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Entrepreneurship in Norway's economic and religious nineteenth-century transformation

2011; Taylor & Francis; Volume: 59; Issue: 1 Linguagem: Inglês

10.1080/03585522.2011.541123

1750-2837

Bruce R. Dalgaard, Magne Supphellen,

American Constitutional Law and Politics

Abstract Abstract This paper advances the discussion of a connection between religion and economic change in Norway in the late eighteenth and early nineteenth centuries. While the economic impact of marginalized religious groups in Britain is fairly well documented, there is little in the economic history literature on the role of such groups in Scandinavia. We focus on the entrepreneurial initiatives of one major religious maverick in Norway, Hans Nielsen Hauge (1771–1824). The literature on nonconformists in Britain is used to inform the discussion of why Hauge came into prominence. Important similarities and differences between Hauge and nonconformists in Britain are highlighted. Moreover, modern economic theory of entrepreneurship is used to explain Hauge's extensive success as an entrepreneur and business man. This analysis suggests that Hauge's approach to business development stimulated important performance factors, such as motivation, personal agency, and alertness to market disequilibrium. Keywords: economicsentrepreneurshipNorwegian historyreligion Acknowledgements The primary research for this paper was conducted while Dalgaard was a Visiting Fellow at NHH. That visit and much of this research was supported by the Leiv Erikisson Mobility Programme provided by the Research Council of Norway. The authors are grateful to the Hauge Institute for assistance in the search for relevant sources of literature. They also acknowledge the contributions of two anonymous referees whose comments greatly improved the final paper. Notes 1. Weber argued that Reformation doctrines and the way of life that these spawned were conducive to the accumulation of capital and the creation of a capitalistic way of thinking. He focused initially on Martin Luther's doctrine of 'calling' and more specifically on John Calvin's notion of predestination. Tawney saw a similar connection between protestantism and capitalism but he reversed the causation. 2. David J. Jeremy, ed., Religion, Business and Wealth in Modern Britain (London: Routledge, 1998), 18. 3. Among the relatively few studies related to economics and religion is James D. Montgomery, 'Contemplations on the Economic Approach to Religious Behavior', The American Economic Review (Papers and Proceedings) 86, no. 2 (1996): 443–7. Montgomery summarizes several of these studies and demonstrates what seems to be the prevailing attitude within economics, namely that 'religious beliefs are formed through nonrational processes'. While this view continues to predominate among social scientists, Laurence R. Ianaoconne has presented an alternative view in which he argues '... there exist plausible a priori arguments for religion's impact and that despite numerous attempts to root out spurious correlations, many religious effects remain substantially large and statistically significant.' See Laurence R. Iannaconne, 'Introduction to the Economics of Religion', Journal of Economic Literature XXXVI (September 1998): 1465–96. From our perspective the most insightful and compelling work relating religion to the economy is that by Rachel M. McCleary and Robert J. Barro, 'Religion and Economy,' Journal of Economic Perspectives 20, no. 2 (Spring 2006): 49–72. Their work has influenced our thinking about the impact of Hauge's religious beliefs. 4. See David J. Jeremy, ed., Business and Religion in Britain (Aldershot, UK: Gower, 1988) and Jeremy's other edited volume, Religion, Business and Wealth in Modern Britain (London: Routledge, 1998). 5. An early exploration of this connection was by Norwegian-American scholar, Christen T. Jonassen, in his 1947 piece, 'The Protestant Ethic and the Spirit of Capitalism in Norway', American Sociological Review 12, no. 6 (1947): 676–86. 6. A very early attempt to highlight the business initiatives of Hans Nielsen Hauge in Norway was Dagfinn Breistein's book, Hans Nielsen Hauge: Kjopmann i Bergen (Bergen: John Griegs Forlag, 1955). But this was primarily a description of Hauge's several business initiatives. 7. Our approach to this topic is inspired by the pioneering work in institutional economics of Douglass North and we must acknowledge his influence on our thinking. 8. W.H.B. Court, A Concise Economic History of Britain (Cambridge: Cambridge University Press, 1967), 13. 9. Phyllis Deane, The First Industrial Revolution (Cambridge: Cambridge University Press, 1969), 79 fn. 10. Stephen Broadberry and Bas van Leeuwen, 'British Economic Growth and the Business Cycle 1700-1850: Annual Estimates,' Working Paper, University of Warwick, November 25, 2008. 11. David J. Jeremy, ed., Business and Religion in Britain, p. 17. 12. David J. Jeremy, ed., Business and Religion in Britain. 13. Paul H. Emden, Quakers in Commerce: A Record of Business Achievement (London: Sampson Low, Marston & Co., 1940), 13. 14. Paul H. Emden, Quakers in Commerce, 16. 15. Estimate by Ola Grytten based on data from Fritz Hodne, 'verdiskapingen i manufaktur og industri i Norge 1817-1829', in Nordic Historical National Accounts, ed. Ola H. Grytten, (Bergen: NHH, 1999), 42–61. 16. Ola Honningdal Grytten, 'The Gross Domestic Product for Norway, 1830-2003', Norges Bank Occasional Papers no. 1, 2004, 241–88. 17. Joseph M. Shaw, Pulpit Under the Sky: A Life of Hans Nielsen Hauge (Westport, CT: Greenwood Press, 1955), 29 quoting Karen Larsen, A History of Norway (1948). 18. Discussion of the response to these uprisings is explored in Glen Peter Ryland, 'Peasant Radicalism in Early Nineteenth Century Norway: The Case of Hans Nielsen Hauge' (unpublished Masters Thesis, Simon Frasier University, 2005), 20–3. 19. Glen Peter Ryland, 'Peasant Radicalism in Early Nineteenth Century Norway: The Case of Hans Nielsen Hauge' (unpublished Masters Thesis, Simon Frasier University, 2005), 5. 20. Mancur Olson, Logic of Collective Action; Public Goods and the Theory of Groups (Cambridge: Harvard University Press, 1965). See also Jeffrey Friedman, ed., The Rational Choice Controversy: Economic Models of Politics Reconsidered (New Haven: Yale University Press, 1996). 21. See Inger Furseth, A Comparative Study of Social and Religious Movements in Norway, 1780s-1905 (Lampeter, UK: The Edwin Mellen Press, 2002). 22. There are some current Norwegian firms that can trace their origins to Hauge and his followers. For example, descriptions of the O.A. Devold Sons' company note that it has its roots in the emerging industrialization and Haugianism in Norway in the late 1700s. There are currently 19 furniture factories in the Alesund area. Preliminary field research indicates that at least 14 of these have origins in the Hauge movement. 23. These data are reported in David J. Jeremy, Capitalists and Christians (Oxford: Oxford University Press, 1990), 83, 113 and 115 and summarized in David J. Jeremy, Capitalists and Christians, 15. 24. Furseth, A Comparative Study. 25. The work of David J. Jeremy, cited numerous times in the paper, certainly addresses the relationship between religious groups and entrepreneurial activity in England. Jeremy's work, exceptional in its scope, is largely descriptive and contains few references to a theoretical model of entrepreneurial behavior. 26. A very early attempt to put the Wesleyian movement into an economic context was Wellman J. Warner's book, The Wesleyan Movement and the Industrial Revolution (London: Longmans, Green and Company, 1930). The connection between nonconformists and economic change is disputed by many, perhaps most notably, Michael R. Watts, The Dissenters, From the Reformation to the French Revolution (Oxford: Clarendon Press, 1986). 27. William Baumol, 'Entrepreneurship and Innovation: The (Micro) Theory of Price and Profit'. Paper presented at the American Economic Association Annual Meeting, January 4, 2008. Available at http://www.aeaweb.org. 28. In addition to the AEA paper, see for example William J. Baumol, The Free-Market Innovation Machine: Analyzing the Growth Miracle of Capitalism (Princeton: Princeton University Press, 2002). 29. Mark Casson, The Entrepreneur: An Economic Theory (Totowa, NJ: Barnes and Noble Books, 1982), 9. 30. Frank Knight, Risk, Uncertainty, and Profit (Boston: Houghton Mifflin, 1921). 31. Joseph A. Schumpter (1942), Capitalism, Socialism and Democracy (New York: Harper and Row, 1975). 32. Harvey Liebenstein, 'Allocative Efficiency vs x-efficiency', The American Economic Review 56, no. 3 (1966): 392–425. 33. Mark C. Casson, The Entrepreneur: An Economic Theory (Totowa, NJ: Barnes and Noble Books, 1982). See also Casson's edited volume, Entrepreneurship. Vol.13, International Library of Critical Writings in Economics (1990). 34. Baumol has written extensively on the entrepreneur and entrepreneurship. See, for example, Entrepreneurship, Management and the Structure of Profit (Cambridge: MIT Press, 1994) and 'Entrepreneurship, Innovation and Growth: The David-Goliath Symbiosis', Journal of Entrepreneurial Finance and Business Venture 7, (Fall 2002): 1–10. 35. Israel M. Kirzner, Competition and Entrepreneurship (Chicago: University of Chicago Press, 1973) and Perception, Opportunity, and Profit (Chicago: University of Chicago Press, 1979). 36. Israel M. Kirzner, 'Competition, Regulation, and the Market Process: An "Austrian" Perspective'. Cato Policy Analysis No. 18, September 30, 1982. 37. David A. Harper, Foundations of Entrepreneurship and Economic Development (London: Routledge, 2003), 6. 38. David A. Harper, Foundations of Entrepreneurship, 7. 39. David A. Harper, Foundations of Entrepreneurship, 14. 40. David A. Harper, Foundations of Entrepreneurship, 14. 41. David A. Harper, Foundations of Entrepreneurship, 14–15. 42. W.D. Rubinstein, 'The Weber Thesis and Ethnic Minorities' in Jeremy, Religion, Busines and Wealth in Modern Britain, op cit, p. 176. 43. A good discussion of this phenomenon is found in Maurice W. Kirby, Men of Business and Politics: The Rise and Fall of the Quaker Pease Dynasty of North-East England, 1700–1943 (London: George Allen and Unwin, 1984). Documentation of the Quakers' record of achievement is found in Paul H. Emden, Quakers in Commerce: A Record of Business Achievement (London: Sampson Low, Marston and Company, 1939). 44. Particularly focused on this is Sigbjorn Ravnåsen, Ånd Og Hånd: Hans Nielsen Hauges Etikk for Ledelse og Naeringsliv (Oslo: Luther Forlag, 2002). 45. Magnus Nodtvedt, Rebirth of Norway's Peasantry: Folk Leader Hans Nielsen Hauge (Tocoma, WA: Pacific Lutheran University Press, 1965), 107. 46. Nils Gilje, 'Hans Nielsen Hauge: En radikal ildprofet fra Tune', in Hans Nielsen Hauge og det moderne Norge, ed. Svein Aage Christoffersen, KULTs skriftserie nr 48 (Norges Forskningsråd, 1996), 20. 47. N.H. Ording, Hans Nielsen Hauges Skrifter (Oslo: H. Aschehoug, 1947), vol. 6, p. 88. 48. N.H. Ording, Hans Nielsen Hauges Skrifter (Oslo: H. Aschehoug, 1953), vol. 5, p. 39. 49. Ingolf Kvammen, Brev frå Hans Nielsen Hauge (Oslo: Luther Forlag, 1971), 101. 50. N.H. Ording, Hans Nielsen Hauges Skrifter (Oslo: Luther Forlag, 1949), vol. 3, p. 592. 51. Magnus Nodtvedt, Rebirth of Norway's Peasantry, 103. 52. Quoted in Sigbjorn Ravnåsen, Ånd Og Hånd. 53. In a broader sense, Hauge's approach, empowering – and in the process educating – people, might be considered an aspect of human capital development. Gary Becker has argued that human capital is essential to economic growth and that firm specific human capital can help explain firms' performance. In encouraging people to use their talents, Hauge may have been taking the first step toward developing the human capital of his followers. This concept has relevance in our discussion of the performance of firms started by Hauge and his followers. See Gary S. Becker, Human Capital (New York: Columbia University Press, 1975) and subsequent works. 54. Connie Marie Gaglio and Jerome A. Katz, 'The Psychological Basis of Opportunity Identification: Entrepreneurial Alertness', Small Business Economics 16 (2001): 99. 55. Connie Marie Gaglio and Jerome A. Katz, 'The Psychological Basis', 103. 56. See M. Supphellen, S.A. Haugland, and O. Oklevik, 'Entrepreneurial Orientation, Self-efficacy, and Religious Attitudes in Small Third-world Enterprises', The Strategic Management Society Conference, Rome, 2010. 57. Fritz Hodne and Ola H. Grytten, Norsk okonomi i det 19. arhundre (Bergen: Fagbokforiaget), 67–76. 58. Many of Hauge's followers abstained completely and the Hauge movement is often associated with teetotalism 59. Quote appears in Dagfinn Breistein's account of Hauge and his business endeavors, Hans Nielsen Hauge: Kmopmann i Bergen (Bergen, 1955) and is included in English-language version of Alv Johan Magnus' Magister Thesis in Sociology, 'Revival and Society: An Examination of the Haugian Revival and its Influence on Norwegian Society in the 19th Century', University of Oslo, 1978. Much of the discussion on Hauge's business activity is taken from this Magister Thesis and it, in turn, relies heavily on Breistein's book. 60. Alv Johan Magnus, Magister Thesis, 50. 61. Dagfinn Breistein, Hans Nielsen Hauge, 187 as cited by Alv Johan Magnus, Magister Thesis, 57. 62. Dagfinn Breistein, Hans Nielsen Hauge, 171 as cited by Alv Johan Magnus, Magister Thesis, 54. 63. Vegard Tafjord Rødal and Andreas Kiplesund, 'Hans Nielsen Hauge: Entrepreneur, Banker and Industrialist' (Master of Science in Economics and Business Administration, Norges Handelshøyskole, Bergen, 2009), 69. 64. Vegard Tafjord Rødal and Andreas Kiplesund, 'Hans Nielsen Hauge', 69. 65. Estimates by Ola Grytten based on data complied by Fritz Hodne, 'verdiskapingen i manufaktur og industri i Norge 1817-1829', in Nordic Historical National Accounts, ed. Ola H. Grytten (Bergen: NHH, 1999), 42–61. 66. Wellman J. Warner, The Wesleyan Movement in the Industrial Revolution (London: Longmans, Green and Company, 1930), 27. 67. Wellman J. Warner, The Wesleyan Movement, 31–2. 68. Andreas Aarflot, Hans Nielsen Hauge: His Life and Message (Minneapolis: Augsburg Publishing, 1979), 155. 69. Quoted in Aarflot, Andreas Aarflot, Hans Nielsen Hauge, 159. 70. This estimate is based upon preliminary surveys of businesses and interviews with business leaders undertaken by the authors and Ola H. Grytten.