Adam Smith on Religion and Market Structure

Amid the treasure trove of brilliant insights contained in the Wealth of Nations, one dominant theme shines through: Smith's analysis of the effects of economic incentives on human behavior. This insight is as applicable in the realm of religion as it is in the realm of commerce. In this paper the authors offer supporting evidence for the claim that Smith's goal of consumer sovereignty could be achieved within openly competitive output markets (his first choice) or within a quasi-monopoly market whose internal organization provided for consumer choice (his second choice). Although Smith praised certain aspects of established religions, he aimed his highest approbation squarely at Presbyterianism. His qualified praise was not inconsistent with his advocacy of competitive religious markets, because he found within the internal organization of the Presbyterian church elements that promoted consumer sovereignty.