The theocracy: an economist’s lament

The theocracy: an economist’s lament

Aristidi Armstrong
March 3, 2014

God is bad for the economy.

Well, at least the religious authority which operates or heavily influences legal and political institutions is. This view is shared by many secular capitalists who are of the view that the world ought to be a globalised open market, devoid of cultural and religious differences between states. Theocracies, ie governments which are ruled by or subject to religious authority, or where all administrative decisions are done in the name of God, fly in the face of this idea.

Religion itself remains a virtuous practice and all citizens should have the right to observe their own respective religions, provided it stays out of government decision making. It is unsettling that in Saudi Arabia, a country where “God’s Book and the Sunnah of His Prophet” is the federal constitution, women are not allowed to vote, be elected to a high political position or even drive an automobile.  The debate about religion’s place in the modern era is, however, not the focus of this commentary. This article focuses on religion seeping into government policy and the economic detriment, and yes I say detriment, that sovereign nations suffer when they are governed by the church or any other religious leaders.

A country’s economic output has traditionally been attributed solely to the inputs of capital and labour, with advances in technology a more recent addition to the equation. Technology and physical capital tends to have improved over time in most countries, however there is evidence to suggest that theocratic governance stifles or even prohibits innovation. Dr John L Perkins, an economist at the National Institute of Economic and Industry Research and founding member and president of the Secular Party of Australia, argues that the average worldwide compound growth in living standards is a “bounty” of technological advances.[1] He is of the opinion that theocracies force their citizens to prioritise scripture over scientific research. He also claims that the introduction of Christianity into the Roman Empire marked the fall of the empire’s economic advances, because Rome’s emphasis was shifted to enforcing the church’s policy instead.[2] Indeed, it was a religious dispute which caused “the Great Schism” between the East and the West of the Empire. Nowadays however, governments which make decisions based on religion influence national economies in much more subtle ways.

Weddings are a billion dollar industry in the west. The opposition toward further extending this industry to homosexual couples is due to the religious views of national administrators. No reasonable argument seems to be mounted against two consenting adults of the same sex marrying, other than a religious one. New Zealand’s recent approval of the gay marriage bill is tipped to boost the Kiwi economy by approximately NZ$122 million, according to former Dutch MP and gay rights activist, Boris Dittrich, due to a spike in tourism and wedding ceremonies.[3]

The theocratic Holy See condemns the use of contraception. This is problematic because not using contraception facilitates the spread of diseases which naturally leads to severe socio-economic consequences. Perhaps more controversial however, is the issue of legalising abortion. Theocratic and religion-influenced governments vehemently oppose any discussion of the subject of abortion. Whilst there are obviously serious non-religious ethical arguments against abortion, which must be considered in this particular debate, theocratic governance outlaws any discussion about the topic altogether, by virtue of abortion being a sin. Theocracy serves to moot any valid pro-abortion arguments including any economic arguments for abortion. The macabre reality, as presented by Steven Levitt in the book Freakonomics, is that following the 1973 Roe v Wade decision in the United States which legalised abortion, crime rates fell in the 1990s.[4] It was suggested that this was due to a generation of unwanted children never being born. By virtue of the drop in crime rates, there was less of a drain on police, prison and other state resources. Another angle is that the prevention of unwanted children saved the government millions in what would have otherwise would have been paid out in welfare to young, disadvantaged or single mums. Whilst the economic argument cannot justify the legalisation of abortion by itself, it still deserves to be brought up in the public discourse, which would be impossible to do in a theocracy.

Hence it seems to be the political things when it comes to theocracies that hold back economic prosperity. No female drivers in Saudi Arabia unnecessarily halves the demand for automobiles and related services. This is before we count the cost of the deterrent effect it has on female and non-Muslim tourists. The insistence on Indonesian slaughterhouses to kill cattle in accordance with sharia law, despite the lack of adequate equipment has caused it to lose lucrative trade opportunities with Australia.[5] Despite this, Sharia law is being implemented on a government level in Indonesia, especially in the conservative state of Aceh.[6] The UN-led economic sanctions imposed on Iran is based on Iran’s military threats toward Israel. This is administrative hatred rooted in religion. Given the dogmatic nature of theocratic Iran and the “Jewish State” of Israel[7], there is little room to negotiate toward lifting the crippling trade and financial services ban on the Islamic Republic.

Most youth in Europe, Japan, North America and Australia are the least religious in the world, according to a 2008 Gallup poll.[8] They are the first generation to believe that man-kind can live and prosper on its own without a divine protector. They also almost exclusively reside in the First World. According to the same Gallup poll, the most religious country on earth is Somalia. Is it the case that countries with less developed economies cling to religion for hope and guidance? Do countries with advanced economies cease to require religion in their government policy, by virtue of their success? Or is religion in government simply “the perpetuation of poverty”?[9] Whatever the answer, Australia enjoys a strong economy without religious guidance in decision-making. It therefore seems that we as young Australians should pledge: In Secularism, We Trust.


[4] Levitt, S. D., & Dubner, S. J. (2005). Freakonomics: a rogue economist explores the hidden side of everything. New York, William Morrow.

[9] Op cit n1

Image: ‘In God we trust’ by Kevin Dooley, Licence at