------------ EH.NET BOOK REVIEW --------------
Published by EH.NET (March 2007)

Robert B. Ekelund, Jr., Robert F. Hebert, and Robert D. Tollison, 
_The Marketplace of Christianity_. Cambridge, MA: MIT Press, 2006. x 
+ 355 pp. $30 (cloth), ISBN: 0-262-05082-1.

Reviewed for EH.NET by J. Daniel Hammond, Department of Economics, 
Wake Forest University.


"I do not mean that I have observed, all through my narrative, the 
impartiality of the perfect historian; such detachment is hardly 
possible, where eternal issues are at stake." R.A. Knox, _Enthusiasm: 
A Chapter in the History of Religion_

This book provides an economic analysis of the evolution of the 
existential itch-scratching industry. The analysis used is industrial 
organization and economic history. The period given most attention is 
the century after the breakout of competition that started in Germany 
in 1517 and spread across Europe. Also considered are the structure 
of the industry in the United States and the effect of the industry 
on economic growth. The authors use the commonplace term for the 
existential itch-scratching industry, Christianity. Other industries 
are in no meaningful sense different from Christianity -- Judaism, 
Islam, Buddhism, Hinduism. All provide consumers with relief from 
their itch, albeit in different ways. Ekelund, Hebert, and Tollison 
follow convention in treating Christianity as an industry separate 
from these others. This is sensible. Elasticities of substitution 
between Christianity and Islam would seem to be on the low side. The 
authors' choice of Christianity rather than, say, Islam is also 
sensible given that much of their audience is American readers.

It is not known exactly when consumers contracted existential itch, 
but the malady has persisted since we became human. The Enlightenment 
gave us science and good government, thereby providing a degree of 
immunization against the itch, but so far it has not been eradicated. 
Indeed, the authors predict that scientific marvels such as 
extra-uterine reproduction, though helpful, will not provide full 
immunization. "Existential terror will not disappear no matter how 
far science takes Homo sapiens" (p. 270). It seems that the itch, 
like hunger but perhaps unlike procreative sex, will remain part of 
the Homo sapiens condition. With the itch unlikely to disappear in 
the foreseeable evolutionary future, so is the industry that deals 
with it.

The Roman Catholic Church had an enviable monopoly for centuries, so 
powerful that it was able to engage in first degree price 
discrimination. Like all monopolists, though, it struggled with 
technical inefficiency and potential entry. The former manifested 
itself in excess capital investment in beautiful cathedrals and 
paintings. To forestall entry it practiced usual monopolistic 
techniques such as limit pricing, but also tortured and killed 
competitors. By the end of the fifteenth century the Vatican's 
pursuit of ever larger monopoly rents against the background of 
technological progress (the printing press) set the stage for 
successful entry by an entrepreneurial monk named Martin Luther. Once 
Luther's firm got a foothold, all hell broke loose. Actually, it was 
not all hell; it was all heaven. For as every student of economics 
learns, when monopoly gives way to competition consumer surplus 
expands. There were direct gains for consumers as the price fell from 
the breakup of the Catholic monopoly and, in addition, the entrants 
lowered real production costs.

The latter welfare gains warrant explanation. What happened is that 
the entry of Protestant firms reduced the real cost of itch relief by 
doing away with ornate churches, daily masses, pilgrimages, 
sacraments, and middlemen confessors. This is a classic case of 
efficiency gains from entrepreneurial innovation, not unlike the more 
recent case of Wal-Mart.

In analyzing contemporary Christianity the authors use as a measure 
of efficiency the degree of religious belief (relief from the itch) 
relative to time, talent, and treasure spent in church (scratching 
the itch). It seems to this reader that the way this plays out is 
that forming and holding religious beliefs with less involvement in 
churches increases the efficiency of religion. Sort of like the 
paperless world that computer networks allow for publication of 
EH.NET book reviews. Religion without Churches or churches is the 
limit on efficiency gains in the industry. The Catholic marketing 
department would no doubt argue that the sacraments and other items 
done away with by the Protestants are part of the product, not 
wasteful inputs. Protestant firms disagree. The beauty of the 
competitive process is that in the end the consumer decides. If it 
should turn out that there is a God, He may also have a preference 
set. But investigation of that question is, as they say, beyond the 
scope of this project.


J. Daniel Hammond is the editor, with Claire H. Hammond, of _Making 
Chicago Price Theory: Friedman-Stigler Correspondence, 1945-1957_ 
(Routledge, 2006).

Copyright (c) 2007 by EH.Net. All rights reserved. This work may be 
copied for non-profit educational uses if proper credit is given to 
the author and the list. For other permission, please contact the 
EH.Net Administrator ([log in to unmask]; Telephone: 513-529-2229). 
Published by EH.Net (March 2007). All EH.Net reviews are archived at 
http://www.eh.net/BookReview.

-------------- FOOTER TO EH.NET BOOK REVIEW  --------------
EH.Net-Review mailing list
[log in to unmask]
http://eh.net/mailman/listinfo/eh.net-review