Mendicant Orders and the Foundations of Impersonal Exchange

• Authors: Lucas López-Manuel and Benito Arruñada
• BSE Working Paper: 1447 | May 2024
• Keywords: persistence, institutions, Religion, values, cultural change, Catholic Church, Late Middle Ages
• JEL codes: N34, O10, Z12, Z13

We argue that the main Mendicant Orders of the Late Middle Ages—Dominican and Franciscan— were instrumental in shaping key cultural and institutional traits of impersonal exchange by updating both moral codes and religious practice. As one of the three pillars of impersonal exchange—alongside state capacity and merchant institutions—religiously infused moral cognition provides the focus of our analysis. In line with their specializations, we document opposing effects of the two Orders on individualism, impersonal prosociality, and impartial enforcement: positive from exposure to the Dominicans and negative from exposure to the Franciscans. These effects stem from deep moral changes tied to the emotions of guilt, shame, and compassion, with knowledge and education accounting for historical persistence. We assess these differences across multiple datasets, analytical levels, and historical contexts—always focusing on the differential effects of the two Orders. Our findings invite a reassessment of the Church’s role in cultural and institutional development and underscore the divergent effects of its branches and doctrines.