Paper #1885

Title:

The medieval church and the foundations of impersonal exchange

Authors:

Benito Arruñada and Lucas López-Manuel

Date:

April 2024

Abstract:

The prevailing view attributes the making of Western culture to the Rnaissance, the Reformation, and the Enlightenment, in opposition to the Catholic Church. Conversely, we contend that the Church of the Late Middle Ages was instrumental in enabling its key element: impersonal exchange. the Church did this by updating the moral code and enhancing its enforcement through the new "Mendicant" Orders—Dominican and Franciscan. In line with their specializations, we document opposite effects for each of these Orders on cultural and institutional attributes underpinning impersonal exchange: positive for exposure to the Dominicans and negative for exposure to the Franciscans. These effects stem from deep moral changes tied to the emotions of guilt, shame, and compassion, with knowledge and education factors explaining historical persistence. Our causal identification relies on exploiting a natura experiment prompted by the Christianization of Mexico, comparing second-generation migrants, and estimating withincountry and individual differences, always focusing on the differential effects between the two Orders. The findings suggest a need to reassess the Church's role in cultural and institutional development.

Keywords:

Cultural change, values, institutions, religion, Catholic Church, persistence, Late Middle Ages

JEL codes:

O10, Z12, Z13

Area of Research:

Business Economics and Industrial Organization

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