An Economic Analysis of the Protestant Reformation

The 8^th and final article that Sydney and I presented on is titled “An Economic Analysis of the Protestant Reformation.” It talked about a lot of things, but the first half mainly dealt with the sale of indulgences. The Medieval Roman Church modified doctrine to permit the monetary sale of forgiveness of sins, which was key for spiritual redemption. This was what the members were really purchasing from the church. It was very interesting to walk through the Vatican and see where a lot of that money went. There was a lot of incredible artwork and sculptures that would not have been cheap, and I would not have thought about where that money came from without the article. We were really able to see the immense wealth that church gained during this time, in large part due to the sale of indulgences.

It discussed the use of price discrimination, and how stable wealth dispersion and tight knit communities would help them set the indulgences prices. When cultures were pretty rural and family based, the church would know how much a person makes, and therefore how much they could charge for their product. They also used the idea of purgatory to convince members to buy indulgences for relatives that had passed, which would result in less time in “limbo” between earth and heaven.

It then started its main test, which was trying to create a link between the countries stance on primogeniture and the probability of converting to Protestantism during the reformation. Primogeniture is the act of leaving everything you own (most of the time land) to your first born son when you die. This is unfortunate if you do not have a son or if you are the second born son. The basis of this link was that people would be willing to pay a high price for indulgences if they could assure all of their children’s futures (ex. they could work in the church), but if your country did not practice primogeniture, you could already practice the freedom of dispersing your wealth as you pleased when you passed, so you would not be willing to pay a high price for indulgences, because there was a cheaper and very similar product (Protestantism).

Their second test tried to create an inverse link between the growing urban societies and the practice of primogeniture. They tried to do this because it would create a link between urban societies and conversion to Protestantism. They argued that a son’s inherited wealth was no longer measured by land, because there were more industries to work in and less land per person, primogeniture was less likely to occur, and therefore conversion would be more common. They also argued that in those societies, there was less reliance on the church to help them in legal areas, and more reliance on the community as a whole.

It is really interesting to walk around Rome and see all of the old (many of them Catholic) buildings. It is strange to think about where the money to build those came from, and how the immoral actions of the Catholic Church helped fund some of the best known religious buildings and art we have today. It is also really interesting to think about how much they still make from those buildings, with a line of hundreds of people to get into the Vatican museum during January to see that great art, and at least 7 gift shops throughout the tour.