By Kristina Terkun
Paper given at the Third Annual Conference on Religion, Economics and Culture (2004)
Introduction: This is a paper about the economics of religion. The model of the franchise organization is applied to the early Christian and Roman Catholic churches. The importance of this research is that it shows how the application of a simple economic model, franchise theory in this case, can give new perspectives to historical events.
We argue that using franchise theory as an overarching model of the growth and development of Christianity gives a much clearer understanding of a number of issues that have long concerned economists, historians, and social scientists. Franchise theory is able to incorporate the received wisdom of historians concerning the spread of Christianity throughout Western Europe. It rationalizes the existence of state religions and the demonstrable monopoly power of the medieval Roman Catholic Church. Finally, it explains the historical record of conflicts within Christianity and the Roman Church including the Eastern Schism, the Great Papal Schism, and the Protestant Reformation.
This paper argues that the Roman Catholic Church grew out of a partnership between secular leaders and the Roman See in the aftermath of the Fall of the Roman Empire. The Roman Church was the franchisor of a brand-named religious good. The secular rulers were franchisees that controlled the production of the good. The secular rulers found it in their interests to monopolize the supply of religion while they acted as agents for a franchisor of a brand- named product. That they did both of these things is understandable in a historical context. It also set the stage for predictable contractual conflicts between the franchisees and the franchisor. The lifecycle of the franchise contract maps out much of the history of the Roman Church.
This paper examines the events surrounding the schism between the Eastern and Western Christian churches that occurred in 1054, and explains the se events in terms of opportunistic behavior on the part of the papacy. Obviously, the Eastern Schism represented a break by Rome with the Eastern part of the Christian Church, but we argue that the impetus for this split was a desire by the Roman See to rearrange the franchise agreements with its franchisees.
While the empirical focus of this paper is the Eastern Schism, we think that a franchise interpretation of the church organizes all three of the great schisms: the Eastern Schism, the Great Papal Schism, and the Protestant Reformation. Social scientists traditionally have treated these as three independent events. Our approach explains all three events in terms of incentive misalignments, the balancing of which is the challenge of the franchise organization.
The paper is organized in the following way. The next section outlines our model and relates it to the literature. In the third section, we develop the model in its historical context. Following that we present some quantitative measures in support of our model as it applies to the Eastern Schism and its aftermath. Finally, we summary the paper and present some concluding comments about its application to the later history of the Roman Church.