on high standards or pull back on their commitments to these institutions.

For capital markets: The integrated global capital markets are increasingly sophisticated and driven by economic performance. Sovereign debt is big business. Banks should make loans based on factors that include religious liberty and economic freedom and the ratings should gauge such rankings. The world’s capital markets should be closed off to countries that do not meet minimum standards, or at the least such countries should be forced to pay premiums.

For trading regimes: The World Trade Organization and other trading bodies of a regional or bilateral nature need more adequately to reflect religious liberty and economic freedom and link the two, as treaties allow. Trading with countries that do not respect human rights in the religious or economic spheres should have penalties attached. Fines, tariffs, or even economic sanctions should be considered and enforced to sway public opinion and ultimately change behavior.

For civil societies around the world: In the past few decades the emergence and significance of civil society—in the form of mediating structures located between the individual and the state—have come to the fore. Without these “little platoons” there would be little structure for freedom, civil rights, or social advancement. Nongovernmental institutions and organizations must be allowed and permitted to thrive. The encouragement of this sector and the role it plays in society needs to be more highly valued. It is a bulwark against tyranny and injustice. It should also be a force for religious liberty and economic freedom.

Trade (not aid) is the real engine of enterprise. Interdependency trumps dependency every day, everywhere. Countries or economies that dwell in a poverty cycle are generally those with the least freedom of religion or economy. As totalitarian regimes or kleptocracies, they are too often either cults of personality or a defunct ideology. Some are desperate places of internecine warfare. Others have come to live like welfare queens off the aid system of guilt-ridden developed countries who are quick to give aid but slow to build or invest.

Such regimes will remain mired in poverty with nowhere to go and no way to break free until they step out into the risky zone of freedom. If they start with religious liberty they will also get a degree of economic freedom. And if they commence changes in their economic freedoms, they will soon find rising demands for religious liberty. The mistake is trying to separate two things that are forever joined.

Linking religious liberty and economic freedom to form enterprises of lasting value is the clarion call of humane people and enlightened nations today, in every country, every region, and on every continent.  

Dr. Theodore Roosevelt Malloch is founder and chairman of the Spiritual Enterprise Institute and president and CEO of the Roosevelt Group.

1 Responses (comments are closed) • Features, Business, Global Culture, Public Square, Religious Liberty, Society, Mon 13 Aug 2007