Connecting Religious and Economic Liberty

New data suggest that countries that value and protect religious liberty offer fertile soil for economic liberty to flourish.

In a recent article in the Interdisciplinary Journal of Research on Religion, Brian Grim, Greg Clark, and Robert Edward Snyder published their findings that “religious freedom contributes to better economic and business outcomes and that advances in religious freedom are in the self-interest of businesses, government, and societies by contributing to successful and sustainable enterprises that benefit societies and individuals.” Grim et al. demonstrate a strong connection between religious freedom and economic growth. This raises another question: does religious freedom also correlate with economic liberty?

In this essay, I compare data from the Heritage Foundation and Wall Street Journal’s 2014 Index of Economic Freedom with the Pew 2012 Government Restrictions on Religion Index and the 2012 Social Hostilities Toward Religion Index, which can be found in Appendix 2 and 3 of the report “Religious Hostilities Reach Six-Year High.” Every measure of this kind has its limits, of course, but both sources use clear and consistent methods to determine their ratings. They reliably reflect the concrete realities in the countries they rate.

The economic freedom index put together by Heritage and the Wall Street Journal uses the following five ratings (from best to worst): “free,” “mostly free,” “moderately free,” “mostly unfree,” and “repressed.” These ratings are based on average scores in ten quantitative and qualitative measures, divided into four equally weighted categories: the rule of law (property rights and freedom from corruption); limited government (fiscal freedom and government spending); regulatory efficiency (business freedom, labor freedom, and monetary freedom); and open markets (trade freedom, investment freedom, and financial freedom). Thus, countries with a “free” or “mostly free” rating do well in maximizing these measures, whereas countries with a “mostly unfree” or “repressed” rating lack most if not all of them.

The Pew indices measuring restrictions on religious freedom use four ratings (from best to worst): “low,” “moderate,” “high,” and “very high.” These ratings derive from categorizing and counting data from eighteen published, cross-national sources. Government restrictions are rated based on twenty criteria. These include: how conducive to religious freedom a country’s constitution and basic laws are; whether the government restricts religious observance (including freedom to worship, wear religious symbols and apparel, publish religious materials, own property for religious use, proselytize, and convert); instances of government violence against religion; legal and procedural favoritism of one religious group over others; and the extent to which governments deny due process in cases involving religious repression. Data on social hostilities toward religion measure instances of religiously motivated crimes, censorship, coercion, violence, war, and terrorism committed by groups or individuals.

Placing these two sets of data side by side reveals that while religious liberty can exist under any degree of economic liberty, economic liberty does not tend to exist without religious liberty. Thus, I argue that there is a strong connection between the two. Those who defend economic liberty should also promote religious liberty.

Establishing the Connection

When the data are grouped based on “low” to “moderate” ratings for government restrictions on religion, there appears to be no connection between religious liberty and economic liberty. Many countries with excessive economic regulations enjoy expansive religious liberty protections. For example, the Solomon Islands, Kiribati, the Federated States of Micronesia, São Tomé and Príncipe, Haiti, Argentina, Lesotho, East Timor, Bolivia, Ecuador, Togo, the Republic of the Congo, and the Democratic Republic of the Congo all received a “repressed” rating for economic liberty in the 2014 Index of Economic Freedom, despite a “low” rating for government restrictions on religion and “moderate” to “low” rating of social hostilities against religion from Pew.

This would seem to contradict Grim et al. on the subject. They write,

Research finds that religious freedom is highly correlated with the presence of other freedoms, such that it can be considered part of a bundled commodity of social goods that have significant correlations with a variety of positive social and economic outcomes ranging from better health care to higher incomes for women.

When the data are grouped based on economic liberty, however, a different picture appears. Of the thirty-four countries that have “free” or “mostly free” economies according to the Heritage/Wall Street Journal index, only four had “high” restrictions on religion, and only seven had “high” social hostility toward religion, according to Pew. Those with “high” restrictions on religion were Singapore, Qatar, the United Arab Emirates, and Bahrain. Those with “high” social hostility toward religion were the Netherlands, Sweden, Colombia, Germany, the United Kingdom, Georgia, and Bahrain. This latter index, however, is more a measure of cultural climate than institutions and law.

What we see in this case, with few exceptions, is a strong correlation between economic liberty and religious liberty. So why is the correlation strong when sorted for economic liberty but not when sorted for religious liberty?

Interpreting the Connection

Correlations, of course, do not show causation, so a precise answer to this question cannot be expected. However, we can make some observations.

First of all, what religion is dominant in a country seems to matter. Three of the four nations with “high” government restrictions on religion (Qatar, the United Arab Emerites, and Bahrain) have large Muslim majorities. Restrictions on other religions inherent to Shari’a law probably explain these high restrictions. Yet this also would mean that the majority of the populations in these countries have no restrictions on their religion, Islam, skewing the measurement to some degree.

That said, Grim et al. highlight a few ways in which religiously motivated government restrictions in historically Muslim countries can and often do hurt their economies. They write,

Religious restrictions in Muslim-majority countries take many forms. One direct religious restriction that affects economic freedom involves Islamic finance. For instance, businesses involved in creating, buying, or selling Islamic financial instruments can find themselves in the situation that one Islamic law board deems a particular instrument acceptable while another board does not (Lawrence, Morton, and Khan 2013), making the instrument’s acceptance on stock exchanges subject to differing interpretations of Islamic law. Other examples include the banning of Hollywood films in some Arab countries for religious reasons (Browning 2014) and the misuse of anti-blasphemy laws to attack business rivals (Tarin and Uddin 2013). Perhaps most significant for future economic growth, the instability associated with high and rising religious restrictions and hostilities can influence young entrepreneurs to take their talents elsewhere (Younis and Younis 2011).

These are challenges that would need to be overcome within the legal and religious climate of these countries before one could expect significant progress with regard to economic liberalization.

Notably, the vast majority of countries that score well in both economic and religious liberty have historically had Christian majorities. The exceptions are Hong Kong, Taiwan, and Japan. Another partial exception would be South Korea; the largest percentage of the population claims no religion, and the rest are basically split between Buddhism and Christianity. The history there, however, is not dominated by Christianity, but by Buddhism, folk religion, and others. Nevertheless, that leaves twenty-six countries with both favorable ratings in religious and economic liberty and a Christian religious heritage.

While these demographic observations do not mean that non-Christian religions are incompatible with economic and religious liberty—Buddhist countries untouched by communism score relatively well, for example—it does raise questions regarding what challenges some religions may face in making room for others, Islam in particular. These challenges, in turn, may diminish their prospects for economic liberty.

Additionally, the fact that countries with many restrictions on economic liberty often enjoy high levels of religious freedom suggests that the latter is typically a precondition of the former. That is, freedom from government restrictions on religion often paves the way for economic liberty, but it is not necessarily a direct, automatic cause.

Religious Freedom Offers Fertile Soil for Economic Liberty

Thus, we can say that if someone wishes to promote economic liberty worldwide, one should not neglect to encourage religious liberty at the same time. This requires facing the challenges of any given country’s religious context and history, while underscoring the importance of interreligious studies for international economic development efforts.

These findings also ought to affirm a tempered realism among international development organizations and advocates who hope to encourage free economies in countries with high government restrictions on religion. Such liberalization is not impossible, as Singapore, Qatar, the United Arab Emirates, and Bahrain demonstrate. However, the strong correlation clearly favors those countries with moderate to low government restrictions on religion and preferably with moderate to low social hostility toward religion as well. A country that values and protects religious liberty offers fertile soil for economic liberty to flourish.

Indeed, while the ancient Roman economy was far from free, we can see the link between religious and economic liberty in the Emperor Constantine’s Edict of Milan in 313, remembered for granting religious tolerance to Christians in the empire. What is often overlooked is the fact that a previous declaration in 311 already granted such toleration. So what makes Milan unique? Why did the Church remember it as the moment that Christians were granted their freedom in ancient Rome?

The difference is that Milan returned confiscated property to Christians and acknowledged the property rights of the Church. The Edict states,

And since the said Christians are known to have possessed not only those places in which they were accustomed to assemble, but also other places, belonging not to individuals among them, but to the society as a whole, that is, to the society of Christians, you will command that all these, in virtue of the law which we have above stated, be restored, without any hesitation, to these same Christians. . . .

Thus, within the soil of religious liberty we can see a seed of economic liberty. Religious bodies and organizations cannot be considered free from government restriction without private property rights, freedom of exchange, and equal treatment before the law. Granting such rights certainly does not equate to liberalizing an entire economy, but it can be an important first step.

Religious liberty is only one of a whole host of conditions favorable to the development of free economies worldwide. Nevertheless, the fact that it is one such favorable condition, and a significant one, cannot be denied.

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