Mormons and Business… An Arrington Perspective for Development?

Utah is popular for a number of different things: The Utah Jazz, (the almost-made-it team of the NBA), The hosting of the Winter Olympics,Skiing, astronomic bankruptcy and of course, Mormons.

Now whether you are starting a business or keeping one running in Utah, it can be helpful to remember the depth of the culture you are dealing with.

Although Utah’s economy is now very strong, it has certainly not always been the case and actually has gone through a number of very interesting evolutions to become what it is today. Moreover it serves as a model that that can demonstrate the building of an impoverished economy.

In a book written by David Arrington, entitled, The Great Basin Kingdom, the economic history of early mormon settlers is reviewed. Faiths or bias aside it is an extremely interesting, (although very dense) read.

Below is a paper I once wrote as a review of this book. Feel free to skim it or read it in depth.

Great Basin Kingdom
An Economic History of the Latter-day Saints
By Leonard J. Arrington

The factors of cultural and social development are among some of the more complicated and controversial topics found in present day sociology and economics. Although when discussing social and economic development our minds may instantly turn to Africa, South America or East Asia, we often overlook the incredible, “Mormon Miracle” which took place right, (and arguably is still taking place), right here in the Great Basin Valley. The development of formidable deserts among a destitute people could be considered one of the greatest development stories of all times.

In the book, Great Basin Kingdom, Leonard J. Arrington explores the development of the Great Basin Valley from 1830 – 1900. By reviewing the religious, social, political and environmental factors of the day, Arrington identifies what he feels are the key principles to the success of the Mormon Pioneers. Quite different from the general growth found in the Harrod Domar model discussed in class, it is clear to see that although increased investment and capital definitely play a role in the development of an economy, their role is only secondary to the great importance of the elusive passion and desire which fuel success: more along the lines of the “mo-jo” or Total Factor Productivity as identified by my economics professor, Professor Frank McIntyre.

The Mormon perspective the Kingdom of God was spiritual and literal. Indeed Arrington identified that Mormons saw the spiritual and temporal as being a nearly inseparable distinction. The Kingdom of God was to be resurrected on the Earth and it would need the hearts, mind and logistical infrastructure to support it.

Incentives of The Kingdom. Economics is based on the trade off of incentives and the Mormon theology, though peculiar, was no exception. Mormon theology was deeply engrained with the concept of unity and mutual wealth. To be saved and gain eternal happiness, was only possible through service and selfless development of ones families and other brethren. By stressing the long term, indeed post life perspective, the incentive of eternal happiness was extremely great and strong enough to endure the hardships of today for something greater in the next life.

Economic Programs of The Kingdom. A considerable amount of revelation received through Joseph Smith and Brigham young had directly to do with the economic development and programs of the saints. These were originally established to encourage self-dependence, equality and prosperity among Mormon believers.

From an economic standpoint, the different institutions and programs could be considered savings or investment and institutions for stability and distribution of capital. Although not all of these programs could be considered successful, it can be seen and inferred by the large number of them that the development of the Great Basin Area was a dynamic process that ran with those things that worked and if something failed they quickly adapted to revise or throw it out. A few of the different programs and institutions integral to the economic logistics of The Kingdom include the following:
• The Law of Consecration/ United Order: All things are the Lord’s and were consecrated to the building up of his Kingdom.
• The Law of Tithing: One Tenth of all the “increase” received by believers was to be donated back to the Church for the building up of the kingdom. This was done “in kind”, manual labor or by cash. (p. 18, 138)
• The United Order of Enoch: One of several variations of the United Order that encouraged trade and industrial development among members but condemned trade and development with non-members. (p. 321-322)
• Perpetual Emigration Fund: A Fund developed for the transportation of immigrant members to join with the saints. Expenses were expected to be paid back when the newly arrived saints could repay. (p. 77-79)
• Public Works: A program set up to develop the city and give work to the huge influx of migrant members. (p. 154-155)
• The School of The Prophets: An education program and school established for members of the priesthood to be trained and work together. (p. 245, 251)
• The Council of Fifty: An institution influential of members and nonmembers that worked together to shape policy and petitions for the development of the church. It was a predecessor to the school of the prophets. (p. 31, 245)
• Development and Settlement Programs: Saints were called on missions to develop different geographical areas and industries. Primarily in the agricultural sector although it did increase to include other avenues.
• The Relief Society: An institution to organize the labor and skills of women. This Society provided a system of support for needy members as well as a means to develop industry especially in silk and textiles. (p. 31, 254)
• A Deseret Banking and Fiscal Policy: Promissory notes, coins, tithing notes and in kind trade credit were among the different policies instituted among members to establish a self-sufficient economy. (191-192)
• Church Bonds and Quasi-Business Ventures: The Church as an extensive trust was able to fund a number of different business ventures and establish and sell church bonds for funding of those industrial and agricultural undertakings.

Although the church had a number of different effective programs for capital, investment and institutional guarantees, there were a number of different factors that could not be controlled. These external factors threatened and hurt the development of church programs thus preventing them from being successful in the economic growth and stability.

Environmental threats. The Great Basin Area was a very harsh and undeveloped region. Terrible droughts and location near cricket breeding grounds made agricultural developments very difficult. Many important crop harvests were nearly obliterated due to these harsh conditions. (p. 49-50, 151-156) Powerful floods and other extreme climate conditions made many mining and horticultural undertakings difficult as well

Social threats. Angry non-mormons would try to undo what they could of the Mormon Kingdom by introducing different commercial or entertainment aspects into The Kingdom. Many people were confident that the introduction of the Railroad through Utah would actually end up flooding the Mormon Kingdom with so much outside influence that the Mormon incentives for unity, hard work and sacrifice would dissolve. In addition to the growing number of unhappy capitalists who could not compete with the growing monopoly of the Church, there was a great anti-polygamy sentiment that was growing among the neighbors in the territory and created powerful incentive for anti-Mormons to band together to eliminate the Mormon question.

Political threats. The Utah war definitely raised people’s awareness of the Mormons and just how far they were willing to go to defend their beliefs. A number of different political policies were put into play to address what was perceived as the growing Mormon threat: (p. 349-350)
• The Wade Bill
• The Cullom Bill
• The Ashley Bill
• The Poland Act
• The Edmunds Tucker Act

The final and most deadly act, the Edmunds Tucker Act, essentially gave the United States power to dismantle the expressed financial and some religious, (cohabitional) institutions that were sanctioned by the church. Cash, credit and capital were ravaged by the church and many leaders went to prison or hiding during this political pressure.

Through the development of The Kingdom, The Church had failed in many different ventures and policies, only to adapt and develop stronger or more appropriate policies. The bounce back from the set backs of the Edmunds Tucker act and subsequent hardships were no exception to this characteristic.

Religious policies were changed to no longer sanction polygamy, thus alleviating a large amount of the social and political pressure on their organization. Without the existing trusts and financial protection of the church, members were encouraged to learn and work together with “gentiles” in different educational, political and business ventures. Many business ventures were sold off or dissolved and energies and stress on the literal logistics and building of The Kingdom were transferred to more spiritual and doctrinal unity and realization.

Although a completely different development than other parts of the territory up until that point, (meaning not a free market or capitalistic development), Utah did make the transition, (slowly but surely) similarly to that of its western neighbors.

Dissolved of much of its financial interests, The Church still remained a financial powerhouse and out of debt since 1900, growing to become one of the largest private supporters of social relief, humanitarian relief and welfare training in the world today.

There is no question that the development of The Great Basin is one of the more significant success stories in American History; but why? What is it that made it so successful? By exploring a few of the different development models we have discussed in class, we can attempt identify the unique variable to this success.

Harrod Domar: In the terms of building The Kingdom, there are number of different fallacies in trying to apply this model. This model has no diminishing returns, and gives a tremendous amount of weight to the growth population and depreciation. There are only so many saints that can be working or on involved in one or more projects at one time. Even though there was a pretty constant flow of saints and capital investment, there was not an equal enough distribution for constant return to scale. Also the population growth rates in the Mormon community was extremely high and the depreciation rates were also extremely high, (when taking famine and things into consideration), and yet the growth rates for The Kingdom certainly did not respond according to the Harrod Domar model.

Solow: Although this model does take into consideration diminishing returns, there are still some fallacies in the response of The Kingdom economy to this model. In the long run, the growth rates of an economy based on the Solow model are zero, and yet clearly the economy responded with even more endogenous variables and even with basic agricultural technologies Mormons were continuing to increase their settlements and standards of living. In addition, this model does not recognize the importance of the level of capabilities of the population and labor.

Human Capital: Investment in human capital was undoubtedly important for Mormons and the development of The Kingdom. Various forms of training through the Relief Society, the Public Works projects, The School of the Prophets and more, increased the skills and abilities of Kingdom Members. Unfortunately, this model does not necessarily identify what it was that held the society together during all of the environmental, social and political conflicts of the time.

Total Factor Productivity (TFP): Initially introduced as a measure of technical progress, TFP could in a sense, be considered as the explainable variable for the unexplainable success or failure of a given model. This “technical progress” could as easily be substituted for progress in “ideology”, “gumption” or “mo-jo”, as one of my college economics professors once referred to it. It is this variable which, in the face of destructive environments, oppressive external forces, failed institutions, high growth rates and gross depreciation, still allowed the development of the Great Basin Kingdom to realize its success. Mormon “mo-jo” becomes the most important variable in the growth function of the Great Basin Kingdom and the deciding factor in its success. A change in that variable (as expressed by the members forsaking their memberships, failing to pay tithing or continue their charitable and communal ways) would undoubtedly have created the biggest difference in Mormon development.

Although the factors of social and economic development among The Great Basin Kingdom were extremely complicated and often controversial it turned out to become one of the greatest development success stories in modern history. In the book Great Basin Kingdom, Leonard J. Arrington explores this development and the policies and obstacles that early Mormon founders faced. Unique from normal development models, the greatest reasons for success of this model was identified as being the ideology or of the Mormon people and their unified quest to build the literal and spiritual Kingdom of God. (With plenty of hiccups along way).

This book has given me a deeper perspective of the Mormon economic structure and the development of the Salt Lake Valley. It serves as an interesting model to study and follow for development and fight against global poverty.

It is a book that would be helpful to read before any business start-up, non-profit, for-profit or social venture.

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