About this Issue

Today’s westerners are likely to be highly tolerant of other religions, but this was not always the case. Indeed, repression was the norm in many European societies during the early modern era. So what changed? 

The standard story holds that after the Reformation, Europe simply fought itself to exhaustion. Whole nations were decimated in religious wars between Catholics and Protestants. Eventually, rulers and common people alike began to look for a way to stop the bleeding, and from this necessity, toleration emerged. 

This month’s lead essayists beg to differ. Mark Koyama and Noel D. Johnson argue that stronger states had less need of religious unity, because stronger states could rely on contracts and the rule of law to establish interpersonal trust and national solidarity. As a result, they didn’t need the type of solidarity that comes from religious unity. Liberalism was therefore a luxury they could afford. 

This is bound to be a controversial idea, though Koyama and Johnson stress its origins in classical liberal historiography. Joining them to discuss religious freedom, liberalism, and how we can further religious toleration in the modern world, we have invited Prof. James A. Robinson of Harvard University, Dalibor Rohac of the American Enterprise Institute, and Dr. Hans Eicholz of Liberty Fund. We also welcome readers’ comments through the end of the month.

Lead Essay

The Trouble in Getting to Denmark

How did modern liberal states emerge? Francis Fukuyama calls this the problem of “getting to Denmark.”Economists have traditionally focused on the question of how sustained economic growth got started. Political scientists, on the other hand, have focused on questions of democratization and political stability. Both of these are critical components of liberal states. But there is one factor that social scientists have neglected: religion.[1]

This neglect is easy to understand. In the developed world religious liberty is so ingrained in formal and informal institutions that it rarely emerges as a newsworthy issue. This was not always the case. Religion was so central to premodern societies that it is difficult to fully understand the transformations associated with modernity without attending to it. Religion was used to justify the categories in which government and society more broadly used to structure everyday life. Women versus men, nobles versus commoners, guild members versus non-guild members, Muslims versus Christians, Christians versus Jews. All of these categories—as well as the different statuses associated with them in law and in culture—relied to a varying degree on religion to legitimize their use.

If we are interested in the rise of liberal societies and liberal principles such as freedom of expression, then we have to understand how society came to adopt new political and economic institutions that were largely separated from religious doctrines. That is, we need to explain the rise of religious freedom.

The emergence of religious freedom in the West was not the product of ideas alone. The mid-20th century historian of religious freedom Roland H. Bainton observed that “the best things on religious liberty were said in the sixteenth century but not practiced until the nineteenth.”[2] What he meant was that during the 16th century there were many statements in favor of religious liberalism despite an intensification of religious persecution and violence. Writers including Sebastian Castellio (1515–1563)—who condemned the burning of Michael Severtus by Jean Calvin—and Anabaptists such as Felix Manz (d. 1527) and Balthasar Hubmaier (1480–1528), both of whom suffered death for their beliefs—articulated arguments in favor of religious pluralism. But they were largely ignored by their peers and had no influence on policy. It was only in the 19th century that some measure of religious freedom was attained in Europe.

Religious freedom should be sharply distinguished from the practice of toleration. Today what the word “tolerance” refers to is better called permissive individualism, that is,the idea that we have no right to judge or condemn individuals for their lifestyle choices so long as those choices don’t impose harms on others. But the original Latin meaning of tolere, which persisted all the way through the 17th century, is to bear something that one strongly disagrees with. It was a practical rather than a moral principle, and it was contingent and subject to revision. In our book Persecution and Toleration, we use the term “conditional toleration” to emphasize the difference between toleration and genuine religious freedom.

Why does this distinction matter? Too often historians praise societies that didn’t actively persecute religious minorities as “tolerant.” But the absence of persecution does not imply that individuals were free to worship as they liked or, indeed, to pursue economic or social betterment. The assumption that dissent could invite repression was sufficient to create a climate in which potentially subversive thoughts were not freely expressed. In our reading of the historical evidence, neither ancient Rome nor the Islamic or Mongol Empires had religious freedom. They often refrained from actively persecuting religious minorities, but they were also ruthless in suppressing dissent when it suited their political goals.[3] Religious freedom is a uniquely liberal achievement, and liberalism is an achievement of post-1700 modernity. What explains it?

Personal Rules versus Identity Rules

In Violence and Social Orders, Douglass North, Barry Weingast, and John Wallis distinguish between personal rules, identity rules, and general rules. Personal rules involve treating people differently on the basis of their individual characteristics. This works when social cooperation is limited to a small number of individuals, say a band of ten or twenty. Members can trust one another because the chances of future interactions are high. Consistent with game theoretic reasoning, this very often leads to sustained cooperation.

Personal rules have a serious shortcoming, however. They are of limited use in dealing with strangers. As the scale of society increases and the complexity of social interactions grows, personal rules cease to be sufficient. With the shift to settled agriculture after 8,000 BC, political organizations became larger and states oversaw the introduction of more sophisticated legal systems to prevent theft, fraud, and uncontrolled violence. For most of history, and in much of the developing world today, these laws have taken the form of identity rules.

Identity rules depend on the social identity of the parties involved. This could refer to an individual’s clan, caste, class, religious affiliation, or ethnicity. Examples from historical legal systems abound. Aristocrats faced different rules from commoners. Slaves faced different rules from freemen. The Code of Hammurabi, for example, prescribed punishment based on the relative status of the perpetrator and the victim. Identity rules were common historically because governing individuals on the basis of their legible social characteristics was cheap. As religious identity was particularly salient, many identity rules treated individuals differently on the basis of their religion.

Religion was an especially important component of identity in the large agrarian civilizations of Europe and the Near East in a time before nationalism and nation states. Shared religious beliefs and religious identities were seen as crucial to maintaining social order. Religious differences were extremely destabilizing because they were associated with a host of deep societal cleavages.

In an environment where a common religious identity undergirded not only the institutions of the church, but also those of the state and civil society, both religious freedom specifically, and liberalism more generally, were unthinkable.

For instance, in medieval and early modern Europe oaths sworn before God played an important role in upholding the social order. These were thought so important that atheists were seen as outside the political community, since as John Locke put it, “promises, covenants, and oaths, which are the bonds of human society, can have no hold upon an atheist.”[4]

A shared religious identity was also crucial for guild membership. Guilds in Christian Spain excluded Muslims. Guilds in 14th century Tallinn excluded Orthodox Christians. Jews were excluded almost everywhere. In parts of Europe converts from Judaism and even their descendants or remote relations could not be guild members.[5] In a world governed by identity rules, an individual’s religious identity determined what economic activities were open to them. The question is: How did we move from a world of identity rules to one of general rules?

General Rules and State Capacity

The eventual abandonment of identity rules in favor of general rules in Western Europe is intricately bound up with the development of state capacity. State capacity refers to the ability of a government to enforce rules and raise taxes. Identity rules are a cheap, but ultimately limited, way to do both these things. In contrast, it is expensive to implement general rules that are uniformly applied to individuals regardless of their personal beliefs or family background.

As an illustration, consider how early modern governments often used Jewish communities as a source of tax revenue. Usury restrictions made lending by Christians very costly. However, rulers could grant monopoly rights to Jews to lend without violating their religious principles. In turn, the rates of interest charged by Jewish lenders were high, and the profits were taxed away by the very rulers who granted these rights. Finally, the specialization of Jews as moneylenders exacerbated preexisting antisemitism among the Christian population. This in turn made it relatively easy for rulers to threaten Jews in case they didn’t intend to pay up.

So long as rulers relied on Jewish moneylending as a source of revenue, Jews were trapped in this vulnerable situation. Their position could improve only when states developed more sophisticated systems of taxation and credit.

As suggested by the above example, low state capacity and a reliance on identity rules are self-reinforcing. States that rely on identity rules face less incentive to invest in the fiscal and legal institutions that would increase state capacity. This, in turn, makes them more reliant on identity rules and less able to enforce general rules.

Furthermore, religion is a convenient source of legitimacy for weak states. This gives rise to a partnership between state and church. While there are many forms that this partnership can take, a common one involved the state enforcing religious conformity in return for support from the religious authority.

In Persecution and Toleration we provide a detailed historical narrative that discusses how events like the Black Death and the Reformation disrupted the medieval pact between the church and state. This narrative focuses on the political and institutional consequences of these shocks.

Following the Reformation, we document how religious violence was most extreme in states like England and France where the state was relatively strong. It was in these states that these conflicts first undermined the old church-state partnership. As this partnership weakened, new sources of legitimacy had to be sought. In contrast, Poland, where state capacity was low, saw little religious persecution despite the spread of Protestantism.

It took repeated failures to reimpose the old partnership between church and state before rulers gave up trying to eliminate religious diversity. In France, for instance, Louis XIV’s attempt to eradicate Protestantism by expulsion failed, and during the 18th century French Protestants gradually secured a degree of recognition, culminating in the Edict of Toleration of 1787. In England, while formal laws against Catholics and nonconformists remained on the books until the 19th century, the 18th century also saw a marked decline in religious tension and violence.

In our argument it was not that the Wars of Religion simply exhausted confessional and doctrinal disputes. Rather there was a transformation at the institutional level. The leading European states shifted away from identity rules towards more general rules. This shift was related to 19th-century historian Henry Sumner Maine’s discussion of the passage from status to contract: Status was imposed and ascriptive. Contracts, in contrast, are the outcome of voluntary choices. Status-based rules are invariably identity rules. Contracts provide the foundation for a system of general rules.

Moving from a fixed status to a contractual society helped set in motion a range of developments, including the growth of markets and a more extensive division of labor. But it had the unintended consequence of diminishing the political importance of religion, and this made liberalism feasible for the first time in history.

Throughout our book we stress that there is no necessary relationship between state capacity and liberalism. Powerful states have been and still are capable of repressing minorities, of course. The horrors of the 20th century were conducted by all-encompassing Leviathan states. But liberalism is fragile and highly vulnerable in the absence of a powerful state.

Readers of Cato Unbound might find this argument uncomfortable. After all, it places a lot of explanatory weight on the rise of state institutions and stands in contrast to much scholarship in the libertarian tradition. However, we see it as building directly on the insights of the most important classical liberals, including Adam Smith and F.A. Hayek, who emphasized the importance of strong but limited states in providing the institutional framework in which markets and liberalism can flourish.

Modern States and Liberalism

What does our argument imply about the fate of liberal societies today? While the far left has never accepted liberal values such as freedom of expression and freedom of religion, antipathy towards liberal values is now evident in mainstream progressive publications as well. Liberalism is indicted because it is perceived as legitimating inequality and failing to endorse social justice.

Similarly, writers from the right such as Patrick Deneen and Yoram Hazony critique liberalism for destabilizing the family and the foundations of social order.[6] They construct a strawman version of liberalism based almost entirely on John Locke’s account of the social contract. As these writers would have it, liberalism is based on the idea that society is justified because rational self-interested individuals came together to form a society for mutual self-betterment. This legitimates a society where individuals become atomized and dislocated, unmoored from tradition, religion, and family.

This essay is not the place to fully engage these misconceptions. But it is important to note that we think the core characteristics of a liberal society are the rule of law and reliance on general rules. It does not require belief in the realism (or even usefulness) of social contract theory. Nor does it require us to believe that human beings correspond to the model of Homo economicus.

Liberalism is valuable because it is the only form of social order we know of that is consistent with a high degree of autonomy and human dignity. By documenting the vital role played by the strong states in adopting liberal institutions, Persecution and Toleration sheds new light on how we think of the prospects of the liberal order in the future.

In parts of the developing world, where states are weak and religious and ethnic identities remain strong, the future does not look bright for religious freedom or liberalism more generally. Globalization and the spread of Enlightenment values were once thought likely to lead to liberal democracy becoming the default mode of government. This no longer seems so. There is simply little evidence that liberal ideas alone will sway governments to adopt general rules and the kinds of institutions required to upload a liberal social order.

By contrast, in the developed world where states are relatively strong and liberal ideas already have legitimacy, there remains room for optimism. Though liberal values appear in retreat today, the costs of reverting to a world of identity rules would be very costly. Understanding the origins of liberalism allows us to take some measure of those costs.


[1] Historians, on the other hand, have rediscovered the importance of religion in recent decades. Conflicts like the English Civil War (1642-1649) that were once studied through the lens of class analysis are now viewed as religious struggles.

[2] Roland Bainton, The Travils of Religious Liberty. Westminster. 1951, page 253.

[3] See for instance, Maria Rosa Menocal, The Ornament of the World: How Muslims, Jews and Christians Created a Culture of Tolerance in Medieval Spain. Little Brown, 2002 for the claim that Islamic Spain was pluralist and tolerant. Similar claims are made for the Mongols by George Lane, Daily Life in the Mongol Empire, Westport, Conn.: Greenwood, 2006. A recent book that promotes the notion that the Romans were comparatively tolerant despite their persecution of Christian is Catherine Nixey, The Darkening Age: The Christian Destruction of the Classical World. MacMillan, 2017.

[4] John Locke, Letter on Toleration, 1689; 52.

[5] Sheilagh Ogilvie. The European Guilds: An Economic Analysis. Princeton University Press. pages 103-104. We discuss this in Johnson and Koyama, pages 56-57.

[6] See Patrick J. Deenen. Why Liberalism Failed. Yale University Press and Yoram Hazony, The Virtue of Nationalism. Basic Books. 2018.

Response Essays

The Perks and Perils of Having a State-Run Church

Johnson and Koyama make an ambitious and original claim about the origins of religious toleration. In brief, certain big shocks to western European society made it difficult for states to base their legitimacy and social control on a pact with the church. In response they had to develop capacity and new instruments which freed them to tolerate religious freedom.


There is a lot to like about the argument. For one, it moves us beyond Charles Tilly’s politics-free notion that “war made states and states made war” and instead asks us to focus on the internal politics of control and the development of capacity. This move is long overdue, and it is exciting.

I have three big issues with the argument, however. First, imagine that it is correct that something sunders the pact between state and church and forces states to rule in different ways. Why does this mean they wish to allow, or promote, religious toleration? What is the mechanism exactly? Is it that once the state exits from its ruling pact with the church, it wants to foment religious competition to undermine the church and make sure that it is, if not a useful ally, at least submissive? I can see how the argument might allow for religious toleration to emerge, but I didn’t see why it happens. It seems possibly necessary, but not sufficient. At the moment the thesis seems to be more a new argument about state formation than one about religious toleration.

My second main issue is whether this argument really makes sense empirically, even in the European case. Take Britain. Henry VIII broke with the Catholic Church in the 1530s, expropriated the monasteries, and created the Church of England, with him as the head. That doesn’t sound like a weakening of the state-church pact, it sounds like a nationalization of it. In fact, one would have thought that a Protestant church with the British king at the head of it would have been even more useful as a tool of legitimation and social control than a distant, and not so cooperative, Catholic Church. This moment did indeed coincide with a period of state formation, what Geoffrey Elton called the “Tudor Revolution in Government,” where something like state offices separate from Henry’s personal retainers begin to emerge. But was this due to the separation of state and church, or the latter’s indigenization? Roll on to the next century. If you wanted to pick an even more pivotal moment in British state formation it would be the Glorious Revolution. This led to the emergence of a bureaucratized fiscal system, including the creation of the Bank of England to manage the public debt and other measures. At the heart of 1688 was the overthrow of James II. How was that justified? The Bill of Rights put it like this:

it hath been found by experience that it is inconsistent with the safety and welfare of this protestant kingdom to be governed by a popish prince

No Catholics on the throne! Moreover, one clause of the Bill stated, “That subjects which are Protestants may have arms for their defence suitable for their conditions and as allowed by law.” No arms for Catholics. The various Test Acts meant that no public servant in Britain, including members of Parliament, could be a Catholic. They were finally repealed in 1828. So the heyday of British state formation was accompanied by systematic and institutionalized discrimination against Catholics. Rather than vanish as a tool for legitimation, the British state created its own more pliable religion to accompany its rise.

Third, let’s think outside the European case and ask about the relationship between religion, religious toleration, and state formation elsewhere. There are cases which certainly resonate with the thesis of the book. Think of the Saudi state, the first version of which formed in the 1740s with the famous pact between Muhammad ibn Saud and Muhammad ibn Abd al-Wahhab. It was a fusion of a nascent state with an expansionary jihadist religious ideology. The Saudi state remains very weak as a consequence of this pact; for example, the necessary commitment to Sharia and religious judges creates a huge amount of discretion and uncertainty in the legal system, with huge adverse economic consequences. If for some reason this pact was broken, the Sauds might indeed have to build a very different sort of state.

But perhaps the part of the world where powerful states have been most in evident, at least for their economic consequences in the past 70 years, is in East Asia. A plausible hypothesis about why the East Asian Miracle was possible was the legacy of bureaucracy which ultimately seems to come from Imperial China. But what has that got to do with religion? Not much I think. The usual story is that it is linked to Confucianism. Confucius said in the Analects, “promote those who are worthy and talented.” Confucianism also promoted a very different model of state-society relations which wasn’t primarily based on some religious sanctioning—even if the ruler had the “mandate of heaven.” Of more practical importance seems to be the notion that rulers maintain legitimacy by “sowing wealth amongst people,” or as President Xi recently emphasized, quoting Confucius,

He who rules by virtue is like the North Star. It maintains its place, and the multitude of stars pay homage.

This was not a model based on participation. Confucius also observed, “When the Way prevails in the world, commoners do not debate matters of government.” So meritocracy, no accountability, all legitimized by benevolent rulers. Where is the church? Is there religious toleration in China? Certainly not, because this would promote a different set of loyalties other than those espoused by the ruling ideology. But the lack of religious toleration does not stem from a pact between the rulers, whether imperial or communist, and some organized church, for there is none.

What do I conclude from this? It’s a brilliant argument, and it might be right, though I have doubts as discussed above, but is it, if not Euro-centric, since Medina isn’t in Europe, at least maybe restricted to the domain which generated the great monotheistic religions? There is something about the way the relationship between Catholicism, Islam, and the state played out that seems to generate a particular set of interactions between religion and state. But it is not clear to me that this is true elsewhere in the world. Yet if that is so, it is difficult to disentangle this argument from a whole host of other things that makes this part of the world distinct.

Realizing Religious Liberty: “Stateness” or Competition?

Initially Johnson and Koyama appear to be presenting a succinct, even compact, theory of historical development. The opening question leads one to believe that their theory is about the emergence of liberal states. To my mind, however, that framework does not quite fit.

In point of fact, they seem also to want to make a more specific claim: That the early modern state is the very source of the principle of religious liberty itself.But this claim too, is a bit confusing. Do they mean as an idea, or as a principle of law? Much of my confusion stems from the kind of explanation they have chosen to give.

What our authors have presented is a repackaging of what in German was called eine Stufenlehre,or a stadial theory, with all of the attendant problems these theories entail for historical causation. Under the mistaken impression that they have identified certain specific causal relations through the identification of the distinctions of specific kinds of rules, they have actually provided only descriptions of large aggregate events. And each step in this process of change has unfortunately encouraged insufficient attention to the complexity of the relationship of thought to action. That has, in turn, churned up all the classic chicken and egg problems that such ideas involve, whether we are speaking of the systems of G.W.F. Hegel, Friedrich List, Karl Marx, or the early ideas of Douglass North.

But make no mistake. I like Johnson and Koyama’s descriptions. Their typology of rules is vital for making important qualitative distinctions in the interpretation of human actions. I very much agree with their aim to caution all liberals of either classical or libertarian inclination not to treat the importance of a powerful state so cavalierly as to think they can make do without one. “Liberalism,” they want us to recognize, “is fragile and highly vulnerable in the absence of powerful states.” I accept this up to a point.

But from their typology of rules, we do not obtain an explanation for change, and from the need for government, we do not get a prescription for policy. Now, it may well be that in my rather quick overview of their book length treatment, I have missed where they offered a theory of historical change, or a means for evaluating public policy choices. They certainly have not done so in this essay, and I remain dubious that it can be done in any definitive sort of way while keeping to their framework.

For starters, what exactly does powerful mean? Many, I suppose, might be tempted to assert that it entails a claim of arbitrary will; that is to say, the authority to do whatever the sovereign wants. Such power over the lives of others, however, would not be the sort of state any liberal or libertarian would endorse.Might they mean what the American Founders meant when they spoke of “energy in government”? By this, they would stress efficiency in the exercise of specifically enumerated and limited powers. It is then a question of the kind of government, and not so much about its being strong or weak. If some liberals confuse these terms, they should not.

The real problem, however, is to be found in the treatment of status and contract as legal indications of trust. Henry Sumner Maine’s typology of status versus contract is a very handy way of classifying the differences among ideas about what is and is not acceptable behavior. What explains this shift in attitudes?

Koyama and Johnson’s answer amounts to a restatement of the question: “In our argument it was not that the Wars of Religion simply exhausted confessional and doctrinal disputes. Rather there was a transformation at the institutional level. The leading European states shifted away from identity rules towards more general rules.”

Ok. But what prompted this shift? All throughout their more extensive treatment, it is in fact the processes of competition, among princes, prelates, cities and, yes, eventually, what we now call states and, ultimately, nation states. Is it more accurate to say then that it is “The State” that gives us the full articulation of the principle of religious liberty in question, or is it the process of competition that drove states to do so? I would make a case for the process in this instance.

History is, of course, always a dynamic relation between thoughts and actions. Institutions are themselves the products of the articulation of various ends and means, what Ludwig Lachmann (1971) aptly called the “nodal points” of coordination. To understand either thoughts or the forms of action, you need to slice into the hermeneutical circle at some point in order to interpret the relationships involved. This is the nature of all feedback loops. Our authors recognize this in part, observing that “The emergence of religious freedom in the West was not the product of ideas alone.” I am not aware of any serious historian who would assert such an extreme claim, but they then go on to favor just one part of the circle: the primacy of the institution of the modern nation state: “It was only in the 19th century,” they assert, “that some measure of religious freedom was attained in Europe.”

Some measure? Do they not mean, some degree? And what could this be?

Tolere we are told is not really freedom. It is putting up with something with which you disagree. Freedom, on the other hand, is the positive affirmation of your right to practice what you wish; or in other words, “the idea that we have no right to judge or condemn individuals for their lifestyle choices.” Really?

If condemning means use of the state, then yes I agree, but if it is the right to judge, then no, I do not. We still tolerate those with whom we disagree, we just do not attack them. Something of the positive has crept into their notion of rights. Real religious freedom always has, and always will, retain the right to judge for oneself and one’s religious community.

Consequently, if it is true that the earlier forms of governance, from ancient Rome forward, sometimes observed more, and sometimes observed less tolerance, then it is not clear why the modern state must be privileged in this regard. And if the idea of religious freedom can be shown, as they have noted, to precede the early modern state (“there were many statements in favor of religious liberalism despite an intensification of religious persecution and violence”), then the origins of the principle must in fact be rooted in even earlier processes. And this is borne out by their own evidence.

That some states (e.g. Spain, and England under the Stuarts) did not observe the principle, and others like France under the premiership of Louis Henri, Duke of Bourbon, even reversed themselves, indicates that it was not the characteristic of “stateness” per se, but the processes of constitutional thinking that were more especially involved—processes of both thought and action.

Douglass North’s early works, which appear to predominate in our authors’ longer treatment, do indeed, at times, seem to favor institutional structures over mere thought. His later work, however, did not (See especially Understanding the Process of Economic Change 2005). Above all, North emphasized the important dynamic of competitive processes in the shaping of ideas in the West. This move was not taken out of thin air. He rather expanded on some older ideas.

Among those taking up the competitive argument very early on were Hume (1742) and Kant (1784). James Madison also recognized the importance of a multiplicity of competing faiths among the colonies in early America as the basis for American recognition of political constitutional freedom. Likewise Max Weber, in his more developed reflections published posthumously as the General Economic History (1920), observed the critical importance of the competitive element in the economic and political relations of Europe. And it was this that Randall Collins expanded upon in his Weberian Sociological Theory (36, 1986). It was also a central theme in the histories of E. L. Jones (1981), Harold Berman (1983, 2003) and Hendrik Spruyt. The latter’s book, The Sovereign State and Its Competitors (1994), is particularly relevant here, because Spruyt drew specific attention to the importance of the league cities.

Koyama and Johnson themselves have noted, in their longer treatment, the interesting case of the city of Hamburg, one of the great Hansa cities. It was especially “favorable to Jewish settlement,” they noted. Being open, as the merchant senators of the city were, “to international trade” (300, 2018), Hamburg welcomed moral strangers. Granted, the city-states were ultimately replaced by the nation-state, but they were responding to the same competitive process to which the later nation-states were also subject.

To conclude then, I would contend that it was the processes involved in the context of decentralized authorities, and the ensuing competition among them, that paved the way for the widening of toleration and eventually the formation of constitutional republican forms of modern governance.

The point is not to disagree with the importance of well-constituted political regimes. It is however misleading to say that it was the nation-state, full stop, which gave us religious liberty. It was rather the processes of competition that forced open the various monopolies of power.