It pays churches to have faith in markets

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The analogy between Wal-Mart’s competition for customers and Southern Baptists’ for adherents, reveals some interesting insights.

Why is the US the only western country in which the role of religion in social and political life is increasing? And why is the brand of religion that is driving that growth a simple-minded fundamentalism that barely exists in Europe?

These may not sound like questions for the FT. But business economics suggests an answer. The US is the most competitive of religious marketplaces. Competition stimulates innovation and growth among churches just as it does in the personal computer business.

The European industry is very different. Most national markets have dominant churches, often state supported. In other industries dominant companies with political advantages are too well insulated from market pressures for their own long-term good. Their decay affects the health of the whole industry. Perhaps this is also true of churches.

The international market for religion is complex. Catholicism is a global brand. It competes with domestic products rather as McDonald’s competes with national eating habits. Some franchise operations, such as Methodism, have global reach. The Highland Park Methodist congregation, popular with the rich Texan establishment, pulled off a coup by attracting George W. Bush away from the episcopalianism of his father.

Customer switching is less common in Europe. Catholicism dominates the south but local businesses are strong in the north. There seems to be tacit market-sharing. European churches make little effort to poach each other’s customers, disapproving of proselytisation. The US has never had a dominant church since the days of the Pilgrim Fathers. The separation of church and state in the US constitution was a conscious refusal to give any firm regulatory advantage. Entry into the US market was greatly helped by immigration. Catholicism became the largest player, with just over a third of the market. US churches have never shown the same inhibitions about inter-faith competition.

The recent success in this competitive market has been the expansion of the Southern Baptists. Southern Baptism is to religion what Wal-Mart is to retailing. Even though its base is small-town America, the size of that base makes the church one of the world’s largest. Both Wal-Mart and Southern Baptism have a simple formula: low prices; scriptural truth. Both have flat organisation structures and are focused on their customers.

But Europe’s monopoly churches are, like its monopoly utilities, directed towards the needs of producers rather than consumers. Producer-run businesses favour technical excellence over cost-effectiveness. Compare European cathedrals with the no-frills premises of the new fundamentalists – just as the gothic splendours of the traditional department store are very different from Wal-Mart’s sheds.

Unconstrained by market forces, European churches devote energy to doctrinal niceties. These subtleties do not interest most users. The seminaries of Southern Baptists are concerned with practical skills, just as Wal-Mart’s training is directed towards minding the store, not the financial engineering of a Harvard MBA.

There is always market pressure to liberalise dogma. But in the long run a church that makes few demands on adherents commands little respect and little support. Accountants, consultants and investment bankers are familiar with the problem. They can usually gain immediate advantage by telling the customer what he wants to hear. But this erodes the authority that is ultimately the basis of their market position. This is the dilemma that destroyed Andersen: churches face it too. The Vatican reforms of the 1960s did not arrest declining observance in the Catholic Church; by reducing the differentiation of its product they diminished its competitive advantage. People need discipline from their church, as from their auditors.

The chief executives of religious organisations are motivated by convictions, not the maximisation of shareholder value. But attempts to make their products more customer- friendly are often self-defeating. The marketplace favours not what customers ought to want but what they do want. So does the religious marketplace. If fundamentalism is in the ascendant, in the US and the Islamic world, the lesson may be the familiar but depressing one that you cannot buck the market.

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