Marco has advanced the thesis that the principle of Separation of Church and State enshrined in the United States constitution is a major, or even the major, factor in the success of the United States, and that nations that have such a principle are likely to be more stable and prosperous than those that have not. If I have misstated his thesis, I am sure he will correct me!
Now, I am not sure that this is a general principle at all. There are three obvious questions: Which Church? Which State? And, most importantly, what do we mean by Separation? I asked Marco for a definition, and I am taking the liberty of reproducing his response below:
My definition of Separation of Church and state is the principle (enshrined in USA's constitution for instance) that the laws of the "Church" as in any moral edicts or by-laws given in any registered religious organisation are independent of the laws of the country. It also means that the head of state cannot also be a head of a religious organisation. This does not mean that just because murder is disallowed with Christians that this law cannot be also a law of the country, but that the country's law is independently defined, judged and policed from any christian institutions. Although Australia does not seem to have this enshrined in the constitution, the principle is well known, and is argued at great length when, for instance the GG is/was also the head of a Church. I agree that where there wasn't an alternative in the past history, in the examples you mention for instance, long and stable Theocracies did thrive - but in modern history, from whence the principle first surfaced, how have countries that disavowed the principle thrived compared to ones that didn't?
(1) If by ‘independent’ is simply meant, ‘there should be laws of the state separate from the laws of the religions followed by people in the state’, I agree. There is no reason these laws of the state should be quite as all pervasive as they are in Australia; Israel, for example, gets along reasonably well with no civil marriage or divorce. At its most trivial, there are many things that need laws, but are not important enough for religion to deal with: traffic lights, income tax, corporations law, etc.
Every state that I can think of has some laws that are not religious laws; I don’t know if Afghanistan under the Taliban was run completely according to Shari’a. Sudan and Sa’udi Arabia (and to a lesser extent Iran) have a very large religious component in their laws, and I don’t think we can say they are that much less successful than the surrounding nations who share a similar cultural background but are more secular. And on the other hand, Utah was quite prosperous and successful as a theocracy. I don’t think there is enough proof that this form of the general principle holds, although I suspect it will once the state is large enough to hold significant minorities who are not wholehearted adherents of the religion in question.
(2) If ‘independent’ is meant in the sense of ‘independent variable’, such that the laws of the state should not be a factor in determining the laws of the religion, then again I agree completely. If our religion demands polygamy, or wax fruit, woe betide the state that tries to legislate against us! The laws of God beat the laws of man as surely as rock beats scissors. To be fair, religions should not accept money from the State, because he who pays the piper calls the tune. The State should not fund religious schools.
However, there have been plenty of successful states where Church and State were not separated by this formulation of the principle: The United Kingdom, for instance, where the tenets of the religion were determined by the State and the Head of State is the Head of the Church; Russia, which experienced extremely rapid development and economic growth in the late 19th century with a church wholly subservient to the State; ditto Japan, with the state-sponsored Shinto cult. The prosperous nations of Scandinavia have (or had) state-sponsored Lutheran Churches on the same model as the Church of England.
(3) If ‘independent’ is meant in the sense of ‘independent variable’, such that the laws of the religions followed by people in the state should not be a factor in determining the laws of the state, then I would strongly disagree. I would argue that this is not the practice of the United States, nor the theory on which the United States constitution is built. The United States was a nation with a great variety of (Christian, Protestant) religions when it was founded and its founding documents rest on a foundation of 18th century theism- the basic religious ideas that just about everyone could agree to. ‘That each man is endowed by his creator with certain inalienable rights...’ Without that bedrock consensus, I doubt that the United States or the United States constitution would have been as successful as they have been.
Nations that have instituted separation of Church and State on this model that I can think of are France and Italy in the period 1870-1914, approximately. They seemed to do reasonably well in that time. I am leaving out all those modern states that have actively tried to destroy religion, like the Communist ones... they had too many other problems.
I think ‘Separation of Church and State’ is not a determinant of a nation’s prosperity. If the Church and the State are both pulling in the same direction (e.g., a Protestant or Confucian work ethic with an economically responsible government and a clearly defined rule of law), it does not matter whether the Church and State are separate by definition 2 (United State) or not (England, Japan...). Which Church? and Which State? are very important questions. If the laws of the religion insist on a three day week and generous subsidies for uncompetitive manufacturing industries, the State will probably be better off ignoring them. But even if the laws of the State are based on some Anarcho-Syndicalist fad, the right sort of religious laws might keep the economy moving...
I wanted to talk mostly about ‘what is good?’ but have ended up talking mostly about ‘what will make us more money?’. Hopefully my answer to the first is clear. My answer to the second is, it depends: Which Church? Which State?