Religion and the Rise of Capitalism

long run, of the self-correcting mechanism, has not yet been invented. The idea of a law of nature⁠—of natural justice which ought to find expression in positive law, but which is not exhausted in it⁠—supplies an ideal standard by which the equity of particular relations can be measured. The most fundamental difference between medieval and modern economic thought consists, indeed, in the fact that, whereas the latter normally refers to economic expediency, however it may be interpreted, for the justification of any particular action, policy, or system of organization, the former starts from the position that there is a moral authority to which considerations of economic expediency must be subordinated. The practical application of this conception is the attempt to try every transaction by a rule of right, which is largely, though not wholly, independent of the fortuitous combinations of economic circumstances. No man must ask more than the price fixed, either by public authorities, or, failing that, by common estimation. True, prices even so will vary with scarcity; for, with all their rigor, theologians are not so impracticable as to rule out the effect of changing supplies. But they will not vary with individual necessity or individual opportunity. The bugbear is the man who uses, or even creates, a temporary shortage, the man who makes money out of the turn of the market, the man who, as Wyclif says, must be wicked, or he could not have been poor yesterday and rich today.53

The formal theory of the just price went, it is true, through a considerable development. The dominant conception of Aquinas⁠—that prices, though they will vary with the varying conditions of different markets, should correspond with the labor and costs of the producer, as the proper basis of the communis estimatio, conformity with which was the safeguard against extortion⁠—was qualified by subsequent writers. Several Schoolmen of the fourteenth century emphasized the subjective element in the common estimation, insisted that the essence of value was utility, and drew the conclusion that a fair price was most likely to be reached under freedom of contract, since the mere fact that a bargain had been struck showed that both parties were satisfied.54 In the fifteenth century St. Antonino, who wrote with a highly developed commercial civilization beneath his eyes, endeavored to effect a synthesis, in which the principle of the traditional doctrine should be observed, while the necessary play should be left to economic motives. After a subtle analysis of the conditions affecting value, he concluded that the fairness of a price could at best be a matter only of “probability and conjecture,” since it would vary with places, periods and persons. His practical contribution was to introduce a new elasticity into the whole conception by distinguishing three grades of prices⁠—a gradus pius, discretus, and rigidus. A seller who exceeded the price fixed by more than 50 percent was bound, he argued, to make restitution, and even a smaller departure from it, if deliberate, required atonement in the shape of alms. But accidental lapses were venial, and there was a debatable ground within which prices might move without involving sin.55

This conclusion, with its recognition of the impersonal forces of the market, was the natural outcome of the intense economic activity of the later Middle Ages, and evidently contained the seeds of an intellectual revolution. The fact that it should have begun to be expounded as early as the middle of the fourteenth century is a reminder that the economic thought of Schoolmen contained elements much more various and much more modern than is sometimes suggested. But the characteristic doctrine was different. It was that which insisted on the just price as the safeguard against extortion. “To leave the prices of goods at the discretion of the sellers is to give rein to the cupidity which goads almost all of them to seek excessive gain.” Prices must be such, and no more than such, as will enable each man to “have the necessaries of life suitable for his station.” The most desirable course is that they should be fixed by public officials, after making an enquiry into the supplies available and framing an estimate of the requirements of different classes. Failing that, the individual must fix prices for himself, guided by a consideration of “what he must charge in order to maintain his position, and nourish himself suitably in it, and by a reasonable estimate of his expenditure and labor.”56 If the latter recommendation was a counsel of perfection, the former was almost a platitude. It was no more than an energetic mayor would carry out before breakfast.

The doctrine was, of course, more complex and more subtle than a bald summary suggests. With the growth of the habit of investment, of a market for capital, and of new forms of economic enterprise such as insurance and exchange business, theory became steadily more elaborate, and schools more sharply divided. The precise meaning and scope of the indulgence extended to the purchase of rent-charges produced one controversy, the foreign exchanges another, the development of Monts de Piété a third. Even before the end of the fourteenth century there had been writers who argued that interest was the remuneration of the services rendered by the lender, and who pointed out (though apparently they did not draw the modern corollary) that present are more valuable than future goods.59 But on the iniquity of payment merely for the act of lending, theological opinion, whether liberal or conservative, was unanimous, and its modern interpreter,60 who sees in its indulgence to interesse the condonation of interest, would have created a scandal in theological circles in any age before that of Calvin. To take usury is contrary to Scripture; it is contrary to Aristotle; it is contrary to nature, for it is to live without labor; it is to sell time,