As we saw in Chapter 18, Hume bracketed religion in general under the rubric of “superstition and enthusiasm” (he called them “corruptions of true religion,” but they exhaust the phenomena of religious experience as he conceived them to the point where it is hard to know where to look for “true religion”). Smith provides a subtle (or perhaps not so subtle) indication of the Humean lineage of his own analysis of religion by referring, immediately before an acute discussion of religion in Book 5 of The Wealth of Nations, to “the delusions of enthusiasm and superstition.” (If, according to Hume's formula, superstition is code for Catholicism and enthusiasm is code for the Reformation, then any reference to the corruptions of superstition and enthusiasm is necessarily a loaded reference.) However, as was the case for Hume, the conjunction is less important, analytically speaking, than what distinguishes superstition and enthusiasm as separate categories. As we will see, Smith's analysis hinges no less on this distinction than was true in the case of Hume.

The bulk of Book 5, chapter 1, Part 3, Article 3 of The Wealth of Nations is devoted to a historical narrative of the relations between church and state with respect to the shifting balance of wealth and power. The hardheadedness about the realities of wealth and power displayed by Smith in this narrative is entirely in the spirit of great figures in the tradition of anticlerical thought such as Hobbes and Hume. In effect, Smith provides a history of the power dynamics within pre-Reformation and post-Reformation Christendom. Much of the story up until the Reformation is one of increasing centralization of power and authority. Originally, there was provision for joint election of bishops by the clergy and the people. The people's right of election soon gave way to what was for the clergy an “easier” arrangement – election solely within the clergy. Having been elected, the bishop in turn controlled all lesser ecclesiastical benefices. “All church preferments were in this manner in the disposal of the church,” leaving the sovereign with “no direct or sufficient means of managing the clergy. The ambition of every clergyman naturally led him to pay court, not so much to his sovereign, as to his own order, from which only he could expect preferment.” However, the process of consolidation of clerical power did not end there. The power of the bishops was then largely appropriated by the papacy, not only disempowering the bishops but leaving “the condition of the sovereign…still worse than it had been before.” The papal regime constituted “a sort of spiritual army,” dispersed across Europe, “directed by one head, and conducted upon one uniform plan.” Thus, the Pope amounted to “a foreign sovereign” with “arms” that were “the most formidable that can well be imagined.” The clergy with all their wealth were like “the great barons” lording it over their feudal vassals. Like the barons, the clergy controlled great landed estates that had both political and economic aspects. In its political aspect, it provided the clergy with independent jurisdictions that “were equally independent, and equally exclusive of the authority of the king's courts, as those of the great temporal lords.” In its economic aspect, it provided the clergy with “a very large portion of the rents of all the other estates in every kingdom of Europe,” yielding an “immense surplus” – the source of charity for the poor and hospitality for itinerant knights. The effect was to erect a parallel feudalism in which clerical power and authority exceeded that of the king, resulting in the clergy's “total exemption from the secular jurisdiction.” Smith characterizes the Church during this epoch, spanning the tenth to thirteenth centuries, as “the most formidable combination that ever was formed against the authority and security of civil government, as well as against the liberty, reason, and happiness of mankind, which can flourish only where civil government is able to protect them.”