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The Major Contributions of the Scholastics to Economics

Mises Daily: Friday, December 03, 2010 by


Given the standard accounts of the origins of economics, the claim that the Scholastics made a significant contribution to economic theory may seem somewhat surprising, even perverse.

Many histories of economics, especially if they are anglophone, locate the beginnings of economics with Adam Smith's Wealth of Nations, together with the works of David Ricardo and the Mills, James and John Stuart. Others, more historically ecumenical and less Britannically insular, might look upon the Mercantilists of an earlier age as protoeconomists; still others would include the Franco-Hibernian Richard Cantillon and the Physiocrats among the originators of economics. While the names of the founders and significant contributors of economics may differ from list to list, the suggestion that there is anything of value to economic theory to be found in the speculations of Scholastic philosophers is likely to invite skepticism.[1]

As an exemplary skeptic, we may instance the economic historian, Mark Blaug, who regards his fellow economic historian Joseph Schumpeter's treatment of Scholastic economics (in his monumental History of Economic Analysis) to be "excessively laudatory"[2] and who devotes a mere 3 pages out of over 700 of his own monumental volume to them. Blaug concludes, "One may doubt, therefore, whether recent work on Scholastic economics required a revision of the history of economic thought prior to Adam Smith."[3]

Another skeptic, George Reisman, concedes that "some discussions of economic matters took place among scholastic philosophers in the Middle Ages" but judges that they "appraised economic activity largely from the hostile perspective of the Roman Catholic church and … accordingly, denounced as unjust such perfectly normal economic activities as the taking of interest on loans, speculation, and, indeed, even the mere changing of prices." He concludes categorically that "the scholastics contributed nothing to sound economics."[4]

While I believe that Blaug and Reisman seriously err in their estimations of the contributions of the Scholastics to economics,[5] it is nonetheless true that economics in the thought of the Scholastics occupied a subordinate position, derivative upon their reflections on ethics and law;[6] for example, the economic reflections of St. Antonino are to be found in his Summa moralis. De Roover remarks that "one should not be surprised to find economics discussed in a work of this kind, since it was not yet recognized as an independent discipline but was still linked to moral theology or philosophy. This was still true in the 18th century. Was not Adam Smith professor of 'moral philosophy'?"[7]

Marjorie Grice-Hutchinson remarks that

before the rise of mercantilism in the sixteenth century, when "political economy" came into being as a separate subject of study, economic analysis existed only as a by-product of legal, theological and philosophical inquiry. This was almost entirely centred in the "schools," as the newly founded universities were called. … Such analysis as they [the Doctors] produced was generally developed in commentaries on Aristotle or St. Thomas or in the examination of … contracts. … This method led to a patchwork of theory.[8]

Happily, not all scholars agree with negative judgments of Reisman and Blaug outlined above. Gloria Zuniga writes,

The economic legacy of the Schoolmen … was thought to be a foolish notion of just price and an obsession with usury. This … is antiquated and erroneous. … the development of economic thought progressed mainly from the contributions by the Scholastics.[9]

Others, such as Raymond De Roover, would agree with Zuniga's judgment on the positive contributions of the Schoolmen to economics but would be less inclined than she to regard the negative view as totally unfounded: as De Roover puts it, "the Schoolmen … devoted so much space to this one subject [namely, usury] and overrated one problem to the neglect of many others, that they created the impression of being devoid of a sense of balance."[10]

Without wishing to fall into the antiquated and erroneous view noted by Zuniga, I shall examine the Scholastic treatment of (1) usury; (2) utility, value, and price; and (3) exchange, not because these were by any means the only matters they discussed — other topics treated include property, taxation, money, and banking — but because they illustrate very clearly both the strengths and the weaknesses of the Scholastic approach to economics and the significant respects in which they contributed lastingly to economic theory.


If the Scholastics are associated in the popular mind with the notion of usury, this is largely because they struggled in their articulation of this concept to reconcile scripture, the philosophers (in particular the Philosopher), and reason. The basic problem here came from what appeared to be a scriptural prohibition on the charging of interest on a loan (see Deuteronomy 23:20). Some interpreted this as enjoining a complete ban; others interpreted it as the prohibition of the charging of excessive interest. After some uncertainty in practice, Pope Clement V at the Council of Vienna condemned usury absolutely. Grice-Hutchinson remarks,

The Mosaic prohibition of usury, then, presented the same dilemma to the members of the three religious communities of medieval Spain. Should the taboo be observed in its original purity or circumvented to suit the facts of business life? Jews, Moslems and Christians in turn chose the second course, but, in each case, only after a tenacious, centuries-long struggle.[11]

Today, usury is taken to be the charging of excessive rates of interest on loans. It is important to realize that this is not what the Scholastics meant by the term. For them, usury was the charging of any amount, large or small, over and above the principal. Not only did the amount of the extra charged not matter, it mattered not what the loan was for, nor whom the loan was made to, nor the circumstances of lender or borrower.[12]

However, it is equally important to understand that usury was associated only with loans[13] and not with any other kind of contract — usura solum in mutuo cadit. A loan, in turn, was a contract whose matter was fungible goods (such as grain, wine, or money) whose use was inseparable from their substance. Quantity x of grain loaned from A to B required the return, by B to A, of an equal quantity of grain — no more, no less.[14]

The assumption throughout is that such fungibles are consumed by the borrower and are not productive of any increase in wealth. Philosophical support for this position seemed to come from Aristotle, who deemed that money has no intrinsic value, generates no utility itself, and is merely the product of a human convention. If money has no intrinsic value, then a lender of such loses nothing by giving it temporarily to another. If he receives back exactly what he gave, then there would appear to be an absolute equality.[15]

Money, of course, in an obvious sense, is absolutely sterile. If left in a drawer or, as in the case of the parable in St. Matthew's gospel, buried in the ground, it produces no offspring. However, those acquainted with the parable of the talents should have noted that the recipients of the talents were expected to return not just the talents they were given but also an increase, and not just an increase from trade (as with the first two servants) but, as the parable explicitly states, even from interest:

Then you ought to have invested my money with the bankers, and on my return I would have received what was my own with interest.[16]

What is being missed in regarding money as sterile is the understanding of money as capital, or, perhaps better, as productive of capital that is then employed to generate an increase in real wealth. The Scholastics appear to be, at best, ambiguous on this matter.[17]

Of course, it does not take much reflection to see that the Aristotelian doctrine that a lender loses nothing in making a loan will not bear scrutiny and, indeed, the Scholastics came to recognize certain exceptions to the universal prohibition of usury. Within the context of a loan proper, the Scholastics considered, and in many cases accepted, so-called extrinsic titles not inherent in the loan as such, which could justify a monetary return — poena detentiori, damnum emergens, and lucrum cessans.

Poena detentiori derived from delay in the repayment of the loan — an implicit recognition of the notion of time preference; damnum emergens was a form of recompense to indemnify the lender for losses incurred because of the loan; and lucrum cessans was consideration owed to the lender because of opportunities he had missed by virtue of granting the loan and it also embodies an appreciation of time preference. Blaug comments upon damnum emergens and lucrum cessans, remarking of the latter that it "must be put down as a genuine analytical insight."[18]

While not all the Scholastics recognized the phenomenon of time preference, St. Thomas's defender, the Dominican Giles de Lessines, in 1285 clearly did, noting that

future goods are not valued so highly as the same goods available at an immediate moment of time, nor do they allow their owners to achieve the same utility. For this reason, it must be considered that they have a more reduced value in accordance with justice.[19]

Even among those who lacked Giles's acuity, lucrum cessans can be taken to be an embryonic appreciation of the fact that in lending money, a lender always loses the use of that money now and recovers it only at some future time. Intuitively, we appreciate that jam today is better than jam tomorrow. As one can immediately see, there can be very few loans — perhaps none — in which there is no risk, and there are no loans that do not involve an opportunity cost, and so the exceptions stretch in effect to cover all loans with the result that the universal prohibition becomes eviscerated.

In the end, the letter of the law was observed, but as the commercial life of Christendom developed with a corresponding developing requirement for debt financing, complicated ways emerged of circumnavigating the restrictions, such as the contractum trinius, a kind of repurchase agreement.

"There can be very few loans — perhaps none — in which there is no risk, and there are no loans that do not involve an opportunity cost, and so the exceptions stretch in effect to cover all loans with the result that the universal prohibition becomes eviscerated."

As the utility theory of value in the pricing of goods became more clearly expressed, so the opportunity arose to apply it to the price of money in a social context in which banking was ever-more prevalent and needed. There was a tendency to subsume both goods and money under a unitary theory of value. Cajetan defended the practice of banking as both useful and honorable. Moreover, he recognized the applicability of time preference to money — money absent is always worth less than money present — and entertained the idea that the price of money might be determined, as any other good, by the laws of supply and demand. St. Bernardino, too, recognized that "present goods are more valuable than future goods, a principle that, centuries later, was invoked by Eugen von Böhm-Bawerk (1851–1914) as the economic justification of interest."[20] Sometimes, interest charges were concealed in the discounting of exchange rates. Foreign-exchange operations were another fruitful way in which the prohibition on usury could be evaded.[21]

Utility, Value, and Price

Joseph Schumpeter believed that the value theory of the Scholastics was missing only the theory of marginal utility, a theory that is generally understood to have found expression only in the last third of the 19th century in the work of three independent thinkers — Leon Walras, Stanley Jevons, and Carl Menger. Other scholars are not convinced that the Scholastics indeed missed the theory of marginal utility. Blaug, despite the brevity of his treatment of Scholastic economics, concedes "the Doctors did develop a utility-cum-scarcity doctrine of value."

He notes that Aquinas's commentary on the fifth book of Aristotle's Nicomachean Ethics "led to the view that the Scholastics held a labour theory of value, ignoring Aquinas's insistence that all goods are valued only in relation to human wants. Scholastic economies [sic] based value squarely on the satisfaction of wants and, in its later version, related utility to the relative scarcity of a good."[22] R.H. Tawney, however, claimed that not only did the Scholastics not discover or propound the utility theory of value but that, as he put it in a notorious passage, "the true descendant of the doctrines of Aquinas is the labour theory of value. The last of the Schoolmen is Karl Marx."[23]

De Roover comments,

Economists may be dismayed at the uncomfortable thought that two toothless, emaciated, and ascetic saints should perhaps be considered as the originators of utility theory. Incredible as it may sound, such seems to be the case. St. Bernardino and St. Antonino developed a value theory based on scarcity and utility, both objective and subjective.[24]

While St. Thomas's writings are not free from ambiguity, a reasonably unforced reading will show that, all things considered, he did not endorse — as Blaug clearly notes — the labor theory of value. In fact, De Roover refers to two key passages in the works of St. Thomas to substantiate his claim that the Schoolmen maintained a utility theory: "The price of things saleable does not depend on their degree of nature, since at times a horse fetches a higher price than a slave; but it depends on their usefulness to man."[25] The second passage (one of my favorites) comes from Aquinas's commentary on the Nicomachean Ethics. The idea is more or less the same, though the wording is somewhat different.

But this one standard which truly measures all things is demand. This includes all commutable things inasmuch as everything has a reference to human need. Articles are not valued according to the dignity of their nature, otherwise a mouse, an animal endowed with sense, should be of greater value than a pearl, a thing without life. But they are priced according as man stands in need of them for his own use.[26]

These passages show that value depends upon utility or the ability to satisfy human wants.

"Economists may be dismayed at the uncomfortable thought that two toothless, emaciated, and ascetic saints should perhaps be considered as the originators of utility theory. Incredible as it may sound, such seems to be the case."
Raymond De Roover

Not only was the concept of value as utility discovered by the Schoolmen, but St. Bernardino, following St. Thomas, went on to distinguish between what we might term objective and subjective utility.[27] Objective utility (virtuositas) is the character a good has of being able to satisfy human wants. Meat or potatoes, for instance, have an objective utility when it comes to satisfying the human need for nutrition — small pebbles and CD players do not. Subjective utility (complacibilitas) is the appeal that a good has for a particular individual in particular circumstances. The two kinds of utility can coordinate so, for example, all clothing is more or less objectively useful for protecting me from the elements, keeping me warm, serving the interests of decency, and so on. However, I choose the clothing I do because, given its objective utility, it answers to my particular subjective needs, desires, and interests. Not only may the two kinds of utility coordinate but, given the human capacity for error, it is quite possible for the two utilities to disconnect.

What, then, is the relation between utility and price? The Scholastics, in general, were agreed that the just price of an article was set by the common estimation of the participants in the market. De Roover notes,

Later Scholastics … made a distinction between the natural price — by which they meant the market price — and the legal price, but this doctrine is not yet found in St. Bernardino who still emphasizes that the just price is determined "by common estimation."[28]

On the matter of the "just price" Blaug remarks that

there is no suggestion in the scholastic literature of a just price that corresponds to the cost of production as determined by the producer's social status. … They [the Schoolmen] seldom gave much attention to what constituted a just price, but usually they identified it with the current market price, the price given to an individual which he cannot himself affect.[29]

Aquinas's teacher, St. Albert the Great, in common with most of the Schoolmen, held that just price is determined by the estimation of the market participants at the point of sale. However, according to Grice-Hutchinson, he also appears to have maintained something approaching a labor theory of value inasmuch as "the arts would be doomed to destruction if the producer did not receive a price that covered his outgoings" and derived from Aristotle the principle that commutative justice requires that in exchange the items exchanged must be absolutely equal.

In regard to his alleged maintenance of a labor theory of value, I cannot see that the cited passage commits St. Albert to any such thing. At most it makes the common-sense point that, generally speaking, a producer cannot continue in business unless income exceeds expenditure. No argument there. But the basic argument for utility still obtains, which is that if x is the price below which you are not willing to sell (and x is determined by your costs of production), no sale will take place unless (a) a buyer is willing to offer x plus delta, or (b) you change your mind and are willing to accept x minus delta, i.e., to sell at a loss.

St. Thomas offers no explicit definition of a just price but the cases he considers suggest that he believed that price was related to supply.[30] Luís de la Calle concurred, denying the cost of production account given by Scotus:

Those who measure the just price by the labour, costs and risk incurred by the person who deals in the merchandise are greatly in error. The just price is found not by counting the cost but by common estimation.[31]

Schumpeter notes that

the late Scholastics identified their just price not, as Aristotle and also Duns Scotus seem to have done, with normal competitive price but with any competitive price (communis estimatio fori or pretium currens). Wherever such a price existed, it was "just" to pay and to accept it, whatever the consequences might be for the trading parties: if merchants, paying and accepting market prices, made gains, this was all right, and if they suffered losses, this was bad luck or else a penalty for incompetence so long as gain or loss resulted from the unhampered working of the market mechanism though not if it resulted, for example, from price fixing by public authority or monopolistic concerns.[32]


The man in the street holds, prereflectively, that an exchange is just if the objects exchanged are equal. However, a moment's reflection reveals some problems with this position. What does equality mean here? How is it to be measured? Does it make any difference if we are dealing with an exchange of cash for goods or services, or if we are dealing with barter?

Take barter. If absolute equality were to be taken literally, exchange would be completely pointless. You would receive exactly what you had given. In making such exchanges, the actors would be like the islanders of legend who made a living by taking in one another's washing. No rational person would exchange in these circumstances. If different goods are exchanged one for the other, then the equality of each, since it is not manifest, must be measurable in some way or another. One simple way to do this is to take it that if both parties to the exchange are satisfied to make it, this, prima facie, satisfies the demand for equality.

It might be argued that we can measure the value of the respective exchange items objectively against, let us say, the labor involved in its production and/or associated expenses involved in bringing it to market. As mentioned above, while such factors are obviously going to enter into the deliberations of a vendor in deciding to make the exchange or not, they are not obviously objectively decidable. In any event, once again, such considerations can be taken to have been met if the buyer and seller freely agree to the exchange.

If money is involved then, once again, absolute equality, strictly speaking, is out of the question. If the exchange is made and both parties satisfied, what is missing? The equality that is to be discerned is the equal satisfaction of the exchangers, subjectively determined, and manifested by their willingness to exchange. It is now generally accepted that an exchange will not take place unless each of the parties to the exchange is persuaded that he will gain (subjectively considered) from the exchange. It may well be that one or both of the parties is mistaken in this belief — in fact, this can well happen — but an exchange will not take place (assuming no coercion) unless both parties believe they will gain from the transaction.

The subjective element, then, in price and utility would appear to be ineradicable. Given the paucity of Thomas's scattered remarks on economic matters, it would be unwise to put any great emphasis on them.[33] However, what Aquinas holds, in contradistinction to the views of his teacher, is that an exchange should be mutually beneficial so that each party is better off after it than he was before.[34] Aquinas writes, "But this one standard which truly measures all things is demand. This includes all commutable things inasmuch as everything has a reference to human need."[35]

"What Aquinas holds, in contradistinction to the views of his teacher, is that an exchange should be mutually beneficial so that each party is better off after it than he was before."

The trouble with including a reference to human needs is that it seriously compromises the notion of intrinsic value, since need is person relative.[36] It would appear, then, that value in exchange is subjectively determined and that this is so whether the exchange is based on barter or on money. We can accept Grice-Hutchinson's conclusion that "St. Thomas's theory of value shows little significant advance on that of St. Albert"[37] provided we accept that St. Albert did not endorse, except in the most trivial of senses, a labor theory of value. St. Thomas, like his teacher, shows a lingering disposition to espouse a minimalist labor — i.e., cost of production — theory of value,[38] but the principal emphasis of our authors is that value is subjectively determined.[39]

Schumpeter sums up the issues under discussion by remarking that among the last Scholastics, there emerged a

genuine subjective or utility theory of exchange value or price in a manner for which there was no analogue in either Aristotle or St. Thomas, though there was in both what we may describe as a pointer. … First, the late Scholastics, particularly Medina, make it quite clear that cost, though a factor in the determination of exchange value (or price) was not its logical source or "cause." Second … Molina and Lugo … were as careful as C. Menger, to point out that … utility was not a property of the goods themselves or identical with any of their inherent qualities, but was the reflex of the uses the individuals … proposed to make of these goods and of the importance they attached to these uses. Third … though they did not explicitly resolve the "paradox of value" … [they] obviated the difficulty by making their utility concept … relative to abundance or scarcity; their utility was not utility of goods in the abstract, but utility of the quantities of goods available or producible in the individual's particular situations.[40]

Most significantly, Schumpeter concludes that the elements for a full-fledged theory of supply and demand were all present in the deliberations of the Scholastics and "the technical apparatus of schedules and of marginal concepts that developed during the 19th century is really all that had to be added to them."[41]



The Scholastic tradition, from early to late, contains analytically insightful reflections on many central economic topics. These insights "anticipated" later rediscoveries. We can discern a general trend in the approach of the Scholastics, with local variations, from a more rigorist to a less rigorist position, from a position in which the intrinsic value of economic laws is recognized, if at all, only fitfully and partially, to a position in which they occupy a more central focus. We can see an example of the move from the more to the less rigorist in the matter of wage determination. Aquinas held that wages were, as it were, (quasi) the price of labor (Summa Theologiae, I-II, q. 114, a. 1, r.), while St. Antonino requires no quasi, holding that the wage of the worker is a price that is to be determined, like any other, by common estimation, i.e., by the market.

Despite their insights, the Scholastics were constrained in their development of economics by considerations of deference to authority and by the relatively slow development of the external economic conditions upon which to reflect. Taking everything into account, however, it is more true than false to say that the Scholastics made a significant contribution to economic theory.


[1] An exception to this general skepticism might be the contribution made to monetary economics by the late Scholastics. This is due in no small part to the work of Marjorie Grice-Hutchinson — see her The School of Salamanca: Readings in Spanish Monetary Theory, 1544-1605 (Oxford: Clarendon Press, 1952).

[2] Mark Blaug, Economic Theory in Retrospect, 5th ed. (Cambridge: Cambridge University Press, 1997), p. 32.

[3] Blaug, Economic Theory in Retrospect, p. 31.

[4] George Reisman, Capitalism (Ottawa, Illinois: Jameson Books, 1998), p. 6.

[5] This is not to suggest that Scholastic economics is beyond criticism — even Raymond De Roover admits (speaking of St. Bernardino — but the point is extendable to all Scholastics mutatis mutandis) that his preoccupation with ethics blinded him to the need for more careful analysis of economic processes. See San Bernardino of Siena and Sant'Antonino of Florence: The Two Great Economic Thinkers of the Middle Ages (Boston: Baker Library, Harvard Graduate School of Business Administration, 1967).

[6] "Not only did the Scholastics look at economics from an ethical standpoint, they were also legally minded. In addition to the Bible, the Church fathers, and the 'Philosopher' (Aristotle), canon and Roman law were their main sources of inspiration and their treatises bristle with references to Gratian's Decretum, the Decretals, and the Corpus juris civilis of Emperor Justinian (527–565)" (De Roover, San Bernardino, p. 8). Marjorie Grice-Hutchinson agrees: "These writers [of the School of Salamanca] were, in the main, theologians and jurists in whose thought the social and economic order played an important though secondary part" (Early Economic Thought in Spain 1177-1740, London: G. Allen & Unwin, 1978), p. 81. See also Economic Thought in Spain: Selected Essays of Marjorie Grice-Hutchinson, edited with an introduction by Laurence S. Moss and Christopher K. Ryan (Cheltenham: Edward Elgar, 1993).

Leaving aside the matter of the historical development of economics within the context of ethical reflection, the conceptual relationship between ethics and economics is complex. Human action falls under the prescriptions of the natural law as normative — so much is obvious — however, it also needs to be considered under the natural law as prescriptive. One can usefully distinguish between different kinds of economics — for our purposes it suffices to distinguish between the science of economics and the ethics of economics. The Scholastics did not always draw this distinction, certainly not explicitly, but much of what they have to say in this area can only be appreciated if this distinction is borne in mind. The science of economics is the study of the formal implications that can be deduced from the fact of human action and that, in so acting, man acts purposefully for ends. As such, the science of economics is nonnormative; the ethics of economics, like all ethics, is essentially normative in orientation. It considers whether and to what extent human economic acts are good or evil. "As moral theologians, the Late Scholastics devoted the majority of their efforts to the discussion of what is just and good. With their attention focused on the broad spectrum of human action it is natural for them to study economic issues. Such questions as the right to charge interest, the propriety of profits, the ethic of monetary intervention, the justice of taxes, were, in their view, not only appropriate but essential topics of discussion. They recognized the need to study all aspects of the phenomena, that is, interest, profits, taxes, et cetera, before making ethical valuations. They knew that, when properly conducted, such study is value-free" (Alejandro Chafuen, Faith and Liberty: The Economic Thought of the Late Scholastics [Lanham: Maryland, 2003], p. 25). A key point to understand is that, whatever may be the ethical implications of certain notions, the objective interconnection of their objective correlates is what it is — as Chafuen puts it, "It is important to note, however, that while ethical considerations may either promote or hinder scientific development, they have no impact on underlying truths. For example, no ethical judgment can invalidate an economic law" (Chafuen, Faith and Liberty, p. 24. Emphasis in original.).

[7] De Roover, San Bernardino, p. 2.

[8] Grice-Hutchinson, Early Economic Thought, p. 83.

[9] Gloria Zuniga, "Scholastic Economics: Thomistic Value Theory." Religion & Liberty 7, no. 4 (1997): p. 5.

[10] Raymond De Roover, San Bernardino, p. 2. To see that Zuniga's claim regarding the contribution of the Schoolmen to economic thought is not fantastic, consider the list of topics dealt with in the 14th–15th-century St. Bernardino's De Contractibus et Usuris. In addition to an extensive discussion of usury these include: private property, the need for trade, business ethics, and the determination of value and price (De Roover, San Bernardino, p. 1). According to Marjorie Grice-Hutchinson, the 16th–17th-century Spanish Scholastics concerned themselves with private property, taxation, poor relief, price, usury, money, banking, and foreign exchange (Early Economic Thought, p. 81).

[11] Grice-Hutchinson, Early Economic Thought, p. 53.

[12] See De Roover, San Bernardino, p. 28.

[13] Because the prohibition of usury applied only to loans, those wishing to circumvent the prohibition could disguise the loan under the form of another type of contract —see below.

[14] See the discussion in De Roover, San Bernardino, pp. 28–29, on which this account is based.

[15] As early as the middle of the 16th century, a quantity theory of money is articulated by Azpilcueta (Dr. Navarrus) in which the value of money, like all other goods, is determined by supply and demand.

[16] Matthew 25:27.

[17] Aquinas, within the space of a few lines, appears both to support the account of money as sterile and also as being fruitful. Summa Theologiae II-II, q. 62, a. 4, ad. 1 and 2. St. Bernardino, too, seems to want to uphold the thesis that money is sterile and, at the same time, to recognize its seminal quality in its use as capital in investment. See De Roover, San Bernardino, p. 29, n. 148.

[18] Blaug, Economic Theory in Retrospect, p. 31.

[19] Quoted in Bernard W. Dempsey, Interest and Usury (Washington, D.C.: American Council on Public Affairs, 1943), p. 214, n. 31.

[20] De Roover, San Bernardino, p. 30.

[21] It is easy enough to see that the third of the extrinsic titles (lucrum cessans) makes the doctrine of usury fundamentally untenable since every lender incurs an opportunity cost in making a loan. It is, perhaps, not surprising that this title was rejected by some Scholastics, including Aquinas (Summa Theologiae, II-II, q. 78, a. 2, ad. 1). St. Bernardino, however, recognized its validity, to some extent, under certain conditions. De Roover is emphatic that the intellectual gymnastics generated around the usury doctrine contributed substantially to the discrediting of Scholastic economic thought. This is all the more frustrating when one considers the sophisticated thinking evidenced in the Scholastic treatment of other economic topics.

[22] Blaug, Economic Thought in Retrospect, p. 30.

[23] R. H. Tawney, Religion and the Rise of Capitalism (New York, 1950), p. 36. De Roover ringingly rejects Tawney's claim, saying that "the Scholastics did not base their value theory on labour. If Karl Marx had any forerunners, they were David Ricardo and John Locke, not St. Bernardino, Pierre Olivi, or Thomas Aquinas" (De Roover, San Bernardino, p. 41).

[24] De Roover, San Bernardino, p. 41.

[25] "Ad tertium dicendum quod … pretium rerum venialum non consideratur secundum gradum naturae, cum quandoque pluris vendatur unus equus quam unus servus, sed consideratur secundum quod res in usum hominis veniunt" (St. Thomas, Summa Theologiae, II-II, q. 77, a. 2, ad. 3). On the other hand, one can find passages like this: "If the price exceeds the value of a commodity or vice versa, the equality of justice will be destroyed. Hence it is intrinsically unjust and unlawful to sell a thing at a higher price, or to buy it at a lower price, than it is worth" (Summa Theologiae, II-II, q. 77, a. 1). However, as Alfred O'Rahilly points out, while "this may seem to suggest that the just price is something intrinsic and inherent in a commodity," such an interpretation would not be correct when read in the context of adjoining passages "in which St. Thomas gives … grounds for selling at more than the cost price" (Alfred O'Rahilly, "Aquinas versus Marx" in Studies: An Irish Quarterly Review 32, no. 125: p. 73).

[26] Translated by C.I. Litzinger, OP, in Commentary on Aristotle's Nicomachean Ethics (Notre Dame, Indiana: Dumb Ox Books, 1993. Originally published in 1964 by Henry Regnery). "Hoc autem unum, quod omnia mensurat secundum rei veritatem est indigentia, quae continent omnia commutabilia, inquantum omnia referentur ad humanam indigentiam; non enim appretiantur secundum dignitatem naturae ipsorum: alioquin unus mus, quod est animal sensibile, maioris pretii esset quam uni margarita, quae est res inanimate: sed rebus pretia imponuntur, secundum quod hominess indigent eis ad suum usum" (In Decem Libros Ethicorum, Liber V, lect. 9, 981. Editio Tertia, Marietti, 1964). O'Rahilly disputes the utility-value interpretation of this passage but he does so on grounds that appear to support it rather than to undermine it. See O'Rahilly 73–74.

[27] While St. Bernardino had a clear conception of value as utility, an idea that he apparently appropriated from Pierre de Jean (1248–1298), and while it would be true that he realized that utility as a determinant of price could not be absolute (otherwise, as in the hackneyed example, water would always cost more than diamonds) it is probably fair to say that he did not clearly elaborate a theory of diminishing marginal utility.

[28] De Roover, San Bernardino, p. 20.

[29] Blaug, Economic Theory in Retrospect, p. 30. Some thinkers who defended the setting of a just price by legislative authority were Jean de Gerson and Henry of Langenstein (both, significantly, nominalists), and Duns Scotus, who held that a just price was a function of cost of production. It is not that the other Scholastics denied that prices could be set by authority but they denied that this was either necessary or normal for justice to be observed. Langenstein is often cited in support of the thesis that the Scholastics defended a labor theory of value, but in fact, he, as much as other thinkers, considered the notion of want in the determination of price and distinguished the relevant roles of supply and demand (see Grice-Hutchinson, p. 86). De Roover seems to think that the failure of such public interventions in the price system was a function of the absence of a "well organized rationing system" rather than an intrinsic feature of all dirigiste attempts at central control (San Bernardino, p. 21). He and the Scholastics are mistaken in this belief. De Roover notes that "the nominalists, including Martin Luther, were in favour of price regulation rather than a free market" (San Bernardino, p. 21, n. 101).

Among those we find willing to allow the cost of production a place in pricing we find Pedro de Valencia, who proposed a maximum price on wheat predicated on the input of labor, and Domingo de Soto, although, in the end, he too admits that want is the basis of price. Diego de Covarrubias, on the other hand held a subjectivist theory of value, believing that the value of an article was not primarily related to its essential nature but depended rather on the estimation in which it was held by particular individuals. He noted that although wheat is wheat wherever it may be, the price of that commodity differed in Spain and in the Indies because of the different estimation in which it was held in those places. Some, such as Saravia de la Calle Veroñese, do not wish to allow cost of production any role in the determination of price for a surprising reason: if cost of production were allowed to determine price then merchants would always have a pretext for raising their prices — "the just price arises from the abundance or scarcity of goods, merchants, and money … and not from costs, labour, and risk. If we had to consider labour and risk in order to assess the just price, no merchant would ever suffer loss … In order to determine the just price we need only consider these three things; abundance or scarcity of goods, merchants and money — of things that people want to barter or exchange for money. This doctrine is founded on Aristotle's dictum, pretium rei human indigentia mensurat, 'the price of things is measured by human need'" (Luís Saravia de la Calle Veroñese, Instrucci—n de mercaderes muy provechosa…cambios licitos y reprobados, Medina del Campo, 1544; reprint Madrid: Coleccion de Joyas Bibliograficas, 1949, p. 27; translation by M. Grice-Hutchinson in Early Economic Thought, p. 100). (English translations of extracts from many important Scholastic thinkers on economic matters can be found here.)

[30] Scotus was unhappy with the reluctance of the Thomists to delineate a specific account of intrinsic worth and just price. He realized, however, that the cost of production theory included an element for expenses and that this element was open to exaggeration with the result that the just price could be hiked up. Reflecting on this led him to consider the necessity for competition to, as it were, keep the merchants honest, which led him to condemn monopoly as fundamentally immoral. It should be noted, as well, that Roman law gave no consideration to the notion of intrinsic worth — for the Romans, a price was just if it had freely been agreed to by the contracting parties.

[31] Instruccion, p. 53, cited in Grice-Hutchinson, Early Economic Thought, p. 100.

[32] Schumpeter, History of Economic Analysis, pp. 98–99, emphasis in original. He continues: "Molina's disapproval of price fixing … and his approval of gains arising from high competitive prices in times of scarcity … reveal a perception of the organic functions of commercial gains and of the price fluctuations that are responsible for them, a fact that marks a considerable step in analysis." Similarly, Aquinas thought it in order to profit from what would now be called asymmetrical information.

[33] De Roover remarks that "there is very little on economics in the vast works of Thomas Aquinas except some casual remarks buried here and there among extraneous material and two or three more extensive fragments in his Summa theologica and his Commentaries on the Nicomachean Ethics of Aristotle" (De Roover, San Bernardino, p. 7).

[34] Summa Theologiae, II-II, q. 77, a. 1, resp.

[35] In Decem Libros Ethicorum, Liber V, lect. 9, 981. See Bernard W. Dempsey, "Just Price in a Functional Economy," The American Economic Review 25, no. 3 (1935): pp. 471–86.

[36] Buridan attempted to salvage the notion of intrinsic worth by relating it to the notion of usefulness, but this would appear to be every bit as compromising a notion as need, for it too is person relative.

[37] Grice-Hutchinson, Early Economic Thought, p. 85.

[38] See In Decem Libros Ethicorum, Liber V, lect 8. Cf. Barry J. Gordon, "Aristotle and the Development of Value Theory," The Quarterly Journal of Economics 78, no. 1 (1964): pp. 115–28.

[39] "Some authors deny that the cost of production should be allowed any part in the determination of price, others allow that it may be taken into account, but it is generally agreed that the most important factor to be considered in assessing the 'natural' or uncontrolled price of a commodity are the 'estimation' in which that commodity is commonly held (such estimation reflecting the utility of the thing in question), and the forces of supply and demand" (Grice-Hutchinson, Early Economic Thought, p. 101).

[40] Schumpeter, History of Economic Analysis, p. 98.

[41] Ibid.