Published on February 14, 2008
Aquinas and Scholasticism: Aquinas and Scholasticism History of Economic Thought Boise State University Fall 2004 Prof. D. Allen Dalton Economy and State in the Middle Ages: Economy and State in the Middle Ages Fall of Rome disintegration of cities inability of central government to provide defense against marauding barbarians Invasion and Defense invasion by horsemen - Moors, Vikings, Magyars - in 8th and 9th Centuries system of local defense dependent on armored horsemen (Knights) Frankish Kingdoms and development of Feudalism grants of lands in exchange for military service land grants entail administration of local order and justice Economy and State in the Middle Ages: Economy and State in the Middle Ages Manorialism - the economic structure Roman latifundia; self-sufficient estates; introduction of warriors into ruling class division of land into lord’s demesne, peasant lands, and commons demesne worked by peasants as service to lord Economic and Social Orders Lords, clergy, peasants Townspeople outside of hierarchy Peasant status fall of Rome to 10th/11th, conditions become increasingly servile from 12th century on, a progressive relaxation of servility Economy and State in the Middle Ages: Economy and State in the Middle Ages The First Logistic (9th-11th Centuries) Agricultural Innovation and Population Growth increased agricultural productivity via three-crop rotation, heavy wheeled plow and adoption of horses for fieldwork Geographic expansion and land reclamation The Crusades (1095-1291) Response to Seljuk Turk expansion into Holy Lands that threaten Christian pilgrims; end with Egyptian Malmuks in control of Holy Land Centralization of Power and Wealth in Church Weaken Islamic Power and Weaken Christian Faith Expansion of Trade and Commerce Economy and State in the Middle Ages: Economy and State in the Middle Ages Commercial Revolution (11th-13th Centuries) Rise of Cities, Merchant Class and Communes Fairs of Champagne and Law Merchant Manufactures Intensified Rivalry between Feudalism and Towns Famine, Plague, War, and Statism The Great Famine (1315-1317) Rise of Nation State (France and England) taxation and plunder of the Church and the Fairs The Black Death (1348-1352) wage controls and labor rationing Hundred Years War (1338-1453) Economy and State in the Middle Ages: Economy and State in the Middle Ages The Breakdown of Serfdom Population/urban growth expand hired labor as wage rates fall and increase private holdings relative to commons and rental rather than service payments of serfs Disasters of 14th Century reverse wage trends landlord competition and dissolution of feudal ties wage controls and peasant revolts Europe’s Second Logistic (15th-17th Centuries) Renewed Growth and Development Maritime Trading Centers, Era of Discovery and Expansion Breakdown of Trading and Guild Monopolies The Price Revolution (Gold and Silver Inflows) Development of Law: Development of Law Roman Law and Canon Law Commercial Revolution growth Expansion of Universities; University of Bologna becomes center of study of Roman and Canon Law Roman Law Twelfth and Thirteenth Centuries are period of classification, organization and commentary on Roman and Canon Law Gratian’s Concord of Discordant Canons (1140) collects canon law texts, civil law texts, patristic writings and papal decretals, known as Decretum “Merger” of the Law fine line of distinction (specialists and professors of Roman Law tend to be same as those of Canon Law) Pre-Scholastic Christianity: Pre-Scholastic Christianity How are we to reconcile reason with revelation, science with faith, philosophy with theology? Question addressed and answer found in St. Basil, Origen, St. Augustine and others ALL wisdom of philosophy (Plato, etc.) is due to inspiration of the Logos; therefore, all wisdom of philosophy is God’s truth and can not be in contradiction to revelation St. Augustine faith aids reason and reason aids faith But How??? Scholasticism: Scholasticism the method and manner of dialectical philosophizing (question and answers) taught in the schools the period from 9th century CE, when new schools arose in Europe to spread Patristic faith disciplined by dialectic methods of thinking Christian Rationalism, as distinct from Augustinian Intuitionism reason applied to nature, human nature and supernatural truth The Major Scholastic Thinkers: The Major Scholastic Thinkers St. Anselm (1033-1109) first to incorporate Aristotelian rationalism into Christian theology; rational proofs for existence of God in Monologium and Proslogium Peter Abelard (1079-1142) Sic et non, collection of contradictory sayings from Scripture and Church Fathers, introduces method of resolving contradictions, lays foundation for scholastic method Peter Lombard (c.1100 - c.1160) Sentences, compilation of early theological opinions, becomes central text of scholastic theological instruction The Major Scholastic Thinkers: The Major Scholastic Thinkers St. Albertus Magnus (1193/1206 - 1280) from Averroes, introduces Aristotle’s treatises and method; his Summa theologiae disputes Averroes and reconciles Aristotle and Christianity Roger Bacon (1212-1294) Franciscan, first great Scholastic empiricist St. Bonaventure (1221-1274) Franciscan, reconciles Aristotle with Augustine; reason subservient to faith John Duns Scotus (1266-1308) Franciscan, greatest opponent of Thomism William of Occam (1285-1349) Franciscan, scientific empiricist; disputed self-evident principles in Thomism, denying competence of reason re faith St. Thomas Aquinas: St. Thomas Aquinas St. Thomas Aquinas (1225-1274) Italian, born near Naples Dominican, student of Albertus Magnus, professor of theology at Paris, papal advisor Century of Dispute The 13th Century is torn between Augustinians who make truth a matter of faith and Averroists, led by Siger de Brabant ( ? - 1277), who separate truth from faith St. Thomas advances a middle ground reason and faith constitute two harmonious realms faith complements reason reason has autonomy of its own St. Thomas Aquinas: St. Thomas Aquinas Thomist Philosophy systematic application of Aristotelian methods and distinctions repeated Avicenna’s position on Universals which becomes standard Scholastic view Aquinas’ Works Commentary of the Sentences (public lectures 1254-56) seven quaestiones disputatae (public debates 1256-72) commentaries on several of Aristotle’s works Summa contra Gentiles (1258-60) Summa theologica (1267-73) Scholastic Process: Scholastic Process “Through doubting we come to inquiry, and through inquiry we perceive the truth.” - Peter Abelard Influences on Economic Thought: Influences on Economic Thought The Crusades breakdown of Papal authority influx of Islamic philosophy, science, commercial ideas, and customs Rediscovery of Aristotle Arabic translations and commentaries (11th and 12th centuries) of Avicenna, Averroes and Al-Ghazali first Latin translations of… Nichomachean Ethics (c. 1247) by Robert Grosseteste, Bishop of Lincoln Politics (1260-4) by William of Moerbeke Centrality of “the mean” Influences on Economic Thought: Influences on Economic Thought Economic Background expansion of trade and wealth progressive breakdown of feudalism rise of Cities, followed by rise of Nation-states Roman Law and Canon Law Stoic and Epicurean influences of Natural Law theory and republican equality (Cicero) Two strands of early Christianity Augustinian and Tertullianist “Two forums” doctrine from 13th Century on Roman Law in external world (jus fori) Canon Law in confessional (jus poli) Development of Economic Thought: Development of Economic Thought Two Approaches to Economics From the Law Roman and Canon Law From Philosophy Scholasticism Periods of Scholastic Economic Thought Early Scholasticism - Aquinas and Olivi Middle Scholasticism - Bernardino, Buridan, Oresme Late Scholasticism - Molina, Mariana The Law Tradition: Mercantile Activity: The Law Tradition: Mercantile Activity Mercantile Activity and Profits Gratian (Decretum-1140) pure mercantile activities (buying cheap, selling dear) is turpe lucrum and inevitably involves fraud Rufinius (Summa on the Decretum-1159) artisans and craftsman justified by labor and expenses in buying cheap and selling dear Huguccio (Summa-1188) artisans, craftsmen, and merchants justified by providing for needs of family to buy cheap and sell dear Albericus (c. 1200) introduction of laesio enormis into Roman Law notion of just price arrived at through bargaining The Law Tradition: Mercantile Activity: The Law Tradition: Mercantile Activity Mercantile Activity and Profits Alanus Anglicus (c. 1200) no turpe lucrum if future price is uncertain William of Rennes (Gloss-1250) merchant or speculator actions not sinful unless driven by wanton desire of temporal riches Pope Innocent IV (Commentaries- 1246-1253) increase in price justified as consequence of risk What is the “Just Price”? Communis aestimatio, the going current market price (result of competitive exchange or legally-fixed price) taken from Roman Law and explicitly enunciated by Simon of Bosignano in Canon Law (c. 1179) The Law Tradition: Usury: The Law Tradition: Usury Usury Council of Nicaea (325) declares clergy who charge interest on loans are guilty of turpe lucrum cites Psalm 14: “Lord, who shall swell in thy tabernacle? He that hath not put out his money to usury.” Pope Leo I (440-461) extends prohibition to lay usurers Charlemagne’s Imperial Synod of Aachen (789) prohibition enters secular legislation and applies to lay and cleric alike St. Anselm (c. 1070) declares usury is theft The Law Tradition: Usury: The Law Tradition: Usury Usury Gratian (Decretum-1140) declares “just price” of loans is interest rate of zero Pope Alexander III Third Lateran Council (1179) excommunicates and denies Christian burial to all manifest usurers Simon of Bosignano (1179) and Huguccio (Summa-1188) interest on loan is usury, but renting of a good is not distinction between commodatum (rental contract that transfers use of a good) and mutuum (loan where ownership transfers for a contracted period of time) The Law Tradition: Usury: The Law Tradition: Usury Usury Cardinal Hostiensis (Henry of Segusio) (Summa -c. 1250) reverted to tradition that usury is uncharitable but not a sin against justice listed 13 instances in which interest could be charged surety required by guarantor of loan higher price on credit versus cash debtor free gift to lender path-breaking lucrum cessans (profit foregone) argument, but applied only to non-habitual lenders lending out of charity to a debtor Decretalist position of “two forums” comes to dominate punishment of usury Economics of Roman and Canon Law: Economics of Roman and Canon Law Summary Roman Law conceptions come to dominate Canon Law conceptions of mercantile activity, profits, and just price mercantile activity served important social ends (health and maintenance of family) profits (wages) were justified by labor and expense, ends served, risk, and uncertainty the just price was established by the “common estimate” of the market, but isolated exchange was subject to laesio enormis constraints Usury prohibition lessened at fringes (groundwork for future) but dominant position was that usury was a mortal sin Canon Law predominant, but “two forums” doctrine effectively allows interest (esp. from mid-13th century) Early Scholasticism: Property: Early Scholasticism: Property Property Rights the conflict between God’s “Natural” Law of common ownership and use and the Human Law (embodied in Roman Law) that defended private dominion over ownership and use Augustine’s solution had been that the fall from innocence had subjected Man to Human institutions, and that God alone grants power to kingdoms; therefore human law regarding private property is God’s law Alexander of Hales suggests Natural Law changes after the fall from innocence Early Scholasticism: Mercantile Activity: Early Scholasticism: Mercantile Activity Commerce and Profit Peter Lombard (Sentences, 1150) a merchant can not perform his duties without sinning Thomas of Chobham (Summa Confessorum, 1215) merchants permitted to buy cheap and sell dear, even if they add nothing of value, and they are clearly entitled to charge value of labor and expenses and capital laid out, as well as value of improvements Albertus Magnus (Commentary, 1244-49), Peter of Tarentaise (Commentary, 1253-57), St. Bonaventure (Commentary, 1250-51) all declare merchants essential to society, and justify profits (wages) by labor and expenses (transportation, storage, care) and risk Early Scholasticism: Just Price: Early Scholasticism: Just Price Just Price Alexander of Hales (Summa universae theologiae, 1231) trade was licit when conducted by “a just estimation of the thing, and by commerce, according to the way it is commonly sold in that city or place where trade occurs” Albertus Magnus (Commentary, 1244-49) just price is ratio of value of one good to another as measured by (1) labor and expenses, and (2) “in regard to need, which is the cause of exchange.” Early Scholasticism: Usury: Early Scholasticism: Usury Usury William of Auxerre (Commentary, 1244-49) interest is unnatural, a violation of natural law interest on a loan is “selling time,” a possession all humans hold in common since a buyer would always prefer “no interest” to paying interest, an interest contract was voluntary only is a “conditional” sense, not an absolute sense, and therefore is not a valid voluntary contract Albertus Magnus (Commentary, 1244-49) Aristotelian argument that usury is the unnatural breeding of a barren metal St. Thomas Aquinas: St. Thomas Aquinas Aquinas on Property Rights All law, including natural law and human law, if derived from “right reason,” is derived from God’s eternal law; reason can add or subtract to natural law Private property is justified by right reason private property leads to a society of less conflict private property is better cared for than common property private property allows people to exercise liberality private property founded in labor and occupation private property in ownership and use, but this right is limited by just demands of the social order (state) and just demands of the needy not all takings are theft or robbery St. Thomas Aquinas: St. Thomas Aquinas Aquinas on Just Price and Price Determination notes exchange is for mutual advantage views exchange as driven by utility but reintroduces Aristotelian confusion of “equality for equality” without the interpretation of Albertus Magnus distinguishes between civil and divine law treatment of justice in exchange seller may charge higher price than he paid (labor and expenses, risk, uncertainty) supply affects price (common estimate is just price) a seller need not tell buyers of future supplies that would affect price willingly paid by buyers price of a good depends on its usefulness to man, not on the nature of the good St. Thomas Aquinas: St. Thomas Aquinas Aquinas on Usury (1) certain things are extinguished upon their use, and therefore their use can not be separated from the thing itself (2) to lend such a thing is to transfer ownership (3) one can not sell the use of such things separate from the ownership of such things (4) money is such a thing (“invented chiefly for exchange”) (5) therefore interest is unnatural and therefore usury is a sin but other things can be granted the use of while retaining ownership, and therefore can both be rented and sold profits from partnerships (societas) is not usury Pierre de Jean Olivi: Pierre de Jean Olivi 1248-1298, b. Provençal Spiritual Franciscan, lector at Florence Two treatises: On usury and On purchases and sales unique because of narrow focus, perhaps the first truly economic texts Determinants of Economic Value and Price scarcity (raritas), usefulness (virtuositas), and desirability (complacibilitas) Desirability is ultimate determinant of price, given a degree of scarcity Pierre de Jean Olivi: Pierre de Jean Olivi The price arrived at by the common estimate of desirability is the just price Capital (capitale) is a fund of money invested in a business venture and when combined with the labor and industry of the investor, is fruitful A holder of capital who gives up the capital for a period of his time foregoes the possibility of profit Interest is a payment for foregone profit of the capital holder (lucrum cessans) and is natural and just Olivi retains usury ban for loans that are not invested with labor and industry to produce profit and are not granted out of charity The Economics of Aquinas and Olivi: The Economics of Aquinas and Olivi Aquinas’ economics show some progress beyond Aristotle but continues Aristotelian confusions, especially regarding interest; inferior to immediate predecessors (esp. Albertus Magnus) substantial contribution to the idea of natural law as discovered by “right reason” Olivi’s economics discoverer of subjective utility theory and initiator of concept of capital defender of current market price as just price and partial use of lucrum cessans in loans Olivi’s direct contribution initially lost to posterity Odd Man Out: John Duns Scotus: Odd Man Out: John Duns Scotus John Duns Scotus (1266-1308) Irish Franciscan Major opponent of Thomist doctrine Property natural law decrees that all resources be held in common Just Price cost-of-production theory of just price cost + labor + risk equals just price Usury admitted interest for compensation of risk, delay in repayment, and true gift Middle Scholasticism:Buridan, Oresme, Bernardino: Middle Scholasticism: Buridan, Oresme, Bernardino Jean Buridan of Bethune (1300-1358) Franciscan, student of William of Occam rector of University of Paris contributions to theory of exchange and theory of money Nicole Oresme (1325-1382) noted French intellectual contributions to mathematics, astronomy, physics contributions to monetary theory San Bernardino of Siena (1380-1444) Italian Franciscan great systematizer of Scholastic economics Jean Buridan: Jean Buridan Quaestiones, (c. 1340), commentary on Aristotle’s Ethics Theory of Exchange Exchange defended as always mutually beneficial, even when the exchange is itself immoral or to be condemned on ethical grounds Supply and demand determination of just price Theory of Money Money arises on the market as a useful commodity and its value is determined by human need catalogues desirable qualities of money portability, divisibility, durability, high value per unit Nicole Oresme: Nicole Oresme A Treatise on the Origin, Nature, Law and Alterations of Money (c. 1350) Monetary Theory repeats Aristotle’s arguments for origin of money tract against debasement and clipping of coins (worse than usury) ruler has right to coin and set price for money, but limited by interests of community Gold/silver ratio in bimetallic system should reflect actual market prices; if not undervalued money will be exported causing economic difficulties at home (Gresham’s Law) San Bernardino: San Bernardino On Contracts and Usury (1431-33) set of sermons for Sienese parishioners Defense of private property a human institution necessary for efficiency but not a construct of natural law System of trade defense of commerce useful services of transporting commodities to scarce sites storing goods to be available when consumers want them transforming raw materials into wanted goods profits legitimate return to entrepreneur for labor, expenses and risks San Bernardino: San Bernardino On Contracts and Usury (1431-33) Analysis of successful entrepreneurship responsibility labor assumption of risks diligence - being well-informed of market prices, costs, qualities and subtle evaluations of risks and opportunities Market Price common estimation (identified as just price) costs of labor, skill and risk do not affect price directly but only indirectly through supply changes in demand and supply determine price took over, word for word, Olivi’s analysis of subjective utility San Bernardino: San Bernardino On Contracts and Usury (1431-33) Market Wages common estimation (identified as just wage) wage inequality function of differences in skill, ability, and training longer and more costly training reduce supply and increase wage Foreign Trade and Exchange foreign trade benefits individuals same way as regular commerce money-exchangers necessary for functioning of foreign trade risk of fluctuations in money value are properly compensated by apparent interest payments San Bernardino: San Bernardino On Contracts and Usury (1431-33) Usury extremist view of sin of usury litany of objections nevertheless, gave his weight to defense of interest on grounds of lucrum cessans in cases of charitable loans, because in such a situation money was not barren but was capital (Olivi strikes again!) in discussing forms of disguised usury, also recognized the concept of time-preference -that people prefer present goods to future goods- but did not draw conclusion that this would lead to interest Odd Man Out: Henry of Hesse: Odd Man Out: Henry of Hesse Heinrich von Langenstein the Elder (1325-1397) German, later taught at University of Paris Treatise on Contracts (c. 1360) analyzed just price as current market price then argued that local authorities should fix prices further, they should fix prices so that each seller could maintain his status in society influenced only two later Scholastics Matthew of Cracow (c. 1335-1410) Jean de Gerson (1363-1429) though Gerson eventually turned to John Duns Scotus’ just price theory The Swabian Liberals: The Swabian Liberals Johannes Nider (1380-1483) University of Vienna; On Contracts of Merchants (c. 1430) Gabriel Biel (1430-1495) University of Tübingen; Treatise on the Power and Utility of Moneys (c. 1480) Conrad Summenhart (1465-1511) University of Tübingen; Treatise on Contracts (1499) Progressive attack on usury prohibition Summenhart demolishes 23 natural law arguments against usury, leaving only two formal arguments: (1) Aristotle said it was unnatural and (2) the divine prohibition advances significant arguments in favor of interest, esp. census (insured or guaranteed partnerships) Economics of Middle Scholasticism: Economics of Middle Scholasticism Contributions of the Middle Scholastics Buridan and Oresme advanced the theory of money significantly, laying the groundwork for the Late Scholastics’ quantity theory of money Bernardino’s defense of commerce, description of the entrepreneurial function, and defense of foreign trade and foreign exchange contributed greatly to the collapse of anti-commercialism Bernardino’s revival of Olivi’s contributions to subjective utility theory and the concept of capital are vital to development of future economic theory Usury question remained topic of dispute though increasingly liberalized position and markets were making arguments increasingly irrelevant Late Scholasticism: Late Scholasticism Late Scholasticism product of the Reformation and the Catholic Counter-Reformation Cardinal Catejan (1468-1534) Thomas De Vio, General of the Dominican Order The School of Salamanca founded by Francisco de Vitoria (c.1485-1546) revived Thomism and Scholasticism Martin de Azpilcueta Navarrus (1493-1586) Dominican, Canonist Luis de Molina (1535-1601) Jesuit, theologian Juan de Mariana (1536-1624) Jesuit, theologian at Rome, Paris, and Toledo Cardinal Catejan: Cardinal Catejan Commentary (on Aquinas’ Summa) defended market as means for upward mobility of skilled and able De Cambiis (1499) an unqualified defense of foreign exchange noted that value of money depends upon expectations (first use of expectations as a determinant) noted two values of a monetary unit - purchasing power over goods and price in terms of another currency vindicated lucrum cessans for all business loans; essentially justifying the profession of money-lending Martin de Azpilcueta Navarrus: Martin de Azpilcueta Navarrus First economist to clearly state that government price-fixing was imprudent, unwise, and counter-productive Comentario resolutoio de usuras (1556) first unambiguous statement of quantity theory of money defines money’s value as its purchasing power, whose value is determined by the demand and supply of money attributed (12 years before Bodin) the price inflation of the mid-16th century to the influx of silver and gold developed purchasing-power parity theory of exchange rates advanced by colleague Domingo de Soto (1494-1560) clearly recognized existence of time preference nevertheless, was influential in Papal bull condemning census Luis de Molina: Luis de Molina De Justitia et Jure (6 vol., 1593, 1597, 1600, etc.) championed free will against Dominican determinism championed active natural rights against passive natural rights claims in economics, common estimation theory of just price as monetary theorist analysis of monetary value explicitly uses ceteris paribus clause concentrates on reasons for monetary demand (including expected prices and wealth) Juan de Mariana: Juan de Mariana De Rege (On Kingship) 1599 suggested by King Philip II; dedicated to Philip III advanced state of nature argument for rise of government as protector of private property argued people necessarily reserve certain rights that are not given up to King right to reclaim sovereignty, taxation, veto of laws, determine succession expanded definition of tyrant to ruler who violated the laws of religion, imposed taxes without consent, or prevented a meeting of parliament argues that any citizen can justly assassinate a tyrant Juan de Mariana: Juan de Mariana De Monetae Mutatione (On the Alteration of Money) 1609 denounces Philip III for debasement of copper coinage demonstrates that debasement is a hidden tax on the private property of the subject which he has no right to impose without consent citing the papal bull Coena Domini, which had decreed excommunication for any ruler who imposes new taxes, argues that taxation without consent deserves at least that punishment also argues that this punishment is fitting for those who erect state monopolies without parliamentary consent Economics of Late Scholasticism: Economics of Late Scholasticism Contributions of Late Scholastics Catejan’s arguments regarding foreign exchange and usury briefly held sway before a reaction set in restricting interest Navarrus and Molina significantly advanced monetary theory and founded the quantity theory of money, noting the value of money is its purchasing power determined by demand and supply of that money, and that foreign exchange rates are determined by the purchasing-power parity of different currencies as determined by demand and supply of one currency for another Molina and Mariana significantly reformed natural law and natural rights theory into the active concept that was to find favor in contemporary and later political economy Further Reading: Further Reading General History Will Durant, The Age of Faith, 1950. Rondo Cameron, A Concise Economic History of the World, 1997. Richard Rubenstein, Aristotle’s Children, 2003. Philosophy A.C. Pegis, ed., Introduction to St. Thomas Aquinas, 1948. Brian Davies, The Thought of Thomas Aquinas, 1992. G.K. Chesterton, Saint Thomas Aquinas: “The Dumb Ox,” 1933. F.C. Copleston, Aquinas, 1955. A.S. McGrade, ed., The Cambridge Companion to Medieval Philosophy, 2003. Further Reading: Further Reading Economics Raymond de Roover, San Bernardino of Siena and Sant’ Antonino of Florence, 1967. Raymond de Roover, Business, Banking, and Economic Thought in Late Medieval and Early Modern Europe, 1976. Odd Langholm, Economics in the Medieval Schools: Wealth, Exchange, Value, Money & Usury, 1992. Odd Langholm, The Legacy of Scholasticism in Economic Thought: Antecedents of Choice and Power, 1998. Diana Wood, Medieval Economic Thought, 2002. Alejandro Chafuen, Faith and Liberty: The Economic Thought of the Late Scholastics, 2003.
08aquinas05s |authorstream - Economics of Roman and Canon Law: Economics of Roman and Canon Luis de Molina De Business, Banking, and Economic Thought in ...
08Aquinas05s |authorSTREAM. Aquinas and Scholasticism: Aquinas and Scholasticism History of Economic Thought Boise State University Fall 2004 Prof. D ...