1. Early Christianity and Scholasticism History of Economic Thought Boise State University Fall 2015 Prof. D. Allen Dalton

2. Christianity in Antiquity Old Testament treatment of merchants and trade Early Christian organization –Voluntary communism Early Church Fathers –Clement of Alexandria (150-215 CE) –Tertullian (160-240 CE) –St. Jerome (340-420 CE) –St. Augustine (354-430 CE)

3. Legal Traditions Roman and Canon Law doctrines –Justinian Code and laesio enormous –Turpe lucrum Council of Nicea (325) Council of Nijmegen (806)

4. Christianity and Philosophy How to reconcile reason with revelation, science with faith, philosophy with theology? –Question addressed and answer found in St. Basil, Origen, St. Augustine and others –ALL wisdom of philosophy (Plato, etc.) is due to inspiration of the Logos; therefore, all wisdom of philosophy is God’s truth and can not be in contradiction to revelation –St. Augustine faith aids reason and reason aids faith But How???

5. Islamic Scholasticism Aristotle and Plato influenced the West by the transmission of their ideas as seen through the lens of Islamic Scholasticism of the 9 th – 12 th centuries of the Common Era.

6. The Islamic Scholastics Al-Kindi (801-873) Al-Razi (865-925) Al-Farabi (870-950) Ibn Sina (Avicenna) (980-1037) Al-Ghazali (Algazel) (1058-1111) Ibn Rushd (Averroes) (1126-1198) Ibn Khaldun (1332-1406)

7. Economics of Islamic Scholasticism Private Property –strong defense of private property Wealth and Trade –acquisition of wealth is natural desire –mercantile activity and labor are Godly pursuits Prices and Profits –Market price is “just” price –Price Regulation in case of monopoly or emergency, but must always allow costs to be covered –Profits are deserved because of efforts and risk- taking

8. Al-Ghazali (Algazel) (1058-1111) born at Tus in Khorasan (mod. Iran) reared by Sufi friend of deceased father primary field was law, but as result of teaching law, lost belief in reason to sanction Islam In his two great works, Tahafat and Ihya, greatly influenced Aquinas and Christian theologians in putting reason to employ in defense of orthodoxy, but also... nearly ended pursuit of philosophy and science in Islam, while making Sufism acceptable to orthodoxy

9. Ibn Rushd (Averroes) (1126-1198) born in Cordova grandfather and father chief justices of Cordova 1169, chief justice of Seville 1172, chief justice of Cordova 1182, physician to Emir of Marraqesh Kitab al-Kulliyat fil-Tibb (Colliget), a medical encyclopedia, widely used in Christian universities The ultimate Aristotelian rationalist and primary heretic of medieval Islam and medieval Christianity

10. Latin Scholasticism Latin Scholasticism, built upon Greek philosophy and Christian theology, is the foundation of modern philosophical and scientific thought.

11. Scholasticism the method and manner of dialectical philosophizing (question and answers) taught in the schools the period from 9th century CE, when new schools arose in Europe to spread Patristic faith disciplined by dialectic methods of thinking Christian Rationalism, as distinct from Augustinian Intuitionism –reason applied to nature, human nature and supernatural truth

12. Scholastic Process “Through doubting we come to inquiry, and through inquiry we perceive the truth.” - Peter Abelard

13. The Scholastic Ages “Fall” of Rome (5 th century) Rise of Feudalism and Manorialism (8 th and 9 th centuries) Peasant status becomes increasingly servile until the 12 th century The First Logistic (9 th – 11 th centuries) –Agricultural Innovation and Population Growth The Crusades (1095-1291)

14. The Scholastic Ages Commercial Revolution (11 th – 13 th centuries) The 14 th Century –The century of Famine, Plague, War, and Statism Breakdown of Serfdom (14 th – 15 th centuries) Europe’s Second Logistic (15 th – 17 th centuries)

15. Development of Legal Traditions Roman Law dominates… –Mercantile activity served important social ends (health and maintenance of family). –Profits justified by labor and expense, ends served, risk, and uncertainty. –“Just price” is established by the “common estimate” of the market; isolated exchange subject to laesio enormis constraints. Canon Law dominates… –Usury prohibition lessened at fringes, but dominant position is usury as a mortal sin. –“Two forums” doctrine effectively allows interest (esp. from mid-13th century)

16. Major Scholastic Thinkers St. Anselm (1033-1109) Peter Abelard (1079-1142) Peter Lombard (c.1100 - c.1160) St. Albertus Magnus (1193/1206 - 1280) Roger Bacon (1212-1294) St. Bonaventure (1221-1274) John Duns Scotus (1266-1308) William of Occam (1285-1349)

17. Averroes’ Legacy “Thomas Aquinas was led to write his Summas to halt the threatened liquidation of Christian theology by Arabic interpretations of Aristotle....indeed, the industry of Aquinas was due not to the love of Aristotle but to the fear of Averroes.” –Will Durant, The Age of Faith

18. St. Thomas Aquinas St. Thomas Aquinas (1225-1274) –Italian, born near Naples –Dominican, student of Albertus Magnus, professor of theology at Paris, papal advisor Century of Dispute –13th Century is torn between Augustinians who make truth a matter of faith and Averroists, led by Siger de Brabant ( ? - 1277), who separate truth from faith. Aquinas advances a middle ground –reason and faith constitute two harmonious realms; faith complements reason; but, reason has autonomy of its own.

19. St. Thomas Aquinas Thomist Philosophy –systematic application of Aristotelian methods and distinctions Aquinas’ Works –Commentary of the Sentences (public lectures 1254-56) –seven quaestiones disputatae (public debates 1256-72) –commentaries on several of Aristotle’s works –Summa contra Gentiles (1258-60) –Summa theologica (1267-73)

20. St. Thomas Aquinas Aquinas on Property Rights –All law, including natural law and human law, if derived from “right reason,” is derived from God’s eternal law; reason can add or subtract to natural law. –Private property is justified by right reason because it leads to a society of less conflict. is better cared for than common property. allows people to exercise liberality. is founded in labor and occupation. … but this right is limited by just demands of the social order (state) and just demands of the needy.

21. St. Thomas Aquinas Aquinas on Just Price and Price Determination –Exchange is for mutual advantage and driven by utility. (But, reintroduces Aristotelian confusion of “equality for equality” without the interpretation of Albertus Magnus). –Seller may charge higher price than he paid (labor and expenses, risk, uncertainty). –Supply affects price (common estimate is just price). –A seller need not tell buyers of future supplies that would affect price willingly paid by buyers. –Price of a good depends on its usefulness to man, not on the nature of the good.

22. St. Thomas Aquinas Aquinas on Usury –(1) Certain things are extinguished upon use, and thus their use can’t be separated from the thing itself. (2) To lend such a thing is to transfer ownership. (3) One can not sell the use of such things separate from the ownership of such things. (4) Money is such a thing (“invented chiefly for exchange”). (5) Therefore, interest is unnatural and usury is a sin. –But other things can be granted the use of while retaining ownership, and therefore can both be rented and sold. –Profits from partnerships (societas) is not usury.

23. Pierre de Jean Olivi Pierre de Jean Olivi (1248-1298) –born in Provençal –Spiritual Franciscan, lector at Florence Olivi on price –Three determinants of economic value: scarcity, usefulness and desirability. –Desirability is the ultimate determinant of price, given a degree of scarcity. –The market price is the common estimate of desirability - market price is the just price.

24. Pierre de Jean Olivi Olivi on capital and interest –Capital Defined! -a fund of money invested in a business venture. Combined with labor and industry of the investor, capital is fruitful. Holder of capital who gives up the capital for a period of his time foregoes profit. –Interest Doctrine of lucrum cessans Olivi’s limitations on extension of doctrine –Interest still banned when capital invested without being altered (money-lending itself)

25. Middle Scholastic Economics Contributions of the Middle Scholastics –Buridan and Oresme on money –San Bernardino’s on commerce, entrepreneurial function, foreign trade and foreign exchange –San Bernardino’s revival of Olivi’s contributions –Usury question remains topic of dispute though increasingly liberalized position and markets were making arguments increasingly irrelevant. Two forums doctrine from mid-13 th century –Aquinas’ argument concerning items that can be granted the use of while retaining ownership may be justly paid for –Swabian Liberals (Nider, Biel, Summenhart)

26. Late Scholastic Economics Contributions of Late Scholastics –Catejan on foreign exchange and legality of interest –Navarrus and Molina on the quantity theory of money and foreign exchange rates –Molina and Mariana on natural law and natural rights