Economic Thought in the Middle Ages

In the High Middle Ages, a distinctive Christian approach to economics starts to take form in relation to ecclesiasti- cal properties. A paradigm of unselfish but productive use of wealth is set, using poverty as a model. From the eleventh century, canon law unfolds this broad paradigm drawing on Roman law: a juridical condemnation of usury is put forward which, however, is linked to derogations grounded on nonlegal principles. During the thirteenth century, theologians take the lead in economic debates, influenced by two diverging approaches. A doctrine of usury and a theory of just price are developed, drawing on Aristotle. Loan on interest is rationally condemned on the assumption that money is sterile, economic exchange is explained as an objective process guided by proportional reciprocity. Debates on voluntary poverty, on the other hand, reaffirm the importance of high-medieval conceptions. Trade is described as an activity from which the commu- nity derives benefits, and the merchant’s wealth is seen as the result of his status of expert trained in determining the value of goods. Canon law exceptions, combined with high-medieval emphasis on productivity, slowly under- mine the usury doctrine. Credit provided by reputed professionals or institutions (merchant-bankers, munici- palities) is seen as productive and permitted, while usury is associated with moneylenders. The distinctiveness of the Christian approach emerges in comparison with other traditions. Jewish conceptions, developed within talmudic jurisprudence, rely on the idea that money is a material object without productive poten- tial. This rationale is used to explain prohibitions of usury and to allow credit profits in the form of loans on security. Islamic tradition is heavily influenced by the predomi- nance of religion. Economic issues, mainly discussed within Islamic jurisprudence, are rarely considered in purely philosophical terms. This leads to a distinctive approach, condemning credit gains except if lenders suffer the risk of losing their capital.