The implications of the Reformation are more than ecclesiastical or theological, says Timothy Terrell, professor of economics at Wofford College in Spartanburg, South Carolina. 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.