T

he article entitled '€œReligions and Capitalism'€ by Satrio Wahono (The Jakarta Post, Jan. 30) has linked the success (or failure) of capitalism with religion. Economic crisis happens because the very system abandons religion. Here are some notes on this proposition.

First, capitalism has no founders and was developed without any blueprint. And there is also no spirit of religion involved. The seed of capitalism was rooted in business activities in Italy, the bastion of Catholicism, long before the birth of the Protestant movement.

The next milestones were when the English and the Dutch established the first joint-stock companies: the East India Company in 1600 and Dutch India Company in 1602. Furthermore, the stocks could be sold and bought on the first stock exchange established in 1611 in Amsterdam. Europe entered an age of enlightenment which was based on reasoning. Science and technology, trade and factories were thriving.

Second, to link religion with the rise of capitalism is too exaggerated. Protestantism definitely shook up Christendom. For the first time, the authority of Pope and his priest were openly opposed. This breakthrough arguably freed people'€™s potential from the shackles of divine authority. However, if Protestantism guarantees advanced development, why is Protestant-majority Papua New Guinea still poor?

Islamic law arguably hampered capitalism. In The Long Divergence: How Islamic Law Held Back the Middle East, Timur Kuran, a Turkish American scholar, argues that laws of inheritance discourage the accumulation of wealth, as the Islamic law of commercial partnership limited its sustainability and Islamic legal proceedings hampered a paper economy which is critical to establishing large scale enterprises such as joint-stock companies.

This explains why the Ottoman Turks, a former Islamic superpower, declined sharply amid the rise of capitalist Western countries. Moreover, the resurrection of China was definitely nothing to do with Confucianism. Rather, the pragmatist Deng Xiaoping emancipated all the pent-up Chinese productive forces. His policy was merely practical, neglecting the color of the cats as long as they caught mice.

Third, capitalism has befriended economic crises since its infancy. The first economic crisis transpired in 1636-1637 caused by the reckless stock trade of tulip bulbs. Since then, one crisis after another buffeted capitalism including the great depression and formidable challenge of communism. But, capitalism gets by.

Unfortunately, its success inherently brings unintended consequences. For example, the advanced technology results in globalization and a knowledge-based economy. This kills jobs and widens inequality. Globalization shifts the low-skilled jobs from advanced economies to the Third World. This causes the unemployment in some advanced countries to be stubbornly high.

To sum up, capitalism is linked with more earthly, rather than heavenly, ideas. Without the burden of divinity or heresy, capitalism has always managed find creative ways to sort out all of its problems. And the crisis surrounding capitalism strengthens rather than weakens the system. This creative destruction culls the good/adaptable businesses from the bad/inadaptable ones.

Erwin Wirawan
Jakarta