Idea of Weber that Protestantism Has a Great Impact on Economic Progress - Essay Example

Answers 347793 Weber d that the only way of living acceptably to God is to fulfill the obligations imposed upon the individual by his position in the world. This statement was traced back from the central notion of Luther. This was rigorously developed in certain Protestant communities, such as Calvinism, Puritanism, Methodism, and Baptism. The Protestant work ethic approved the accumulation of wealth and thus, according to Weber's argument, provided the moral foundation for capitalist industrialization. Weber has provided an ethics-based theory for economic development. He said that work ethic drives Protestants to work harder. And also their belief system compels them to save more in order to defer gratification, which transforms into investments and thus higher productivity in the longer run. This was suggested in Max Weber's The Protestant Ethic and the Spirit of Capitalism that a "Protestant ethic" was instrumental for economic progress, several interpretations have emerged how the greater economic affluence of Protestants relative to Catholics might have come about. The idea of Weber that Protestantism has a great impact on the economic progress of a country was depicted in Figure 2,3a and 3b. But not all areas in Prussia have exhibited the jolt of Protestantism to their economic status. Figure 2 has revealed a concentric pattern of the diffusion of Protestantism with Wittenberg at the centre. There was a marked x in Wittenberg, to emphasize the distance from the areas with dominant protestant population. The central, north and the north-eastern part of Prussia is predominantly Protestant, which accounts more than 75 % of their population. Protestant diffusion came to a halt in the western provinces (Rhineland and Westphalia) and in the eastern parts which were predominantly Polish speaking. As a general tendency, the predominantly Protestant regions in the centre of Prussia are also economically more successful (Figures 3a and 3b). Another centre of economic progressiveness is the western rural area with its mineral resources, in which not all residents were Protestants. The idea of having a positive correlation between Protestantism and the growth of per capita income in Prussia does not hold in the North-eastern and the Western Part of the region. The north-eastern part has a predominantly protestant population but it was not reflective to the percentage share of employment in manufacturing and services, they only have less than 22% share. In the western part, in which less than 22% of the population were Protestants, revealed a larger share of employment in manufacturing and services with more than 30% Becker and Woessmann have disputed Weber's idea that Protestantism itself generates greater growth. They have suggested that higher literacy among Protestants was responsible for greater growth of per capita income; it's not because of religion alone. The idea of Becker and Woessmann of literacy being the key factor to economic progress was base on Luther's Educational Postulations. Luther was the first one to translate the Latin Bible into German. His idea of convincing people to read the gospel, instead of a priest reading it to them, has lead to his advocacy of teaching them to read (in order for them to understand the bible). Luther has explicitly urged for the expansion of education (cf. Rupp 1996a, 1996b, 1998). Quite obviously, if one wants to read the Bible, one must be able to read. Very early on, in what is generally viewed his first major pamphlet that signified the breakthrough of the Reformation among the general public, To the Christian Nobility of the German Nation Concerning the Reform of the Christian Estate, Luther (1520, pp. 461-462) explicitly demanded that every town should have both a boys' and a girls' school where every child should learn to read the Holy Scriptures, in particular the Gospel. Luther's call to teach everyone in order for them to be able to read God's Word by themselves is the key feature for our alternative theory of the relative economic affluence of Protestants, because - as a mere coincidence - the literacy that was created also had a significant use in the economic sphere. It should be stressed, though, that Luther never had an economic use in mind. The increased education of Protestants was purely religiously motivated in its instrumental function for the dissemination of the Gospel; instruction, learning, education, and scientific engagement did not carry a value of their own for Luther (Rupp 1998, p. 173). Thus, Rupp (1996b, p. 618) states quite clearly that "Luther's prime concern in this area was the creation of elementary schools for the people as a means of providing all Christians with access to the word of God, as contained in the Bible". In line with the diffusion of Protestantism, literacy rates are highest in the Protestant heartland in the centre of Prussia and lowest in the western and eastern counties and income is highest in the centre and western part, as seen in Figure 4 and 3b. 2. The noteworthy variables considered in the model were Prot, Lit, Age below ten, Jews, Females, and Y. Each of these variables has their own significant assumptions that explain the changes in economic outcomes. With respect to Weber's thesis, the study of Becker and Woessman re-estimated the model, with additional demographic and literacy variables, using three-stage-least-square estimation. Prot refers to the share of Protestants in the population of Prussia. From Weber's thesis, it was concluded, that indeed there was a significant relationship of Protestantism to economic progressiveness. This variable was used again to re-estimate the model and re-affirm the results. There was an assumption that the spread of Protestantism was exogenous to prior economic progressiveness, and - given our argument above that the additional literacy of Protestants was an unintended by-product of Luther's urge to read the Bible - we take denominational differences in literacy as exogenous to both work ethic and economic outcomes. Lit refers to the literacy of Prussian citizens that was the very core of explaining the human capital theory model. As a measure of educational outcome, literacy may be a more informative measure of accumulated human capital than standard enrolment data, which may partly capture years in school that did not lead to effective educational outcomes. The supreme importance of education for economic prosperity receives particular emphasis in the economics profession since the emergence of the theory of human capital in the early 1960s. The key idea of this theory is that education is an investment which yields higher labor-market earnings because it increases productivity. Thus, this is an explanatory variable that roughly explain the changes or improvement in economic progressiveness. Human Capital Model: Age below ten refers to students in this age range that were attending the primary schools in the German Empire. Literacy is measured as the ability to read and write among the population aged 10 years or older. This variable was an important tool to capture the real affluence of Protestantism in literacy of primary school age students. It is well accepted in the study of German educational history that the Reformation was of exceptional importance for the development of the German school system. Jews and Females are the demographic control variables that would significantly explain changes in economic progress aside from religion and literacy. These two variables will clearly specify the share of the population of Jews and Females in the Literacy and Protestantism shares. Y refers to the economic outcomes brought about the explanatory variables Prot, Lit, Age below ten, Jews and Females. To provide a more thorough analysis of the relative importance of literacy and other traits of Protestant counties in determining their superior economic outcomes, we perform a "horse race" between the share of Protestants and literates in explaining economic outcomes, as referred by this model: The main prediction of the Weber thesis was tested, whether Protestant counties were economically more advanced. And then, the validity of the alternative explanation on whether Protestant counties showed higher literacy was estimated. Third, the extent of differences in literacy by religion was calculated, for it would account for the economic differences and run a "horse race" between Protestantism and literacy in accounting for economic outcomes. 3. The economic interpretations of coefficients from equation (9) were based on Becker and Woessman's readings on Luther's educational postulates and Weber's thesis. The coefficient on literacy, , is virtually unaffected by the inclusion of the share of Protestants, retaining its large and significant effect on economic progress. On the otherhand, the coefficient , on the share of Protestants drops to virtually zero. By including the share of literates in the county, the share of Protestants loses all the quantitative or statistical significance in accounting for economic progressiveness that it had without conditioning for literacy. This is true for all four measures of economic outcomes, as well as for the three sectoral shares measured for the male labor force. It was noted that the magnitude of the standard errors of the coefficient on Protestantism stays the same after including literacy. That is, the coefficient is as precisely estimated as before; only its size changes to about zero in each specification. The results reveal that after conditioning on the effect of literacy, there is no difference whatsoever in economic outcomes between Protestant and Catholic counties. Protestantism has no independent effect on economic outcomes beyond literacy. This leaves little room for substantive economic differences stemming solely from differences in work ethic, in that Protestants provided more effort, strived more for economic success, were thriftier, or had a more efficient approach to working life. The whole economic lead of Protestant counties can be attributed to their higher human capital. Becker and Woessman have expected that Protestantism and Literacy are positively related with economic progress, with basis on Luther's role on economic progress. In accordance to Luther's call, in teaching everyone, in order for them to be able to read God's Word by themselves is the key feature of the alternative theory of the relative economic affluence of Protestants, because - as a mere coincidence - the literacy that was created also had a significant use in the economic sphere. It was stressed that Luther never had an economic use in mind. The increased education of Protestants was purely religiously motivated in its instrumental function for the dissemination of the Gospel; instruction, learning, education, and scientific engagement did not carry a value of their own for Luther (Rupp 1998, p. 173). Thus, Rupp (1996b, p. 618) states quite clearly that "Luther's prime concern in this area was the creation of elementary schools for the people as a means of providing all Christians with access to the word of God, as contained in the Bible". 4. Full regression estimates and their interpretation Variables Coefficients Standard Error Literate ( ) .636 .086*** Protestants ( ) .001 .020 Age below 10 ( ) -.573 .331* Jews ( ) 1.917 .520*** Females ( ) -3.477 .553*** R-Square .586 *significance at ten, **five, ***one percent The coefficient implies that for every 1 % increase share of literates, there is a corresponding increase in income by .636 %. On the otherhand coefficient explains that for every 1% change in the size of protestants, there is a relative increase in income by only .001 %. While coefficient denotes that for every increase percentage share of students age below 10, there is a substantial decrease in income by .573 %. Next, for every percentage share increase of jews in the population, there is an increase in income by 1.917 %. And finally, an increase in the female population by 1 % will create a significant decrease in income by 3.477 %. Meanwhile, the coefficient of variation or referred to as R-square explains that 58.6 % of the changes in income can be explained by the explanatory variables (, , , , ). 5. The summary of the most suprising result Becker/Woessmann fnd that there is a significant positive association between Protestantism and economic success , while it correlates positively with literacy, the impact of Protentantism on Economic success actually drops to .001 % when accounting for income. It is not so much the idea of a Protestant work ethic itself but rather the educational side-effects of Protestantism that affect later the economic progress. Read More