FREE has created a program for an ecumenical group of religious leaders. Most have advanced degrees and teach in seminaries or divinity schools. Some are in charge of publications; others involved with formulating and articulating their organization’s public policy positions. All are influential in the public environmental debate.

These leaders all agree that environmental stewardship is an important religious obligation. Their groups are lending their moral authority to the environmental cause and adopting programs they hope will improve the environment.

FREE believes an understanding of the political economy of environmental policy, along with a few simple analytical tools with which to examine alternatives, will help religious leaders design prudent and effective policies. Specifically, knowledge of economic principles and the role of entrepreneurship can help religious leaders avoid politically motivated pitfalls that disproportionately affect the world’s poor. (An example is the increasing price of food due partially to political pressure in the U.S. for ethanol subsidies.)

When we speak of economics, we are not referring merely to financial matters. We understand that beyond a modest level of prosperity, more money does not buy greater satisfaction. Rather, fellowship, a sense of community, and a wholesome environment trump material wealth. Which institutions foster these values? Which threaten them? How can spiritual and moral leaders advance this process?

One way is for religious leaders to understand the important role institutions play in fostering social wellbeing and environmental progress. Nobel Prize-winning economist Douglass North explains:

“Institutions are the…constraints that structure human interaction. They are…formal…(rules, laws, constitutions) [and] informal…(norms of behavior, conventions, and self imposed codes of conduct)…. Together they define the incentive structure of societies and…economies.”

Consider the role of institutions in alleviating poverty. For thousands of years, the default condition of humanity was hunger, illiteracy, disease, and high mortality. Our view of the natural world was clouded by ignorance and superstition.

How did things change? The West invented three institutions that had never existed before: science, democracy, and capitalism.

We know the Chinese recorded the eclipses, the Hindus invented the number zero, and the Mayans developed a complex calendar. But what we understand today as modern science, that is inquiry via the “scientific method,” is a Western institution. This process of empirical inquiry demands that theories of the way the world works be amenable to observation, prediction, and falsification. This represents a triumph of reason over appeals to authority or animistic beliefs.

As we see all too frequently, tribalism is often a powerful and destructive force. Democracy, which requires elections, the peaceful transition of power, and institutional checks and balances, is a Western creation.

Humans are hardwired to truck and barter. Across time and cultures the exchange of goods for mutual benefit is a constant. The marketplace evolved into what we know as modern democratic capitalism. Capitalism requires political bodies to define rules and an independent judiciary to enforce them. This system evolved only in the West.

A recent World Bank Study found that a nation’s wealth resides in its laws and institutions rather than its natural resources. They call this “intangible capital.” The report finds that, “The most striking aspect of the wealth estimates is the high values for intangible capital. Nearly 85 percent of the countries in our sample have an intangible capital share of total wealth greater than 50 percent.”

Levels of educational attainment and a “rule-of-law index” account for 90 percent of the variation in intangible capital. The more highly educated a country’s people, and the more honest and fair its legal system is, the wealthier it is. (On the World Bank’s rule-of-law index, the United States scores 92 out of 100. The Swiss score 99. The OECD’s average score is 90, while sub-Saharan Africa’s is 28.)

Douglass North’s work explains that where institutions reward work, innovation, and risk-taking, levels of intangible capital are high. Where institutions reward theft and expropriation, it is low.

From the time of Adam Smith, economists have argued that material progress is not the result of superior people. Rather, people benefit from superior social institutions and the incentives that those institutions create. This understanding can help religious leaders achieve their worthy goals.