Some quick ruminations on medieval and Thomist economic thought. The Summa Theologica of St. Thomas is one of the world’s most reknowned masterpieces of intellectual thought. The medieval intellectuals prohibited the taking of interest, a philosophy fortified by earlier, Aristotelian doctrine. (The Second Lateran Council explicitly forbade usury to all, and before that, the Council of Nicea — 325 — forbade the clergy to take interest.)
St. Thomas himself made a distinction between consumable and non-consumable goods, and between loans and leases. Since leases rendered a yield, a lessor could receive a return as well as rent. However, loans for consumable goods could not produce rent for the lessor because such consumables did not produce a yield. This then, was a violation of natural law and justice. St. Thomas did not recognize the notion of Hoppean time preferences. It appears to have been foreign to these early thinkers.
These early doctrines of usury applied more to consumption loans than to loans that facilitated the use of capital in productive processes. However, still, in the overall sense, retarded was the formation of capital during these times. Aquinas was Aristotelian on Just Price, deriving his theory from Aristotle’s Golden Rule, thus he saw the just price as that which prevailed at a given place and time, “to be determined by the estimate of a fair-minded person.” Do we not have the beginnings of Austrian subjective valuation, as Aquinas and his teacher, Albert The Great, envisioned true valuation emerging from the mindset of the individual marketeers in the marketplace?
The medieval philosophy on Just Price essentially expanded on the Romans’ laesio enormis. St. Thomas saw profit as morally neutral, and legitimate, if the profiteer pursued a noble cause via his profits — self-support, charity, or public service.
