Development and Underdevelopment in the History of Economic Thought

The Analytical Structure of the Scholastic Theory of Interest and Usury: A Multi-Stage Journey

Lapidus André, Phare, University Paris 1 Panthéon-Sorbonne
Chaplygina Irina, State University of Moscow

The understanding of interest in Scholastic economic thought can be viewed as a by-product of the debates on the doctrine of usury. This also highlights the main difficulty encountered in its restitution: we have to separate positive and normative statements and, at the same time, explain how and why they were embedded. Our contention is that Schoolmen did have explanations of a possible difference between the amount lent and the amount paid back by the borrower to the lender: this is for the “interest” side. However, on moral grounds, all these explanations were not equally acceptable: this stands for the “usury” side. The explanations given for the difference between the money lent and the money paid back would be today rather familiar. Nonetheless, from a moral point of view, one of them was clearly not admissible: the use of greater power in negotiation. A special difficulty therefore arises from the fact that the mere existence of interest does not show how it should be explained. Whereas the dismissal of the explanation based on the money loan itself, as presented by Thomas Aquinas in the Summa Theologica, deserves attention, it allows other explanations, which show the relevance of the idea of an opportunity cost linked to a loan through the emergence of extrinsic titles. The creditor and the debtor might know what the correct explanation is, but the priest or the judge at an ecclesiastical court does not. Such a perspective constitutes an efficient reading guide for controversies which ran throughout this period. The acknowledged existence of substitutes for interest loans called for an appropriate criterion to ensure that the income perceived by the lender is non-usurious – hence the focus on property and risk-bearing. The various positions of the Schoolmen can therefore be viewed as so many attempts to avoid the committing of a major sin, and to obtain the relevant information on the actual interpretation of interest which should prevail.


Keywords: Usury; Interest; Scholastic Economics

Paper file