A Review of Ethics and the National Economy

by Dr. Peter Chojnowski

Catholics! Forget Milton Friedman and supply-side economics. Shelve your Eco I textbook and leave the road to serfdom. Now is the time to put Fr. Pesch in the place of Ludwig von Mises. As you always suspected, morality really must govern economic life and Fr. Pesch's Ethics and the National Economy will tell you why.

Solidarism proposes to leave the private ownership in the means of production. But it places above the owner an authority-indifferent whether Law or its creator, the State, or conscience and its counselor, the Church - which is to see that the owner uses his property correctly.... Thus State and Church, law or conscience, become the decisive factor in society. Property.. .ceases to be the basic and ultimate element in the social order... Ownership is abolished, since the owner, in administering his property, must follow principles other than those imposed on him by his property interests....[It] wants to put other norms above them. These other norms thus become society's fundamental law.... Solidarism replaces ownership by a "Higher Law"; in other words, it abolishes it.(Ludwig von Mises, Socialism, II, III, 16, 1,5)

In Ludwig von Mises's negative characterization of Heinrich Pesch's Solidarism, we find the deeper significance of Pesch's title Ethics and the National Economy. In stark contrast to the neo-Liberal von Mises's apparent dismissal of both a socially binding "ethics" and the very concept of a "national economy," we find a priest, philosopher, and economist asserting the real existence of both. Indeed, if we can assert anything concerning the thought of Heinrich Pesch, SJ. (1854-1926), it is that it attempts to demonstrate the necessary grounding of all economic science in the more encompassing sciences of ethics and philosophical anthropology.

This ethical and philosophical consideration is not at all meant to be a merely academic exercise. Rather it is meant to be, and indeed became, the first serious attempt to ground an economic system in the fundamental truths of Aristotelian-Thomistic philosophy. In his five-volume, 3,832-page text (it was the most exhaustive economics textbook ever written) Lehrbuch der Nationalokonomie, Pesch articulates just such a system. He meant it to be a model for future economic development and organization. It is a concrete, scientific alternative to the amoral and anti-social theories of the libertarian von Mises.

Ethik und Volkswirtschaft (Ethics and the National Economy), published in 1918, was intended to be a concise summary, not of the Lehrbuch, but rather, of his social and economic system, Solidarism. This work was one of several books published by noted scholars under the auspices of the Commission for Christian International Law established in Germany in 1917. It serves as a brilliant summation and application of the political and social thought produced by a whole ensemble of Catholic and Corporatist German authors and intellectuals, such as Bishop von Ketteler, Baron von Vogelsang, and Franz Hitze. Its importance to Catholic social teaching is that it served as a bridge between Pope Leo XIII's Rerum Novarum and Pius XI's Quadragesima Anno, the first draft of which was written by Oswald von Nell-Bruening and Gustav Gundlach, both disciples of Heinrich Pesch.

The most important fact to remember when considering Pesch's text and, indeed, his entire system of Solidarism, is the specific challenge which it poses to those who would "separate" ethics from a scientific account of economic systems. Those who do separate ethics from economics-we think here of von Mises and his modern-day devotees-argue that to consider the ethical aspects of economic questions is to impose, arbitrarily, extrinsic considerations which would only obfuscate the necessary and universal economic "laws," the understanding of which is requisite for a vibrant and well-functioning economy. Economics has its own laws, argue the neo-Liberals, and these must not be transgressed by the dislocating imposition of "heteronomous" (a Kantian term meant to express any kind of extrinsic influence) considerations.

The basic purpose of Pesch's writing and apologetic was to indicate how ethics does not come into play in the field of economics in a purely extrinsic way, it is not merely "a personal ethical evaluation" of necessary and ineradicable natural laws of economic interactions between men. It is not even a sacrificing of economic prosperity to the exigencies of divinely revealed Church doctrine. Instead, Pesch's system, as articulated in his Ethics, attempts to provide the reasons for his insistence that ethics is a science prior to, and more ultimate than, economics. Man is only an "economic animal" because he is first a free animal; a being with physical needs who is required to work and to make free decisions in order to fulfill those needs. Pesch, as economist and philosopher, rightly insists that, rather than being of ancillary import, ethics, or the science of how man ought to act in order to achieve the properly human good, is the very soil from which any truly scientific consideration of economic activity ought to emerge. Unless we understand the way in which the inner life of the human soul is ordered, both in relation to its own self and in its relationship to others, we will never understand the basic economic dynamic, which is a human dynamic.

It is quite ironic to read so many Libertarians accusing Pesch of "illegitimately" imposing Church-sanctioned moral norms upon the economic freedom of individuals. According to this evaluation, it was the Austrian School of Economics, prefigured by the British Whig Adam Smith, which recognized that only by individuals "freely" seeking after their own economic self-interest would there be general economic prosperity and socio-psychological well-being. What is ironic here is that in order to assert the inviolability of human economic freedom, the Whigs and the neo-Whigs needed to reject the personal volitional indeterminacy of man. Paradoxically, man cannot be free if his free interactions necessarily lead to the best possible result. This fact strikes at the very heart of the entire Liberal/Libertarian conception of human life and civilization. Freedom would negate its own self if, in its performance, it served as part of a system whose ultimate status would be determined prior to the free actions themselves. Here, we are not considering the free action of Divine Providence, which, on the basis of God's free will, draws good out of evil so that the greatest good may be obtained. The Libertarians clearly do not wish to include a consideration of "heteronomous" Providence when seeking to ground an economic system. Besides, there is no way in which any one could substantiate a claim that God's Providence requires, of necessity, a drawing out, by God, from the sum of all free actions, the greatest possible economic good.

In upholding economic necessity, the Whigs, of the past or of our own time, circumvent and negate the very object of ethical thought, human freedom. What Heinrich Pesch does, in his anti-Liberal treatise, is to uphold the freedom that expresses itself in the moral life of man. Free choice is the subject matter of all ethical discussion; it contributes, essentially, to the determination of the destiny of each individual and of human civilization as a whole, and such choices can be good or evil, in accord with the right order of things or in opposition to the right order of things. What Pesch is saying, in Ethics and the National Economy, is that truly free activity-again, his assertion is that man is truly free-can tend towards the good or towards evil. Since men can tend towards good or evil in their personal lives, they can tend towards what is in accord with the common good of the community or act in an egotistical way that contravenes the common good of the civil community.

The anti-liberal character of Pesch's entire system becomes clear, when we take note of his assertion of the Aristotelian understanding of the origin of human society and his subsequent rejection of the liberal and revolutionary Social Contract theory concerning the origin of civil society. According to Pesch and the perennial philosophical tradition, it is man's social nature, requiring the actualization of his capacities and the satisfaction of his genuine human needs, which directs man to move beyond the life of the family and, instead, toward that more powerful and comprehensive human association, the State. It is through the existence of the State, along with the social and economic conditions which the State creates, that man can achieve all of those temporal human objectives that would be unattainable without it. In Pesch's Ethics, he remarks that, "the state is supposed to do for its members what they, by their own personal capabilities and by the capacities of lower-ranking societies within the state, cannot accomplish."1 In contradistinction to the Libertarian-Liberal instinctive treatment of the State as an evil, even if a "necessary" one (in Catholic moral theology, no evil is ever "necessary"), Pesch writes that, "The purpose of the state consists in providing, safe-guarding, and complementing the sum of those social conditions, institutions, and structures which alone provide and preserve for all members of the state the fuller capacity to secure and maintain their temporal welfare on their own and by using their own abilities."2 This delineation of the proper status and powers of the State is part of Solidarism's complete rejection of any type of Statism or Totalitarianism. Rather than exalting the State as the object of all human hopes and endeavors, Solidarism insists that the authority of the State does not exist for its own sake, but rather, for the sake of political society; it exists to safeguard the rights of the community against private interests. The State also has the right and, indeed, the obligation to promote this well being positively, without harming the personal initiative of its citizens. It and it alone can rally all the social energies to cooperate positively in establishing and fostering the public welfare.

As Pesch explicitly states, the only ultimately efficacious check on the arbitrary and intrusive power of the State comes from absolute and unchanging moral norms. For Pesch, such norms are convertible with the Christian moral law. It is this moral law, along with the doctrinal understanding of the nature of man that underlies it, which is the only thing that can insure the status of the individual as having a destiny that transcends the confines of the social and political life created by the State. Only if we believe that nothing in the natural order can completely fulfill the desire and destiny of man, will we steel ourselves to a potential conflict with a State that overreaches its proper domain. Such a belief can only stem from a supernatural faith, more particularly, one that does not allow for compromise or doctrinal ambiguity.

In Chapter IV of the Ethics, entitled "Work and the Worker," Pesch proclaims the truth that is at the foundation of all of economic life, "Man is the lord of the World!" The brutes do not have a right to have an economy. This dominion of man, however, is only achieved by work. Without work, the raw material present in the world, as the divinely provided common resource of all mankind, would not be transformed by mind so as to become amenable to the human condition. Here we can discern the relationship Pesch draws between the nature of economics and the nature of man. The very origin of economics is the need for man to "economize." To "economize," as here understood, is to act so as to transform materials, through continuous repeated labor, in order to take advantage of the bounty of nature and to replace by other things transformed resources which have been used up. As Pesch states, "without continuous and persistent work, mankind could not sustain itself, and the largesse of our national environment with its materials could not function in the service of man."4

The economic centrality of labor is not a fact without theoretical importance for Solidarism. Work precedes ownership. That is because all ownership could only come into being by work. Even though Pesch does not identify work as the only title to ownership, we think of inheritance here, it is work rather than ownership of financial capital, which serves, for Solidarism, as the basis of all economic culture and society. Since a man who works, acquires the right to own, the institution of private property will be conditioned by its relationship to genuine human labor. Such a stipulation makes property something which, by its very nature, must be accessible to all those who work, regardless of whether or not they, prior to working, have available to them a significant amount of financial capital.

Here is made a point that contradicts those who would make the rights of private property absolute. As Pesch, himself, states, "the institution of private property was established by virtue of the law of nations (jus gentium) as one of the natural rights and requisites of man, of families, and of political society in all nations which progressed to a higher level of culture. However, in the Christian view of things, there is no such thing as an unconditional, free, absolute right of private property that does not involve also obligations"5 In the face of those, like Ludwig von Mises, who state that private property does not exist as an institution if it is regulated by considerations other than those of private interest, Pesch states that there is no such thing as a human right that would be independent of the moral order that operates in the world. Since the economic acts, including the use of property, are, more fundamentally, human acts, they fall within the domain of ethics and must, therefore, be regulated by the properly human good. It is to distort the true condition of man to insist upon the independence of the individual from the larger social and moral context of his action. Moreover, Pesch's Solidarism also provides us with a meaning for property, which Liberalism, in its capitalistic form, does not. To speak of an ultimate and objective purpose for private property would be to deny the rationality of the unlimited acquisitiveness that serves as the elan vital of Capitalism. For Pesch, and for the whole Catholic social teaching that he articulates, private ownership is not an end in itself. Rather, it is "a means to make possible in an orderly and fitting manner the well being of the individual, of the family, and of political society."6 Neither is it the case that the right to private property trumps all other human rights. It is, by no means, to be regarded as the highest right overall that man enjoys as he makes his way in the world of material goods. As Pesch's philosophical and analytical approach is Scholastic, by considering the most basic ontological (i.e., having to do with the principles and functions, which make up a specific being) aspects of man, he can arrive at the conclusion that the right to life and the right to the necessary means of subsistence occupy a higher position than any derived right to material property. Sam Walton cannot own Wal-Mart unless Sam Walton first exists as a living being and can sustain his life with the basic "fungibles" (i.e., those goods that are either "consumed" or which perish due to their not being "consumed") that a man needs to survive. Before the State concerns itself with securing the inviolability of the Super Store, it must ensure that the two more basic and fundamental rights are upheld within its jurisdiction. No power but the State can do that to an adequate extent. The State's very raison d'etre is to do just that. Moreover, as Pesch emphasizes, in the event of extreme need, the right to own a material thing has to give way to the right of a person to survive. In this way, "all things are common"; all things, in the material creation, are destined and intended for the preservation of the human race.

When considering this text, it is important not to forget the second part of the title. For Solidarism, and for Heinrich Pesch's entire endeavor in the area of Social Catholicism, it is necessary to remember that an economy should not exist that is not a "national economy." The State is a perfect society for the simple reason that it has the means of providing for the highest and most basic needs of its citizens. An economy that is not "national" is equivalent to global grand larceny. If an economy is global, if capital-rich seekers after minimal wages and maximal profits are allowed to roam unhindered by government across the economic expanse, property ceases to be a stabilizing factor in human affairs and, instead, serves to co-opt human work into the service of those who have the connections and the financial resources needed to translate genuine human labor into large quantities of digital dollars.

A series of critical issues are raised in Chapter VI of Ethics and the National Economy, that of the Just Price, the most debated economic issue in the Middle Ages, and that of the Just Wage. These issues are, even amongst our contemporaries, much debated since many contemporary neo-Liberals are claiming that the "late Spanish scholastics" upheld the position that the "law of supply and demand" ought be the sole regulator of prices. Since all considerations of justice, and especially the idea of a "just price, "seem to create alarm in the minds of the neo-Liberals of the von Mises type, due, no doubt, to a belief that such considerations are idealistic and subversive of the economic laws of "supply and demand," it is heartening to see Pesch carefully, and in a very realistic manner, insisting upon the fact that economic exchange is not "gift-giving," but rather, an exchange of economic values. No one intends to suffer a loss of some of his wealth in the process. This fact, however, is the only given in the economic process. Other than this, there is no "law" of exchange that can be derived from this state of affairs. This basic understanding is rejected by liberal economists who hold that prices are established directly by the interaction of supply and demand; this process then leads indirectly to the economically correct distribution of goods for satisfying the wants of all. Moreover, these same economic liberals argue that if such "free competition" is allowed, with regard to the pricing of goods, in the long run prices will fall to the lowest possible level. The entire operation, bringing about this economic "benefit" takes place automatically, mechanically, as if "by itself."7

In refuting these liberal capitalist doctrines on pricing, Pesch expresses the primary thesis of his text:

Behind supply there are suppliers, and behind demand there are demanders, causes which operate freely, human deliberation, human ambitions, human passions, and human power relationships. Therefore what is needed is the intervention of regulating factors and protection against speculative falsification, against artificial manipulation of the fluctuation of prices which makes it possible to earn vast amounts of money in a short time.8

It is breathtaking to behold the neo-Liberals of our day, both of the militant and the instinctive variety, insisting on the benefits for freedom and prosperity brought to us by our present Capitalist System. What the Liberals-Libertarians choose to ignore is that there is no business success, in the present day Capitalist System, without the leave of the bankers. One is only "free" in this System if the bankers give you the loans and the credits which will "allow" you to be successful. As Chesterton once said, " Utopia for whom?" For those who dream of the day when the world and truly free men will not have to beg "leave" of the bankers, Pesch gives cause and counsel.

Dr. Peter E. Chojnowski has an undergraduate degree in Political Science and another in Philosophy from Christendom College. He also received his master's degree and doctorate in Philosophy from Fordham University. He and his wife Kathleen, are the parents of five children. He teaches for the Society of Saint Pius X at Immaculate Conception Academy, Post Falls, ID.

--------------------------------------------------------------------------------

1. Heinrich Pesch, Ethics and the National Economy, trans. Rupert Ederer (Norfolk, VA: I.H.S. Press, 2003) p. 50.

2. Ibid., pp. 50-51.

3. Ibid.

4. Ibid., pp. 64-65.

5. Ibid., p. 68.

6. Ibid.

7. Ibid., pp. 81-83.

8. Ibid., p. 84.

IHS Press

Read more...

Observations on Catholic Social Teaching

by Dr. Peter Chojnowski

Economic theory distills to Catholic principles based on the Church's perennial philosophy and theology. Therefore, let it be said:

A "world of order" is not synonymous with a "world governed by economic theories and procedures of liberal capitalism." Why not?- A "world of order" implies limitation and form. The core problem with Capitalism is that it rejects the idea that there are "limits," It is a system which states that every man should seek to maximize his own wealth. The psychology of Capitalism is contrary to the Catholic principle that man should only seek after a sufficient amount of wealth to cover his basic needs with an allowance for an element of comfort and genuine leisure.

Rather than being reasonable, Capitalism transgresses reason by telling man that he should not "stop spending" when he has experienced contentment with his condition and possessions. Modern capitalistic advertisement (outlawed in days of the corporate guild system) indicates how new, non-natural "needs" are created by profit-seekers. It is manifest that the contemporary "consumer" is an artificially constructed entity. For example, clothing no longer has the purpose of covering the body in a dignified way, but rather; to "create" a character. The nature of modern clothing is an expression of the capitalist/liberal ethos telling consumers there is no end to "self-creation" and "need-fulfillment"

If we are to conform our economic, social, and political actions to the "economic laws" of the advocates of Capitalism, we must ask: "Where is the regularity which is summarized by these so-called laws?" Are we speaking about the regularity of physical interactions? Are these the basis for the laws to which we are to conform all our actions if we are to attain a state of maximum prosperity? Excuse me! Is not man the master of creation? Was he not given the divine mandate to name all of the creatures in the natural order? By naming all of the creatures, he gained control over them by including all of the divergent instances of a being into a concept which expresses their essence and, hence, type. Shouldn't man order all he finds, regulating all with prudence and moderation towards the greater good of the social order of which he is a part? Is not man called to be providential just as God is providential? And since the State, which St. Thomas Aquinas understood to be a perfect society, is called upon to see to the common good of those under its temporal authority, isn't it self-evident that the State is called upon to order all the goods which are present within its jurisdiction for the sake of the common good? This ordering would necessarily involve insuring that private property be possessed by a maximum number of the citizenry.

Capitalists tend to move without a blink from explaining the only Catholic sense of God's order to a favorable account of the appreciation for the "elegant regularity of phenomena and the beautiful order that Isaac Newton had described." What they fail to explain is the radically different understanding of "nature" and "order" which characterized the Catholic Aristotelian of the Middle Ages and the mechanistic Newtonian/Cartesian world of the Enlightenment. What is most important to remember is that the philosophy dominant during the Enlightenment rejected the Aristotelian doctrine that final causes could be discovered, through an experiential and philosophical encounter with nature, by the human mind. Descartes insisted that the human mind could not "discern the plan of God for all things" and rejected the knowability of that towards which a being is directed (i.e., the final cause).Therefore, he eliminated all reference to "goals" in nature by philosophy or empirical science. For him, all nature was simply one "extended" thing. He denied that individual substances had discernible natures that were directed towards fulfillment through the achievement of certain ends. Following in this philosophical development, the modern science of economics has forgotten the "goal orientation" ingrained in the nature of things by the Creator Himself. Most importantly, it has forgotten that all men are meant to achieve the same final end. This indicates that the goods of the world are given by God for mankind to fulfill those basic needs which God has placed in man's nature. A commonality of needs requires the recognition of a certain commonality of goods. The true goal of an economy is to provide those goods to man, using what St. Thomas called "the prudence of rulers."

Since prudence involves concrete acts of reason and-in the case of economics-reason extended to the common good of a community, those in charge of the good of the community must use reason to distribute the commonality of goods in a just way amongst those who have a commonality of needs. Quite obviously, man's needs are not provided for automatically by following the empirical laws of nature! Why should they be provided for by following the so-called capitalist "laws of the market"?!

©The Angelus

Read more...

Corporation Christendom Part Two

by Dr. Peter Chojnowski

The Spanish Fairs and Renaissance Banking

To offer proof that the Scholastics, early or late, did not adhere to Libertarian principles of economic life, it is best to cite the historical works of the Neo-Liberals themselves. The two which draw our attention are The School of Salamanca: Readings in Spanish Monetary Theory 1544-1605 by Marjorie Grice-Hutchinson18 and Raymond de Roover's San Bernadino of Siena and Saint Antonino of Florence: The Two Great Economic Thinkers of the Middle Ages.19 Our task can also be simplified if we can demonstrate, using the research of the Neo-Liberal scholars themselves, that the later Spanish Scholastics of Salamanca, along with the two above-mentioned saints, were fully within the great intellectual, social, and economic tradition of Catholic Christendom most particularly concerning the question of the "just price." If the "just price" is formulated in a way which allows for many factors other than the exigencies of "supply and demand" (i.e., whether there is a social and moral aspect of the determination of price), and, especially, if there is a role for the "prince" in the determination of "market prices," then we can safely reject the notion that these Catholic scholars of the past accepted a paleo-capitalistic conception of the determination of price and, hence, of the entire economic life of society.

Even though Salamanca University was the most prominent place of higher learning in the European world at the time, it was Spain's position as master of the New World that set the stage for a concentration on the problems of economics by the Scholastics of Salamanca. The gold and silver coming from the mines of the Americas made Seville, the homeport of the treasure fleet, the economic center of and primary money market in Continental Europe during the middle of the 16th century.20 Here we have a place where there was a large circulation of money and a high price level. Tomas de Mercado (d. 1585), a Dominican from Mexico who was present in Seville and preached on commercial morality, portrays the mercantile and financial situation that grew up in these conditions to us. According to Mercado, when the fleet comes in, every merchant puts into the bank all the treasure that is brought to him from the Indies, the bankers having first given a pledge to the city authorities that they will render good account to the owners.21 The bankers served their depositors free of charge and used the money deposited with them to finance their own operations. Most of the gold and silver brought in by the fleet passed in this way through the hands of the bankers and served as a basis for credit. The opening for usury was occasioned, however, by these transactions. As Mercado complained at the time, "money-changers sweep all the money into their own houses, and when a month later the merchants are short of cash they give them back their own money at an exorbitant rate." In Spain, concludes Mercado, "a banker bestrides a whole world and embraces more than the Ocean, though sometimes he does not hold tight enough and all comes crashing to the ground."22

The above stricture, on the part of Mercado (who died on a ship in 1585 on his way back to Mexico), against the financial transactions of bankers and merchants, was an articulation of an idea that was of ancient origin. Interest paid simply for the use of money during a certain period of time was considered usurious and universally condemned. Much of the moral thought about economics coming out of Spain during this period was, specifically, an attempt to grapple with the moral considerations occasioned by certain attempts to avoid the Church and State's condemnation of usury.

The attempted circumventing of the usury laws occurred in a very subtle way. It originated in a seemingly legitimate attempt to deal with two practical difficulties encountered by merchants at the time. First, there was, generally, a lack of cash available at the time, requiring merchants to set debts against one another at the merchant "fairs" held at various times and in various places throughout the year. Second, the merchants of the period, at the various fairs, had to act as money changers since, often, a debt was incurred in one place, say Seville, and paid in another, say Flanders. In this regard, it was generally agreed that the merchant who paid out money in one place and recouped himself in another was entitled to make a reasonable charge for his services. Even with regard to this type of "financial service," to charge a similar fee for bills transferring money from one Spanish fair to another was forbidden by a royal decree in 1551.23 Clearly the Spanish Catholic Crown was even willing to "dislocate the whole business of the fairs" rather than allow merchants to become involved in unnecessary "financial servicing." There also developed situations in which borrowed money was not to be paid back at the next fair but at one year later. Due to the "fees" attached to such "financial services," these became loans camouflaged as fees and involving a high payment of interest. According to Grice-Hutchinson, these met with "fulminations from both Church and State."24

It is when dealing with this question of the transference of funds from one fair to another, that Grice-Hutchinson, as representative of the Neo-Liberal Economic School, focuses on the question of "price" and the factors determining the "prices" of both money and goods.

The Function of Money and the Question of Foreign Exchange

Medieval ideas about the origin and functions of money are largely based on a few short passages in Aristotle's Politics and Nicomachean Ethics. Here, Aristotle insists that the function of money was its use as a medium for the exchange of goods. Money was first invented to overcome the difficulties of transport and need that are bound to arise in a barter economy.25 Money, therefore, is meant to serve as a common denominator that brings into line with each other things diverse in nature: "Making all things commensurable, equalizes them."26 Along with rendering commensurable for the seller and buyer what is, by nature, qualitatively different, money can serve as "capital," or as a store of value to be used at a future time. Aristotle emphasizes the function of money as a man-made instrument by indicating that its value rests on custom and that it, "rests on us to change its value or make it wholly useless."27 Averroes (1126-98), whose commentary on the Ethics was translated into Latin early in the 13th century, follows Aristotle closely on the origin and functions of money.28

Since St. Thomas Aquinas upheld this traditional view that money was invented for purposes of exchange, he held that it was unlawful to take payment for the use of money lent, which payment is known as usury. Here we have a reassertion of Aristotle's own condemnation of usury. St. Thomas himself applies this to our issue under discussion, gain on account of the foreign exchange of money, by condemning this practice outright. Merchants who attempt to make money by lending money where money is plentiful and collecting it where money is scarce for a real financial gain, meet the following statement by St. Thomas, from his Commentary on Aristotle's Politics, I, lvii:

Likewise the art of money or acquisition is natural to all men for the purpose of procuring food, or money with which to buy food, out of natural things such as fruit or animals. But when money is acquired not by means of natural things but out of money itself, this is against nature.

This teaching concerning making money on the basis of the relative "price" of money in one place or another, appears again in 1532 when the Spanish merchants of Antwerp sent their confessor to Paris to get a ruling on the legitimacy of exchange transactions from the learned doctors of the University. They condemned forthright all exchange business.29 The point that the Neo-Liberals, represented by Marjorie Grice-Hutchinson, would like to draw out of this incident is that, in this reply, the rate of exchange fluctuates according to the state of supply and demand and is not derived from the labor and costs incurred by the person in whose favor the bill is drawn. The assumption here being that that which all think should determine the "price" of money, is the same as what all think should determine the price of commodities. This is an arbitrary assumption. Moreover, the doctors of the University of Paris are, apparently, merely speaking of a matter of fact. In itself, it by no means determines what the Scholastic doctors will say about the "just price" of things that ought to be sold, namely commodities. What we are truly left with from this reply is a further verification of a perennial teaching of the Christian Era; money should not be made off money. As St. Thomas states, such activity is justly deserving of blame, because, considered in itself, "it satisfies the greed for gain, which knows no limit and tends to infinity."30

The School of Salamanca and the Just Price

When considering what the purportedly innovative School of Salamanca said about this important question of the "just price," the economic issue extraordinaire in the Middle Ages, I came across a text, included in The School of Salamanca by Grice-Hutchinson, which led me to hesitate for a moment. Here, in a citation from Domingo de Soto's book De justitia et jure published in 1553, we find the following in answer to the question, "Should prices be determined according to the judgment of the merchants themselves?":

Firstly…excluding fraud and malice, we should leave merchants to fix the price of their wares. Secondly...every man is the best judge of his own business. Now, the business of merchants is to understand merchandise. Therefore, we must defer to their opinion in settling prices. Thirdly, that a man may do as he likes with his own property. Consequently, he may ask and receive whatever price he can extort for his wares.

"Now," I said to myself, "we have a big problem. Domingo de Soto is an important figure in the history of the School of Salamanca. He was a Dominican, a contemporary of the School's founder Vitoria, and considered to be one of its best writers on economic subjects. In 1532 De Soto was appointed to a chair of theology at Salamanca. His fame was such that, in 1545, the Holy Roman Emperor and King of Spain Charles V appointed De Soto, now regarded as the most eminent of the Spanish theologians after Vitoria, as his own representative at the Council of Trent. He became Charles's own confessor two years later. Surely if this man held for the 'free market' approach to commodity pricing, such must be a genuine teaching emanating out of Salamanca."

After some uncomfortable consternation, it dawned on me what I was reading. Rather than being De Soto's own position and teaching on the matter, these were the Objections to De Soto's own position, which always, of course, appear first in any properly organized Scholastic article. De Soto's own teaching on the matter of the just and proper price is perfectly in line with what you would expect a Catholic theologian of a still flourishing and faithful civilization to say.

De Soto's first "conclusion" with regards to this issue is to make a distinction that is the common-sense ground work for any discussion of prices: the price of a "good" (or commodity) is not determined by its essence (how the thing fits into the whole hierarchy of creation), but rather, "by the measure in which [it] serve[s] the needs of mankind."31 Here he affirms what was taught during this same period (1554) by another Salamancan scholar, Diego de Covarrubias: "The value of an article does not depend on its essential nature but on the estimation of men, even if that estimation be foolish."32 The "goods" we are citing here are "goods" which are good insofar as they service human needs. These things, therefore, have a price insofar as they are valuable in the eyes of the citizens; these goods or commodities would allow the citizens to satisfy their human needs. De Soto concludes this foundational claim about prices by saying, "We have to admit, then, that want is the basis of price." Things are, therefore, more desirable, and therefore will go for a higher price, insofar as they more perfectly satisfy man's desire for fulfillment and sustenance, irrespective of the place which the thing holds in the hierarchy of Creation. As St. Augustine states (City of God, Bk.II, chap. 16), "a man would rather have corn than mice in his house"; this, even though mice are ontologically more perfect than grains of wheat.

When speaking of the "want" which is at the basis of all economic life and pricing, De Soto recognizes, in a very balanced way, that when we speak of "want" we must not exclude a recognition of the fact that the city needs "adornment"; even though such things are not necessary for human life, it is something which renders life "pleasurable and splendid."

In De Soto's second "conclusion," we find a statement which directly contradicts the Libertarian claims that the later Scholastics of Salamanca thought that nothing should be considered when calculating price, other than "supply and demand." De Soto lists supply and demand as one of the elements that go into determining the just price for an item.

Next, we must bear in mind the labor, trouble, and risk which the transaction involves. Finally, we must consider whether the exchange is, for better or worse, to the advantage or disadvantage of the vendor, whether buyers are scarce or numerous, and all other things which a prudent man may properly take into account.

In other words, much to the consternation of those who would insist that the Salamanca School recognized nothing but the needs of "supply and demand," we find one of its most prominent scholars asserting that the entire process and situation of production and sale must be considered when the just price is calculated. Social and economic prudence is truly queen here.

We find out in the next paragraph who it is, exactly, who is entitled to make a binding judgment, while employing this social and economic prudence. The answer to this question depends upon another Scholastic distinction. This distinction is between the "legal" price and the "natural" price. These are, as De Soto states, the "two-fold" aspect of the "just price." Here we find that "the just legal price" is that which is fixed by the prince. The "discretionary" or "natural price" is that which is current when certain prices are not legally controlled. De Soto states that this distinction is one drawn by Aristotle in his Nicomachean Ethics (V, chap.7). Notice, in this regard, De Soto is not making a "value judgment," saying that the "legal price" is bad and the "natural price" is good. As we will find, the application of these two different types of prices depends upon what type of good or commodity we are speaking of.

The next few paragraphs of the passage we have been citing are very significant and are echoed by other scholars of the Salamanca School. De Soto states:

To understand the [above] Conclusion and to judge its validity, and to see why it is necessary for prices to be controlled, we must realize that the matter is a primary concern of the republic [in the sense of res publicaor the commonweal] and its governors, who, in spite of the arguments repeated above [i.e., those "free market" arguments in the Objections], ought really to fix the price of every article. But since they cannot possibly do so in all cases, the task [of "fixing" the price of those commodities which the prince has not fixed] is left to the discretion of buyers and sellers. The price that results is called the natural price because it reflects the nature of the goods, and the utility and convenience which they bring [emphasis mine].33

In proof that the term "legal price," entails no negative judgment on this form of pricing, we can cite De Soto as stating, "When a price is fixed by law (for instance, when a measure of wheat or wine, or a length of cloth, is sold for a certain sum) it is not lawful to increase this price by even a farthing. If the excess be great, then it is mortal sin and a matter for restitution." Those prices which are not regulated, especially the prices of commodities extraneous to the basic needs of the citizenry, can "enjoy a certain latitude within the bounds of justice." Here we find that even the prices allowed to fluctuate must be kept within the bounds of justice; "justice," in this case, meaning the requirements of the common good.

The Complexity of the Just Price Reaffirmed

De Soto was, as was every Scholastic, an inheritor of a centuries-old tradition of scholarship and learning. His statements concerning the advisability of "fixing" prices had antecedents deep in the heart of the Middle Ages. That characteristic "non-giant," the Viennese scholar Heinrich von Langenstein, was an advocate of a strict system of price controls. He advises the prince, however, to fix prices in accordance with the customary price, which is determined by "the degree of human want." Moreover, Langenstein shows a completely balanced approach to the question of the just price. He acknowledges that there is an objective factor, in the sense that it should be fixed by some authority standing outside the market, and yet subjective as being the product of subjective factors. Some of those subjective factors that Langenstein mentions are: supply and demand, utility, cost of production, remuneration of labor, cost of transport, and risk. All of these are to be taken into account when determining value.34 Just like St. Thomas Aquinas, Langenstein understood "supply and demand" to play a part in determining price. Grice-Hutchinson herself recognizes this to be the generally held position of the Scholastic tradition when she writes, "we have seen that the concepts of utility and rarity were placed high in the traditional list of factors determining value which accompanied scholastic discussions of the 'just price.'" She also admits, "We have seen that our Scholastic writers regarded utility and rarity as the primary, though not the sole, determinants of value [emphasis mine]."35

If we should look specifically for another member of the School of Salamanca who affirms De Soto's teaching on the desirability of fixing prices, especially those of "staple" commodities, we come upon one Pedro de Valencia. In his Discurso sobre el precio del trigo, he states:

[T]hose who allege that a thing is worth the price it will fetch must be understood as referring only to things that are not essential to life, such as diamonds, falcons, horses, swords, and also to other commoner things when there is no fraud, compulsion or monopoly, and when vender and purchaser enjoy equal liberty or suffer equal need [emphasis mine].

Recognizing, however, that in matters of real need the citizenry is at a distinct disadvantage in any exchange, he states, "in the case of bread, in years when it is dear—the vendor always enjoys liberty and plenty, and the purchaser always suffers urgent need and want." Now we come to the question of the just price:

The just price is not whatever a thing will fetch on account of the purchaser's need, nor can such a price in conscience be demanded. No price is just or should be regarded as current if it is against the public interest, which is the first and principal consideration in justifying the price of things.36

Bernadine of Siena and Antonino of Florence: Saints Misconstrued

We ought be very much surprised when we find a Neo-Liberal scholar like Raymond de Roover focusing our attention on two great saints, St. Bernadine of Siena and St. Antonino of Florence.37 It is, first of all, surprising to see that they are termed, "The Two Great Economic Thinkers of the Middle Ages," when they lived their lives square in the heart of the blossoming Italian Renaissance. That these thinkers are acclaimed as far-sighted prophets of the goodness of Liberal Capitalism is also surprising, since their attitude towards economics itself could not be farther away from the mentality of a Ludwig Mises, who would hold the laws of private property and the "free-market" to be adverse to the "heterogeneous" moral claims made by the divine and natural law. Here it would be useful to recall Mises' statement:

In urging people to listen to the voice of their conscience and to substitute considerations of public welfare for those of private profit, one does not create a working and satisfactory social order [emphasis mine].

The only thing which the two great saints under consideration intended by their preaching and writing on economic issues was to "urg[e] people to listen to the voice of their conscience and to substitute considerations of public welfare for those of private profit." They also held that only if such things were done, would a just and satisfying civil order be attained.

When we consider the moral teachings of St. Bernadine (1380-1444) as these relate to economic issues, what we are analyzing are 14 sermons which are part of a larger collection of sermons entitled De Evangelio aeterno (Concerning the Eternal Gospel). These Latin sermons, as opposed to his Italian ones, were meant to be read rather than preached. Here we can see the continuation of a long tradition, echoed in our own age by men like Heinrich Pesch, S.J., of including economic questions within the larger framework of ethics. In these sermons of St. Bernadine (a Franciscan and the great apostle of devotion to the Holy Name of Jesus), we find the general teachings of the Church as regards economic life repeated anew. As De Roover himself admits, the condemnation of usury was a prominent theme in St. Bernadine's writings.38 Just as was the case with the other Scholastics, St. Bernadine was "preoccupied with another set of problems [as opposed to questions of "how the market operates"]: what is just or unjust, licit or illicit? In other words, the stress was on ethics: everything was subordinated to the main theme."39 Both St. Bernadine and St. Antonino (Archbishop of Florence from 1445-59), both frown upon acquisitiveness as leading to sin and eternal perdition. St. Antonino deals with the whole topic of market transactions in the section of his Summa Moralis that deals with the sin of avarice.40 Moreover, economics was discussed within the framework of contracts, as Roman law understood these. The virtues that regulated the individual and collective economic actions of men were the virtues of distributive and commutative justice (i.e., the State giving to its citizens "their due" and citizens "giving to each other their due"). Let us face it, the only "due" that the Libertarians allow is the absolute claim that each man has to have the government and his fellow citizens respect his already demarcated private property right. They forget what the Distributists remembered quite well, all men have a certain right to private property. Those who uphold the Social Teachings of the Catholic Church, better than their Libertarian antagonists, understand the role of private property in personal and familial fulfillment.

When we study De Roover's book on these two putatively innovative saints, we find ourselves at a loss to find a significant teaching that is not firmly rooted in the wisdom of the Catholic past or one which is not clarified, in a purely traditional way, by the later Scholastics of the School of Salamanca. As De Roover himself recognizes, St. Bernadine, like the Medieval Scholastics before him, understood price determination to be a social process. Price is not set by the arbitrary decision of individuals but collectively by the community as a whole.41 St. Bernadine makes this explicit when he states, "the price of goods and services is set for the common good with due consideration to the common valuation or estimation made collectively by the community of citizens [emphasis mine]."42 According to De Roover, in the writings of St. Bernadine, there was "only minimal analysis of changes in demand or supply as this affects prices."43

With regard to the above question of price, as we found earlier with his analysis of the economic thought of St. Thomas Aquinas, De Roover's portrayal of the intellectual "innovations" of St. Bernadine is very forced and often involves the use of statements that do not at all prove his point, in fact, they often contradict it. One example is his citation of a single sentence from the "sermons" of St. Bernadine which seems to indicate that the saint held to an idea of the "just price" which was convertible with the idea of "market valuation." In support of this view, he cites St. Bernadine as defining the "just price" as, "the one which happens to prevail at a given time according to the estimation of the market, that is, what the commodities for sale are then commonly worth in a certain place."44

As we have seen, however, with regard to this determination of price based upon "supply and demand" and "market conditions," there was a solid moral tradition, passing into late Scholastic times, in which it was considered perfectly reasonable that prices of certain inessential items were allowed to "float" freely, their value being determined by how much someone who did not absolutely need the item was willing to pay. De Roover himself seems to recognize that the language of "just price" as "prevailing market price" refers to just this situation and to these kinds of goods. And yet, that De Roover wants to insinuate that St. Bernadine equated the "just price" with the "one that happens to prevail at a given time according to the estimation of the market" in all cases, is clear. With his usual hesitant definitiveness he says, "This statement [about just price and prevailing market price], it seems to me, is so clear that it does not admit any other construction.”

If, as he seems to say, St. Bernadine equated just price with market price, all prices should, for justice's sake, be subject to the free flow of market forces—any interference would be, according to this view, an interference in the market's setting of the "just price." That this is not St. Bernadine's view is made clear, again by De Roover himself, when he admits that the Franciscan taught "prices may be fixed for the common good." Society, then, is in charge of setting prices. Who does not hear the echo of the entire economic ethos of Christendom in St. Bernadine statement that, prices may be fixed for the common good, "because nothing is more iniquitous than to promote private45 interests at the expense of general welfare."

St. Antonino, the Just Price, and the Just Wage

St. Antonino of Florence was explicitly committed to the position that civil authority had the right and, often, the obligation to fix prices for the sake of the common good. Clearly the "common estimation" by which prices ought to be determined, included the possibility of the State explicitly setting the price of items. According to De Roover:

Sant' Antonino…states that it might be desirable under certain circumstances to have prices of victuals [i.e., food stuffs] and other necessities fixed by the bishop, or even better, by the civil authorities. If there is such regulation, it is binding and victuallers and other tradesmen may not, without sinning, raise the price above the legal minimum.46

Rather than being anything like a "free market" advocate, the Archbishop of Florence reaffirms the traditional condemnation of usury and monopoly. He also insisted upon there being a "just wage." The calculation of what would constitute a "just wage" was a social and a complex process that would involve the consideration of many different elements. To quote De Roover's citation of St. Antonino, "Sant' Antonino states that the purpose of wages was not only to compensate the worker for his labor but also to enable him to provide for himself and his family according to his social situation."47 Moreover, "it was as unfair and sinful to pay less than the just wage because a worker had mouths to feed as it was unfair to pay less than the just price because of the seller's urgent need for cash."48 St. Antonino clearly saw man as a whole, not just as a private property owning (or not owning) unit. The whole talk about a "just wage" (not to mention a "just price") means nothing unless we understand man to be a social creature and all of man's activities and social interactions, including his economic ones, as having an orientation to the higher and more perfect good, at least the true and fulfilling good of human existence. We see this over-arching teleological (from the Greek word telos or goal) understanding of the human good present in the following statement that De Roover makes concerning the teaching of St. Antonino:

The purpose of a fair wage was to enable the worker to earn a decent living, the purpose of a decent living was to enable him to lead a virtuous life, and the purpose of a virtuous life was to enable him to achieve salvation and eternal glory.49

As we might expect, from what we have seen from the various Libertarian writers cited in this article, De Roover "summarizes" St. Antonino's position by overturning everything he had previously stated concerning the saint's teaching: "St. Antonino's own wage theory according to which the just wage was set by common estimation, that is, by market forces without any reference to individual needs."50 Here he is asserting A and not A simultaneously. Here we have the manipulation of a classical Christian moral text by a Libertarian whose views on economics, logic, politics, society, and, even simple human psychology would be completely inexplicable to our saintly Renaissance bishop.

Restoration Economics

Why does all of this matter? Much of "conservative" and "libertarian" thought, in the United States, in the British Commonwealth, and on the Continent of Europe has attempted to find a way to, as Arthur Penty put it, "stabilize the abnormal." What is truly needed is a return to the normal. What we have seen when analyzing the actual statements made by the Medieval and Renaissance moral theologians on economic issues is a balanced portrayal of what the "normal" is. What has been amazing to see is not how innovative they were, in a Liberal direction, but rather, how traditional and deeply Christian they were. That there was room for discussion on such questions as the worth of money as a result of foreign exchange is a perfectly normal manifestation of the Catholic desire for justice and a deep prudence that understands the multiplicity of situations in which human beings act. Such prudence cannot be taken as a revolutionary innovation or for an opening to modern economic liberalism.

The basis of our current "abnormal" is an inflated and unnatural understanding of man as an individual, free to "create" his own "value system," which, to a certain extent, means to "create his own world." Liberalism, in its economic and political manifestations, has created a situation in which the ancient psychological, social, economic, and political tapestry of human societies has been unraveled. By upholding an ethereal concept of "choice," it has robbed us of our honor, our personal security, and our heritage. This entire conception of man and human existence is embedded in the Neo-Liberal equation of the "just price" with the "market price." That Arthur Penty and many others would present the "just price" and its attainment as the primary purpose of the Medieval Guild System is testimony to the fact that the very social life of Christendom, in a very real way, pivoted upon this reality. That "justice" should involve more than mere "freedom of choice," rather including within the very term an idea and concrete historical reality expressive of a higher order and more fundamental and essential obligations, is testimony to the fact that the spiritual psychology of Christendom was profoundly different from the one we find possessed by all those who reject the ancient way, whether they be Socialists, Globalists, or Libertarians. For those who would correctly seek for a life outside of the spiritually suffocating totalitarian Liberalism that we find ourselves immersed in, Penty warns them that any attempt to realize the dream of an independent rural existence without price controls put into place, would result, for most, in economic suicide for families and for individuals. These are sobering words. Our struggle must then take on a more encompassing religious, moral, and even political dimension if our children and our children's children are to live a life richer and, hence, more traditional than our own.


Dr. Peter E. Chojnowski has an undergraduate degree in Political Science and another in Philosophy from Christendom College. He also received his master's degree and doctorate in Philosophy from Fordham University. He and his wife Kathleen are the parents of six children. He teaches at Gonzaga University, Spokane, WA, and for the Society of Saint Pius X at Immaculate Conception Academy, Post Falls, ID.

1. For Neo-Liberalism's understood indebtedness to Ludwig von Mises during the post-World War II period, see Erik von Kuehnelt-Leddihn, Leftism Revisited: From De Sade and Marx to Hitler and Pol Pot in the chapter entitled "Real Liberalism" (Washington, D. C.: Regnery Gateway, 1990), p. 180.

2. Ludwig von Mises, Human Action: A Treatise on Economics (New Haven, CT: Yale University Press, 1949), p.726.

3. Ibid., p.728.

4. Ibid.

5. Ibid., pp.728-729.

6. Raymond de Roover, "The Concept of the Just Price: Theory and Economic Policy" in Journal of Economic History 18 (Dec. 1958), p.418.

7. For a traditional view of Medieval history and economics, rejected as a "fairy tale" by Raymond de Roover, cf. William Ashley, An Introduction to English Economic History and Theory, 4th ed., 2 vols. (London: Longmans, Green, 1920), I, Part II, 391; John M. Clark, The Social Control of Business, 2nd ed. (New York: McGraw-Hill Book Co., 1939), pp.23-24; Shepard B. Clough and Charles W. Cole, Economic History of Europe, rev. ed. (Boston: D.C. Heath, 1946), pp.31, 68; George Clune, The Medieval Guild System (Dublin: Browne and Nolan, 1943), p.55; Alfred de Tarde, L'idee du justeprix (Paris: Felix Alcan, 1907), pp.42-43; Joseph Dorfman, The Economic Mind in American Civilization, 3 vols. (New York: Viking Press, 1946-1949), 1,5; N. S. B. Gras, Business and Capitalism (New York: Crofts, 1939), pp. 122-123; Herbert Heaton, Economic History of Europe, 1st ed. (New York: Harper, 1936), p.204; George O'Brien, An Essay on Medieval Economic Teaching (London: Longmans, Green, 1920), pp. 111-112; Leo S. Schumacher, The Philosophy of the Equitable Distribution of Wealth (Washington, D.C.: The Catholic University of America, 1949), p.47; James Westfall Thompson, An Economic and Social History of the Middle Ages, 300-1300 (New York: Century Co., 1928), p.697. Also, included as a representative of this "erroneous" view of the Middle Ages, Arthur J. Penty, A Guildman's Interpretation of History (New York: Sunrise Turn, n.d.), pp.38-46. De Roover concludes these footnotes by saying, "This list is by no means exhaustive" [emphasis mine].

8. Ibid., p.419. Cf. Werner Sombart, Der moderne Kapitalismus (Munich: Duncker & Humblot, 1916), I, 292-293.

9. De Roover, Just Price, p. 420.

10. As the source of this quotation, de Roover cites Heinrich von Langenstein, Tractatus bipartitus de contractibus emptionis et venditionis, Part I, cap. 12, published in Johannes Gerson, Opera omina, IV (Cologne, 1484), fol. 191. According to de Roover, "No more recent edition is available."

11. De Roover, Just Price, p. 419.

12. Ibid., p.420.

13. Ibid., p.42l.

14. St. Thomas Aquinas, Summa Theologica, II-II, Q. 77, Art. 3, ad 4.

15. De Roover, Just Price, p.423.

16. ST, II-II, Q. 77, Art. I, ad 2.

17. De Roover, Just Price, p.421.

18. Marjorie Grice-Hutchinson, The School of Salamanca: Readings in Spanish Monetary Theory 1544-1605 (Oxford: Clarendon Press, 1952).

19. Raymond de Roover, San Bernadino of Siena and Sant' Antonino of Florence: The Two Great Economic Thinkers of the Middle Ages (Boston: Harvard University Printing Office, 1967).

20. Hutchinson, School of Salamanca, pp. 1-6.

21. Ibid., p8.

22. From Tomas de Mercado's Tratos y contratos de mecaderes published in Salamanca in 1569 cited in Hutchinson, pp.4-8.

23. Ibid., pp.9-11.

24. Ibid., p. l&.

25. The Politics of Aristotle, edited and translated by Ernest Barker (New York: Oxford University Press, 1945), I, 1257a and 1133b.

26. Aristotle, Nicomachean Ethics, trans. Terence Irwin (Indianapolis, Indiana: Hackett Publishing, 1985), V, 1133a.

27. Ibid. Cf. Hutchinson, School of Salamanca, pp.20-21.

28. Hutchinson, School of Salamanca, p. 22.

29. Ibid., p. 38.

30. Ibid., p.35. Cf. ST, II-II, Q. 77, Art. 4.

31. Domingo de Soto, De Justitia et Jure, Book VI, Q. 2, Art. 3, pp.546-549 (Salamanca, 1553). This text is cited in Hutchinson, pp.83-88.

32. Diego de Covarrubias, Variarum ex pontificio, regio et caesareo jure resolutionum, Book 4, 1554, vol. li, lib.2, chap.3 as found in Hutchinson, p.48.

33. See Hutchinson, School of Salamanca, pp.84-85.

34. Ibid., p.28.

35. Ibid., p.64.

36. Pedro de Valencia, Discurso sobre el precio del trigo (reprinted in Pedro de Valencia, Escritos sociales, in Biblioteca de clasicos sociales espanoles [Madrid, 1945]); the text is cited in Hutchinson, pp.118-119.

37. Raymond de Roover, San Bernadino of Siena and Sant'Antonino of Flor­ence: The Two Great Economic Thinkers of the Middle Ages.

38. Ibid., p. 1.

39. Ibid., pp.7-8.

40. Ibid., p. 1.

41. Ibid., p.20.

42. St. Bernadine of Siena, De Evangelic aeterno, sermon 35, art. 2, cap.2 and 3 in Opera omnia, IV, 197-198. This text is cited in de Roover, San Bernadino, p.20.

43. De Roover, San Bernadino, p.21.

44. Ibid., p.20.

45. Ibid., pp.20-21.

46. Ibid., pp.22-23.

47. Ibid., p. 25.

48. St. Antonino of Florence, Summa Theologica, Part II, tit. I, cap. 17, n.8. This text is cited in de Roover, San Bernadino, p. 25.

49. De Roover, San Bernadino, p.27. The citation is a paraphrasing of St. Antonino's Summa Theologica, Part III, tit. 8, cap.l, n.l.

50. Ibid., p.25

©The Angelus

Read more...

Corporation Christendom Part One

by Dr. Peter Chojnowski

In urging people to listen to the voice of their conscience and to substitute considerations of public welfare for those of private profit, one does not create a working and satisfactory social order [emphasis mine].2

In one sweeping statement, Mises has negated Christendom and every social, economic, and moral teaching of the Catholic Church; this statement also renders "inoperative" the entire Classical moral and philosophical tradition.

Such statements by the hero of contemporary Libertarianism and Neo-Conservatism (read, Neo-Jacobinism) need not disquiet us at all if we understand it exactly as he meant it to be, a statement by one who upheld the modern Liberal, anti-Christendom world-view and denigrated the civilization, overall and in its detail, built by the Catholic Church; this civilization, of course, was constructed in a certain way, on account of the Church's attempt to conform the circumstances and the means of man's life to the Eternal Law, which includes within itself the Providential Plan by which each created being is brought to a state of perfect fulfillment and satisfaction. Christendom, unlike the "market forces," presupposes real freedom; if man was not free and meant to be fulfilled in his freedom, Christendom would not be needed. "Freedom," of course, is meaningless, and soon becomes bizarre (as in our own commercialist culture) if it is not directed towards the true "good" that fulfills human nature. If freedom does not achieve a true satisfaction of human nature, why is freedom "good"? If, however, freedom is "good" because it genuinely fulfills human nature, economic "freedom" or the ability to sell goods made and to purchase goods made by others, must be subordinated to over­arching considerations of the "good." Since we are speaking about a public "good," we must speak about the "common good," in which every private good is included. The common good entails the fulfillment of human nature at large. If all of the above reasoning is valid, economic freedom to buy and sell must be ordered to the achievement of a truly fulfilled human nature, both individually and commonly.

Only those with the most animalistic conception of man would think that the ability to buy and sell things is the pivot around which should turn an individual life, a political ideology, or the efforts of the State. That "man does not live by bread alone" is not only a religious truth, but is also a bit of wisdom testified to by universal human experience. It is the religious devotion of man, his virtuous moral actions, and his aesthetic and emotional appreciation and expression, which are the higher aspects of man's being that mercantile trade is meant to facilitate and sustain. In light of this, it is perfectly rational that the normal and traditional (i.e., non-Liberal) societies and governments of the past have tried to ensure that the buying and selling that went on amongst men truly facilitated the genuine end of all economic relationships, the full and complete good of men, both individually and as, necessarily, living within a civic body. It was for this reason that such notions as "the just price" and the "the just wage" were normative, and limitations on the use and procurement of private property were instituted.

One point in favor of Ludwig von Mises, however, one not shared in by a number his disciples, is that he recognized that the whole bulk, theoretical and practical, of historical Christendom was against his understanding of the proper order of things. He, at least, recognizes that there was a very definite concept of "justice" in "medieval" Christendom. He simply relativizes it. In pure Nietzschean fashion, he insists that claims about the "justice" of this or that social arrangement or economic condition are merely an attempt by some to preserve an arbitrarily adopted "utopia."

They call "just" that mode of conduct that is compatible with the undisturbed preservation of their utopia, and everything else unjust.3

Von Mises, also, does not claim St. Thomas Aquinas as an early advocate of Liberal Capitalism and the "free-market economy." He understands that St. Thomas, as a Catholic philosopher and theologian, held views profoundly at variance with his own, including in matters of economics. With regard to the question of the "just price," Mises writes:

If Thomas Aquinas's doctrine of the just price had been put into practice, the 13th century's economic conditions would still prevail. Population figures would be much smaller than they are today and the standard of living much lower."

The sentence following should, also, be of interest to those who would like to see the sharp distinction between Mises's Liberalism and the great tradition of the Christian World:

Both varieties of the just-price doctrine, the philosophical and the popular, agree in their condemnation of the prices and wage rates as determined on the unhampered market.5

If Aquinas was a capitalistic pre-Liberal, Mises certainly did not see it; in fact, he uses St. Thomas's teachings as the embodiment of the very mentality and outlook which he is rejecting.

De Roover's Libertarian Dreaming

To base one's ideas solely on conceptions prevailing in relatively current times has never been a very attractive option. The American Whigs of 1787 looked to Republican Rome and the French Democrats of 1789 could look to Democratic Athens. Looking back 2,000 years for a political model is a genuine example of antiquarianism. At least Napoleon, with his later emulation of Charlemagne, only had to look back 1,000 years to find an example of a situation in which his newly chosen form of government "worked" (We must keep in mind here that the reason people had not, for so long, adopted these first two old systems of government was because they were historically conscious enough to realize that they had not "worked.") A number of Libertarians have felt the need to trace their ideas back to the established thought of Catholic Christendom. We can only speculate as to their motives. However, what is clear is this, within the second half of the 20th century and even into our own, there have been some Libertarians who identify nascent capitalistic ideas (I simply identify Capitalism here as the economic form of Liberalism—not to be confused with American Leftism) as existing within the corporate organism that was Christendom, prior to the "dawning" of the Enlightenment. There are some more reckless Libertarian thinkers who would even state that, not only are there Liberal anomalies within the paradigm of historical Christendom, but rather, that Liberalism is the Christian civilizational paradigm itself. The recurrent focus of such Libertarian "dreaming" is the late Renaissance Spanish School of Salamanca and Sts. Bernadine of Siena and Antonino of Florence. The main issue, although not the only one, is the one of the "just price." Can it be that the later Scholastics, as represented by the School of Salamanca, along with the two Renaissance saints known for their sermons on economic concerns, should be identified as early advocates of Liberal Capitalism due to their supposed insistence that the "just price" which must be upheld by Church, State, and Society at large, is simply the one which is assigned to a product due to the interplay of producer supply and consumer demand? If economic "justice," at this most basic and essential level, is simply a matter of adhering faithfully to the "laws of supply and demand," we can say that the view of these Catholic thinkers could, indeed, be characterized as an example of Early Economic Liberalism. If there were something more to "justice" than the simple end result of the interplay of the free will of producer and the free choice of the consumer, then their thought could not be denominated as an early form of Misesian Neo-Liberal/Libertarian conceptions.

When looking for an example of a Neo-Liberal who represents this attempt to find roots in the distant past for Liberal doctrines that seem quite modern, we can turn to Raymond de Roover, who published an article entitled, "The Concept of the Just Price: Theory and Economic Policy" in Journal of Economic History (Dec. 1958). Here it is interesting to read De Roover's portrayal of the "typical" view of medieval thought as it relates to the topic of the "just price." In this article, we read,

According to a widespread belief—found in nearly all books dealing with the subject—the just price was linked to the medieval conception of a social hierarchy and corresponded to a reasonable charge which would enable the producer to live and to support his family on a scale suitable to his station in life [emphasis mine]. This doctrine is generally thought to have found its practical application in the guild system. For this purpose the guilds are presented as welfare agencies which prevented unfair competition, protected consumers against deceit and exploitation, created equal opportunities for their members, and secured for them a modest but decent living in keeping with traditional standards.6

I will place in the footnote all the authors who held these universally acknowledged "misconceptions."7 Such was the "idyllic" view of the Middle Ages upheld by the great German economist Max Weber and by the British author, controversialist, and historian Arthur Penty. According to De Roover, another famous German economist, Werner Sombart (1863-1941), went even further: according to him, not only the medieval craftsmen but even the merchants strove only to gain a livelihood befitting their rank in society and did not seek to accumulate wealth or to climb the social ladder. This attitude, Sombart claimed, was rooted in the concept of the just price "which dominated the entire period of the Middle Ages."8

De Roover, however, has a different understanding of the common mind of the Christian Era as regards prices and economic activity in general. Amidst the presence of many non sequiturs, confused and, even, contradictory historical claims, we find De Roover throwing out various red herrings such as, "Thomas Aquinas himself recognizes that the just price cannot be determined with precision, but can vary within a certain range, so that minor deviations do not involve any injustice. This…is not in accord with Marxian dialectics; but it agrees with classical and neoclassical economic analysis" [emphasis mine].9 So an obvious and balanced moral statement about a minor aspect of the just price issue, because it does not agree with the Marxist theory, makes St. Thomas's economic position into one that "agrees with classical and neoclassical analysis."

The bizarre and forced logic present in De Roover's analysis can only be touched upon here. For example, one of the "naive" economists, Werner Sombart cites Heinrich von Langenstein (1325-97) to the effect that "if the public authorities fail to fix a price, the producer may set it himself, but he should not charge more for his labor and expenses than would enable him to maintain his status (per quanto res suas vendendo statum suum continuare posit)." This is fully in accord with the "traditional" understanding of social and economic thinking in the Catholic Middle Ages. Langenstein continues in the same vein, "And if he does charge more in order to enrich himself or to improve his station, he commits the sin of avarice."10 This position of Langenstein was "regarded as a characteristic formulation of the scholastic doctrine of the just price," according to De Roover. Having been cited by Sombart, De Roover insists that it was "copied by one author after another."11 De Roover tries to throw cold water on the enthusiasm of economic historians for the writings of Langenstein, by stating that, "Langenstein was not one of the giants in medieval philosophy but a relatively minor figure."12 This statement is, of course, totally irrelevant to the topic at hand. The question was not whether or not Langenstein was one of the "giants" of medieval philosophy, but whether his statement of economic theory and practice can be seen as "characteristic." Someone need not be a giant in order to be characteristic. "Giants," of course, are not characteristic at all, but that is another point entirely.

When De Roover does treat a giant, St. Thomas Aquinas, we find contradictory statements interwoven with more than questionable deductions. With regard to St. Thomas, he focuses on the topic that he—De Roover—believes will confirm that the "majority of the [Scholastic] doctors" held that the "just price" did not correspond to cost of production as determined by the producer's social status, but was "simply the current market price." Clearly, De Roover understood that if the just price meant something other than the capitalistic "just the price," his attempt to root Neo-Liberal Capitalism in Catholic social tradition and thought would fail. He had to prove that the "justice" of the price charged in the times of Christendom was nothing other than the price that the item could fetch on the open marketplace. The plan was to portray St. Thomas as an early economic liberal, and then indicate how later Scholastic thought followed him, and, thereby, set the stage for Adam Smith and capitalistic Manchester Liberalism.

De Roover starts his analysis of the position of St. Thomas on the question of the "just price" by stating that in the works of Aquinas, "the passages relating to price are so scattered and seemingly so conflicting that they have given rise to varying interpretations."13 He then goes on to state, unambiguously, what St. Thomas definitely meant by the term "the just price." As he goes on "definitively" articulating St. Thomas's position, he proceeds to contradict his own interpretation of and statements about this position. For example, De Roover states, "By selecting only those passages favorable to their thesis, certain writers even reached the conclusion that Albertus Magnus and Thomas Aquinas had a labor theory of value." In a footnote, on the same page, he states, "As a matter of fact, Aquinas comes close to saying that any exchange of two commodities should be based on the ratio between the amounts of labor expended on each." Isn't he affirming here that Aquinas had a "labor theory of value," when he was just one paragraph above, chiding "certain writers" for reaching the conclusion that St. Thomas "had a labor theory of value"?

The Liberal scholar's reasoning becomes somewhat more convoluted when we find him, at the beginning of a paragraph, stating that St. Thomas "nowhere puts the matter [of the just price] so clearly," and by the end of the paragraph states that

this [single] passage [which is only a story addressing a very limited moral question] destroys with a single blow the thesis of those who try to make Aquinas into a Marxist, and proves beyond doubt that he considered the market price to be just.

So, within a single paragraph, made up primarily of an illustrative story about a merchant selling wheat in a town when he knows that more wheat is on the way, we go from Aquinas the Ambiguous to Aquinas the Absolute. When we look for the passage cited by De Roover, in the Secunda Secundae of the Summa Theologica, we find that the article cited has absolutely nothing to do with the topic of the just price. It is from the question dealing with "Cheating" and the specific article is entitled, "Whether the Seller Is Bound to State the Defects of the Thing Sold?" St. Thomas states here that a seller is acting rightly, from the view point of strict justice, if he merely accepts the amount offered for his wheat by the buyer, without informing the buyer of the greater amount of wheat to come. In other words, it is not unjust to fail to provide information that one could provide about the relative short-term worth of one's products. St. Thomas ends by saying, "If however he were to do so, or if he lowered his price, it would be exceedingly virtuous on his part: although he does not seem to be bound to do this as a debt of justice."14 From this short story concerning a very specific moral question having nothing in itself to do with economic systems or the general topic of the just price, De Roover takes it as proven that "Aquinas upheld market valuation instead of cost,"15 thus beginning a pre-Capitalist tradition in moral theology, which bore fruit in the late Renaissance Salamanca School and in the economic-related sermons preached by St. Bernadine of Siena and St. Antoninus of Florence in the 15th century.

Before treating the real attitude of the late Scholastics in Salamanca and the sermons of St. Bernadine of Siena and St. Antoninus of Florence, it is worthwhile to look at a simple reply to an objection, present in Question 77, "On Cheating, Which is Committed in Buying and Selling." In Article 1, the same article from which De Roover draws his conclusions about the "free market" inclinations of St. Thomas, we read, in Reply to Objection 2, a line of reasoning that would certainly put St. Thomas outside the boundaries of any form of Liberal capitalistic sympathies. Here he cites St. Augustine who says,

th[e] jester, either by looking into himself or by his experience of others, thought that all men are inclined to wish to buy for a song and sell at a premium. But since in reality this is wicked, it is in every man's power to acquire that justice whereby he may resist and overcome this inclination.

The example, cited by St. Thomas, which St. Augustine uses to illustrate this idea, is one of a man who gave the just price for a book to a man who through ignorance asked a low price for it. Here we see the virtuous buyer, who knows the real value of the book, ignoring the market value of the book (the one which was being asked by the seller of those wishing freely to buy), and, instead, justly compensating the seller for his loss. St. Thomas concludes from this example that the "capitalistic" drive to buy as cheaply as possible and sell as dearly as possible—expressive, as it is, of an unlimited drive for acquisition and an overriding self-interestedness—can be overcome just like any vice is overcome. He acknowledges, however, that this self-interested attitude—which is, precisely, the attitude assumed by Liberal Capitalism—is "common to many who walk along the broad road of sin."16 Here we see clearly that economic attitude of Christendom contrasted with the economic attitude of Neo-Liberalism. Neither St. Augustine nor St. Thomas Aquinas is anything like Neo-Liberals. Clearly, the "market price" is not necessarily the "just price." To quote a phrase commonly used by Raymond de Roover, "This text…does not lend itself to a different interpretation."17

©The Angelus

Read more...

A Review of Economics for Helen

by Dr. Peter E. Chojnowski

"Economics" is the name which people have come to give to the study of Wealth. It is the study by which we learn how Wealth is produced, how it is consumed, how it is distributed among people, and so on. It is a very important kind of study, because it often depends upon our being right or wrong in Economics whether we make the whole State poorer or richer, and whether we make the people living in the State happier or not.1

By giving us a title such as Economics for Helen (apparently dedicated to Belloc's adolescent niece), Hilaire Belloc, in 1923, was emphasizing something that many others at the time, such as the Solidarist Heinrich Pesch, were also emphasizing. Economics is a human science about the very basic functioning of human society. It was a discipline that was not something abstract and unintelligible to the average man; rather that economics, as the study of the production, use, and distribution of wealth, was, in its basic concepts, accessible to all. With this conviction in mind, Belloc sets about denning and indicating the relationships between the basic concepts employed in the science of economics, such as wealth, land, the means of production, and capital. For example, one could not hope to even understand the scope of economics if one did not know that "wealth," which is the proper object of the science of economics, was properly defined, not as something possessed by someone, but as "those values attaching to material objects through the action of man, which values can be exchanged for other values."2 With this essential definition, we can understand "wealth" to be something necessarily social and civic in its very nature. With the social and civic dimension, we also enter into the moral dimension of human existence on account of the concern for justice that is part of man's inherent conception of his life lived among other men.

Even though Belloc understands clearly this necessary and essential link between the economic and the moral, in Economics for Helen he specifically indicates that the operation of economic laws and the demands of the moral law are two distinct things. Likewise, he further identifies the parameters of economic science by stating that,

The Science of Economics does not deal with true happiness nor even with well-being in material things. It deals with a strictly limited field of what is called "Economic Wealth," and if it goes outside its own boundaries it goes wrong.3

There are several aspects of this text, which open up new vistas for those seeking an alternative to the materialistic determinism of both the Marxists and the Economic Liberals. All of these insights, on the part of Belloc, into the very fiber of the economic life of man, point to the fact that economics is grounded in two realities, both of which the Capitalists and the Socialists have overlooked: the divinely ordained goal-orientation of human nature and the freedom of choice originating in the spiritual principle of man, which is his soul.

What these two facts indicate is that economics is grounded in the psychological, spiritual, and intellectual life of man to such an extent that the orientations and demands of this life create economic facts and laws that cannot be circumvented. One mentioned by Belloc is the idea of "subsistence." According to Belloc, "subsistence" is "the worth while of labor." By this, he means that if a certain standard of living were not provided to the worker, on account of his work, labor itself would no longer be thought to be worthwhile and, hence, would not be engaged in. Belloc identifies this as an economic law, rather than a moral law. Here we see the advancing of a concrete example of an "economic law" which all nations and economic concerns must adhere to if they are to maintain a healthy economic life. Moreover, Belloc implicitly refutes his accusers who charge him with collapsing economic law into moral law. If a nation does not provide its people, in their generality and in their individuality, with work that can sustain a man and his family at levels acceptable within the context of the national culture, men will not work and the nation will not prosper. Of course, it is the obligation of the State to ensure that companies and enterprises uninterested in providing subsistence wages do not simply locate their factories in foreign countries and export their products to the "job-free zones" of the "developed" countries.

The economic laws governing national economies also affect the outlay of capital. In this regard, Belloc affirms that "capital," or "already-made wealth which man uses with the object of producing further wealth," does not merely exist in capitalist countries. Just as "property," or "lawful control over a piece of wealth," continues to exist in communist countries. The only relevant question here is "who owns or controls the capital and property present in a nation?" Upon the answers to these questions rides the determination of the economic system under which the people of a nation live.

Having spent the first part of Economics for Helen delineating, in logical sequence, the various concepts that make up the science of economics, starting with wealth, moving through a consideration of the three elements necessary for the production of wealth, and arriving at the three parts into which produced wealth naturally divides (i.e., rent, interest, and subsistence), Belloc devotes chapters to two topics that render the definitional aspects of the earlier pages more immediately relevant and politically charged. Those two topics are money and banking.

In regard to money (i.e., currency) and banking, it is important to mention here that Belloc shows himself to be a perfect economic realist when he clearly states that both currency and some type of banking are the sine qua non of a complicated and advanced national economy. When money or currency is simply a medium of exchange, which is used to facilitate transactions between individuals with heterogeneous goods within the context of an economy based upon a highly specific division of labor, it serves as a useful human tool. When the currency becomes mere fiat money or, as Belloc calls it, "wretched bits of paper" (i.e., money to which the government or the "currency markets" assign a value consonant with their own needs but based upon no objective and regular standard of worth, like gold) then the nation with such a currency will see the greatest instability and social manipulation brought about by inflation and price fluctuation.

It is, however, the consideration of modern banking, as this began to flourish in England and Holland during the 17th century, which provides the incentive for Belloc to consider those economic systems (i.e., the Servile "slave," the Capitalist, the Socialist, and the Distributist), which would struggle for supremacy in the last three quarters of the 20th century. Again, as in his consideration of paper currency, Belloc states that the origins of the modern banking enterprise were innocent and obvious enough. Men who have capital to save look for those who have the means to guard deposited wealth. Those who control the deposits of others agree to return the money deposited to the depositors when that money is demanded. However, the bankers soon find that only a small percentage of the deposited savings are demanded at any one time, hence, rather than allowing large amounts of wealth to lie "unused," they "invest" the money to make more money. As this lucrative enterprise gains momentum, "partial reserve banking" (i.e., the system in which only a portion of deposited funds are actually "on hand" in the bank for the depositor to withdraw-the rest having been "invested") and usury (i.e., the taking of interest on non-productive loans) become more and more the order of the day. It is by these means that the bankers gradually gain a stranglehold on the financial resources of the nation. This clout even outweighs that of the capitalist who owns the means of production (e.g., factories, machinery, land, tools), since it is to the banker that the capitalist must go if he is to launch into any new enterprise, always, in current circumstances, being "short" of capital. This situation continues to the point where:

[t]he bankers can decide, of two competitors, which shall survive. As the great majority of enterprises lie in debt to the banks-any one of two competing industries can be killed by the bankers saying: "I will no longer lend you this money"....This power makes the banks the masters of the greater part of modern industry.4

The part of this text that might aid those unfamiliar with Belloc's Distributist thought is the section of the text on the "political implications" of his economic analysis. Here we find Belloc giving succinct definitions of the major systems which have, throughout the history of mankind, ordered the distribution and control of property, property being, of course, a necessary part of human society. Without some specific entity (e.g., corporations, guilds, governments, or private individuals) controlling every single item and piece of property in the world, those unowned items would eventually cease to be of any use to man, and "rot." The question that makes for the division between the various economic systems is, "Who controls the process of production in any particular society?"

It is advisable that those who see Belloc as a "closet Communist" read carefully his portrayal of the socialist economic system. He both views it as unworkable and states that it is totally contrary to his own wishes and intentions. Whereas Belloc wishes men to become masters of their own fate by possessing the property necessary to direct and sustain a life of fulfilling and efficacious work, Socialism, and its extreme form-Communism-would take such power and property out of the hands of the family man and put it into the hands of bureaucrats. In Belloc's own words, such a system would involve "complete surrender of personal honour and freedom and appetite."

If we, in the nascent 21st century, wish to sustain our honor, freedom, and happiness, Helen must not be the only one reading this text.

Dr. Peter E. Chojnowski has an undergraduate degree in Political Science and another in Philosophy from Christendom College. He also received his master's degree and doctorate in Philosophy from Fordham University. He and his wife Kathleen are the parents of six children. He teaches at Gonzaga University, Spokane, WA, and for the Society of Saint Pius X at Immaculate Conception Academy, Post Falls, ID.



--------------------------------------------------------------------------------

1. Hilaire Belloc, Economics for Helen (Liss, Hampshire, England: The Saint George Educational Trust, n.d.), p.6. [It has been reprinted by IHS Press and is currently available from Angelus Press ($12.95).

2. Ibid., p.8.

3. Ibid., p.9.

4. Ibid., p.96.

©Dr. Peter E. Chojnowski

Read more...