5 ms·

How the Fifth Lateran Council unlocked financial theory

69 points by momentmaker 4mo ago

metalman 4mo ago
[flagged]
- pavel_lishin 4mo ago
  > for the simple reason that money is a human construct By that reasoning, there's no such thing as "chess theory" either. > with the end of scarcity Scarcity ended? Nobody told me!
- nstents 4mo ago
  As you point out, the difference between money and the tooth fairy is between their characteristics and rules. Economic theory then focuses on money, the economy, and their characteristics and rules to develop insights into patterns, behavior, and previously unseen characteristics inherent to economic theory. Anyone is free to create a theory of tooth fairies and attempt to find similar relevance.
- BigTTYGothGF 4mo ago
  Music is a human construct as well and yet: https://en.wikipedia.org/wiki/Music_theory https://en.wikipedia.org/wiki/Music_theory
  - cindyllm 4mo ago
    [dead]
hvs 4mo ago
"Usury" is still a word in use but now, for legal purposes, it means "interest that a lender charges a borrower at a rate above the lawful ceiling on such charges" rather than just any interest at all.
- bombcar 4mo ago
  It had a very specific meaning, which we would more properly translate as "personal recourse loan".
- fsckboy 4mo ago
  traditional usage of usury was the same, any interest charges at a rate above the lawful ceiling, just where the ceiling was 0% for christians and in a like manner for moslems.
  - lo_zamoyski 4mo ago
    That's a strange way to phrase things. It's a bit like saying that the Church recognizes the licitness of murder under a lawful ceiling, but that this ceiling just happens to be 0 per year. Interest as such is recognized as theft and therefore an injustice.
    - neaden 4mo ago
      Well murder is similar in that it means an illegal or immoral killing. There are times (say in self defence) where it has taunt it is moral and should be legal to kill, because that isn't murder. So similar to this, it changed usury to illegal lending rather than lending.
      - geye1234 4mo ago
        How far would you take this? Let's grant that the difference between murder and a just killing is what someone (maybe the guy in power) says it is, nothing more. Would you say the same about robbery? Is it only robbery to point a gun at someone and take his money if someone says it is? If yes, at what point does the distinction between one thing and another thing become real, and not just based on what some guy says?
        neaden 4mo ago
        Well yes, there are times where it legal to take someones possessions/money such as if they owe a debt or have a legal judgement against them. In that case it could mean for instance sheriff deputies showing up at your house with guns and taking things in a manner that would be legal and not be considered robbery. When it becomes one thing or another is going to depend on your position on other things, there is a legal answer for when it becomes robbery/murder but also moral answers. I am for example a moral realist, so my answer to that would be different than someone who was a moral relativist.
Schlagbohrer 4mo ago
It is fascinating to see the differences in philosophy and understanding of economics between Adam Smith, who in 1776 was looking at a pre-industrial economy of taking raw material inputs and doing very little to them before sale, versus Karl Marx who in 1848 was looking at the effects of industrialization and an economy very focused on value-add activities. Different economic structures, different social consequences, and different philosophies that emerged out of that. I highly recommend David Harvey's guide to Marx's Kapital especially for anyone who has been soaked in anti-communist propaganda (read: grew up in North America) but who has never actually read it. Harvey's guide to it is quite readable and uses modern examples and translates some of the old fashioned language. It's fascinating. After all, Peter Thiel said that he became a better capitalist after reading Marx...
dmenj 4mo ago
Unfortunate for this article to not actually define or explain anything about Catholic usury theory. Usury in medieval context is profit made on a mutuum loan (a contract for the borrowing a consumable good - as opposed to the commodatum contract, the locatio, etc). It does not apply only to money but all fungible borrowed things. If you borrow a cup of flour from your neighbor, and they ask for 2 cups back, they have (probably) made a usurious contract with you. The nuance here is the immorality of an "intrinsic title" (as if the loan itself carries a right to earn profit) as opposed to an "extrinsic title" (something external to the loan for which one may validly seek compensation). The two chief extrinsic titles being lucrum cessans (roughly opportunity cost) and damnum emergens (a loss suffered due to the loan). The case of the Monti from TFA is clearly the right to an extrinsic title of damnum emergens i.e. administrative costs (crucially - not for profit!).
- geye1234 4mo ago
  Yes. A full-recourse loan and a non-recourse loan are different: in the way a cat and a dog are different, not in the way a small dog and a big dog are different. It's most unfortunate (and probably deliberate) that they both go by the word 'loan'. Aquinas explains this very clearly in his discussion of usury in the Summa. Anyone failing to distinguish between the two has no business talking about the ethics of usury, or the history of late-medieval Catholic teaching on the same. Making a profit on a full-recourse loan, regardless of whether the lender or borrower are Christian or not, is a sin, and a pretty serious one at that. Usury is to fraud what robbery is to larceny. Many people try to claim that the Church has 'changed its teaching' on this, but they can never point to a source that shows this.

69 points by momentmaker 4mo ago

metalman 4mo ago

[flagged]

pavel_lishin 4mo ago
> for the simple reason that money is a human construct By that reasoning, there's no such thing as "chess theory" either. > with the end of scarcity Scarcity ended? Nobody told me!
nstents 4mo ago
As you point out, the difference between money and the tooth fairy is between their characteristics and rules. Economic theory then focuses on money, the economy, and their characteristics and rules to develop insights into patterns, behavior, and previously unseen characteristics inherent to economic theory. Anyone is free to create a theory of tooth fairies and attempt to find similar relevance.
BigTTYGothGF 4mo ago
Music is a human construct as well and yet: https://en.wikipedia.org/wiki/Music_theory https://en.wikipedia.org/wiki/Music_theory
- cindyllm 4mo ago
  [dead]

hvs 4mo ago

"Usury" is still a word in use but now, for legal purposes, it means "interest that a lender charges a borrower at a rate above the lawful ceiling on such charges" rather than just any interest at all.

bombcar 4mo ago
It had a very specific meaning, which we would more properly translate as "personal recourse loan".
fsckboy 4mo ago
traditional usage of usury was the same, any interest charges at a rate above the lawful ceiling, just where the ceiling was 0% for christians and in a like manner for moslems.
- lo_zamoyski 4mo ago
  That's a strange way to phrase things. It's a bit like saying that the Church recognizes the licitness of murder under a lawful ceiling, but that this ceiling just happens to be 0 per year. Interest as such is recognized as theft and therefore an injustice.
  - neaden 4mo ago
    Well murder is similar in that it means an illegal or immoral killing. There are times (say in self defence) where it has taunt it is moral and should be legal to kill, because that isn't murder. So similar to this, it changed usury to illegal lending rather than lending.
    - geye1234 4mo ago
      How far would you take this? Let's grant that the difference between murder and a just killing is what someone (maybe the guy in power) says it is, nothing more. Would you say the same about robbery? Is it only robbery to point a gun at someone and take his money if someone says it is? If yes, at what point does the distinction between one thing and another thing become real, and not just based on what some guy says?
      - neaden 4mo ago
        Well yes, there are times where it legal to take someones possessions/money such as if they owe a debt or have a legal judgement against them. In that case it could mean for instance sheriff deputies showing up at your house with guns and taking things in a manner that would be legal and not be considered robbery. When it becomes one thing or another is going to depend on your position on other things, there is a legal answer for when it becomes robbery/murder but also moral answers. I am for example a moral realist, so my answer to that would be different than someone who was a moral relativist.

Schlagbohrer 4mo ago

It is fascinating to see the differences in philosophy and understanding of economics between Adam Smith, who in 1776 was looking at a pre-industrial economy of taking raw material inputs and doing very little to them before sale, versus Karl Marx who in 1848 was looking at the effects of industrialization and an economy very focused on value-add activities. Different economic structures, different social consequences, and different philosophies that emerged out of that. I highly recommend David Harvey's guide to Marx's Kapital especially for anyone who has been soaked in anti-communist propaganda (read: grew up in North America) but who has never actually read it. Harvey's guide to it is quite readable and uses modern examples and translates some of the old fashioned language. It's fascinating. After all, Peter Thiel said that he became a better capitalist after reading Marx...

dmenj 4mo ago

Unfortunate for this article to not actually define or explain anything about Catholic usury theory. Usury in medieval context is profit made on a mutuum loan (a contract for the borrowing a consumable good - as opposed to the commodatum contract, the locatio, etc). It does not apply only to money but all fungible borrowed things. If you borrow a cup of flour from your neighbor, and they ask for 2 cups back, they have (probably) made a usurious contract with you. The nuance here is the immorality of an "intrinsic title" (as if the loan itself carries a right to earn profit) as opposed to an "extrinsic title" (something external to the loan for which one may validly seek compensation). The two chief extrinsic titles being lucrum cessans (roughly opportunity cost) and damnum emergens (a loss suffered due to the loan). The case of the Monti from TFA is clearly the right to an extrinsic title of damnum emergens i.e. administrative costs (crucially - not for profit!).

geye1234 4mo ago
Yes. A full-recourse loan and a non-recourse loan are different: in the way a cat and a dog are different, not in the way a small dog and a big dog are different. It's most unfortunate (and probably deliberate) that they both go by the word 'loan'. Aquinas explains this very clearly in his discussion of usury in the Summa. Anyone failing to distinguish between the two has no business talking about the ethics of usury, or the history of late-medieval Catholic teaching on the same. Making a profit on a full-recourse loan, regardless of whether the lender or borrower are Christian or not, is a sin, and a pretty serious one at that. Usury is to fraud what robbery is to larceny. Many people try to claim that the Church has 'changed its teaching' on this, but they can never point to a source that shows this.