I start the countdown by selecting Israel Kirzner as my 10th favorite thinker. I do not think that he is right about everything, but it is hard to overestimate his ability to make the reader (i.e. me) think.

When I first read his most well-known book, Competition and Entrepreneurship, it was akin to a revelation. My vague dissatisfaction with mainstream theory seemed explained and solved: the source of the problem is that there is no entrepreneur in contemporary neoclassicism, because end-state equilibria assume that the entrepreneurial problem has already been solved.

This had the effect of making me a downright “Kirznerian” for a while (my paper “The Spatial Nature of Entrepreneurship” is almost as Kirznerian as Kirzner himself). But then I became increasingly skeptical, and in my later writings I have spent more time criticizing than defending Kirzner’s conception of  entrepreneurial “alertness,” “discovery” and so on. But this does not mean than I don’t like his theory. I think we should all be grateful to Kirzner for having articulated an extraordinarily consistent, thin, and elegant theory.

The reason I call Kirzner a gateway to economic sanity is that he is sufficiently grounded in the neoclassical tradition to be taken seriously by the more open-minded of mainstream economists, yet he explains some of its most serious flaws in a way that is more likely to keep such economists reading than more heterodox or less polite critics of the received view.  In other words, Kirzner’s work is a sort of “gateway drug” to the even more mind-altering substance of, say, “The Economics of Time and Ignorance” or “Knowledge, Institutions, and Evolution in Economics.”

Unfortunately, the neoclassical sponge has lately had a tendency to integrate the form of Kirzner’s theory while draining it of its substance. In the expansive field of “entrepreneurship studies,” Kirzner is often referred to but seldom understood. Contrary to superficial interpretations, Kirzner’s theory is not a theoretical foundation for empirical studies of small business formation, unless it’s understood that business formation is only a minor subset of profit-yielding human action.

An attractive aspect of Kirzner’s work is that he never emphasizes the policy implications of his theory, which are numerous. While these implications are largely pro-market of the classical liberal variety, policy advocacy never seems to be his main objective. He is first and foremost an economist, who will occasionally provide the reader with understated observations regarding the benefits of free markets, but it’s mostly left to the reader to draw their own conclusions. I think this style is much to be preferred over more passionate policy advocacy (I don’t mind passion, but I think someone who gets passionate about tax rates has got his priorities jumbled up; surely there are other things that should be more likely to excite the passions of homo sapiens).

Israel Kirzner has an interesting background. While he was born in London, he has lived in New York for many years. When listening to a recording of one of his lectures, I was struck by his unique brand of spoken English: an idiosyncratic mixture of British intonation and two types of American pronunciation (New York and standard American).

Another unusual aspect is that he is not only an economist; he is also an Orthodox rabbi and scholar. Indeed, one might even call his style of economic analysis “rabbinical.” And it is perhaps this other occupation that explains his relative lack of passion when he does discuss economic policy choices.

I have decided to reveal my intellectual preferences by doing a countdown of my 10 favorite thinkers. Given my educational background, this will be a very subjective list and limited to economics and adjacent disciplines. I will also attempt to motivate my choices, and  give an indication of what I like and don’t like about each individual (obviously, the pros will have to outweigh the cons). I haven’t decided the exact ranking yet, but I have a general idea about who will be included. Watch this space.

Last week I visited Wuhan for the first time. For those who don’t know, Wuhan is the largest city in China’s Hubei province with a population of more than 10 million. So it’s up there with London, Paris, Istanbul, and Bangkok.

People sometimes ask me which cities I like the most. I think that’s an irrelevant question. What really matters is this: which cities provide the most value for money? The former question may cause lots of people to reply Paris, Venice or New York. The second – more interesting – question would (at least in my case) elicit responses such as Bangkok, Penang and – yes – Wuhan.

What then is so great about Wuhan? Well, first of all it is and has always been an economic center. This means that it has none of the sterile feel of cities that were designed from the top down, and none of the artificial geographical features of cities that are located according to the whim of an emperor or president rather than according to transportation convenience. This is one of the reasons why I don’t like Beijing: a communist reinterpretation of a centrally planned imperial city utterly devoid of natural advantages such as a coast or a river. Of course, Shanghai is a spontaneously evolved economic city, but then Shanghai is expensive for someone like me (someone with either no expense account or one that has been severely constrained by university administrators).

So if there is only one place you should visit in China, and if your subjective preferences are similar to mine, Wuhan is the place to go. It is neither north nor south, and neither west nor east. Indeed, it is the place where China’s main east-west and north-south railroad lines intersect. I was also told that it is the only place in China where they like food from all parts of the country. Having said that, I think that Hubei food represents Chinese food at its very best: lots of chilli and garlic but very little sugar or salt. It’s like a subtle and more varied version of Sichuan cuisine. Best of all: restaurants – and they are everywhere – have a fantastic size-to-price ratio. It’s the opposite of Tokyo: American portions at Thai prices, which is a lot better than the reverse combination.

It helps to know some Mandarin if you go to Wuhan. Mandarin is actually the local language, although the local accent is very strange. Not to worry: people will adjust immediately to standard Putonghua once they find out that you are from somewhere else (this is so different from Beijing where people seem to believe that they already speak with a standard accent; the fact is that most Beijingers also have a heavy local accent). And they are a talkative lot: I spent two or three hours talking to various taxi drivers, and they were the ones who got the conversation going.

Speaking of taxis, they illustrate the value-for-money aspect of Wuhan perfectly. A two-kilometer ride will set you back 6 renminbi (less than US$1) in Wuhan, compared with about 25 renminbi in Shanghai. Also, Wuhan cab drivers sometimes will round down (!) the fare, something that I had previously only encountered in Taiwan.  Another illustration of the price level is that it is possible to find an adequate (clean, air-conditioned etc.) hotel room for under US$30, and that you can get a simple but filling and tasty meal at a hole-in-the-wall restaurant for about US$1.

What is there to see in Wuhan? Well, Wuhan has its own version of the Bund: a road along the Yangzi river which is lined with western banks and office buildings from the treaty port era. They come in a variety of styles, reflecting the simultaneous presence of British, French, German, American, Russian, and Japanese traders in the early 20th century. On one such building, an inscription read “First National City Bank of New York,” although it was now the branch office of some (probably mismanaged) Chinese bank.

Behind Wuhan’s Bund, there is a warren of narrow alleys that brings to mind the dense neighborhoods of Macau. Even further north is where Wuhan’s version of the ”new China” is located: skyscrapers, shopping malls, Carrefour, Walmart, and Starbucks. Proceeding north again, one gets to yet another city: this time gray, dilapidated, and rather drab.

All of the above describes Hankou, which is one of three originally separate cities (the others being Wucheng and Hanyang). On the other side of the imposing Yangzi River (Changjiang) is Wucheng, which has a totally different character. Wucheng is home to two of China’s main universities: Wuhan University and the Huazhong University of Technology. I visited the campus of the latter, which resembled a separate city more than a regular campus. It’s enormous and houses about 50,000 students and a permanent population that I would guess is only slightly smaller. Since university salaries are low as well as standardized in China, some universities compete for faculty by offering on-campus fringe benefits. In the case of Huazhong, this includes subsidized housing, kindergartens, and restaurants, as well as the less tangible benefits of  lower noise levels and better air quality.

Another attraction in Wucheng is the East Lake, which is much larger than the average urban pond. In fact, I found out that the lake is actually larger than the entire territory of the Macau Special Administrative Region. And there is Wuhan’s most famous landmark: a pagoda dating back to the 3d century AD, but since reconstructed on numerous occasions.

This is not to say that Wuhan will be to everyone’s liking. For people who can’t stand pollution, congestion, or chaotic traffic, Wuhan is better avoided. And personally I wouldn’t want to live there, but that’s primarily because of my opposition to all kinds of government suppression of civil liberties.

So, now it has been decided. Oliver Williamson and Elinor Ostrom have been awarded the Nobel Memorial Prize of the Bank of Sweden. The good news is that they are institutional economists. I have my disagreements with Williamson (I think he over-emphasizes opportunistic behavior), but by and large I think he deserves this, as does Ostrom. I have actually read papers by both of this year’s laureates, which has been unusual in recent years. Admittedly, I have read one or two papers by Krugman too, but I would have been far better off reading a novel or watching a movie.

One of the more exciting things that I’m involved in at this time is the planning and editing of a new book, entitled “Handbook of Creative Cities.” It is to be published by Edward Elgar in 2011 (hardcover) and 2013 (paperback). My co-editors are Charlotta Mellander and Ake Andersson, both of the Department of Economics at Jonkoping International Business School. Charlotta Mellander is a frequent traveler to Toronto, where she is doing research within projects initiated by Richard Florida (in fact, she is used as an example of a “creative class” mother in Florida’s latest book; “Who’s Your City?”).

One of my aims as co-editor is to stimulate discussion about the roles of planning (both public and private) and markets in urban development, and how the balance may shift with the emergence of post-industrial society. To this end, we have invited contributors with different theoretical perspectives, with a possible clash of ideas, which I would find very exciting.

While I don’t want to divulge the identities of the contributors yet, suffice it to say that they are a diverse and creative lot, and they represent the following creative or not so creative cities as residents: Chicago, Copenhagen, Jena, Jonkoping, Kaohsiung, Kyoto, London, Los Angeles, Milan, New York, San Francisco, Stockholm, Toronto, Vancouver, Washington, and Wellington.

I have just completed a draft of a new paper.  In the past, the only sensitive topic that I have addressed is politics, but in this paper I deal with the three topics that are likely to upset some people if you express your personal opinions: politics, religion, and sex. While I have tried to keep as low a profile as possible regarding my personal opinions, the implications of the paper are clear:

1 Deregulated religion implies more religion

2 Postmodern (postindustrial) society implies that religions that are tolerant of sexual minorities are more likely to achieve positive growth, other things being equal.

3 Other things have usually not been equal in the past: conservative religions have been more successful because they exclude free-riders to a greater extent than religious liberals.

4 A pattern prediction is that if religious entrepreneurs are able to combine liberal (tolerant) values with high-tension (costly) religion, they are more likely to be successful among people with postmodern values than both low-tension religious liberals and high-tension religious conservatives.

The paper is an attempt to combine  Stark’s sociology of religion and Inglehart’s postmodernization theory within a Hayekian spontaneous-order framework:

Introduction

Most studies of spontaneous orders[1] have focused on markets, with some recent extensions to science, democracy, and legal systems. The religious life of an open society – the religious cosmos – is however also an example of such an order. The systemic feedback of religious spontaneous orders is distinct; religious organizations do not use money revenue or vote totals in assessing their performance. The systemic resource of the religious cosmos coincides with what Rodney Stark and Roger Finke (2000: 103) call “objective religious commitment.” Commitment consists of factors such as religious service attendance, adherence to prescribed religious norms, as well as in-kind and money contributions.

        A number of empirical studies have corroborated Adam Smith’s ([1776] 1965) insight that government involvement in the religious life of a nation leads to a less religious society. This proposition is at the core of the new “religious economy theory” as developed by Stark and Fiske (2000), which is a forceful rejection of sociological theories of religion that rest on the secularization thesis. A further component of religious economy theory is that there are tensions within organizations; expansion beyond some upper limit induces difficulties in maintaining behavioral rules that reduce free-riding.

        Behavioral rules serve the purpose of restricting membership in religious organizations to individuals with “virtuous” behavior and organization-specific contributions. Such rules improve the religious experience since worshippers are both producers and consumers. Rules can however be made too costly, since benefits must exceed costs; organizations have therefore adapted their rules in response to aggregate changes in commitment.

        Religious economy theory has so far not analyzed the relationship between the religious cosmos and social values; the unstated implication is that the ongoing transformation from a modern into a postmodern society does not affect the competitiveness of the distinct religious organizations that constitute the religious cosmos (Inglehart, 1997). Surveys show that individuals with the new value structure (often termed “postmodern values”) are less likely to attend religious services but spend more time thinking about “the meaning of life.” There should thus be ample opportunities for religious entrepreneurship.

Religious entrepreneurs face lessons from the past as well as new challenges. Historical experience shows that the intermingling of politics and religion increases hostility or apathy vis-à-vis organized religion (Iannaccone, 1991; Stark and Finke, 2000). The second history lesson is that “liberal faiths” have been less successful than their “conservative” rivals in modern (rather than postmodern) liberal democracies. Religious liberals have offered a less intense religious experience since they have tended to be more tolerant of free-riders and – in many cases – professed vague religious beliefs.

        Religious entrepreneurs face the challenge of devising costly exclusion rules that reward behavior that desirable recruits are willing to accept while repelling undesirables. Success in systemic resource terms requires that desirable adherents perceive the rewards of commitment to be greater than the perceived costs. As we shall see, both rewards and costs depend to some extent on the prevailing value system of the social environment.

In what follows, I first discuss a few of Stark and Finke’s terms and propositions so as to make their relevance to spontaneous order theorizing more apparent. I then attempt to make the theory even more comprehensive by introducing three extensions to the theory: a distinction between long-term and short-term costs; value system effects; and the relation between value systems and the competitiveness of various sorts of tension. Tension refers to the cost that religious organizations impose on members for the purpose of reducing free-riding and raising commitment (Stark and Finke, 2000). Finally, I discuss some of the future challenges that a religious organization (i.e. a “taxis”) is likely to face in a postmodern religious cosmos.  

Recasting Stark and Finke (2000) as a spontaneous order theory

The once dominant secularization thesis was a reflection of the modernist faith in the perfectibility of both government and science, and was often an unexamined assumption in twentieth-century sociology and anthropology. It also reflected the hostility to religion of nineteenth century thinkers such as Auguste Comte, Emile Durkheim, and Karl Marx.

Over the past 40 years, Rodney Stark, William Sins Bainbridge, Lawrence Iannaccone, and Roger Finke have developed the new religious economy theory, which is opposed to the secularization thesis on both theoretical and empirical grounds. Their most conspicuous difference from earlier sociologists of religion is that they assert that religious choices can – and tend to be – rational. Early attempts at using rational choice theory to formulate a general theory of religion include Stark and Bainbridge (1980; 1986). Gary Becker’s neoclassical rational choice framework exerted a strong influence on these contributions. The most ambitious attempt to date, however, is the comprehensive religious economy theory that is expounded in Acts of Faith: Explaining the Human Side of Religion (Stark and Finke, 2000).

The later version (ibid.) of the theory is more comprehensive and much less wedded to conventional neoclassical concepts. It integrates anthropological insights as well as a more evolutionary approach to a process that involves boundedly rational individuals, as is apparent from Proposition 1: “Within the limits of their information and understanding, restricted by available options, guided by their preferences and tastes, humans attempt to make rational choices” (Stark and Finke, 2000: 85, italics added).

A short paper such as this could never do justice to a theory as rich and subtle as Stark and Finke (ibid.). The theory encompasses 36 definitions and 99 propositions, which the authors manage to integrate into a seamless and persuasive whole. Acts of Faith also contains a wealth of empirical evidence ranging from summaries of regression results and case studies of individual religious organizations, almost all of which are compatible with the theory but incompatible with the secularization thesis. I shall therefore only highlight a handful of features that are especially relevant to an understanding of the religious cosmos as a spontaneous order.

Religious commitment as a systemic resource

A problem with religious economy theory is that it does not provide an explicit recognition of the systemic differences between the spontaneous order that coordinates profit-seeking firms and that which coordinates commitment-seeking religious organizations. Frequently, Stark and Finke (ibid.) offer propositions that treat religious rewards and costs as perfectly analogous to market revenues and costs.

A separation is desirable since there are systematic differences between the information-disseminating capacity of the systemic resources (money and commitment). Unlike money, religious commitment is a vague construct that may encompass various combinations of measurable variables. A commitment measure could for example be an index that attempts to combine measures of money donations, unpaid labor by members, the number of members, total attendance at services, and adherence to organization-specific behavioral prohibitions. Any attempt to convert different qualities of commitment into a single index of aggregate commitment is not as straightforward as calculating money revenues on the basis of market prices, and the relative weight of a commitment variable could at best emerge as an arbitrary social convention. For a religious organization to accept such a social convention as valid would however depend on its sharing this convention with the wider society, which in itself implies a lower level of tension with the social environment than a deviant convention, other things being equal. 

The religious cosmos therefore relies on a fuzzier performance measure than does the market order. But this does not mean that religious organizations must succumb to calculational chaos on a par with a state-owned enterprise in a centrally planned economy. Few would argue against the contention that the Roman Catholic Church has more aggregate religious commitment than the Episcopal Church. But Jehovah’s Witnesses may with some justification claim to have more systemic resources in the United States than the Roman Catholic Church, although most disinterested observers would probably disagree.

We should also note that there is a good reason for why money as expressed in market prices should not substitute for seemingly less “efficient” measures of religious commitment. First, the dominant religious faiths consider the willingness to pay money among adherents as a substandard measure of overall commitment, since it penalizes those with little money. Second, most religious organizations and most believers – regardless of religion – consider the explicit purchase of religious virtue as illegitimate. Like love or trust, but unlike sex or socks, religious virtue is an attribute that is (partly or wholly) devalued by an attempt to buy it. It is also symptomatic that the alleged sale of indulgences – implying purchased virtue – by Pope Leo X was one of the causes of Martin Luther’s Ninety-Five Theses.

The religious cosmos

In spite of not differentiating enough between the market order and the religious order, Stark and Finke’s theoretical propositions (ibid.) make up a logically consistent and convincing depiction of causal processes, which are in turn reinforced by the empirical evidence[2]. On the one hand, this is because the market analogy is often close enough to warrant an identical abstract theory. On the other hand, they also note many – if not all – of the circumstances by which the religious cosmos differs from markets that rely on market prices as the coordinating mechanism. The religious cosmos is more similar to the market order than the “marriage market” as theorized by Gary Becker (1973; 1974); therefore some of Israel Kirzner’s (1999) criticisms of Becker do not apply. They also do not apply because of Stark and Finke’s (2000) much more nuanced and realistic treatment of human knowledge and rational behavior.  

The starting point of a spontaneous order theory of religion is that the religious cosmos is a process without any goals of its own. This process coordinates religious individuals (consumers and co-producers) and organizations (producers). The systemic resource is objective religious commitment, which also functions as a signal that guides domain-specific action.

From the individual’s point of view, there is both subjective and objective commitment. Subjective commitment refers to “belief in, and knowledge of, the explanations sustained by a religious organization and having the appropriate emotions” (Stark and Fiske, 2000: 103). Such commitment reflects an individual’s explicit or implicit relational contract with a religious organization. The individual agrees to the contract in the expectation of a bundle of supernatural and natural benefits. The expectation of at least some supernatural benefits is the criterion for demarcating religious from non-religious exchange (ibid: 90).

The subjective commitment of the individual gives rise to various observable attributes of individual behavior. It is these observable attributes that constitutes objective religious commitment, which is the systemic resource that guides the religious cosmos.

Religious organizations are commitment-seeking producers of religious services. They therefore monitor commitment such as “religious participation or practice (taking part in rites and services, for example), material offerings (sacrifices, contributions, and offerings), and conformity to rules governing action (not sinning)” (ibid: 103). A religious organization accumulates commitment in a number of ways, for example by achieving higher attendance rates among existing members or by adding new members.

Tension and free-riding

Religious organizations operating in a competitive environment can only achieve (aggregate individual) commitment growth if it undertakes measures to exclude free-riders. The reason for this is twofold. First, a religious service is a territorial public good, which means that some consumers may choose not to contribute toward the cost of providing the service if it is not rationed (cf. Olson, 1965). Second, free-riders tend to have lower levels of objective religious commitment. A lower level of commitment matters, since consumers of religious services are not merely passive consumers but also co-producers (Iannaccone, 1994). A religious service is similar to other experience goods that depend on enthusiastic participation: a congregation of listless skeptics is akin to a heavy-metal concert in front of deaf octogenarians. Stark and Finke provide an example:

Think of a congregation in which individual levels of religious commitment fluctuate on a scale of one to ten. Suppose that there are the same number of people at each level, which yields an average commitment level of 5. Now suppose that this congregation imposes a rule requiring a commitment level of 5 or above in order to remain a member. The immediate result is an average level of commitment of 7.5. Moreover, people who previously had scored 5 and thus had been average members in terms of commitment, now find themselves at the bottom. Many of these are likely to respond by increasing their level of commitment in order to once again become average members. As they do so, the average level of commitment also rises, and the returns on their investment increase correspondingly. (Stark and Finke, p. 148-49).   

The required commitment level is not only a measure of the minimal cost that members must pay for inclusion; it is also a measure of the tension of the organization vis-à-vis the surrounding society (ibid: 143). Tension refers to how much a religious group differs from a reference group, usually the general population of some geographical area. One key proposition is that higher-tension organizations tend to grow at the expense of lower-tension ones (ibid: 154), since higher tension both reduces opportunistic behavior and increases the perceived value of the supernatural and natural benefits. However, the transaction costs of excluding undesirables increase with the size of both congregations and organizations, which implies that there is a gradual decrease in tension for those that are most successful in recruiting new adherents (other things being equal). 

Not every prospective member of a religious organization desires high rewards in exchange for high costs – this is why there is a range of religious offerings from low-tension Episcopalians to ultra-strict Holiness sects. But low-tension organizations face difficult commitment problems. For example, they may have funding problems because of their tolerance for listless members who primarily use their membership for infrequent wedding and funeral services, in exchange for low or non-existent contributions. Funding problems and low attendance rates do not usually inspire confidence in the organizational ability to produce rewards, whether uncertain supernatural rewards or observable natural ones such as inspirational sermons or social networking opportunities.

State suppression of the religious cosmos

The American religious cosmos has generally been successful in providing a variety of “brands” that can meet the demands of a diverse set of consumers. American history tells of a remarkable variety of organizations and entrepreneurs in a free religious cosmos, which in the aggregate manifests itself as a higher level of commitment than in Europe.

What then is the reason for the lower levels of commitment in Europe? According to Stark and Finke (ibid: 228-39), this is not due to secularization. Contrary to much conventional wisdom, Stark and Finke (ibid.) claim that there never was an “Age of Faith” in Europe, since the historical record shows that most European religious activity prior to the twentieth century was both involuntary and reluctant. A political analogy would be the claim that there has never been an “Age of Communism” unless most people at that time voted for communist parties in free and fair elections.

European religious history is the history of how governments suppressed the religious cosmos and imposed religious taxis. Before the twentieth century, governments imposed religious monopolies on their subjects, while state-sponsored religious leaders colluded with secular rulers in extracting forced contributions. Later religious toleration did however not end European religious regulations. Instead, each European government subsidized one or two dominant religious organizations, while “unusual” religions were – and in most cases still are – the subject of regulations and taxes that exceed those for other types of non-profits.

Italy offers an interesting counterexample in that the government granted all religious organizations the same rights to state support in 1984. It has subsequently experienced rising levels of objective religious commitment among Catholics and non-Catholics alike (Introvigne and Stark, 2005). Introvigne and Stark (ibid.) ascribe increased Catholic attendance rates to increased Catholic product innovation and market segmentation. The innovation and segmentation policies have been in response to the emergence of small high-growth competitors such as various Pentecostal churches, Jehovah’s Witnesses, and New Age movements.

The ability to receive tax revenues and other state support has had the consequence of high nominal membership counts and low levels of average commitment among Europe’s established churches. European history has borne out Adam Smith’s assertion that religious teachers “in the same manner as other teachers, may depend altogether for their subsistence upon the voluntary contributions of their hearers; or they may derive it from some other fund to which the law of their country may entitle them … Their exertion, their zeal and industry, are likely to be much greater in the former situation than in the latter.” (Smith [1776] 1965: 740; quoted in Iannaccone, 1991, p. 156.)

Nowhere is Adam Smith’s assertion more evident than in Sweden, where the Church of Sweden relies on government taxation to generate revenue and is governed by representatives of secular political parties, who need not have any religious faith (Rydenfelt, 1985). The Church of Sweden is assured of a large number of nominal members, since newborn babies become members without a parental application – as long as one of the parents is a member of the Church of Sweden.

The commitment outcome is consistent with religious economy theory: while 67 percent of Swedes claim that they are affiliated with the Church of Sweden, attendance rates at services hover in the low single digits. Indeed, the overall attendance rate in Sweden is only eight percent (World Values Survey, 2006), at least half of which is accounted for by Roman Catholics, Muslims, and Pentecostals. This figure is even lower than the 10 percent attendance rate among unaffiliated Americans (Pew Forum on Religion and Public Life, 2008).  

The religious cosmos, the market process, and democracy

A religious monopoly, a centrally planned economy, and an authoritarian state are three different types of taxis without cosmos. In an unregulated system there is both cosmos – the unplanned order that gives rise to denominational expansions and contractions – and taxis – the made order of each religious organization. The knowledge problems inherent in central planning (Hayek, 1945) explain why large religious organizations with centralized decision-making face internal feedback problems. Some large organizations, for example Southern Baptists and Unitarian Universalists, have however mitigated these problems through decentralized congregational competition and entrepreneurship.

Within this framework, most of contemporary Europe constitutes a “hampered cosmos,” where certain organizations are penalized and others are subsidized. The result should be unsurprising to those who are familiar with the effects of state intervention on markets: less overall religious commitment and entrepreneurship, even allowing for the long-term lock-in effects of previous monopolization.

There are certain pattern regularities that position the religious cosmos between the market order and democracy. David Emanuel Andersson (2008b: 66) writes that the “market process sorts endowment-weighted, fine-grained, individual priorities. Democracy sorts priorities that are egalitarian, coarse, and aggregated.” Using the same general formulation, we may view the religious cosmos as being roughly egalitarian, fine-grained, and individual. At first sight, these characteristics would seem to imply a knowledge-disseminating capacity that is superior to both markets and democracy (cf. Andersson, 2008b), but this impression would be mistaken. The systemic feedback – the signaling system of commitment gains and losses – is much fuzzier than either the accumulation of money or votes. Table 1 provides a comparison of the systemic performance properties of these three spontaneous orders: the religious cosmos; the market order; and democracy.

Table 1: Systemic properties of three spontaneous orders

Extension I: Long-term and short-term subjective cost

Stark and Finke (2000, p. 85-6) use the conventional treatment of subjective rewards and opportunity costs when analyzing religious choices. But they do not discuss the diversity and ambiguity of subjective cost considerations, which is of more than passing interest. First, a high-cost (i.e. high-tension) religion does not uniformly increase costs by, say, introducing a general requirement that members become vegetarians. Some people may have no individual desire for meat or seafood, and do not face any additional subjective cost. This requirement would only impose costs on individuals with diets that are at odds with the doctrine of the organization.

        Second, it is common for individuals to engage in intra-personal bargaining between their long-term and short-term preferences. A compulsive gambler may have a short-term preference for playing the roulette wheel, but at the same time be convinced that it would be in her long-term interest to abstain. In this case, membership in a religious organization could be a way of enforcing the lexicographic priority of long-term values over short-term preferences. People may purposefully join a religious organization in order to tie their hands in the manner of Odysseus.

        In a static theory of individual choice, it is possible to disregard such inner conflicts and only be concerned with a momentary cost that (at least implicitly) is the present value of the expected future flow of combined long-term and short-term costs. For changes in aggregate demand, however, cost heterogeneity and the trade-off between long-term and short-term costs clarify the effects of changes in social values on subjective cost. Heterogeneous costs imply that value shifts may lead to corresponding shifts in the subjective costs associated with a behavioral rule, even if no single individual changes their perceived cost. This is possible because individuals have finite life spans. Continuous cohort replacement may shift the distribution of perceived costs in the population (Inglehart, 1997). Value shifts may engender new assessments of virtuous behavior, rewards, and costs.

Aggregate assessments affect the capacity of an organization to accumulate objective religious commitment. If the dominant value system in a society makes people believe that homosexuality is a sin, it may be possible for religious organizations that ban homosexual behavior to gain gay members. Conversely, if the dominant value system is that homosexuality is legitimate and that sexual tolerance is a virtue, the effect may be that the anti-gay denominations will repel not only gays, but also heterosexuals. As it happens, exactly this value change has gradually emerged in the most economically developed regions of the world over the past 40 years, according to survey results from the World Values Survey.

Extension II: Changing values imply changing subjective costs

Increasing sexual tolerance is only one aspect of a shift in social values that was first noticed in the 1970s (Inglehart, 1977). Ronald Inglehart calls this change “postmodernization,” which refers to the process whereby postmodern values gradually replace modern ones. According to Ronald Inglehart (1977; 1997), values reflect childhood experiences and are relatively stable after individuals reach adulthood. A consequence is that changes in social values primarily reflect cohort replacement: as new adults enter the population, they replace the values of the recently deceased.

        The cornerstone of Inglehart’s theory is that children who perceive their physical well-being as secure develop a different value system from those who experience subsistence conditions or war. The first cohorts that generally took their survival for granted were those North Americans and Western Europeans who were born in the late 1940s. They came of age in the late 1960s, so that the first measurable changes in social values should have occurred around 1970. The results of various cross-national surveys show that this was indeed the case (Inglehart, 1977).

        The key indicator of postmodern values is Inglehart’s postmaterialism index, which measures interviewees’ priority ordering of four or 12 societal goals. In the original four-item index, postmaterialism is defined as those whose first and second priority exhausts the set [freedom of speech; greater citizen participation in governmental decisions] while materialists give priority to the set [law and order; fighting rising prices]. The combination of one priority from each set corresponds to a mixed category. This index exhibits positive correlations with other postmodern values that reflect increasing tolerance of various ethnic, cultural or sexual minority groups.

        Two tolerance variables measure sexual tolerance: acceptance of homosexual neighbors and degree of justification of homosexuality. These two variables are even more robust than the postmaterialism index during economic downturns.

Analyses of partial correlations (controlling for the postmaterialism index) reveal that acceptance of gay neighbors exhibits consistently significant correlations with a host of indicators of national socio-economic development, unlike the postmaterialism index (controlling for tolerance) or other types of tolerance (controlling for postmaterialism). The simple correlation between tolerance of homosexuality and development is .727 if development is measured as freedom from corruption (Transparency International 2009), .704 if as political rights and civil liberties (Freedom House 2009), .667 if as human development (United Nations Development Programme 2009), and .564 if as economic freedom (Fraser Institute 2009)[3].

        On a less aggregated level, Richard Florida (2002) has shown that America’s most postindustrial metropolitan regions are also among the most tolerant, with greater than average representation of gays. In Sweden, questionnaire surveys from the 1990s showed that postmodern values were most prevalent among highly educated women in the largest conurbations, while they were least common among elderly men in rural settings (Andersson, Holmberg and Furth, 1997).

        While postmodern values are especially prevalent in North America and Northwestern Europe, the levels of religious commitment represent opposing poles in the developed world, with the United States and Sweden as extreme cases (Inglehart, 1997). As a believer in the secularization thesis, Inglehart dismisses the American results as an aberration, even though Canadian and Australian religious commitment align more closely with the United States than with Sweden. But nowhere does Inglehart mention the historical impact of state regulation in Europe.

        Stark and Finke (2000) not only contend that high-tension religious organizations tend to grow, while lower-tension ones are in relative decline. They also contend that higher-tension faiths are more conservative, and thus that conservative faiths are most successful. Pentecostal churches, Mormonism, and Jehovah’s Witnesses are indeed among the fastest-growing as well as among the most culturally conservative of America’s denominations. Table 2 shows attitudes toward homosexuality among American adherents of different religious traditions, along with their respective shares of all adults and all adults with a postgraduate degree. Most Hindus, Muslims, and Orthodox Christians are immigrants, while majorities of all other faiths were born in the United States. The unaffiliated category is made up of atheists (1.6 percent), agnostics (2.4 percent) and interviewees claiming to belong to “nothing in particular” (12.1 percent).   

Table 2: Percentage agreeing with the statement “homosexuality is a way of life that should be accepted by society”; religious composition of adult population, United States, 2007

 Source: The Pew Forum on Religion and Public Life: US Religious Landscape Survey, 2008.

¹ The maximum 95% confidence interval is ±0.6%; ² Maximum 95% confidence intervals range from ±1.5% (Catholics, Evangelical Protestant, and Mainline Protestant) to ±10.5% (Muslim).  

We should note that one of Stark and Finke’s success stories – the Jehovah’s Witnesses – is the least tolerant of the major American religious organizations. Minimum costs include attendance at two religious services, four hours of missionary work per week, and a ban on all forms of political participation. While these costs may have caused considerable religious rewards and high aggregate growth in the past, it is questionable whether the organization can maintain such growth if the social values of the surrounding society become increasingly contrarian.

The evolution of social values over the past 40 years shows an ever-growing[4] endorsement of postmodern priorities such as freedom of speech, democracy, and acceptance of alternative lifestyles. This evolution has occurred in tandem with a continuous increase in average educational attainment. Will future generations be attracted to a denomination where an unelected leadership imposes a doctrine that is unusually difficult to reconcile with natural science? The Jehovah’s Witnesses may be an extreme case, but many other conservative churches have behavioral rules that are quite similar, albeit to a lesser extent.

More liberal religious organizations tend to subscribe to doctrines that are better suited to the emerging postmodern value system. But most of them offer low-energy religion and rarely promise a transformative spiritual experience; they have for many years seen a net loss of members. Can strict behavioral rules (high tension) somehow be reconciled with a tolerant postmodern doctrine? It is to this question that we turn in the next section.  

Extension III: High tension need not imply cultural conservatism

Stark and Finke (2000, 195-217) discuss the matching of the supply of religious organizations to a demand that is divided into niches, reflecting population diversity both in religious preferences and in opportunity costs. The assumption is that the population is normally distributed around two large “moderate” and “conservative” niches. Organizations that straddle these two niches are most successful in the long term (e.g. the Roman Catholic Church). One proposition of the theory is that the strict niche (i.e. stricter than conservative) generates the most new organizations, but that these organizations then relax their tension if they become popular. Groups that exemplify this process include the Methodist and Presbyterian denominations.

        While this view of the relationship between niches, tension, and historical evolution is both theoretically and empirically persuasive, a longer time perspective shows that high tension need not necessarily be associated with cultural conservatism in the sense of behavioral rules that corresponds to earlier norms. It is of course true that Mormons and Jehovah’s Witnesses embody “old-fashioned” values and have experienced rapid commitment growth, while the declining Episcopal Church promotes mainstream values and rules that do not require any deviations from the cultural environment. But the history of the past two millennia shows that there are many instances of organizations that combined high tension, high growth, and what were then liberal breaks with past practice.

        Examples include the practice of early Roman Christians to care for the elderly and sick; the Jewish promotion of literacy and learning; and the Buddhist principles of non-violence and tolerance. If we look at the “ultra-liberal niche,” which supposedly signifies a complete absence of tension with the environment (p. 210), Unitarian Universalists[5] (UU) and New Age groups are mentioned as examples. It is worth noting, however, that 653 out of 1,096 UU Congregations in the United States and Canada are so called “Welcoming Congregations,” which represents a promise that the congregation “affirms and celebrates bisexual, gay, lesbian, and transgender issues and history during the church year (possibly including Gay Pride Week, which is in June)[6].”

        In a society where only about half of the population considers homosexuality a legitimate way of life, and about a quarter of the population would not like to have a gay neighbor (World Values Survey 2006), this signifies a certain degree of liberal tension with the surrounding society. Symptomatically, the Unitarian Universalists is the only historically Christian church that has combined positive growth (since 1983) in religious objective commitment and liberal behavioral rules.

        Unitarian Universalism is not the only liberal organization that has experienced growth. A recent survey (The Pew Forum on Religion and Public Life, 2008) reveals that 73 percent of all American Buddhists have converted from another religion or were previously unaffiliated, and are predominantly non-Asian. The most popular Buddhist sub-religions in the United States are Zen and Tibetan Buddhism, which are relatively high tension religious schools that are compatible with tolerant, postmodern values. Participation in Zen is quite costly since Zen teachers often expect adherents to participate regularly in group meditation retreats that last several days.

Future Challenges

In spite of these exceptions, Stark and Finke (2000) are correct when they link high tension, religious commitment, and cultural conservatism in modern twentieth-century societies. I would like to conjecture that this situation arose as influential modernist thinkers promoted faith in the potential perfection of both society and science. The ruling elites of industrializing Europe and North America were mostly technocrats with more faith in omniscient social engineering than in an omniscient God. High tension in modern society thus implies a rejection of a social value system that celebrates supposedly scientific social engineering, while tension in pre-modern societies often implied rejection of systems that celebrated war and conquest. But absolute faith in one’s own prescriptions unites the modern technocratic state and modern high-tension Christianity.

        Friedrich Hayek’s work in economics (1937, 1945) and psychology (1952) set the stage for a reassessment of the ability of planners and scientists to create a perfect society. The gist of his message is that the cognitive powers of humans are never sufficient for a detailed understanding of society. But long before that, Charles Darwin (1859) had shown that a literal reading of the Bible is untenable. With the spread of higher education and the implosion of the Soviet Bloc, Western populations are gradually, albeit slowly, catching up with Darwin and Hayek.

        The postmodern value system is associated with declining confidence in all types of authority figure, whether politician, scientist or priest. People with a postmodern value structure tend to spend more time thinking about spiritual concerns such as the meaning of life and morality (Inglehart, 1997). These trends offer opportunities for religious innovators, but constitute a challenge for authoritarian creeds.

Individuals do not generally choose religious organizations on doctrinal grounds (Stark and Finke, 2000, p. 116-118). Most potential new adherents are recruited by friends or relatives. Subsequently, recruits will convert if they expect the rewards to exceed the costs, where the rewards are contingent on “belief in, and knowledge of, the explanations sustained by a religious organization” (Stark and Finke, 2000: 103). It seems reasonable to assume that such belief is more likely to be forthcoming if the doctrine harmonizes well with the value system of the individual.

The importance of social networks in religious recruitment implies that Christian organizations have an inherent recruitment advantage in American society. Most Americans are Christians who are for the most part connected to other Christians. People who were raised as Christians also have a greater stake in Christianity, since they have accumulated religious capital that is costly to give up. Christianity thus benefits in proportion to its attained popularity[7]. A prediction is therefore that if a large Christian church manages to combine high tension with postmodern values, it should have extraordinarily good prospects for long-term commitment growth. Perhaps the high-tension religion of the future will resemble a doctoral program more than a military academy[8].    

References

Andersson, Ake E., Thomas Furth, and Ingvar Holmberg. (1997). 70-talister: om varderingar forr, nu och i framtiden. Stockholms: Natur och kultur.

Andersson, David Emanuel (2008a). Property Rights, Consumption and the Market Process. Cheltenham: Edward Elgar.

Andersson, David Emanuel (2008b). “The double-edged nature of the Hayekian knowledge problem: systemic tendencies in markets and science.” Studies in Emergent Order. 1: 51-72.

Becker, Gary S. (1973). “A theory of marriage: part I.” Journal of Political Economy. 81(4): 813-46.

Becker, Gary S. (1974). “A theory of marriage: part II.” Journal of Political Economy. 82(2, Part II): S11-S26.

Darwin, Charles. (1859). On the Origin of Species by Means of Natural Selection, or the Preservation of Favoured Races in the Struggle for Life. London: John Murray.

diZerega, Gus (2008). “New directions in emergent order research.” Studies in Emergent Order. 1: 1-23.

Florida, Richard. (2002). The Rise of the Creative Class: And How It’s Transforming Work, Leisure, Community, and Everyday Life. New York, NY: Basic Books.

Fraser Institute. (2008). Economic Freedom of the World: 2008 Annual Report: http://www.freetheworld.com/2008/EconomicFreedomoftheWorld2008.pdf

Freedom House. (2009). Freedom in the World: 2009 Edition: http://www.freedomhouse.org/template.cfm?page=25&year=2009

Hayek, Friedrich A. (1937). “Economics and knowledge.” Economica. 4(13): 33-54.

Hayek, Friedrich A. (1945). “The use of knowledge in society.” American Economic Review. 35(4): 519-30.

Hayek, Friedrich A. (1952). The Sensory Order. Chicago, IL: University of Chicago Press.

Hayek, Friedrich A. (1982). Law, Legislation and Liberty: A New Statement of the Liberal Principles of Justice and Political Economy, Vol. 1-3. London: Routledge.

Iannaccone, Laurence R. (1991). “The consequences of religious market regulation: Adam Smith and the economics of religion.” Rationality and Society. 3: 156-77.

Iannaccone, Laurence R. (1994). “Why strict churches are strong.” American Journal of Sociology. 99: 1180-1211.

Inglehart, Ronald. (1977). The Silent Revolution: Changing Values and Political Styles among Western Publics. Princeton, NJ: Princeton University Press.

Inglehart, Ronald. (1997). Modernization and Postmodernization: Cultural, Economic, and Political Change in 43 Societies. Princeton, NJ: Princeton University Press.

Introvigne, Massimi, and Rodney Stark (2005). “Religious competition and revival in Italy: exploring European exceptionalism.” Interdisciplinary Journal of Research on Religion. 1 (1), Article 5 (1-17).

Kirzner, Israel M. (1999). “Rationality, entrepreneurship and economic imperialism.” In Sheila C. Dow and Peter E. Earl (Eds.), Economic Organization and Economic Knowledge: Essays in Honour of Brian Loasby (Vol. 1). Cheltenham: Edward Elgar: 1-13.

Nozick, Robert (1993). The Nature of Rationality. Princeton, NJ: Princeton University Press.

Olson, Mancur (1965). The Logic of Collective Action: Public Goods and the Theory of Groups. Cambridge, MA: Harvard.

Ormerod, Paul (2002). “Social networks and information.” In Edward Fullbrook (Ed.), Intersubjectivity in Economics: Agents and Structures. London: Routledge, pp. 216-30.

Pew Forum on Religion and Public Life (2008). US Religious Landscape Survey: http://religions.pewforum.org/pdf/report-religious-landscape-study-full.pdf

Rydenfelt, Sven. (1985). “Sweden and its bishops.” Wall Street Journal. August 21: A25.

Smith, Adam. ([1776]1965). An Inquiry into the Nature and Causes of the Wealth of Nations. New York: The Modern Library.

Stark, Rodney and William Sims Bainbridge. (1980). “Towards a theory of religion: religious commitment.” Journal for the Scientific Study of Religion. 19: 114-28.

Stark, Rodney and William Sims Bainbridge. (1987). A Theory of Religion. New Brunswick, NJ: Rutgers University Press.

Stark, Rodney and Roger Finke (2000). Acts of Faith: Explaining the Human Side of Religion. Berkeley, CA: University of California Press.

Transparency International. (2009). 2008 Corruption Perceptions Index: http://www.transparency.org/news_room/in_focus/2008/cpi2008/cpi_2008_table

United Nations Development Programme. (2009). Human Development Report 2007/2008: http://hdr.undp.org/en/reports/global/hdr2007-2008/

World Values Survey. (accessed 2009). WWS 2005-2008: www.worldvaluessurvey.com

Notes

[2] For a discussion of the relationship between the causal and evidential utility of a theory, see Andersson (2008a: Chapter 1), and Nozick (1993).

[3] This is based on my own calculations, using the most recent data from the 83 countries that carried out surveys between 1990 and 2008 and the most recent data from Transparency International (2009), Freedom House (2009), the United Nations Development Programme (2009), and the Fraser Institute (2009).  

[4] This is true of both North America and Western Europe, although the results of the World Values Survey (accessed 2009) indicate that the social values of the American population were slightly less postmodern in 2006 than in 1999.

[5] Strictly speaking, the UU does not meet the criterion that a religious organization should promise supernatural rewards. While originally a heterodox Christian church, UU is no longer a Christian organization. Instead, it may be described as a secular facilitator of dialogue between different faith traditions, including three UU groups that organize Buddhists, Christians, and Pagans, respectively. 

[6] Quotation from www.uua.org/leaders/leaderslibrary/welcomingcongregation

[7] Individuals are more likely to be connected to other individuals who belong to a large religion than to a small one, ceteris paribus. But the cost of joining a religion, given its level of tension, depends on the religious capital of the potential convert (Stark and Finke, 2000: 118-125). Thus, people who have been socialized into a Christian faith will find it less costly to join a Christian organization, since the marginal cost of denomination-specific doctrinal knowledge within Christian faiths is lower than the marginal cost of learning the doctrine of a religion of which they have no prior knowledge. In addition, “distant” religions imply opportunity costs associated with giving up one’s religious capital (which has both human and social capital attributes). Consequently, societies lacking in religious commitment (few religious connections) and religious socialization (low religious capital) should only experience substantial effects of religious deregulation after a long period of time (cf. Ormerod 2002). On the other hand, the lack of specifically Christian socialization in such societies implies greater opportunities for non-Christian religious organizations than in the United States. 

[8] In my experience, doctoral students tend to have greater faith than members of low-tension religions in their respective hard-core propositions.

I have now returned to Taiwan (and to this blog), after having spent one and a half months in Europe. The highlights of my trip to Germany, Poland, and Sweden include my first attempt to pick cloudberries in a marsh near the arctic circle (I only found about twenty cloudberries), the realization that Flensburg has a pedestrian street that looks like Stroget (in Copenhagen) but is compatible with a much tighter budget, and a very long walk through Lodz which revealed a city with Viennese architecture on a grid that resembles Manhattan.

As a pedestrian, I have come to the conclusion that my favorite urban plan is a city where the design of the street pattern is a regular grid, but where the buildings that line the streets have irregular heights and a variety of architectural styles. While Lodz fulfills these criteria, I wouldn’t like to live there. Some neighborhoods are quite dilapidated, and there are also a few unbelievably ugly structures from the Stalinist era. But perhaps most of all, the tragic history of the city is all too apparent in the contrast between its Jewish architectural heritage and the current homogeneity of its Polish population. Also, it’s a gray city, and it’s not difficult to imagine what kind of emotions a rainy day in November would elicit.

Reading about the history of Lodz certainly puts natural calamities such as typhoon Morakot into perspective. This is not to deny that Morakot claimed the lives of more than 500 people and that large parts of southern Taiwan are still inaccessible. I visited a military compound last Saturday that now provides temporary shelter for several flooded villages. While the facilities were basic, I still think that they have done a good job here: each family has its own room and there are plenty of bathrooms as well as an enormous mess hall where the evacuees have their meals.

The fall semester starts next week, and I will be teaching two courses: Institutional Economics (MA level; Wed 6-9 pm) and Economics (compulsory MBA course; Thu 2-5 pm). My office hours are as follows: Wed 3-5 pm; Thu 11-12 and 1-2 pm. After twelve weeks of no classes, I’m actually looking forward to my lectures.

I have decided that this blog needs a summer break as much as I do, or perhaps it’s the other way around. I am however not abandoning this blog, and promise to return to blogging during the first week of September. But in July and August I want to concentrate on some other things. I will be in Europe (Sweden and Poland)  from July 15 to August 31. I do however promise to check my email almost every day.

I wish all blog visitors an enjoyable summer!

This morning I had breakfast at a franchise of Taiwan’s 85C chain of coffee shops. They have now introduced bilingual signs. I had a “Vegetarian ox-tail-shaped creamy bun.” This is Taiwanese English for croissant.

Note that “vegetarian” in Taiwanese English does not equal vegetarian in standard English. While milk and eggs are considered vegetarian here, onion, garlic, and leek are strictly for carnivores. So for Taiwanese, “vegetarian garlic bread” would be a contradiction in terms (the 85C term is “garlic bread” – the only sign in the shop where Taiwanese and standard English coincided).

The Pirate Party was the big winner in the European parliamentary elections in Sweden. Its share of the vote increased from 0.6% in the Swedish parliamentary elections in 2006 to 7.1% yesterday. This means that there will be at least one – and possibly two – Pirates in the European Parliament. I hope that they will be effective in promoting freedom of speech, protections againt government snooping, IPR reform, and democratic reforms aiming at subsidiarity, transparency, and accountability.

The Pirate Party aims to join either the Liberal or the Green group in the European Parliament, since Liberal and Green politicians tend to be slightly more responsive to demands for greater civil liberties than either of the two largest groups in the European Parliament (the Christian Democrats and the Socialists). It will not be easy, but I think the party can make a difference by highlighting concerns that mainstream parties have ignored in their attempts to please various powerful interest groups such as military organizations, law enforcement agencies, media conglomerates, and pharmaceutical corporations.

But I also hope that the success of the Pirate Party is symptomatic of a new type of democratic party. Instead of choosing an unappetizing mixture of policies dealing with all sorts of issues, it enables the voter to vote for a party that focuses on that voter’s most important objective. I’m for example against agricultural subsidies, but I don’t think that subsidies are remotely as important as civil liberties. Why am I saying this? I’m saying this because I think some other parties may be good on issues I care about, but since they offer a package of all kinds of policies the individual voter can never be sure that they are going to pursue the issues that she cares about most. So I’m hoping for the rise of what one could call “lexicographic priority parties.” And I am optimistic. Almost a quarter of the Swedish electorate voted for parties with clear lexicographic priorities: the Green Party (the environment: 11%), the Pirate Party (civil liberties: 7%), the June List (political decentralization: 4%), and the Feminist Initiative (women’s rights: 2%).