Theological Economics of Medieval Usury Theory

From Joan Lockwood O’Donovan, Bonds of Imperfection.

medieval economics: A Christo-centric ethic of perfection that drew heavily upon the Stoic-Platonist tradition.  

• drew upon the Patristic vision of polarity of opposing loves of spiritual and earthly riches, “viewed avarice as the root of all evil,” property right as morally tainted (Lockwood O’Donovan, 99).  
• Not fully Aristotelian, though.  The Patristic vision viewed community primarily in terms of a common participation in invisible goods and a charitable sharing of divisible goods by its members.  

Canonical Development of the Usury Prohibition

The church recognized two intrinsic titles to interest (indemnity) on loans in the case of delayed repayment:  the title of damages sustained and that of profit foregone.  Further, contracts are distinguished from loans.

• The locatio: a rental contract on a piece of property
• The societas: partnership where profit and risk were shared
• The Census:  sale or purchase for life of a rent-charge (the return varied on the productivity)

The church in fact gave moral license to limited opportunities for investment and credit that favored the welfare of the poor but did not serve an expanding commercial economy (101-102).  However, as contracts became more complex over time, it was really hard to not engage in some form of usury.  

The Earlier Medieval Treatments of Usury

God’s original will for human community:  

• its members make common use of the goods of creation to relieve material want (104).  
• air, sun, rain, sea, seasons (divinely created as koinonia, unable to be monopolized; cf. modern American government attacking those who store rainwater for their gardens)
• Gratian argues this did not mean private ownership and amassing wealth.  It’s hard to see how this squares with Proverbs injunction that a godly man leaves an inheritance.  And if the wealth is to be distributed by the church, it’s hard to see how the church can make any claim to poverty and non-possessorship.

The usurer sells time:  time originally belongs to God, and secondarily belongs to all creatures.  Thus, to sell time is to injure all.  Further, time is a koinon, indivisibly shared by all creatures.  

Roman contract of loan (mutuum):  a fungible good is transferred from owner to borrower. Ownership is transferred because the borrower is not expected to repay the exact same item.  The borrower assumes the risk of loss and is bound to repay it.  Thefore, Lockwood O’Donovan argues, “The medieval theologians and canonists could argue, in the first place, that the usurer charges the debtor for what the debtor already owns” (107).

The Thomistic Treatment of Usury

Commutative justice (ST 2a2ae. 78)

Usury sins against justice in the exchange, a violation against equality in the exchange

Thomas does presuppose property right

• sterility of money theory
• Money is a means of measuring equivalence in an exchange.  It can only establish equivalence if it is formally equal to the thing itself in exchange (
• the usurer inflicts on the needy borrower a moral violence of making him repay more than he was lent.
• Thomas also argues that human industry, not money is the cause of profit.
• to charge separately for a thing

Luther’s restatement of the medieval inheritance

law of natural equity: we do not seek our profit in our neighbor’s loss.