Religion, Corruption, and the Social Contract

Abstract

Religion is one of the most commonly cited explanations for cross-country variation in corruption. In particular, Protestantism, and the cultural values that follow from its doctrine, has been identified as particularly beneficial for getting corruption under control. Nevertheless, micro-level studies provide little evidence for religion producing norms and values conducive to good institutions. An alternate explanation for the observed macro-level variation is presented in this chapter, namely the historical systems for financing religious practices. The medieval parish system in Northwestern Europe, where members collectively paid for and administrated religious services as public goods, is compared with the Ottoman Empire, where such goods were normally provided through endowments from private individuals and tax collection was comparatively privatized. It is shown that these different systems can be seen as two very different social contracts that have had long-lasting implications for accountability, transparency, and representation.