RELIGION AND DEVELOPMENT

Ideas Untrapped

How Religion shapes and influences the trajectory of a country's development path is a subject I have long been curious about - and I found persuasive answers in the work of Economic Historian Jared Rubin. Jared's book is a tour de force on how rulers and elites use religious legitimacy to propagate their rule - and the developmental implications of such equilibrium. The first part of our conversation is to get him to explain some of the fundamental concepts of his book and analysis. It is impossible to capture his work in a single conversation, so curious listeners can check out his book - and his excellent blog posts here, here, and here. He also has a new book out with previous podcast guest, Mark Koyama (episode here).

You can also get the podcast on all the popular platforms like Spotify, Google Podcast, Apple Podcast, and the rest. The transcript of the conversation is available below. Thank you for listening and for your support.

TRANSCRIPT

Tobi;

Welcome to Ideas Untrapped podcast my guest today is Jared Rubin. Jared is an economics professor at Chapman University in California. He's an economic historian, and he has written a wonderful book titled Rulers, Religion and Riches: Why the West Got Rich and the Middle East Did Not. Welcome to the show, Jared.

Jared;

Thank you. It's great to be here. It really is.

Tobi;

Kind of like [an] obvious first question is why religion, really? I mean, so religion has always been this largely accepted but not really systematically defined or studied aspect of the society, especially when it comes to its influence on institutions and economic development. So what motivated you along this line of research?

Jared;

Yeah, so this goes back a long way. Religion is something I've always been interested in. Not necessarily, for me, a personal conviction and I'll be fine if it were, but it's been something mainly because I've had a hard time understanding its impact. It's something that very obviously influences decision making.

So from my undergraduate days, I was interested in economics, which I view as, kind of, how and why people make decisions. And I was also interested in religion for actually similar reasons because it clearly influenced the way that people made decisions.

So I took a lot of courses on various religious topics in undergraduate, but it was something that when I went to get my PhD in economics I never really thought I would pursue. I didn't think that it was something that economists studied.

And then in my second year of graduate school, I took a class from who would eventually become my advisor, [...] Wright, who has done work on religion in the past, particularly the role that Islamic and Christian cultural attributes fed into economic development in the medieval period and my mind was blown that you could do this, that some economists took religion seriously.

So I went to him, this was probably 2003 and I told him that I wanted to do a dissertation on religion and economic development over time. And at the time, precisely the setup to your question, he told me - that's fine if that's what you want to do, and that's what you're interested in, but know that you're going to have a hard time getting a job?

Because there were very few economists at the time that were interested in religion. I mean, you could probably count them on two hands, the economists seriously thought about religion... which in retrospect, is kind of mind-blowing.

For me, especially, thinking about medieval Europe, say... I don't understand how you can think about European economic development in the medieval period without thinking of the role of the church.

If you think about almost any aspect of Middle Eastern economic history since the spread of Islam, very hard to think through the mechanisms through which growth either happens or doesn't without thinking about the role of Islam, and particularly religious authorities.

So I decided to go down this path anyway. I knew that it was something I wanted to do with my career. That's the type of thing that got me really excited about working. And my view on things in general is, you only live once. So if you're fortunate enough to be in a position where you can do what you want, do it!

I did eventually find a job, which was fortunate. And as I dug more and more into the history, you know, history was also something that I didn't necessarily think I was going to do... I've always read a lot and it always interested me... start to realize that, you know, something I kind of knew anyway, especially Islam-Christianity comparison, there are way more similarities than there are differences between the religion and religious tenets.

Now, clearly, there are differences. But when it comes to the things that impinge on economic development, there's a lot of similarities, especially in history. Now, the question is, has religion played a role at all in economic development and that's what I was trying to think through.

And when you start really reading the history, I think one of the things you must immediately latch on to, whether it be medieval European history or medieval Middle Eastern history, is the role that religion played in politics really mattered.

And when you start getting a [...] that well, maybe even if these religions are pretty similar, actually, (they're not nearly as different as I think a lot of people think they are) the role they played in politics has diverged a lot over time, and the divergence to some degree coincides with the divergence in economic fortunes in the region.

So that was the observation that inspired me to write this book. And to really then think through not just the role that religion has played in politics, but why it might differ across societies, and then how it might evolve over time based on the somewhat initial differences, and then what that might mean for economic development.

So I ended up writing a few papers on this. But I decided that the time had come to write a book because I had enough, at least, I saw how the connections were made in my mind and between my papers, and that's where that came from. It's kind of a brief background.

Tobi;

Yeah, just for the audience, your work on religion is not just limited to the book, you've written numerous papers, and publicly available essays, which I'm going to be putting up links to some of it in the show notes.

So I'll start my exploration with the evolution of big gods in society, because religion has been with humanity for as long as we know. But tell me, how did big Gods, monotheistic religion become the most popular flavour of human religious practice? I know you've written about this.

Jared;

Yeah. So this is something that it's certainly more in the field of anthropology. So there's been some really good anthropological work recently done on this, and actually some work by some economists as well. And this is something that's also, you know, as I was just mentioning, it's intimately related with politics.

So small gods, this is not a term that is meant to describe them or anything like that in any way, shape, or form. But it's just meant to say [that] we call small gods, like, gods that have a specific purpose. It might be a god that brings water to a population or heals sickness, things like that. That's a small god, you know, it's a god that has a specific purpose.

Big gods are gods that has broader powers. So certainly, when we think about monotheistic gods, those are very big gods, it's the God in a sense, but polytheistic gods can be big gods as well.

But what big gods can do is what this literature cites as a purpose of big gods is that it can be a way to legitimate rule. It can be a way that if a ruler has the support of a big god, whatever that means, right? And that can be based on some tenet of the society that whoever's ruling is God-ordained, there might be some clerical class in a society that ordains a ruler as God-ordained.

But the idea is that big gods, especially centralized gods (and this is where you kind of get towards a more monotheistic faith) are much better at legitimating rule, at keeping rulers in power, and this is where we get autocracy from too.

So a lot of these early societies that had big gods, these were the ones that ended up being a little less fair, that kind of really centralized power in a small group of people because gods like that could be used in that way.

You know, when you have a variety of gods you can appeal to, when you have these ''smaller gods'', each group can have their own god. And in that way, it's really hard for any one political group to monopolize divine power.

So the recent research on this has mainly connected the origin of these types of gods with political power. And this is something I haven't done my own original research on. But I've written a few things, especially online, we have a blog that I worked for that kind of summarizes this works.

I think it's really interesting and not just interesting, but it's a really important precursor to my own work to think about where these gods come from in the first place. Because where my own work comes from is well into monotheism. We're talking about the origins of Christianity and Islam that's well past the point where big gods have formed originally.

The real idea is big gods start coming about when humans settle down in society. So, around the Neolithic revolution 8,000-10,000 years ago, so...

One other thing that really popped immediately in your book is the role of elites in society. And this is something that has been a bit elusive, at least, in my own experience to define.

Tobi;

I have a friend [and], I mean, when we talk about Nigeria, and how elites are not really doing enough or talking about the right things or doing the right things, the usual retort is, oh, yeah, well, who are the elites? And I find that it's a surprisingly harder question to answer than it sounds.

Jared;

Yeah.

Tobi;

So you describe elites as anyone who can influence how people whom they do not know, act. Can you explain that a bit? Who exactly are the elites in society? How do they emerge?

Jared;

Yeah, I think this is a really important question. And it's a question that I don't think there's one answer to in the sense, like, I wanted to define elites in a certain way, because I wanted to be able to kind of think through what I described as elites, and this was the commonality.

But certainly, if you read other works, they'll define elites in a slightly different way. There are certain people we all know are elite, right, like presidents, or people on the highest courts, things like that.

But then there are other people that might not be so obvious whether they're a leader or not, like a local priest or imam or something. Is that person an elite? You know, maybe some people would say yes, some people would say no.

So yes, for my book and my work more generally, I use this definition, because it has practical value. So it's this idea that to be an elite, you need to be able to influence the actions of other people, particularly people you don't know.

Now, you ask two questions, both of which are really good. One is, how do you become an elite? This is something I've been thinking about a lot for work I'm still doing now is, what is the source of power? Because elites have power, almost by the definition of what I described, if you really want to think about why this matters, it's [that] there's some sorts of power that they have.

Now, this differs by the type of elite, some of the ones I'm concerned with in the book of religious elites. Now, the idea here tends to be that religious elites (have) either through their study or through their position or something have access to something people care about. Which is, you know, either the Word of God or some places and times actually begin to connect to the supernatural, something like this.

And because they have privileged access to ''we'll just call it the supernatural''... something people really care about, that gives them power to do other things to influence the way people act. And it might be in a way that's consistent with religious tenets and might not. There's been plenty of instances where not.

In other cases, there's access to coercive power that can make one elite. This is something where you can say warlords could be considered elite in the sense that at the top level, they have access to coercive power, that because people fear the use of coercive power, it allows them to make people act in a way that they don't want to act.

You know, more generally, military elites. And there's a lot of grey area here, you know, so in the military, for instance, who's elite who's not? The lowest rank military person probably isn't, you know, they might be able to be on the street with a gun or something, trying to direct people to do something, but it's not really their actions that is causing this, it's the people above them.

Then the very top people are elite. Somewhere in the middle, you just have to kind of make a decision if you're thinking about the social scientific definition. And then this other [group] who I describe as economic elite, who with their access to resources, gives them power.

Whether through a formal political process or not, you know, oftentimes, especially in the modern world, it's often through formal political processes. But there's a lot of non-formal processes as well through which this happens, certainly through markets, for instance.

You know, market power can be really [a] domineering force. So by this definition, my definition is much more broad than many definitions, especially, in the politicacience literature, because by my definition, there's a lot of elites in many societies. And a reason I think that it's important to consider this idea of there being many elites is that there's many people in general and in societies that can influence the political process.

Now, to be clear, it doesn't mean that just because you're elite, you'll influence a political process. The way I've described it in my own work is I do use game theory, or at least is the idea of thinking about the interactions between these various people in societies.

And when you go through a Game in Game Theory, you think about how they interact with each other, and what are their motivations? What are the outcomes of their interactions, that's really ultimately what you want to get at. And so I think about the game as being between elites.

Now, certainly there are people in the background, right, that aren't elites. The non elites are the people that give elites power in a sense because it's those very non elite states that the elites can influence. And that's the very source of their power.

So there is a bit of a tautology here, in a sense that elites power because they can influence people, and then non elites follow elites because they can be influenced. But it's also one of these things. We see it across societies. And I do think that there are many reasons why one can become an elite. And those also differ across societies as well.

Tobi;

In your book, you also describe a class of people who are still elites, as propagating agents of a ruler. But, one thing became very clear your argument that a ruler seeks to propagate their rule. That's what they desire, you know, isn't this a bit of a public choice assumption, some would question that to say that, Oh, well, just ruling for its sake is not the only desire of a ruler.

Some rulers want to do good, some want to, you know, like there are diverse motivations and desires for a ruler. But your mechanism sort of relies on this propagation of rule. What is your argument for choosing to go in that direction?

Jared;

That's a good question, because this is something that, you know, books have been written on, you know, why do religion? What are the motivations?

I mean, you're right, certainly, some have much more altruistic motives, i don't deny that. Some have the exact opposite. Essentially wanting to seek as many rents as possible.

And then there are others in the middle. They might be altruistic towards their own ethnic group, and very much the opposite towards others. And this is more of a theoretical concept. Because when we need to think about the interactions between various people or groups in society, we do need to think about what they need, what they want.

And what I was trying to do in this book was to think about the most general way of capturing this.

And I actually agreed that you can think about it in other ways, and I don't think this captures 100% of motivations, but all of the stuff we've been talking about here, whether it be pure altruism, or you know, something like that, or really wanting to improve society. Or again, on the other hand, wanting to capture as many rents for you or your small group of people. In order to do that, you have to stay in power.

And so at its base, I want to minimize the assumptions we make. Because once you make an assumption about, say, wanting to maximize tax revenue, or state revenue or something like that, you know, because certain types of rulers that would really benefit, well then you're you're no longer capturing the type of society where, you know, as you mentioned, maybe the ruler just wants to do best for their society.

So what I was trying to do, I was trying to think through a way that we might discuss leadership, rulership in a way that is going to be true of all types of societies. So even in democracies, you have rulers at many levels wanting to be reelected. So they're constrained in ways to do that.

Clearly in very autocratic governments, no matter what the autocrat wants to do, they can't do it if they don't stay in power. But yeah, I certainly agree that if you wanted to study, especially, a certain type of rulers or a type of ruler of certain motivation, you could think about this a little different, for sure. Good point.

Tobi;

Going with your mechanism now, so for a ruler to propagate it's rule, you identify two types of agents. One is legitimizing agents and the other coercive agents. But you see cases, and that transverses many societies... you see cases where there is a sort of overlap between the two where the faction of a ruler has some legitimacy, but also uses force to entrench that legitimacy.

So disentangle both types of agents for me slightly.

Jared;

Yeah, so this is good. Maybe for the sake of listeners, that's a word I use that is not really too common in the literature - this term, propagating agents. To your previous question, I find propagating rulers as staying in power. So a propagating agent is somebody in society that can help you stay in power.

If it's a religious agent, they might have access to the Word of God or something like that. A military agent, as you mentioned, is a type of coercive agent - one that has power.

And to your question, you're absolutely right and I think nearly every society in human history has had some combination of legitimacy and coercive power. In fact, you know, you really can't have rulership without some degree of coercive power.

If a ruler has zero access to coercive power, they will be overthrown quite easily. You can, in theory, have a society that has zero legitimacy, and you know, it's run completely by coercive power.

We would say that there have been a few societies that have, at least, come close to that. But again, that ruler is very tenuous in their rule, because there's gonna be a lot of people in society that don't think that they're the rightful ruler.

I should also just note quickly that legitimacy is a very complex concept, but we can think about it in a simplistic way, as just that one has political legitimacy when people view that person's having the right to rule. And that can come from a lot of sources.

It can come from, certainly, religious elites. It can come from economic elites. It can even come from military elites, depending on, you know, the cultural attributes of the society.

So I think, say, certainly, Genghis Khan had this type of legitimacy. And then this was true, at least, in my reading of Mongol societies, that those who could fight have political legitimacy as well as the right to rule.

One of the ideas put in my book, to get directly to your question here, is that you can think about it as not necessarily disentangling the two, but what weight do you put on the two. Does the ruler use 95% coercive power, 5% legitimacy or the reverse?

Now, one thing that I argue is that there are many types of legitimacy that are relatively inexpensive, from the rulers perspective, you know. So, of course, coercive power is often pretty expensive, for two reasons.

One, it's just often expensive in terms of resources, you know, either be outfitting a military or police forces or things like this. And the other thing is that it's expensive in the sense of giving too much coercive power to groups in society is also a threat to your own rule. Because those are the people that are most likely to overthrow you.

Now, legitimacy... to gain legitimacy, I think of it as kind of interaction between rulers - I should say, rulers here doesn't necessarily have to be a person, maybe a small group of people [or] something like that... just the ruling elite - and those in society that can provide legitimacy. Again, whether they be religious elites, economic elites, something like that.

And we can think about this as a trade-off. There's going to be some types of maybe policies, sometimes it's just pure payments. Like it's certainly in both Christian and Muslim societies that much of their history, religious authorities will say tax-exempt, things like that, you know, as a part of the payoff.

They also might want some types of policies. Oftentimes, the religious elite maybe wants suppression of rival religions, things like that. In the grand scheme of things that tends to be relatively inexpensive, relative to other forms of legitimacy. So then it's attractive.

And that's one of the outcomes or the way that I'm thinking about it in the interactions between different groups. You know, some kind of basic economic comparison. There's going to be benefits from using different forms of legitimacy or coercion, there are also costs.

So we think about what's the cost-benefit trade-offs, and rulers are going to use some types and not others. And that's going to differ by society, it's also going to differ over time.

One thing my book tries to do is look at the evolution of these trade-offs over time and why they diverge between the regions.

Tobi;

You also explained and described something called the rules of the game, as institutions - be it culture, norms and the practices of the society which sort of set the boundaries of what a ruler and the elites can sort of do in a society.

So, I mean, describe that to me a bit. How is that a limiting factor? Because a lot of people kind of assume that once you achieve some legitimacy, maybe through religious legitimacy by, say, converting to the most popular religion of population, you can do what you want. But you made it clear that there are some limiting factors in different societies to what rulers and their agents can do.

Describe this process.

Jared;

Yeah, so that term ''the rules of the game'' is a very famous one used by the Nobel Prize-winning economist, Douglass North. And that's, again, even for him, you know... that's like a very simplistic way to think about institutions. And North goes well beyond this. And then they [other economists] have gone even further beyond this.

But the way that these work do not mean that actors, or even rulers, can act unilaterally and do whatever they want. They're constrained by various things. And one of the real things that I focus on here is this degree to which religious elites can really legitimate rule and how effective they are at doing this.

So in some societies, religious elites are extremely effective at doing this; and this is not just to do with their effort or something like that, it's based on history. It's something that historically, in some societies, religious elites have been very good, so they continue to be very good, at least for the short run.

What I do in the book, of course, is you know, look at certain parts of the Middle East. Religious elites can be extremely effective at either propping up rule or the opposite, or challenging rule. Look at the 1979 Iranian Revolution - that's exactly what happened there.

On the other hand, religious elites may no longer be powerful where they once were powerful. I mean, Western Europe is like that today. Religious elites tend to not have much power in Western Europe today, in large part because society is not very religious, whereas they used to.

So again, that's kind of a constraint that's faced by a ruler at any one given point in time. So maybe a medieval European ruler would have desired to have religious legitimacy because in the medieval period religions are still very effective at legitimating rule.

In the modern-day, certainly Prime Ministers, Presidents are going to look elsewhere as they tend to.

So when we talk about, you know, the rules of the game, we can think about this as a rule. It kind of sets the stage for how this game as I described it between those who rule and those who can keep them in power, how they interact with each other.

So let's get right into the meat of your argument proper, which is how Christianity and Islam emerged when they did, and how the relationship between both religions and their societies and the institutions they propagated, sort of lead to economic divergence, so to speak.

Tobi;

And so I'm going to ask you two questions. I'm trying not to assume too much knowledge for the audience here. So I'm going to ask you two related questions.

So describe for us briefly how the emergence of Islam [happened] when it did, and the emergence of Christianity when and where it did [and] how that came to influence the divergence that was to come later in the society where they sort of propagated these influences.

And my second question, just to note, is that you made very clear - which also I should state for the sake of the audience - that you're not arguing that there is something inherently wrong with any religion. Though, some might argue that, well, you kind of have to say that, right? So...

Jared;

Yeah, no, I think the second question follows from the first question, though, too, because this is actually really important to clarify if the audience hasn't picked up on that yet is, this book doesn't really look at the tenets of religion.

In fact, Islam and Christianity are much closer on most fronts than they are apart. So to the extent that religion might have played a role in what ended up becoming a larger economic divergence, it's hard to look at the tenets of religion as the core cause.

And moreover, something the book also notes is that a good explanation of any type of divergence...you know, economic divergence in the long run, but especially between Europe and the Middle East has to also account for the fact that the Middle East was far ahead of Europe for a long time. Minimum, 400 years, probably 700 years.

[It] doesn't really matter exactly how long in a sense that, you know, it was a while and eventually Europe pulled ahead. But that fact in and of itself suggests that a simplistic argument about there being something about Islam that holds economies back is a foolhardy one.

I mean, how do you explain that the Middle East for the first, say, 600 years after the spread of Islam was so far ahead of Western Europe, on every front - economically, scientifically, culturally, technologically, everything?

So specifically, your first question, though the book looks at and draws out the implications of one very important difference between not so much the theology or the tenets of the religion but a historical difference between the two that did get involved institutionally into the two regions.

This stems from the way that the religions were born and it has to do with their role in legitimating role. And the book argues that, for historical reasons, Islam is more effective at legitimating rule. And it cites numerous passages not just in the Quran, but also the Hadith, which are the kind of the second most important set of religious sayings that's associated with teachings of the Prophet Muhammad.

And the reason that the book argues... and I'm not the first person by any means to note this... that Islam is better, or is more effective at legitimating rule is the conditions under which these religions were born.

So Christianity was born in the Roman Empire. And for its first 300 years, it was a minority religion, which was essentially trying to survive in the Roman Empire. And for this reason, we see the writings in early Christianity when the real doctrine in the corpus of Christian doctrine is really being formed are not about legitimating rule.

In fact, it's quite the opposite. You know, there's the famous quote attributed, at least, to Jesus, you know, ''render unto Caesar what is Caesar's and to God, what is God's''.

The idea of being these two separate spheres, and the religious sphere is not part of that of the Caesar, the secular ruler. And then there are plenty of others who at the time, you know, Augustine and numerous Popes that had similar ideas.

On the other hand, Islam formed at the same time, what was at the time the world's largest ever empire was formed. Muhammad himself was a political figure, as well as a religious figure.

Then, in the first 30 years, the first caliphate, then under the Umayyad Caliphate, within a 100 years of the spread of Islam you have it going from the Atlantic Ocean, you know, in terms of the Iberian Peninsula, all the way to South Asia.

This is the largest empire the world has ever seen. And as this empire is expanding, this is the same time that the corpus of Islamic thought is being formed. It's being formed differently in different contexts. But because it's forming alongside a growing empire, there is need for Islamic justification for political rule.

So from a very early period, you get Islamic doctrine and this being kind of ingrained institutionally that a rightful ruler is one who follows islam, however that is defined. And again, what this ends up doing is, eventually, after the Islamic clerical classes eventually come about in the ninth and 10th century, this ends up giving them a lot of power because they're the ones who can define whether a ruler is acting like a good Muslim or not.

And because of the principles, you know, the kind of what we might call a cultural principle of what makes legitimate rule, it gives religious authorities a lot of power on the one hand, because they can be the ones that describe it.

But then, when a ruler has this legitimacy, it gives the ruler a lot of power to act however they like because they're viewed as legitimate and they might not necessarily need as much coercive powers as they otherwise would.

Tobi;

You sort of answered my second question.

I agree with you, by the way. But what I've noticed with people who get defensive about this kind of argument is to insist on the tenets argument and say, Oh, no, one of these two religions, Islam, in particular, is quite politically prescriptive. And because of that you cannot just separate the tenets of each religion from its institutional or social or political influence, right.

But you are saying that, because there was a divergence in the rules of the game, so to speak, when these two religions started growing, influenced the text, the tenants, the practices, and how much legitimacy each can command, you know?

So I guess my next question would be, at what point... because like you said, the Middle East, the Ottoman Empire was a pretty successful Empire for hundreds of years.

Jared;

Yes.

Tobi;

When did it change? When did religious legitimacy and the way it worked in the Middle East become a sort of economic albatross?

Jared;

So this is the great question. And I think this is the important question to answer because I would actually argue, and I do argue in the book, that initially, this was something that actually was economically beneficial relative to what, say, post-Roman Europe was going through at the time; and even relative to what, you know, societies, especially in the Arabian Peninsula, but even throughout the Middle East North Africa look like, you know, there were empires at the time.

But one thing early Islam did was it helped unite these various regions under one rule, which meant fairly consistent rule of law, even though you know, we don't think of these as pure rule of law societies, but there was consistent rule, they use the same currencies, they could expect similar protections.

One thing that religion does do, you know, this isn't unique to Islam, but because Islam at least, was mainly initially spread amongst merchants, so this was something that [for] the broader populations of these regions, it took a while for them to more broadly Islamise, but merchants were among the first to convert.

And this is something that, at least, brought them into similar social circles, it improved their networks. And I think this helps explain - it's not the only thing, but it helps explain the economic growth of what we might think of as a broader Islamic world for its first 400 years.

This is known in the historical literature as the golden age of Islam from the mid-seventh century till about 1000 or so. And I think you can make the case that the fact that these rulers were in fact strong, for the most part, was a reason for this.

And certainly, at least up until like the late 9th century, when the Abbasid Empire which was the large empire, beginning the mid 8th century was kind of at its peak. This is a reason I think that Islam plays its role.

And again, I mentioned a few minutes ago that I think an explanation that focuses on religion also does need to explain why Islam was associated for so long with a relatively economic successful region. Whereas, you know, this is the same period - that period mid-seventh century to 1000 or so where Europe is not nearly as successful, you know, it's still kind of in its post-Roman doldrums.

Even when you get some type of unification like under Charlemagne, the Carolingian Empire, there's no real capacity to rule in most of those places. And I think, in part at least, that's due to differences in the way that these rulers - to use my term of propagating rule.

Now to get at your big question, what we really need to explain then is actually a reversal. So the year 800, ironically enough, is often a year that's pinpointed, because on the one hand, in Western Europe, it's kind of a famous year because it's the year that the Pope crowned Charlemagne.

But it's also right at the height of the Abbasid Empire in terms of its economic power, in particular. And this is a year that, you know, around this time, early ninth century, that economic divergence between the two regions was probably at its greatest.

So we then say, well, what was the source of reversal? Now, I want to make it clear that I'm pinpointing one source, this is by no means the only source. There are many different reasons, I mean, nothing as big as 1000 years of economic history is going to be mono-causal.

But one thing I look at is, we can start with the Middle East and North Africa and say, because religion was so effective at propagating rule, there was very little incentive for political authorities to change this.

They stayed in power, by ceding relatively little to religious authorities, they certainly had to have access to coercive powers, which they did. There's been a lot of good work that has looked at what access to coercive powers meant for the stability of Muslim empires as well as their economic strength.

But it meant that religious authorities remained powerful and, importantly, what I then got to argue is that it meant that economic elites were kept out of the ruling coalition.

Before I go too deeply into this, I want to also make it clear that, you know, having a society run by economic elites is generally not a good thing. You know, purely economic elites. Because economic elites, you know, people that are engaged in commerce, maybe merchants, things like that, we should be thinking about them just like we think about all actors as being somewhat selfish.

They have their own desires that they want satisfied. And in this case, it may benefit them at the expense of society. One thing I note, though, is that the big things that economic elites want from the political bargain are things that tend to benefit society more broadly.

And the two big ones I point out in the book because these come up again and again in our history are some types of protections often for their property. But you know, more broadly for especially commercial interactions, you know, so you have some type of means to appeal when you're being cheated, or certainly when your rights are being infringed in any way.

And there's a very large literature in economics that suggests these types of rights are really important for economic development. And the other thing is investment in large scale public goods. Things like transport networks, roads, bridges, canals, things like that. And a whole host of other public goods, eventually education becomes something, even though that's actually quite a bit later.

There's a long, long history of economics that suggests that those things are typically most efficiently provided by government. Again, the economic elites want these types of things, because they benefit themselves. They do benefit themselves, but they also happen to benefit society more broadly.

So on this front, you could say, Well, if the economic elite really don't have a seat at the bargaining table, in this case they don't have a seat because rulers don't need them.

They have plenty of legitimacy, say, through religion and giving up stuff like property rights is among the most expensive things that can be asked for. So rulers really don't want to give that up if they don't have to.

On the other hand, in Europe, what ends up happening around the year 1000 or so... it starts in northern Italy, in the low countries, is you start to get some seeds of commercial development.

Trade, actually, a lot of the trade at least begins with the Byzantine Empire and the Muslims. And with this, as trade starts to expand, some of the things that the religious authorities might impinge upon, while we look at say like moneyed interest or stuff like that. But that's actually I think less important in the broader scheme of things.

What's probably more important is that economic elites gain more power. And, you know, to go back to the broader narrative in the book, because Christian religious authorities actually have less legitimating power, they're less effective at legitimating rule.

[And] once there are these other sources of power that come up in a society that can provide rulers with things like tax revenue, rulers seek them out. So this is precisely the period where Europe goes through a major kind of overhaul in its Church-State relations.

So the most famous episode and this is called the investiture crisis, where it essentially pits the papacy versus various secular rulers. And this is a period, a medieval period where religious legitimacy remains important, but it loses some of its value and where it loses its power, it's economic elites that gain.

I fast forward a little bit to the Reformation, which where it takes place kind of permanently undermines the role of, certainly, the Catholic Church, but just more generally, [the role of] religion in legitimating rule.

And in those places, that's where you really start to see economic elites, mainly in the form of Parliaments becoming much more powerful.

And there again, that's where you start to see these economic elites bargaining for various things that improve the economic development in the region.

Again, they're doing it for their own personal reasons. it's not to say that economic elites are altruistic, kind-hearted people that want what's best for society. Oftentimes, it's quite the opposite, they just want things that benefit themselves.

But some of the things they want are the types of things that we think of that portend broader economic success. So in a nutshell, that's kind of the very broad scope of the argument. Certainly, there's historical detail that the book goes into. But yeah...

Tobi;

Some of the implications of your work are so deep, that I'm not quite sure I can do it enough justice. But one thing I want to now get at is the issue of persistence.

I mean, the period you called in the book, and also your research, they are pretty long enough, some will say, for us to see maybe some convergence. I mean, there has been the Industrial Revolution, the first one, the second one, and I mean, now we live in an age of globalization. And some of this divergence can still be observed.

So specifically, speaking of religious legitimacy and how growth retarding it can be in certain conditions, how persistent is that effect? And secondly, how does legitimacy wither?

Jared;

I think that this is kind of a key question in terms of thinking about these long-run processes. And I think one answer to this is that, in part, at least, it comes down to incentives.

It comes down to incentives of the ruling elite to continue to use religious legitimacy. And to kind of go back to what we're talking about initially, we can think about this in terms of cost benefits.

And what we might think about as the costs here are what economists think about costs as - it includes opportunity cost, the foregone cost of using something, a different form of legitimacy in this case.

As long as the costs are relatively low, which we might think of that as broadly being the case with religious legitimacy, then it's likely to persist. This doesn't necessarily entail anything deterministic about... you know, just because a religion is good at legitimating rule, it's definitely going to persist, there might be other things in societies that come about.

In fact, you know, we have seen this here and there, you know, so say, after World War One, Turkey became a fairly secular society, at least in terms of its politics. So there's nothing absolute at all here in terms of it persisting, but what we can say, and I think this is where if you do economics correctly enough is strong.

But if you use economics in a good way, you never want to say something's definitely going to happen. But you can say things are more likely to happen because people are incentivized to do something in a certain way.

And that's what I think I would describe here in terms of persistence. And I think this same logic also helps us understand why in this case, things don't persist. Why the use of religious legitimacy doesn't persist.

And these might be things outside of what we might think of as the ruling elite or the religious elite's control. When, you know, what I was just describing... when you have a reemergence of commerce in Europe, for instance, in what is known in the historical literature as the commercial revolution, happening approximately between 1000 - 1300, that changes the cost-benefit calculation.

And because the benefits of religious legitimacy were lower, and now the costs are higher, because you're essentially keeping this increasingly powerful economically outside the political circle if you continue to rely on religious legitimacy, that changes the calculation.

And maybe you do want to start offering these economic elites political rights, but it would come at the expense of political power for the religious elite. But that's precisely what ends up happening in the medieval period in Europe, is that these economic elites increasingly get rights throughout central Europe and actually in other parts of Europe as well.

They start forming communes, which are like the city-states, which are mainly made for merchants by merchants to trade with each other, but they gain a lot of rights and these rights come at the expense of the religious elite.

The religious elites have relatively little power in these areas, and these areas become the economic workhorses of medieval Europe. And they benefit the rulers, in some cases, immensely and this becomes one of the primary sources of tax revenue and a whole host of things.

So again, you know, I think if we think about it in terms of this cost-benefit framework, we have to know the history, certainly, to know why these costs and benefits might change. But I think it does give us a framework for thinking about why things persist as well.

Tobi;

Thinking about incentives the way you just described it, especially of the elites, and this is not just about religion, you see some societies that may be too reliant on rent from resource revenue and their struggles to diversify also struggle with this incentive problem.

So I guess my point would be, is it fair or, should I say, reasonable to conclude that a lot of modernization projects that we are seeing whether in terms of foreign aid or interventions or setting up democracies in, perhaps, states that have no history of that form of governance, are they all efforts that are doomed to fail if the incentives of local elites remain the same?

Jared;

Oftentimes, yes. And this is where I think that this question is extraordinarily deep in that this gets at so many different things in human history. And I think, you know, we can broadly say that transporting something that worked, whether it be institutional design, whether it be just funding for certain types of things that worked in one society, it doesn't necessarily work in another society if, in this case, the institutions... and you could even say that there are cultural incentives too that, you know, when people are imbued with a certain view of the world, then they're not just going to be able to adopt new things in a whole host of ways.

So yes, I would argue pretty strongly that certainly elites that govern the political process, when incentives don't change, you're unlikely to get a change in political behaviour.

So if you really want to think about what might be a driver of societal change, at some point, the incentives of the elites have to change. So this can come from a variety of ways. This can come from certainly international, either pressure or incentives, or, you know, it can be financial incentives.

It can come from the ground up. What I just described in Europe was more of a ground up thing, in that the incentive of political elites only changed after commerce really started to reemerge.

And on the other hand, talking about commerce reemerging in Europe, it still wasn't flowing, as far as we can tell, nearly as much as it was in the Middle East at the time. So what that indicates is that... at least to me, is that the incentives for Middle Eastern rulers or North African rulers at the time to employ religious legitimacy was just so much stronger that it was going to take a lot more to undermine those incentives.

So again, that's where I think to your question, really understanding the incentives that authorities face, [that] the various parts of the ruling coalition face is really important to even begin to understand what is possible in terms of change.

Tobi;

My final question to you, which is also a bit of a tradition on the show, is what's the one big idea that you would like to see spread everywhere? It may be something you're working on new [or] old, it may be something that you find interesting. So what is it?

Jared;

By spread everywhere, you mean [the] broader population?

Tobi;

Yes.

Jared;

I think it's [the] implications of my work. It's not my work in particular, but it's the type of stuff that got me interested in this in the first place. It is that if you really want to take a grand, grand, grand view, I think with both myself and I think a large fraction of people who go into economics, why we get in the field is to understand both wealth and poverty.

Because for me understanding poverty, you have to understand wealth as well, you have to understand how it's created. Because I think what most of us, I would hope one, at least one of the main reasons we're interested in this is because understanding the way economies work as a source to help people.

You know, the people that need it the most. And, you know, something I've long been interested in is the role that religion has played in this because I think it's one of many factors.

And again, I want to be very clear, I have a book coming out early next year with Mark Koyama. He's been a guest on your show in the past about how the world became rich, and we look at a lot of different reasons in that book.

So this is one of the reasons but I do think that there are massive misconceptions in the role that religion has played and can play in the future. And I think that if we want to say think about the broader Muslim world, for instance... you know, what worked to raise the economic profile and improve the economic development of, say Western Europe initially, my argument was that it was in part getting religion out of politics.

I don't think that's going to work, though, in large parts of the Muslim world for reasons we just discussed. So an implication of both my work but also something that is long interested me is this idea that tenets of religion themselves are not things that have a massively damaging impact on economic development.

And I think that oftentimes, that's something that is easy to pinpoint, especially for people who want to blame religion for something. But when we think about the role that religion plays in politics, and this is not unique to religion, it can be the role that the military plays in politics, can be the role that actually, frankly, certain types of economic elites play in politics.

And if we really want to improve the lot of... there's still a billion or so people in the world that live on $3 a day or less...the role of local politics plays a role in depressing the capacity for those people to just get to a point where thinking about what they're going to eat is not dominating their lives.

And it differs by society. But I do think that attempts to improve the lots of those people that aren't as concerned with the political are not going to get far. And that's a lot of, you know, especially Western NGO types. And this is not to say, I mean, many of them do extremely good and important work.

But if we really want to get at the source of lifting, you know, at least the most dire of poverty out of the world, I think it's the political that we really need to address. And we need to address it in different ways in different societies.

This is not by any means to say that all we need to do is impose democracy. It's exactly the opposite in many cases because democracy when it's imposed, and does not arise organically often does not work that well.

So it's thinking about local context, it's thinking about how rulers stay in power, it's all of these things, and including religion. This is in part to say, there's no panacea. There's no silver bullet that's going to affect the politics in various places in the same way.

But I do think that if we can pull on generality out which, much more importantly, can help alleviate the most dire of poverty, it's to really try to affect the political.

That's the thing that I'm frankly hoping to continue to work on for the next 40 or so years to thinking about the historical determinants of this and what that can teach us for the present.

Tobi;

Thank you so much. My guest today has been Jared Rubin, economic historian and professor of economics at Chapman University. Thank you very much, Jared, for joining me.

Jared;

Thank you so much. This has been really fun.

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