The development of an economic sphere had to wait until production and trade was freed from constraints of feudalism. This began with the formation of independent city-states governed by princes of mayors. Serfs who moved off of feudal lands to city-states were free to produce and trade. Businesses were given a boost with the rise of banks. This stimulated invention and origins of modern science during the Renaissance. The economic sphere did not fully blossom until the Reformation, when Luther, Calvin, Wesley, and other Protestant leaders taught that work was “the glorification of God,”1Although in Ephesians and Colossians, Paul spoke of servants and slaves serving God through their work, the idea of free people desiring to work in order to glorify God required an economy not based on slavery or feudalism. Western civilization had reached this point by the time of the Reformation. Many Protestant leaders taught the work was the glorification of God. E.g., John Calvin, Institutes of the Christian Religion, book 3, chapter 10, section 6 “in following your proper calling, no work will be so mean and sordid as not to have a splendor and value in the eye of God.” and “the Protestant Work ethic” 2The relation of the Protestant work ethic to the massive economic development that took place in the West in the last 400 years was developed by Max Weber and R.H. Tawney around 1922. Max Weber, Religions-soziologie (The Sociology of Religion). J.C.B. Mohr, 1922, esp. Chapters 13-16 on religion and the economic order. R.H. Tawney, Religion and the Rise of Capitalism, New York: Harcourt, Brace, and World, 1926, based on lectures given in 1922. developed, contributing to a growth spurt in economic development.
The United States, founded 250 years after the Reformation, separated its cultural vision, embodied in the Declaration of Independence form the Constitution, which was a legal framework to achieve that vision. In 1689, John Locke had listed life, liberty, and property fundamental rights. The US Founders did not list “property” in the Declaration of Independence, but listed “the pursuit of happiness,” a broader category, instead. When the US Constitution was signed, most people had family farms and businesses, there were no corporations.3The American Revolution was fought, in part, to get rid of the Hudson’s Bay Company and the East India Company, which were given favored status by the King, who forbade competition from American family businesses. The Boston Tea Party was an act against the king’s tea monopoly. After the Revolution, those two English companies were declared illegal in the U.S.
At the founding there was no specific document related to the economy, although there were the following concerns expressed:
- Moneyed interests should be prevented from controlling legislation.
- The social and economic affairs were left to the states, which were creating a federal union.
- The federal government would regulate cross-border trade.
- The federal government would be funded by excise taxes and fees for services.
Private ownership of property, freedom, and market economies enabled great production of goods and services, technological development, and wealth in the United States and Europe. Adam Smith, writing in 1776, the same year as the Declaration of Independence, wrote the seminal treatise on economic and market principles, many of which still taught in Economic 101 classes today. Smith’s principles assumed everyone had equal rights to ownership and economic opportunity. They well described an economic system in which most businesses were run by individuals and families, creating lots of market competition.
However, with largely unregulated economies, the consolidation of economic power, cartels, monopolies, and stock markets led to huge disparities in economic opportunity and enabled price gouging and unfair labor practices. Economic injustice developed alongside economic growth. Anti-slavery movements, trade unions, and economic ideologies arose to challenge these negative developments. The ideology of Marxism-Leninism wanted to abolish an independent economic sector altogether and put it under the government, even though governments are non-productive, seize and control property, and ration it to citizens. The Marxist form of “trickle-down economics” never even worked as well as the capitalist, because elites were still selfish and incentives to produce were destroyed.
In 1917 Rudolph Steiner first articulated a relationship of the three social spheres in his book The Threefold Commonwealth.4Rudolph Steiner, The Threefold Commonwealth, trans. E. Bowen-Wedgwood, London and New York: The Threefold Commonwealth Publishing Association, 1922. In 1922, scholars Max Weber and R.H. Tawney specifically discussed the relationship between religion and the socio-economic order, which had emerged as an independent social sphere.