The Demise of Jewish Proselytism and the Counter- Reformation

COMPETITION BETWEEN EXCLUSIVE RELIGIONS: THE DEMISE OF JEWISH PROSELYTISM AND THE COUNTER- REFORMATION

Mario Ferrero

Department of Public Policy and Public Choice (POLIS) University of Eastern Piedmont (Italy)

and

Department of Economics, University of Western Ontario and King’s College, University of Western Ontario

Mailing address: Department of Economics, Social Science Centre, University of Western Ontario, London, Ontario, Canada N6A 5C2 E-mail: [email protected]

This draft, December 2010

ACKNOWLEDGMENTS. Earlier drafts of this paper were presented at seminars at Carleton University in January 2010 and at the University of Western Ontario in October 2010, and at the annual meetings of the Canadian Economic Association in Quebec City, May 28-30, 2010. Participants in these events provided interesting discussion. The author is especially indebted to Mukesh Eswaran and Frances Woolley for useful comments.

1 COMPETITION BETWEEN EXCLUSIVE RELIGIONS: THE DEMISE OF JEWISH PROSELYTISM AND THE COUNTER- REFORMATION

ABSTRACT. This paper sets forth a theory of competition between exclusive religions as an entry deterrence game, in which the incumbent may find it profitable not to accommodate but to deter entry by precommitting to a sufficient capacity expansion in the event of entry. If entry costs are high enough, deterrence is optimal and the incumbent remains a monopolist, although the entry threat distorts its effort upward. The model is then applied, first, to the Jews’ withdrawal from proselytism in the face of Christian competition in the first century CE; second, to the Catholic Church’s reaction to the Protestant Reformation.

1. Introduction

This paper addresses two major puzzles of religious history. Around the end of the first century of the Common Era the Jews ceased proselytizing among Gentiles and left the field free to the Christians’ competition. Yet the destruction of the Second Temple in CE 70 arguably lowered the cost of, and provided added incentive to, the Jews’ mission to the Gentiles. Why did the rabbis give up? At the end of the religious wars sparked by the Protestant Reformation, the Treaty of Westphalia (1648) set the religious borders of Europe in stone. Yet the Catholic Church continued the huge reform effort in its domains that had begun as a reaction to the Reformation. Why bother? This paper sets forth an economic theory of competition between exclusive religions and applies it to the solution of these puzzles. A fresh start is necessary because the extant literature on the economics of religion provides no such model. Building on Iannaccone (1995), Ferrero (2005) develops a theory of conversion to exclusive faiths that yields a model of the competition between an exclusive religion and many nonexclusive providers of religious services. There, exclusivity is viewed as a form of market signalling for superior quality that works to the benefit of the collective group as long as it confronts a plurality of nonexclusive competitors, such as the Christian Church vis-à-vis the polytheistic religion of the Roman Empire; but the signalling effect of exclusivity breaks down when the group confronts another exclusive group, such as the Jews. Barros and Garoupa (2002) have a model of religious strictness in which exclusive groups compete by choosing their location on a one- dimensional, linear ideological space. However, our puzzles show absence of entry. Ferrero (2008) shows that a similar model of competition on the doctrinal line can account for the changing doctrinal position and increasing theological strictness that characterized the evolution of the Christian church up to and beyond the Constantinian age. However, that model assumes that Judaism stays fixed at the upper end of the strictness line and so is not an active player, while the locational contest is being played out by the mainline Church and a variety of Christian or quasi-Christian sects. In other words, the model implicitly assumes that Judaism has already given up proselytizing. Here, by contrast, we want to focus on that crucial decision, taken in the second half of the first century. Finally, Ekelund et al. (2002; 2006) offer an economic interpretation of the Counter-Reformation as the Church’s lowering its price of salvation to counter Protestant entry. However, we will show that this price was actually increased. Ideally, a full-fledged model of competition between exclusive religions would have to rationally account for exclusivity itself, ie the religion’s request that brand loyalty

3 by each individual customer be fully 100 percent – a difficult task, since such a practice is rarely, if ever, observed in the world of ordinary business firms. In this paper we only take one step in the direction of such a model. We simply assume that a religion does require exclusive dealings and look for one important way to enforce this requirement: shutting potential competitors out of the market, so that religious mixing by customers is effectively prevented1. In a nutshell, our modelling approach, based on Dixit (1980), is as follows. An incumbent exclusive group faces the threat of entry by another exclusive group; by definition, they cannot share members but must fight for converts. Knowing this, the incumbent may find it profitable not to accommodate the entrant – which would yield a Stackelberg equilibrium – but to deter entry by precommitting to a sufficient “capacity” expansion in the event of entry; if entry costs are high enough, strategic entry deterrence turns out to be superior to accommodation and the incumbent will remain the sole active group, although the entry threat distorts its effort upward. So in this outcome entry is not observed but over-commitment is. The only difference with an otherwise standard industrial organization model of entry deterrence is that here the groups are not faced with cash market demand for their product; rather, like in a commons, they go out “fishing” for members through missionary effort that exhibits diminishing returns. In the first application, the focus is on the Gentile mission market and the incumbent is Christianity, which began very early to proselytize among the “God-fearers” and other Gentiles attached to the synagogues of the Mediterranean Diaspora. The potential entrant is Judaism, which had the potential to counter its rival by stepping up its missionary effort. The incumbent’s strategic precommitment is the epoch-making decision by the apostle Paul, in his letter to the Galatians, that the Jewish Law was not henceforth to be binding on Gentiles who converted to Christianity. The exogenous event that changed the Jews’ costs and benefits of entry into this mission market was the Destruction of the Second Temple in CE 70. We will argue that it was Paul’s strategic choice, not the war disaster per se, that drove the rabbis to withdraw from the contest. The second application views Catholic Europe during and after the religious wars sparked by the Reformation as the potential mission market for the Protestants. The Catholic Church had successfully put down all heresies for a thousand years thanks to the strong arm of the European monarchs. But then the Hussites in Bohemia, followed by the Lutherans in Germany, and then by a string of ever more radical dissidents managed to secure the protection of princes and kings powerful enough for them to escape retribution,

1 Alone in the literature, Raskovich (1996) offers an interesting model of the enforcement of exclusive dealings in ancient Israel, based not on entry deterrence but on a combination of divine curse and group boycott.

4 hold the Empire in check, and establish independent churches in a number of states. In the mid-sixteenth century, who could tell how far would the contagion spread? After a century of wars, with the peace of Westphalia (1648) the religious borders of Europe were again relative secure and the church could again enjoy a monopoly in the territories it retained, but who could tell whether this was to be a lasting arrangement? What if the twists and turns of international power relations should some day again grant safe protection to some fresh Protestant outburst from within or without? Faced with this problem, the church decided to flood the religion market in its domains with excess capacity to an extent that no entrant could possibly match. This was the work of the Counter-Reformation: binding obligations on the ordinary members for reception of sacraments and Mass attendance, seminary education for priests, promotion of new, militant religious orders starting with the Jesuits, promotion of militant lay organizations to police the rank-and-file, centralization of the saint-making process at the Vatican, and more. Enough with the empty churches, illiterate priests, and lax morality of the Middle Ages. As a result, Protestant missionizing in broad daylight in Catholic Europe did not start again until after World War II. The next section of the paper lays out the model. The following two sections discuss the Jewish and the Protestant cases, respectively, and find that they both fit well with the model. The final section concludes.

2. The model

For the purposes of this paper we set aside issues of free riding and participation within the group, which are the focus of the club model of sects (Iannaccone, 1992), and simply assume that a religious organization’s objective is to maximize its membership net of recruitment costs. While there do exist religious groups (such as modern Jews or the Old Order Mennonites) that are, in principle or in fact, closed to new converts and content with their traditional membership, even a cursory glance at history shows that organized religions have typically been keen to grow and remain as big as possible – if only to be able to withstand competitive pressure from rival groups. In any case the assumption certainly fits well the actors of our chosen historical cases, if one considers that membership maximization can be seen either as an effort to acquire fresh converts or to retain existing members who may otherwise drift away to the competition. Thus the Jews and Christians of antiquity were intent on attracting new converts from the surrounding pagan world, while the Catholic Church of Counter-Reformation Europe was intent on preventing its nominal members’ defection to the Protestants.

5 The two players, the incumbent (I) and the entrant (E), derive benefits, B, from membership in their group, M. Membership is acquired through missionary effort, x, which carries a constant marginal cost, w. Because the total population is fixed and membership growth involves addressing people who are increasingly difficult to convert, missionary effort exhibits diminishing returns. The same reasoning applies to the retention of potential defectors, who are at the margin increasingly prone to defection and thus difficult to retain. Therefore the membership function M(x) is strictly concave. Each group’s membership is proportional to the group’s share in total missionary effort, x ≡ xE + xI. Suppose for now that marginal cost of effort, wE, is the same for both groups. Then the benefit functions are:

x B = I M ()x − w x (1) I x E I

x B = E M ()x − w x − F (2) E x E E

where F is a one-time, fixed cost that the entrant incurs if it decides to enter; assume for now that F is exogenous. Strict concavity of M(x) ensures these benefit functions are strictly concave in own effort levels. Differentiating equations (1) and (2) with respect to each player’s own effort, given the other player’s effort, yields the following conditions for optimal effort:

∂BI xI ∂M xE M = + − wE = 0 (3) ∂xI x ∂x x x

∂BE xE ∂M xI M = + − wE = 0 (4) ∂xE x ∂x x x

Thus, as in a common-property resource, each group’s effort level is such as to equate marginal cost to a weighted average of average and marginal product of effort.

Equations (3) and (4) implicitly define the two groups’ best-response functions, xI

(xE) and xE(xI) respectively. It can be shown (see the Appendix) that these functions are everywhere downward sloping if M(x) is sufficiently concave. It will be assumed throughout that this is the case.

If marginal cost wE is the same for both groups and F = 0, we get a completely symmetric Nash equilibrium satisfying (3) and (4), with equal membership shares and equal benefits. Even if F >0 but BE >0 at the equilibrium, entry will occur and yield equal

6 shares, though not equal benefits. In our setting, however, the incumbent moves first and, anticipating the threat of entry, can credibly precommit to a given level of effort if entry occurs. As a consequence of such pre-emptive “capacity expansion”, the incumbent’s marginal cost falls to wI < wE. This precommitted effort level, joined with the lower marginal cost, can be such as to either deter entry or accommodate the entrant to the incumbent’s best advantage, whichever is more profitable to the incumbent. The first option leaves the incumbent as the sole active group in the mission market, though its effort level is distorted upward by the entry threat; the second option places the incumbent in the position of a Stackelberg leader. We will characterize the two equilibria and compare the incumbent’s benefits in each. The incumbent’s ability to precommit effort turns the game into a three-stage entry game. The timeline is as follows:

Stage 1. The incumbent I chooses its own effort level for the post-entry stage, xI , at unit cost wE.

Stage 2. The potential entrant E decides whether to enter, at unit cost wE and fixed entry cost F, or stay out.

Stage 3. If E enters, the two players simultaneously choose effort levels xE and xI under Nash behaviour. Marginal cost of effort is wE for the entrant; for the incumbent, it is wI < wE up to xI and infinite afterwards. That is, the incumbent enjoys a cost reduction thanks to its precommitted effort level xI but cannot exceed it. If E does not enter, then I is a monopolist. We solve the model backward to determine the subgame-perfect Nash equilibrium.

Stage 3: Effort competition after entry.

The entrant’s best-response function, xE(xI), is still defined by equation (4) above, as in the case of simultaneous effort choice. However, the incumbent’s effort response is bound by the previously chosen effort level, whose cost is now sunk; up to that level, its marginal cost is only wI. That is:

x B = I M ()x − w x (1’) I x I I

Therefore, for given levels of xE, group I’s best-response function is defined by

∂BI xI ∂M xE M = + − wI = 0 up to xI = xI (3’) ∂xI x ∂x x x

7 The Nash equilibrium, defined by (4) and (3’), is thus determined by the incumbent’s xI chosen prior to E’s entry. Since the incumbent will have an incentive to expend all the effort whose cost will already have been committed in Stage 1, this previous effort choice will be such as to be binding at the Stage 3 Nash equilibrium, i.e. at this equilibrium xI= xI . Figure 1 depicts the equilibrium in Stage 3.

(Figure 1 about here)

Point A is the symmetric Nash equilibrium without first-mover advantage. By prior choice of xI and consequent outward shift of its reaction function, the incumbent can get the post-entry Nash equilibrium (such as point N in the figure) to lie anywhere between points A and B on the entrant’s best response function xE(xI). (Point B would be the Nash equilibrium if xI > xB, i.e. if xI were not binding.) Point Z is where the entrant’s benefits (equation 2) are zero. Entry will occur if, as shown in the figure, the entrant expects the post-entry equilibrium N to lie to the left of point Z. If, given the effort xI chosen by the incumbent in Stage 1, the entrant expects N to lie to the right of Z so that BE <0, it will stay out and the incumbent will be a monopolist in Stage 3, enjoying whatever benefits are associated with xI .

Stage 1: The incumbent’s strategic effort choice.

To choose its optimal effort commitment, xI , the incumbent will compare its benefits from entry accommodation to those from entry deterrence. The accommodation option yields a Stackelberg equilibrium in which the S incumbent chooses a level of effort, xI , that maximizes its benefits (equation 1) subject to the constraint of the entrant’s best-response function (equation 4). After some manipulation, the first-order conditions for this problem yield: ∂ 2 M x − x ∂M M xI ∂M xE M ( I E )  + −w xE +  −  x ∂x x x E ∂x 2 x  ∂x x  = 2 (5) xI  ∂M M  ∂ M 2xI  ∂M M   −  xE +  −  x  ∂x x  ∂x 2 x  ∂x x 

plus equation (4). The RHS of equation (5) is (the numerical value of) the slope of the entrant’s best- response function, xE(xI), while the LHS is (the numerical value of) the slope of the incumbent’s iso-benefit contours. Thus condition (5), together with constraint (4), describes a point of tangency between the entrant’s reaction curve and one of the incumbent’s iso-benefit curves. Given our assumptions on M(x), the denominators on both

8 sides are negative. Since effort precommitment enables the incumbent to shift the equilibrium to the right of the symmetric Nash equilibrium (point A in Figure 1) that satisfies (3), the numerator on the LHS of (5) must be negative, which in turn implies that xI >xE and the numerator on the RHS must be negative too. This means that the S incumbent’s optimal effort, xI , is larger than it would be at a Nash equilibrium without strategic precommitment2. The entry deterrence equilibrium is the solution to the following problem. The Z incumbent precommits to a level of effort, xI , such that the entrant’s best response xE, satisfying equation (4), also satisfies:

x B = E M ()x − w x − F ≤ 0 (6) E x E E

That is, the best the entrant can do after entry is to achieve nonpositive net benefits.

If we assume for convenience that in the borderline case BE = 0 the entrant stays out, then equations (4) and (6) together characterize the deterrence equilibrium. As equation (6) shows, this equilibrium hinges on the exogenous entry cost F. There are two opposite cases in which the solution is trivial: at one end, F is either zero or so low that entry occurs anyway and deterrence is impossible (then point Z would be to the right of point B in Figure 1); at the opposite end, F is so high as to make entry unprofitable anyway, even if the incumbent ignores the threat and behaves as a monopolist (then point Z would be to the left of point S in Figure 2 below). The problem becomes interesting in the intermediate range of F values for which deterrence is a feasible strategy, but not necessarily a profitable one for the incumbent. The incumbent’s decision as to which strategy to choose then depends on the comparison of its net benefits in the two equilibria. To gain insight into such a comparison we need an explicit solution to the model, hence we turn to a specific form of the membership function:

M ()x = x − x 2 (7)

2 S S The Stackelberg value xI could be larger than xB in Figure 1, since, given wI < wE , at xI the numerator S of LHS of (5) is negative but the incumbent’s post-entry reaction function in (3’) can take on any sign. If xI S >xB a commitment to expend xI effort after entry would not be credible and the Stage 3 equilibrium would S be at xI = xB . We disregard this possibility in what follows and assume xI ≤ xB.

9 This quadratic form involves no loss of generality, satisfies our concavity assumptions and, further, guarantees that the best-response functions are downward sloping and, specifically, linear3. We need only solve for the Stage 1 equilibria. With this function, equations (4) and (5), which define the Stackelberg equilibrium, become respectively:

∂BE = 1− 2xE − xI − wE = 0 (8) ∂xE

1− 2x − x − w 1 I E E = (9) − xI 2

1− w Solving (8) and (9) for the Stackelberg effort values yields x S = E and E 4 2 2 S 1− wE S 1− wE  S 1 1− wE  xI = . The corresponding benefits are BE =   − F and BI =   . 2  4  2  2  S 4 It turns out that the incumbent’s Stackelberg effort xI coincides with its monopoly effort – the level it would choose if it were unchallenged, which is obtained from equation (3) using (7) and setting xE =0. The entry deterrence equilibrium (at point Z) satisfies equation (8) and equation (6), which now becomes:

BE = xE ()1− x − wE xE − F = 0 (10)

Z Solving (8) and (10) yields xI = 1− wE − 2 F . With this value and xE =0, the Z incumbent’s benefits are BI = 2 F (1− wE − 2 F ). Entry deterrence is thus a superior strategy for the incumbent if:

2 Z S 1 1− wE  BI − BI = 2 F ()1− wE − 2 F −   > 0 (11) 2  2 

3 This function implies that the marginal product of effort becomes negative beyond a certain level of aggregate effort. With the effort levels computed below for both the Stackelberg and the deterrence equilibrium, this will be the case if wE and/or F are low enough (of course, it could never happen at a cooperative solution that maximizes BE + BI). Whether or not this is the case is, however, irrelevant to our results. Membership can eventually fall if proselytizing effort becomes so intense as to send the “wrong” message and turn people away from the religion. 4 This is due to the symmetry of the Nash equilibrium in Stage 3 and to the linearity of the best-response functions under specification (7). Of course benefits are different. This special feature is inconsequential for our results.

Z S Straightforward differentiation shows that this difference, BI − BI , monotonically S increases as F increases whenever BE >0, that is, when the Stackelberg point S is on the S left of point Z as shown in Figure 2; in the opposite case, BE <0, entry would not occur. Z The intuition is that an increase in F shifts point Z to the left and hence decreases xI , i.e. it reduces the overcommitment of effort that is necessary to keep the entrant out, and this is Z S S Z profitable as long as xI > xI . To look at it from another angle, if xI < xI (as in Figure 2), Z deterrence is possible by the incumbent’s precommitting xI , the level of effort corresponding to point Z, which is in turn inversely related to the entry cost F (see above). Z This choice problem can be evaluated by comparing xI with xˆ I , the level of monopoly effort that would leave the incumbent with the same benefits as at the Stackelberg S equilibrium. Although the equation BI (xˆI ) = BI cannot be explicitly solved for xˆI , since Z Z 5 Z S BI monotonically falls as xI increases and hence as F falls , it follows that BI > BI as Z long as xI < xˆ I , as illustrated in Figure 2.

(Figure 2 about here)

This proves that a sufficiently high level of entry cost F triggers the superiority of the deterrence strategy over the accommodation strategy. However, the overcommitment Z result deserves emphasis. Even though with xI < xˆ I entry deterrence is optimal and the incumbent remains the sole active group, the threat of entry distorts its level of effort upward, and hence its benefits downward, relative to the outcome it would achieve in case S of secure, unchallenged monopoly (at xI ). So far we have assumed that the entry cost is exogenous. It seems, however, a natural extension to think that when playing the deterrence strategy, the incumbent would try to raise the entrant’s fixed cost to its best advantage; indeed, one can view effort precommitment and the building of entry barriers as one and the same move by the incumbent. Such an extension can be easily incorporate in our model. Suppose there is an exogenous entry cost F >0, but the incumbent can increase it to F ≥ F at a unit cost of c to itself. When playing accommodation, it would be pointless for the incumbent to incur such a cost. When playing deterrence, on the other hand, it may be worthwhile for the incumbent to manipulate the entrant’s cost if the latter’s given F is not high enough.

5 Z Z Z S ∂BI ∂F >0 if xI = 1− wE − 2 F > 2 F . This is always true for xI > xI , or

1− wE − 2 F > ()1− wE 2 , because the latter implies (1− wE ) 2 > 2 F .

11 Z At the deterrence equilibrium described above, with xE =0 and the optimal xI , the incumbent’s benefits become:

Z BI = (1− wE − 2 F )2 F − c(F − F ) (12)

By differentiating (12) with respect to F and setting the derivative equal to zero we find the level of F that maximizes the incumbent’s benefits from deterrence, which is 2 1− w  F ∗ =  E  . Now the incumbent compares its benefits at the Stackelberg equilibrium,  4 + c  with F = F , to its benefits at the deterrence equilibrium with F = F*. Substituting F* into S (12) and using BI as computed above yields the counterpart of condition (11) with endogenous entry cost:

Z S 2  1 1  BI − BI = ()1− wE  −  + cF > 0 (13)  4 + c 8 

Thus deterrence proves to be a superior strategy unless unit cost c is inordinately high. Inspection of (13) shows that to inflict an extra cost of (F – F ) on the entrant, it pays the incumbent to spend many times more than that, i.e. (13) still holds with c much higher than one. This confirms that with optimal entry cost manipulation, F = F*, a sufficient Z expenditure by the incumbent can bring about the situation xI < xˆI as depicted in Figure 2 above6. In the historical applications that follow we will use one or the other approach to entry cost – exogenous or endogenous – as best suits the problem at hand.

3. The demise of Jewish proselytism: the Destruction and Christian competition

In this section we first discuss and evaluate the evidence that Judaism was successfully proselytizing up until the first century CE but then ceased to do so, and then we provide an economic interpretation of these events in the framework of our model.

6 Setting the entrant’s benefits at the Stackelberg equilibrium, computed above, equal to zero defines a condition in which point Z coincides with point S, i.e. entry is not profitable at that equilibrium. This yields 2 F = []()1− wE 4 , which is strictly greater than F* as long as c >0. This confirms that the optimal F* is not a trivial solution, i.e. point Z at F* is strictly to the right of point S as in Figure 2. In other words, the entry threat is still real and its deterrence costly to the incumbent.

12 Historical research on Jewish proselytizing and conversion in antiquity is very controversial. For much of the 20th century the consensus view was that the Judaism of the late Second Temple period7 was actively and successfully proselytizing across the Mediterranean, while following the Destruction in 70 CE , rabbinic Judaism withdrew upon itself and gave up seeking converts (Harnack, 1908; Moore, 1927; Baron, 1957). In recent decades this view has been challenged on both sides: some scholars now hold that conversions and proselytism continued well beyond the Destruction and even into the Middle Ages (Feldman, 1993), while others (perhaps the majority) argue that Judaism was really never proselytizing at any time (Goodman, 1994; Cohen, 1992; McKnight, 1991). The issue is fraught with difficulties on at least two counts: first, the meaning of conversion, or what “becoming a Jew” would mean in those times; second, conversion and proselytizing are two different things, the first implying only that Gentiles “become Jew” in some sense, the second suggesting that the born Jews take action and seek out converts. To this outsider, both problems, while interesting in themselves, seem peripheral to the main concerns of this paper. On the first problem, it seems clear that there were large numbers of Gentiles attached to the synagogues, especially in the Mediterranean Diaspora, who were not full converts, typically not undergoing circumcision. In the post-Destruction period these “sympathizers” were called “God-fearers”, although it is not clear that these people were already seen as a distinctive group in earlier times. They were certainly welcomed by the born Jews as social support and as reassurance that Israel was indeed “a light to the nations” (Isaiah 49: 6). The key to the uncertainty surrounding the issue is probably that neither Jews nor Gentiles had any interest in sorting out membership criteria or specifying a theology of conversion until the end of the first century CE, when the “Jewish tax” (fiscus Judaicus) that the Roman government began to levy after the war as a replacement for the Jews’ traditional contribution toward the Temple required a clarification of who was liable to pay it (Goodman, 1994, pp. 120-125). As for the problem of proselytizing, there is no extant record of the ancient Jews having sustained an organized missionary effort at any time; the sources do not mention either names of missionaries or the existence of any Jewish institution to that end. The strongest piece of “evidence” usually alleged to buttress the claim that the early Christians built upon, and continued, the Jews’ earlier mission to the Gentiles – Jesus’ famous invective against the Pharisees who “cross sea and land to make a single convert”

7 The Second Temple period conventionally runs from the re-building of the Jerusalem temple after the Jews’ return from the Babylonian exile, at the end of the sixth century BCE, to its destruction by the Romans in 70 CE. “Late” Second Temple period starts either in the third century BCE when, in the political conditions of Hellenism, the first Jewish Diaspora throughout the Mediterranean began, or in the mid-second century BCE with the Hasmonean monarchy in Palestine.

13 (Matthew 23: 15) – may in fact be no evidence at all8. Furthermore, the two aspects – the vagueness of the requirements for conversion and the lack of evidence for an active proselytizing mission – are related; as McKnight (1991, p. 88) remarks, “the absence of firm data regarding initiation is an argument, albeit from silence, that Judaism was not a missionary religion. (…..) had Judaism been aggressively involved in converting Gentiles, there would have been greater attention to entrance requirements” (italics in the original). However, what concerns us here is the simple, undisputed fact that the synagogues of the Second Temple period, particularly in the Diaspora, were open to outsiders and that the Jews were pleased to welcome new members into their communities, even if the initiative came from the would-be convert, not from the converter, and whatever the degree of “Jewishness” of these people and their exact status within the Jewish communities in the first generation (with the second generation, circumcision of the newborn boys would resolve the ambiguity). If such a process of recruitment through “soft mission” to the Gentiles occurred on a sustained basis, this would count as successful proselytism and would show up in the statistical data available. Thus the basic assumption of our model – maximization of benefits from membership – would seem entirely appropriate to the ancient Jews (as opposed to modern Jews). On the other hand, by the turn of the second century, or about a generation after the Destruction, Jewish attitudes toward Gentile conversion began to change. For one thing, the prohibition of circumcision of non-Jews enacted by emperor Hadrian at the time of the Bar Kochba revolt (around 135 CE) must have raised the cost of Gentile recruitment. For another, the rabbis began to work out the doctrine of the Noachide covenant, binding on Gentiles, which would logically make conversion unnecessary and proselytism pointless by granting righteous Gentiles a place in the kingdom of God (Goodman, 1994, pp. 148- 149). Since for this period we have no figures whatsoever and no sources other than the Roman legislation and the Mishna and Talmud, and granted that the old attitudes probably lingered on as the Palestinian rabbis had formally no authority, let alone control, over the Diaspora synagogues, it seems a fair, if prudent, guess to conclude that proselytism gradually subsided. By now the grey area between paganism and Jewishness had been cleared away, conversion was now costly for both parties, and the missionary monotheism of the competition – the Christians – was daily gaining ground. In these conditions, passive, soft, unobtrusive mission in the old style would no longer do: the stark choice facing the Jews was either to come out and actively missionize or give up. The makers of

8 Goodman (1994, pp. 69-74) makes the intriguing suggestion that this may well refer to a mission to the Jews, not the Gentiles, to win converts to the Pharisee sect, not to Judaism in general. Alternatively, McKnight (1991, pp. 106-107) suggests that those Pharisees were intent on turning Gentile half-converts or God-fearers into full converts to the law; that is, Jesus’ argument here is similar to Paul’s in Galatians.

14 the new, post-Temple Judaism – the rabbis – chose to withdraw, and the Noachide covenant doctrine testifies to it. If the evidence for the dying out of proselytism in the later period is of necessity only circumstantial, the evidence for its occurrence in the Second Temple period is somewhat harder, though still conjectural. The best guess we have, put forward by Harnack (1908, pp. 1-8) and still apparently accepted by the scholars, is a total number of 4,200,000 Jews in the Roman Empire of the early first century CE, or about 7% of a total population estimated at 60 millions. Harnack himself claimed that such a number could not possibly be accounted for except by extensive conversion. Historians routinely cite this estimate and evaluation, with varying degrees of confidence, without however, amazingly, ever drawing out the implications for growth. We now turn to these implications. To keep on the safe side, let us take a conservative round figure of 4 millions for the early first century. Ideally, we would want to be able to compare this number with the number of Jews in the early third century BCE, when the Diaspora began, but we have no clue to such number. So we are forced to go back to the return from the Babylonian exile at the close of the 6th century, when we are told that 42,360 people returned to Judea to rebuild the Temple, accompanied by 7,337 servants and 200 singers (Ezra 2: 64-65); these servants must be counted in as Jewish converts since a pagan domestic slave would infringe the purity laws about food and dining. So we start with a round figure of 50,000 people by about 500 BCE. In the course of 500 years to year 1 CE, this number multiplies by a factor of 80, to 4 millions. The implied average compounded rate of growth is 0.88 % per year9. At this annual rate, the population doubles in 80 years. It must be stressed that over a very long-term horizon of five centuries, an annual growth of 0.88 % is very high for antiquity – as indeed for most of human history. For comparison, we have two sets of estimates for world population. Biraben (1980) gives 162 millions for BCE 400, 231 m. for BCE 200, 255 m. for CE 1; this implies an annual rate of growth of 0.19 % for the first time bracket and 0.05 % for the second bracket. McEvedy and Jones (1978) give 100 m. for BCE 500, 150 m. for BCE 200, 170 m. for CE 1; this implies an annual rate of 0.14% for the first bracket and 0,064 % for the second bracket. Thereafter, according to both studies, world population stays roughly constant for the first

9 Baron (2007, p. 383) estimates that the population of the kingdom of Judah (including Jerusalem) at the time of the destruction of the First Temple (586 BCE) was 150,000; the Babylonians may have deported only the social and priestly elite but the countryside appears to have remained deserted and without religious leadership, so it is not safe to start from that number if we mean actual Jews. Baron (ibid, p. 384) then suggests that given the initially small size of the Second Commonwealth, “even adding to (the 50,000 returnees) a number of survivors from the pre-Exilic period, the population of the Commonwealth could not have amounted to much more than 60,000–70,000.” If we take 70,000 as our starting number for 500 BCE and redo the calculations, we find an annual rate of growth of 0.82%, a small difference from the result in the text.

15 600 years CE; this accords with the perception of Roman historians, who seem to agree that the total population of the Roman Empire remained at about 60 millions from Augustus to the end of antiquity. Unfortunately, we have no clue for population levels or growth in the Mediterranean region in the last centuries BCE. If we assume, for want of better measures, that the world growth rates given above apply to this region as well, which is conceivable, and if we take the last 200 years BCE as perhaps the most meaningful comparison, we find that the Jewish rate of growth exceeds average growth by 0.82 – 0.83 % per year. This is a substantial gap. It has been claimed (Goodman, 1994, p. 84; Feldman, 1993, p. 293) that the higher growth of the Jewish population may be due to cultural factors that made the Jews unique in ancient society. These are: better hygiene, due to the purity laws; the aversion to infanticide, abortion and contraception; the solidarity and charitable support extended by Jewish communities to the orphan, the widow, the sick, and the needy among their ranks. These factors together would have reduced mortality, and especially infant mortality, and thereby enhanced demographic growth. Nevertheless, lacking any clue beyond plausibility, it seems difficult to believe that these factors alone, though real enough, can fully account for the magnitude of the gap. So we are drawn to the conclusion that the proselytizing of Gentiles did occur, and that it was substantial in size and sustained through time enough to make a difference. Some scholars (e.g. Baron, 2007, p. 384) stress that some of this growth was due to forced conversion, when the Hasmonean kings conquered the Idumaeans and Ituraeans in the course of their territorial expansion; the forced nature of these conversions is disputed (see Goodman, 1994, pp. 75-76), but even if accepted, it cannot possibly account for the magnitude of the phenomenon. Finally, it has often been pointed out that some of the growth is clearly due to intermarriage with Gentiles and to the conversion of slaves; even so, both these means of conversion underline the penetration and expansion of the Jews into Gentile society. If that is the case, then the discontinuation of such a successful enterprise calls for explanation. Two answers suggest themselves: the Destruction of CE 70, magnified in short order by the two disastrous Jewish revolts of CE 116-117 and 132-135, and the competition from Christianity. Hopefully, our model can shed some light on the problem. It is not clear that the Destruction and its aftermath, by itself, should necessarily drive the Jewish leaders away from Gentile proselytism. This landmark event cut both ways, especially with the passage of time. On the one hand, it made a potential Gentile mission more costly: the Jewish tax and its assessment hardened the boundary between Jew and Gentile, and a generation later, in the 130s, came the prohibition of circumcision of non-Jews. This last point, however, was significant only if circumcision was to be retained as a rite of entry into the house of Israel, while the Jewish tax was not particularly

16 heavy10 so that its burden could easily have been offset by the very substantial benefits, in terms of social protection and economic solidarity, accruing to members of Jewish communities. But, on the other hand, the purity laws that comprised so much of the halakah were now largely irrelevant as the Temple was no more, and as hopes of its imminent rebuilding faded after the accession of emperor Nerva in 96 CE (Goodman, 1994, pp. 44-46); so the Gospel writers, writing in the last third of the century, engaged in overkilling when they poured scorn on the purity laws (Fredriksen, 1999, pp. 109, 200, 229). In principle, then, the Jewish leaders could have yielded, relaxed the laws – perhaps even relaxed the circumcision requirement – and thereby made entry easier for Gentiles. In other words, the Destruction presented the Jews with an unprecedented opportunity: to become a universal religion, stripped of ethnicity. Arguably, it also provided them with an incentive for such a move: without the Temple the land of Israel was no longer so special, so why not react to the disaster by expanding into the outside world (see Feldman, 1993, pp. 412-413). What prevented this from happening and tipped the balance toward withdrawal from proselytism was the success of the Christian mission to the Gentiles and the concomitant failure of the mission to the Jews11. In the forties, Gentiles were flocking to the new Christian sect in increasing numbers in the Diaspora synagogues whereas the born Jews lagged behind (Fredriksen, 1991, pp. 560-562). Then in the fifties, with the letter to the Galatians (2: 15-21; 3: 23-28), the apostle Paul took the epoch-making step of declaring that fulfilling the Law, that is, fully converting to Judaism, was not necessary for Gentiles to become Christians: the Christians’ salvation was to come from faith or grace, not the work of the Law12. This move started the divorce of Christianity from Judaism that would become ever deeper with the passing of time – as witnessed by the Gospels, all written in the thirty years following the Destruction. Crucially, Paul’s fateful step was taken before anyone concerned knew of the upcoming destruction of the Temple with all its consequences, so that the Jewish leaders after the Destruction, when it would have

10 The annual tax rate of half shekel or two drachmas, traditionally paid by adult males and extended to women and children as well after the Destruction, was the value of two days’ pay for a day labourer, a man at the bottom of the wage scale (Fredriksen, 1999, p. 287). 11 The model could just as well be turned upside down by labeling Judaism as the incumbent and Christianity as the entrant. Then the latter’s upstart nature and fluidity of rules can be interpreted as a sign of low entry costs. In response to these low entry costs, Judaism gives up on active missionizing and accommodates Christian entry. Such an interpretation, however, would identify Judaism as a Stackelberg leader, which does not seem to be an accurate description of the active Gentile mission field, as opposed to the synagogues’ area of influence, in the first century CE: on the margin, if we look at the flow of new converts as opposed to the stock of God-fearers, clearly Christianity was the leader, as Paul’s letters and the book of Acts testify. 12 Fredriksen (1991, p. 558-562) explains that such a step, paradoxically, was thoroughly, consistently Jewish: both established practice and scripture had been allowing Gentiles into the synagogue without requiring circumcision; the “startling novelty” (p. 559) was not Paul’s but the “false brethrens”’ proposal that those Gentiles should fully convert, perhaps to hasten the tarrying arrival of the Kingdom of God.

17 become feasible for them to start on the same path, found themselves overwhelmed. For them to start a sustained, aggressive Gentile mission would have required reconsidering all the clauses of the Law one by one and cherry-picking those that were dispensable; for the Christians, by contrast, the door to a faith-based religion, free from Levitical purity rules, was now wide open and did not require piecemeal adjustment. In other words, after Galatians, Christian “capacity” was virtually unbounded, thus pre-empting anything the Jews could possibly have contrived one or two generations later. No wonder, then, that the rabbis gave up. Why did Paul make such a choice? An economist’s reading of the events would focus on human capital. Late Second Temple Judaism was two things: a religion centered on sacrifice at the Jerusalem Temple, and a community gathered around reading and discussion of the Torah during the Sabbath service in the synagogues. As is well known, after the Destruction the rabbis greatly emphasized the second aspect and made religious instruction into a duty of every adult male Jew toward his children. Even before the Destruction, this public reading practice “permitted the growth of a kind of secondary literacy, whereby Jews could be very familiar with a text without necessarily being able to read”, and this in turn “encouraged and intensified community life” (Fredriksen, 1999, p. 61). This implied that Jews acquired a higher level of human capital than that prevailing in the surrounding society, which in turn explains why so many Gentiles were attracted to the synagogue as either proselytes or sympathizers. Use of the Septuagint (the Greek version of the Hebrew Bible) in the Diaspora communities made this possible. By simple attraction, without any active missionizing, the Jews were thus able to recruit converts or God-fearers and grow in numbers: the attraction of membership in a socially superior (though not necessarily economically better off) community, even when carried only half- way, evidently compensated for the higher costs of Jewish religious observance. This put incipient Christianity at a comparative disadvantage: by becoming increasingly Gentile in its composition, especially outside Palestine (like several of the communities addressed by Paul in his letters, including 1 Thessalonians, Galatians, Titus), the movement was diluting its level of human capital or “secondary literacy” and therefore, judging by past experience, becoming less attractive. Paul knew this, and also knew that orthodox Jewish apologists were already busy at work in those communities and that the mother church in Jerusalem tended to side with them. If Christianity was to continue expansion into the Gentile world, something decisive was needed to offset the competitive edge enjoyed by Judaism: if natural attraction was losing force with the fall of literacy levels, then what was required was active mission. Active mission, however, in turn required a drastic lowering of the entry price for Gentiles: waiving circumcision, the food laws, the purity rules, and the rest. This was feasible for a movement still in its infancy and

18 therefore fluid and groping for its identity. One could say that the Jews’ comparative advantage lay in proselytizing by attraction while the Christians’ lay in missionizing by price-cutting. In terms of the parameters of our model, the Galatians turning point amounted to a precommitment of missionary effort that was calibrated on the traditional Jewish Law, which was in full force before the Destruction. In turn, this precommitment dramatically lowered the marginal cost (or, equivalently, increased the productivity) of subsequent missionary effort among Gentiles. Even though, given the tradition of open synagogues and interaction with Gentile sympathizers, aggressive Jewish entry into the Gentile mission market would have been possible in the absence of strategic investment by the Christians, the entry cost for Judaism was then high enough to make the deterrence strategy superior for the Christians. With the fall of the Temple that cost may have come down somewhat, but too little and too late to overcome the first-mover advantage built up by Christianity. Had it been otherwise, the Western world today might well be largely Jewish.

4. The Counter-Reformation and the re-Catholicization of Europe

Far from bending and changing its ways, the Roman Catholic Church reacted to the Protestant Reformation by turning more Catholic than ever before13. While several prominent figures in the Church were initially willing to accommodate some of Martin Luther’s demands for reform, particularly on matters such as justification by faith (which implied rejection of the practice of indulgences), the primacy of Scripture, and the cutting down of the more blatantly superstitious practices of Medieval piety, these suggestions were ultimately rejected at the Council of Trent (1545-1563), which engineered the so- called Counter-Reformation or Catholic Reformation. The Council’s strategy, whose implementation took close to two centuries, was to meet the Protestants on their own ground not by yielding but by upholding and intensifying precisely those aspects that had made the Protestants’ targets on all fronts, from theology through cult practices to church organization. While continuity with trends inherited from late Medieval Christianity was emphasized, the Council recognized that the Protestant breakthrough had been made possible by a serious underprovision of church services that left large sections of population only nominally attached to the Church and hence easy prey to competitive Protestant entry. Therefore, the Council’s program of recovery and consolidation required

13 This section is based on Delumeau (1977), Bireley (1999) and Mullett (1999).

19 first and foremost a massive and permanent increase in clerical effort and a mobilization of the lay population itself in the Church’s service14. In the area of theology and observance, there was no innovation but more of the same. All the seven sacraments were reaffirmed against the Protestant’s two, with a special emphasis on the remission of sins through confession and penance and on the “transubstantiation” of the bread and wine into the flesh and blood of Christ in the Eucharist – hence the centrality of the Mass. Even such a minor, largely symbolic detail as the possibility for the faithful to take communion under both species (bread and wine) was not conceded to the Protestants. The centrality of confession in turn relies on a doctrine of justification by faith and good works. The doctrine of Purgatory was also reaffirmed in full, together with the possibility to shorten one’s and the dead’s time there through the acquisition of indulgences; thus the trade in indulgences that sparked Luther’s outrage remained in place, while only its worst abuses were curbed (mainly by the prohibition of resale)15. This in itself implies outright rejection of Luther’s principle of “Scripture alone” as a source of authority, since the Purgatory doctrine is wholly non-scriptural. “Apostolic tradition” (i.e. the Church’s own teachings) was confirmed as enjoying equal standing with Scripture as a source of authority on doctrinal matters. Finally, the cults of the Virgin Mary and the saints were upheld and indeed bolstered as yet another token of confrontation with the Protestants. In short, old Catholic theology was hardened and its distinction from Protestant theology sharpened. However, the disciplinary side of these traditional observances was new and far- reaching: rank-and-file attendance at Sunday Mass was made mandatory and monitored, confession and communion had to be taken at least once a year (at Easter) but a higher frequency was expected especially of the lay activists; out-of-church, clandestine marriages must be stamped out. Furthermore, the average faithful should know something about the Scriptures and the central tenets of the faith through hearing sermons and attending Sunday school (catechism). All of this, despite the continuity in doctrine, represented a clean break with Medieval practices: a tight, all-encompassing, self- conscious attachment of the faithful to their parishes was expected to inoculate them against any new wave of Protestant infection. But implementing such a program of intense, monitored participation required a huge expansion of effort, both clerical and volunteer.

14 The interpretation put forward in this section is observationally compatible with, but in no way dependent on, a view that the Catholic leaders and saints were cynical, strategic power seekers – any more so than the apostle Paul in the previous section. If one sincerely believes that the Protestants are evil and that the folks’ souls should be saved from hell at all costs, one would indeed devise a strategy of re-Catholicization such as the Counter-Reformation and work hard on it. 15 A good case can be made for the proposition that indulgences, much like tax amnesties, are an efficient device for the Church to retain sinners within its fold at a discount, instead of losing them to the competition or to non-religion; hence the institution’s survival to this day. See Cassone and Marchese (1999).

20 The clerical workers came in two kinds: new or renewed religious orders and a reconstructed secular clergy. The list of new male orders founded in the 16th and 17th centuries is long, including, in roughly chronological order, the Theatines, the Somaschi, the Barnabites, the Jesuits, the Piarists, the Lazarists, the Brothers of the Christian Schools, and others. The new female orders include the Ursulines, the Visitandines, the Daughters of Charity. The Capuchins (an offshoot of the Observant Franciscans) and the Discalced Carmelites founded by St Theresa of Avila became prominent in the renewal of the lapsed, Medieval monastic orders. These orders, called clerks regular, were subject to a strict rule, active in the world as opposed to monastic seclusion (though not the female orders which, by a Council of Trent’s decision, had to be cloistered), and specializing in tasks such as charity, missionizing, and above all education of both the laity and the clergy. In early modern Europe they functioned as a lively competition to the diocesan clergy, offering alternative religious supply to the rank-and-file. The ascendancy of the new orders is seen in the fact that their founders, as well as a number of later prominent members, were canonized (see below). By the start of the Reformation, the territorial organization of the Church had largely gotten out of control, thereby weakening the pastoral care of its flock: bishoprics were rent-yielding benefices for absentee holders, the parish clergy were unsupervised, shirked their duties, were often morally reprobate and next to illiterate. The Council of Trent addressed these problems with sweeping provisions. The bishops were forced back to work: mandatory residence in their diocese, prohibition of “pluralism” (the holding of multiple episcopal benefices), duty of supervision of the clergy in their parishes through regular “visitations”, exclusive responsibility to ordain new clergy. The parish priest was henceforth to be celibate (ending the widespread concubinage), dress and behave frugally, say Mass regularly, preach, teach catechism, and administer the sacraments; on the other hand, priests’ incomes seem to have risen steadily through the 18th century, at least in France. To make this possible, the relevant teachings of the Church were first of all standardized and centralized: pope Pius V in the 1570’s published the Roman Missal, the Breviary, and the Roman Catechism – the workhorses of daily priestly office that were to rule the Church worldwide until the 20th century. But then we find the key innovation of the Counter-Reformation: the seminary, which was to be set up in every diocese under the bishop’s oversight to school and train the local priests. Even though it was a long drawn- out process, seminary education of priests made in the end a substantial difference with the dismal quality of the Medieval secular clergy. The volunteer part of the mobilization program involved the promotion of lay confraternities focused on enhanced devotional practices, such as more frequent Mass and communion and the celebration of particular saints or holy feasts, and serving the

21 additional, key purpose of monitoring and spying upon the rest of the parishioners. While this feature too had its roots in Medieval traditions, whole new organizations were formed, the most prominent being the Marian congregations devoted to the cult of Mary and sponsored by the Jesuits particularly on the frontier with the Protestant lands, such as the Flanders, the Rhineland, Southern Germany, Switzerland, and the Huguenot regions of France. The promotion of the Marian cult was of course a straight slap in the face of the Protestants. The tight network of Marian congregations in time brought about a “Europe of the devout” (Châtellier, 1989). Furthermore, several areas of Catholic Europe were deemed to be so un-Christian that normal pastoral care by the parish was unequal to the task and resort had to be made to missionary operations: the Jesuits and other orders undertook systematic itinerant missions, “converting” the mass of people in whole areas of Central and Southern Italy (including the Papal States!), rural France, and Austria where the Protestants had initially made inroads. Finally, repression played a big part through the Inquisition and the new Index of Forbidden Books. Summing up, the ordinary people’s beliefs and practices were now policed from above by the clerical hierarchy, shaken up by the occasional missions from the urban houses of religious orders, and peer-monitored by the militant confraternities and congregations in their midst. This long-term program of re-Catholicization of Europe worked because it relied on competition. The canonization process was completely centralized at the Vatican by pope Urban VIII in 1634, thus putting an end to the previously existing double track to sainthood – one by the pope and another by local bishops or synods. Canonization could henceforth be exclusively awarded to those groups which best served the general interests of the Church. In turn, the groups that came out on top of the saint-making contest were now the new religious orders, which had both the organizational resources and the incentives to successfully promote their founders and other worthy members; for, securing more saints meant increased prestige, influence in Church politics, better applicants for membership, and higher donations and bequests (Ferrero, 2002). Similarly, the operation of the lay confraternities also relied on competitive incentives: the groups and individual militants who signalled themselves by outstanding performance were rewarded with influence and privilege in the local society and in the Church organization, while at the same time advancing overall Church interests. Just as in revolutionary regimes and in volunteer production of public goods, a centrally run volunteer contest with unlimited free entry and a single prize to the top performer can be shown to be an efficient system to maximize aggregate effort (Cugno and Ferrero, 2004). This picture of the Counter-Reformation stands in stark contrast to the view offered by Ekelund et al. (2002; 2006, chs. 5, 6). In their view, the Reformation was triggered by

22 price discrimination in the market for salvation and hence, for indulgences: by extracting nearly all consumer surplus the Church pushed certain groups, especially those earning incomes from trade and capital, to the edge of defection, which occurred when a new entrant – the Protestants – offered a lower-priced access to salvation. In response, the Church cleaned up its “retail” operations (its dealings with the population), though not so much its “wholesale” organization, and lowered its own price of salvation (or, equivalently, raised the quality of its services) especially in the frontier lands where Protestant competition was strongest. Such a threadbare picture, however, simply fails to account for the main features of the Catholic response to the Reformation as outlined above. It is true that the exploitative pricing of indulgences was brought down, but that is only a small part of Counter-Reformation policies. As the discussion above suggests, the price of Catholic membership, and therefore of salvation (since “there is no salvation outside the Church”), was dramatically increased, not decreased, if one takes the full range of non-monetary aspects into account. This does not square with Ekelund et al.’s theory of incumbent-firm reaction to market entry by price cutting. Though counterintuitive, this increase of membership price by the incumbent to forestall entry makes very good economic sense within the theory of religious capital. It is a basic insight in the sociology of religion, formalized in an economic model by Montgomery (1996), that defection and religious switching occur primarily with people who have a weak attachment to their current religion, a superficial socialization in their faith, and hence a low level of “religious capital”, as was the case with the underchurched, undercommitted populations emerging from the Middle Ages. To the extent that this capital is denomination-specific and loses value if taken out, the higher the capital, the higher the denominational loyalty. Once burned, the Church became twice shy and wanted to make switching costs sufficiently high that Catholic Europe would henceforth become Reformation-proof. To that purpose, first, the Catholic “product” was differentiated from the Protestant product as much as possible, so as to make the religious capital Church- specific and non-transferable – which explains the extremism of the anti-Protestant choices in all fields; secondly, high levels of Church participation and hence “Catholic capital” were forced upon the population by the manifold means of control and competitive mobilization reviewed above. In other words, consumers were deprived of the option of abstaining from consumption: at least initially, they were pushed off their demand curve. Once a sufficient forced accumulation of individual Catholic capital was achieved, it was hoped, pressure could be relaxed and people could once again be let free to “choose”, as their loyalty could now be trusted16.

16 The seeming contrast between Paul’s strategy, which lowered Christian membership price for Gentiles, and the Council of Trent’s strategy, which raised Catholic membership price, is explained by the fact that the

23 Such a strategy required huge initial investments in “capacity” that would subsequently allow low operating costs: the formation of new orders, the promotion of new confraternities, the institution of the network of seminaries, the centralization of saint- making and of clerical discipline. Once this capacity was in place, the work of molding a Catholic society could be carried on at a low marginal cost. At that point, the cost of renewed entry became prohibitive for the Protestants. In terms of the parameters of our model, the product differentiation in Church doctrine and practice launched by the Council of Trent, in all-out confrontation with the Protestants, triggered a dramatic increase in the Protestants’ entry cost, so much so that, simultaneously, entry deterrence through a vast precommitment of effort became the best strategy for the Church. Therefore, the endogenous entry cost version of the model applies best in this case. The lasting legacy of the Counter-Reformation was thus a society filled with religious militancy and clerical control – something that helps explain subsequent religious history of Europe, from the French Revolution to the present time.

5. Conclusion

This paper has modelled competition between exclusive religions as an entry deterrence game, in which the religions compete for converts and the incumbent, if the entrant’s entry costs are high enough, may find it profitable not to accommodate the entrant but to deter entry by precommitting to a sufficiently high effort level in the event of entry. In this equilibrium the incumbent remains the sole active group on the market, but the entry threat distorts its effort level upward relative to what it would be if it enjoyed an unchallenged monopoly position. The model has proven useful to make sense of the Jewish leaders’ decision to withdraw from proselytizing after the destruction of the Temple in 70 CE, when they found they could not match the Christian missionary drive to the Gentiles set into motion by the apostle Paul. Then the model has seemed adequate to account for the enormous expansion of clerical effort started by the Counter-Reformation in early modern Europe to pre-empt the pervasive threat of renewed Protestant entry. This promising start points the way to further historical applications in future research.

early Christians’ problem was to missionize and convert pagans whereas Trent’s problem was to retain their own and prevent defection. As a consequence, religious capital played no role in the former setting while it did in the latter.

24 Appendix

Implicit differentiation of equation (4) in the text yields the following expression for the slope of best-response function xE(xI):

2 ∂ M ()xI − xE  ∂M M  xE 2 +  −  dxE ∂x x  ∂x x  = − 2 dxI ∂ M 2xI  ∂M M  xE +  −  ∂x 2 x  ∂x x 

Strict concavity of BE(xE) (equation 2) ensures that the denominator is negative.

The numerator is certainly negative if (xI – xE) ≥0 (which includes the symmetric Nash ∂ 2 M equilibrium). Otherwise it will be negative if is large enough, i.e. if M(x) is ∂x 2 sufficiently concave.

The analysis of the slope of xI(xE) is analogous.

25 References

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26 Ferrero, M., 2008, “The triumph of Christianity in the Roman Empire: An economic interpretation”, European Journal of Political Economy, 24 (1), pp. 73-87. Fredriksen, P., 1991, “Judaism, the circumcision of Gentiles, and apocalyptic hope: Another look at Galatians 1 and 2”, Journal of Theological Studies, 42, pp. 532-564. Fredriksen, P., 1999, Jesus of Nazareth, King of the Jews, New York: Vintage Books. Goodman, M., 1994, Mission and Conversion: Proselytizing in the Religious History of the Roman Empire, Oxford: Clarendon Press. Harnack, A. von, 1908, The Mission and Expansion of Christianity in the First Three Centuries, 2 vols., 2nd ed., London: Williams and Norgate. Iannaccone, L., 1992, “Sacrifice and stigma: Reducing free riding in cults, communes, and other collectives”, Journal of Political Economy, 100, pp. 271-291. Iannaccone, L., 1995, “Risk, rationality, and religious portfolios”, Economic Inquiry, 33, pp. 285-295. McEvedy, C. and R. Jones, 1978, Atlas of World Population History, cited in Wikipedia, entry “World population estimates” McKnight, S., 1991, A Light among the Gentiles: Jewish Missionary Activity in the Second Temple Period, Minneapolis: Fortress Press. Montgomery, J.D., 1996, “Dynamics of the religious economy. Exit, voice and denominational secularization”, Rationality and Society, 8 (1), pp. 81-110. Moore, G. F., 1927-30, Judaism in the First Centuries of the Christian Era: The Age of the Tannaim, 3 vols., Cambridge, Mass.: Harvard University Press. Mullett, M., 1999, The Catholic Reformation, London: Routledge. Raskovich, A., 1996, “You shall have no other gods beside me: A legal-economic analysis of the rise of Yahweh”, Journal of Institutional and Theoretical Economics, 152 (3), pp. 449-471.

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