Abstract

Luther – A Competent Economist? The Monetary Origins of the German Reformation

The following article studies Martin Luther’s contribution to modern economic thought as well as – by the same token – the monetary origins of the German Reformation. Contrary to conventional wisdom, Luther made a valuable contribution to economic theory, particularly with regard to the monetary situation of his age, mainly silver scarcity and related problems. Luther and other theologians and pamphleteers during the early Reformation never ceased to stress the problems that related to the scarcity of silver and the practice of hoarding of money – a concern found in older discourses as well as later economic theory of the modern age, up to twentieth-century ‘Keynesian’ economics.

The first section discusses those cornerstones of Luther’s biography that are relevant in the present context (I.). The second section briefly discusses how modern economics has evolved into a very peculiar science and how Luther may be placed within it, if one shifts the focus from a somewhat skewed genealogy of modern theory (which has had little place for economic thinkers prior to Adam Smith) to a view that acknowledges that the formation of the modern or ‘mainstream’ – neoclassical economics – was due to a very peculiar change in epistemology. This change only occurred long after 1800, but had precursors that date back as far as Luther and the medieval Scholastic theologians (II.). This section is followed by a discussion of Luther’s basic “economics“ (III.), after which two particular components of Luther’s economic “theory“ will be studied in the light of new research: the focus on greed (avaritia) as the desire not to give away, compared to a more traditional interpretation of this deadly sin as chrematistics (i.e. the desire to have more than one’s due or fair share) (IV.). These findings will then be applied to a very peculiar element of Luther’s theology: the indulgence critique that stood at the heart of his Reformation in 1517 (V.). In this way it will be shown that Martin Luther’s Reformation had monetary origins, and that by his new interpretation of scripture, from which some essentially economic stances were derived, Luther also made a valuable contribution to modern economics (VI.).