Summary and Keywords
Martin Luther is often considered, by historians, theologians, and economists alike, to have had no, primitive, or antiquated knowledge on economic matters. New research has suggested the opposite. Luther’s economic insights were deep, sharp, and modern and even carry much relevance for today. The misinterpretation of Luther as a medieval ignoramus shouting helplessly against the forces of emerging capitalism of his day rests on a double misconception. First, it is often assumed that capitalism broke through in the early Luther age (1480–1520s). But at that time, the German economy, which served as a source for inspiration to Luther, contracted: incomes, output and real wages went down after 1500. Moreover, capitalism had been there for centuries when Luther came forth. Secondly, Luther’s dismissal as a contributor to modern economic knowledge also rests on a decisive misconception of what “modern” economic knowledge entails. Only if we define “modern economics” as neoclassical economics, i.e., the post-1940 academic mainstream consensus in the Western world, based on the assumption of perfect competition, fully transparent information, rational actors, and a free-market economy, does Luther’s economic vision appear out of tune. How could Luther have been ignorant of the rise of the new economy when there was no such rise at his time, or “modern” economic knowledge when neither this type of knowledge nor a modern neoclassical vision of the economy existed?
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