Customer Reviews

Sacred Trust: The Medieval Church as an Economic Firm

5 star:		(3)
4 star:		(0)
3 star:		(1)
2 star:		(1)
1 star:		(1)

 

 

Although "Sacred Trust" is a fascinating idea, it is not carried through in a useful or meaningful way. Perhaps, it is an interesting example of how contemporary economic models might be used to investigate organizations with stated non-economic purposes, but it definitely does not come to any useful conclusions with regard to the Catholic Church in the medieval period.

The authors state, on page 6, that they intend to "model the Church as a corporation that marketed and 'sold' a set of indentifiable 'products' in a rational, cost-concious, 'profit'-maximizing manner. ...[on the theory that] it improves our understanding of many complex (and seemingly irrational) historical events."

In this model, the "product" sold is "salvation", which the authors define as a "credence good", which apparently is an economic term for a product which the buyer purchases without there being an objective confirmation of its value. The Church is a so-called "M-firm", which means that it is a franchising corporation, more or less.

All fine and good, although one might argue that there is considerable value to peace-of-mind, which purchasers might know they've received or not, and which, today, represents a considerable portion of our economy in the form of Psychoanalysis, and thus we can derive a cost-comparison. However, the silliness of the book is not revealed in this moment.

First of all, although the book defines the Church as an M-firm, it does not make a consistent discrimination between "downstream" franchise profits and "upstream" profits. Indeed, in one of the very few moments when the authors actually produce numbers, they assert that the income of the "Church" was 200,000 florins in the early 15th century, plus 100,000 from control of the alum monopoly.

This is nonsense. To begin with, if this were so, it would mean that the Church, as a whole, in possession of fully 1/3 the land of Europe, had an annual income equal to 1/5th that of the Venetian Republic, and 1/3rd of that for France and less than 1/2 of that for England for the same time-period. This strikes me as highly unlikely.

What, in all likelihood, is going on here is that the authors took note of the liquid-income stream to Rome itself per annum, which, of course, was quite a bit less than the annual receipts for the entire Church. For example, it was illegal in England in the 15th Century, for specie to be exported. Therefore, all funds collected by the Church in England would not be transferred to Rome except through bills of exchange and no merchant house would likely be able to meet all the Church revenues in England, nor, given the regulation, would they be likely to want to. Moreover, it does not include all those immoveable assets like buildings, land and the commodities one can derive from land that were accruing to the Church. Since these lands were not the property of the local ecclessiastical authorities--although the usufruct of them might temporarily be--but rather really that of the Papacy, it would seem that with some research, one might be able to come to an average income of the Papacy in order to make later economic deductions. The authors make no such attempt.

Beyond this, the authors make no attempt to determine the value of the Church brand, being so important to purveyors of credence goods, as opposed to their other income-producing efforts like the products of lands, court services such as contract disputes, broadcasting (in the medieval period with low literacy rates, the church was the most effective disseminator of information or disinformation), and banking.

The authors furthermore regard the Church as a monopoly organization, and speak to its conflicts with secular authorities in this vein. While it is absolutely true that the Church came into conflict with secular authorities, the authors decide to sidestep the two most important historical events in this regard: the investiture controversy and the establishment of the Hospitallers and Knights Templar. How they could decide to ignore the two most important examples of the conflict in their study, I have no idea.

An investigation into the investiture controversy, for example, might have helped the authors deal with the question of the Church's regulation of marriage. The authors state that the 6th century Church extended the prohibition of endogamy to "marriages between fifth cousins--at a time when secular law contained no prohibitions against marraige between first cousins." (p. 93) True, but then, in the 6th Century the Church was an arm of the State, and remained so well into the investiture controversy (and in certain instances arguably until well after it). The distinction implied, therefore, between secular and ecclesiastical, only really applied to those subjects or citizens who were not Catholic. Perhaps it served to benefit Church revenues, but absolutely not at the expense of the State, which the authors define as a competitor. Indeed, in all likelihood, the prohibition was imposed at the behest of the State.

There are too many examples of this type of unseriousness to mention here. I seriously doubt whether the authors submitted their manuscript for review by a serious scholar of the medieval period or, if they did, I imagine that they decided to publish without taking into consideration his observations. They explicitly state that the work is not exhaustive, but, if Henri Pirenne could put together a serious work about the economy of medieval Europe in under 200 pages, I imagine they could about the economy of the Catholic Church.

In short, should you have the time for a mildly entertaining short work which suggests a number of irreverant ways of looking at the Church's economy without providing convincing cases for any of them, this is the book for you. I wish that a serious economic historian, someone as astute as Carlo Cipolla for example, would take a look into the issues presented by Sacred Trust, because they are certainly worth serious investigation. The authors apparently did not feel it was worth the effort.

It does contain a fairly useful bibliography, on the other hand.

Ekelund and his team of microeconomists have put together a convincing argument that the Catholic Church operated as an M-firm during the medieval period. Although the book comes in at just under two hundred pages, it contains several excellent examples of the Church making decisions and opperating in this capacity. Much recent economic scholarship has been aimed at using contemporary microeconomic models to analyze organizations that do not fit into the traditional boundaries of economics; Sacred Trust follows this trend, but takes it to a new level. Rather than look at modern institutions (e.g. the U.S. Army and the Soviet Union) Ekelund and his team have gone back over a millenium to examine an institution which most people (historians included) have virtually ceased to analyze. In doing this they have not only broken new academic ground, they have shifted one of the most rigid paradigms in academia. The authors state throughout Sacred Trust that their work is by no means comprehensive, but that they simply wanted to show what could be done with the latest economic models. Hopefully the work will be incouraging to other economists and historians, who can indeed take the work further. Sacred Trust is well worth your time and your money.

Note to historians: do not be discouraged -- it is possible to ignore the annoying MLA format.

The Sacred Trust is interesting in its approach and execution. Unfortunately, the analysis starts with the train already rolling in the Middle Ages. In order to understand the force of religion, economists must start at the very beginning and study its economic doctrines and outcomes through time. To do this, a significant rewrite is necessary because much of the extant material is fraudulent. This is very difficult and prone to new errors. When I look at the conclusions in the Sacred Trust, Islam is staring at my face that there must be a paradox in claiming the Catholic Church as a driver in economic growth in its self interest to protect and expand its mercantile monopoly. It is like a husband beating up his wife and then claiming to having positively contributed to her growth by bringing her to the hospital. Hence, the value of the conclusions in Sacred Trust is limited.

After exhaustively going through Judaism, Christianity, and Islam, The Great Leap-Fraud (my publication) comes to the conclusion that the economic growth was collateral damage from an increasing loss of authority. The church jump started the economy unintentionally and at a very specific time. I do not know whether this theory is closer to reality. Economists have a minefield ahead of them to explore.

AJ Deus, author of the Great Leap-Fraud

I hate to break out the hyperbole, but this book is greatness. These guys are economical wizards. It is a shame that mainstream books, such as "Freakonomics" get all the glory, while this gem sets on the shelves.

There is nothing new and/or novel in this "economic" analysis of the Medieval Catholic Church and the Popes who led it.Once the Church leaders accepted Constantine the First's gift of the Papal States(20%of the land area of modern Italy)around 370 A.D.,the Pope had a dual role to serve as both a spiritual and a temporal leader.This dual role is,to anyone except the Austrian-Libertarian-Anarchist economists who wrote this book,directly contradictory to one of the basic maxims of Christianity.This maxim is one of service and help to one's neighbor's in a communitarian setting without the expectation of some type of pecuniary return.The purpose of the church leader(Pope) was to lever the use of the church's resources and organizational structure to maximize the provision of both the spiritual and human resources needed by the community in order to help its members to live a life according to the Ten Commandments and the Two Great Commandments-Love GOD and love your neighbor.That the church leadership was gradually beginning to sink deeper and deeper into corrupt money making activities that was in no way aimed at fulfilling the above specified fundamental purpose and mission of the organized church was noticed by Francis of Assisi some 300 years before Luther.It is well known that the church authorities rejected the call of Francis for returning the Church to its original mission of service to the community.The wide selling of indulgences,noticed by Luther ,was just the latest Enron style method of a corrupt church bureaucracy setting pecuniary temporal goals above the spiritual and basic human needs of the community.This has been known for some 500 years.The five authors of this book merely substitute a model of a corrupt,Enron style corporate monopoly ,emphasizing microeconomic analysis,instead of the usual macroscopic analysis of a corrupt Papal state attempting to manipulate the spiritual needs of the citizens of Catholic Europe so as to rip them off financially.This book suffers from a number of other basic flaws as well. For example, the authors fail to recognize that the Church's usury laws were ,in fact, based on the church's Scholastic,Thomistic philosophy that differentiated between risk and uncertainty.The fact that the Middle Ages were periods of great uncertainty,as opposed to risk,explains the theoretical underpinnings of these laws.J.M.Keynes ,of course,had already reached this conclusion back in 1936.In summary,a reader of this book will reach conclusions already taught in Catholic grammer schools around the late 1950's in the United States.

A fantastic book that should not be missed by anyone interested in the study of religion or institutional economics. See also Anthony Gill's RENDERING UNTO CAESAR: THE CATHOLIC CHURCH AND THE STATE IN LATIN AMERICA, and Rod Stark's THE RISE OF CHRISTIANITY.