Acton Institute Powerblog

On modern economics and the reading of old books

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I was living with thousands of Marines on a base in Japan when I discovered a novel about a handful of Classics students living at a small, elite Vermont college. Donna Tartt’s The Secret History instantly became on of my favorite books, partially because at the time (1993) I was dreaming of leaving the Corps and attending St. John’s College, a small college famous for their Great Books program.

But I came upon a passage in Tartt’s novel that made me realize the inherent limits of gaining all of one’s knowledge from the reading of old books. In the novel the six students are having a discussion when one of them says,

“[A]fter all your Xenophon and Thucydides I dare say that there are not many young people better versed in military tactics. I’m sure if you wanted to, you’d be quite capable of marching on Hampden town and taking it over by yourselves.”

Henry laughed. “We could do it this afternoon, with six men.”

When pressed, Henry explains how it could be done. And it’s an idiotic plan.

As a young person who had a passing familiarity with military tactics, I immediately recognized what a foolish boast Henry was making. There is much wisdom and knowledge to be gleaned from reading Thucydides and Xenophon. But Classics majors aren’t going to transform into SEAL Team Six and take over an American town simply because they read some ancient Athenians.

Not many liberal arts majors think reading old books will make them military tacticians. Yet an increasing number of (mostly younger) people think reading old books is sufficient to make the able critics of free markets and the market economy.

Recently, in response to my article asking why conservative Christian outlets are increasingly promoting socialist ideas and policies, my friend Jake Meador said:

There is a movement amongst both young Catholics and many young Protestants to go back to the sources of the western Christian tradition. Thinkers like Elizabeth Bruenig are drawing heavily from Augustine. My friend Brad Littlejohn has worked on Thomas. Others have spent extensive time in the primary sources of Catholic Social Teaching or in reading early Reformed political theorists like Althusius.

What we find when we work with these writers is that Christian reflection on political economy is far more complex than many of us were led to believe. We find things like a robust condemnation of usury, to take one example. In fact, Dante places usurers and sodomites in the same moral category because both are taking a gift that should be stewarded toward fruitful ends and are instead squandering it. We also find, in many historic Christian writers, a far more ambiguous attitude toward property rights, and even a deep suspicion of what we might anachronistically term modern-style western individualism. All of these things make us suspicious of the just-so narratives that the Christian Right often resorts to when arguing for a more libertarian or quasi-libertarian economic system. Given these concerns, it will take more than someone saying, “well, markets account for human sinfulness better than anything else so they’re the best,” which is how Dr. Rathbone Bradley opened her remarks at a recent Acton event.

Let me first say that I heartily recommend this ad fontes (“[back] to the sources”) approach. Here at the Acton Institute we’ve published ten books (so far) in our series on “Sources in Early Modern Economics, Ethics, and Law” where we’ve translated works by such thinkers as Luis de Molina, Martín de Azpilcueta, and Thomas Cajetan. Like everyone else here at Acton, I love and revere the sources of the western Christian tradition.

The problem, as I see it, is not where Jake and his peers start but where they end.

C.S. Lewis once referred to “chronological snobbery” as “the uncritical acceptance of the intellectual climate common to our own age and the assumption that whatever has gone out of date is on that account discredited.” There is a similar fallacy—a reverse form of chronological snobbery—that seems to posit the ideas and thinkers of the past are always superior to those of our own era.

Such a perspective is particularly unhelpful when we consider a field such as economics that is a mix of philosophy, art, and empirical observation. In many ways economics is similar to the study of medicine. Imagine, though, going to a physician who gained all his knowledge about medicine from reading Hippocrates, Galen, and William Harvey. Would you trust them to remove your appendix? Would you follow their advice about balancing your black bile and phlegm? If not, why then would you trust economic analysis from people who have only read Dante or Thomas?

Even at my beloved St. John’s College, the most recent thinker on economics the students read is Marx. Has anything significant happened in economics since Marx was writing in the mid-1800s?

The chart below shows the real gross domestic product per capita around the world from the year 1000 AD to 2008. This graph is often referred to as the “hockey stick of human prosperity” because it highlights the sudden and rapid growth in living standards since the mid-1800s.

Notice that from the beginning of human history to about the time of Marx, almost all of humanity lived in or near conditions of abject poverty. What happened?

As economist Don Boudreaux explains, most of our prosperity is due to specialization and trade.

Boudreaux points out that Adam Smith was one of the first to recognize the causes of prosperity in 1776. But the question is why did no one notice it before? A partial reason is because they uncritically accepted the old ideas about economics that had been handed down for millennia. If you believe, as Dante taught, that lending with interest would put you in the same place in hell as the sodomites, you aren’t likely to create the modern banking system.

The reason someone like Dr. Bradley can say that “markets account for human sinfulness better than anything else so they’re the best” is because she’s both read Augustine and studied the effects of markets on human society since the 1800s.

That is also why so many of us Christians who read about economics both before and after the 1800s are so adamant about rejecting socialism (including social democrat and democratic socialism forms). We have combined what we know from reading the ancients with what we have learned from studying the moderns—including observing modern economies.

We don’t reject the old books, we merely recognize their limits. Just as we know why you can’t take Hampden town simply because you learned tactics from reading Xenophon, we understand what happens when you try to create the conditions for flourishing by relying solely on the economic thinkers who came before Marx.

Joe Carter Joe Carter is a Senior Editor at the Acton Institute. Joe also serves as an editor at the The Gospel Coalition, a communications specialist for the Ethics and Religious Liberty Commission of the Southern Baptist Convention, and as an adjunct professor of journalism at Patrick Henry College. He is the editor of the NIV Lifehacks Bible and co-author of How to Argue like Jesus: Learning Persuasion from History's Greatest Communicator (Crossway).


  • Philosophical Actuary

    Isn’t this begging the question? Return to the sources, but to the right sources.

    If you don’t understand the teaching on usury held by Dante and Thomas well enough to know that it doesn’t entail hell-fire for a banking system as such, then why should I trust that your sources are the right ones to go back to? Or put differently, would you trust someone who told you to ignore Thomas, Dante et al. on economics when they didn’t understand them and the “right” sources confirm his own economic theories?

    • For Catholic interest in orthodoxy:

      “It is common to associate early Jesuit philosophers like Leonard Lessius, Luis Molina, and Juan de Mariana, with the Salamanca school.

      The Jesuit Order (‘Society of Jesus’), founded in 1540 by St. Ignatius de Loyola, was erected to combat the appeal of Protestantism. […] The Scholastic doctrine of ‘just price’ was rejected out of hand as all-too-divine, the Jesuits arguing that value is a human affair and was determined by natural human interaction on markets. They followed much the same line on money and inflation. On moral defenses of usury and profit, the Jesuits were eager to reform Catholic doctrine to bring it more in line with current practice, to ease their efforts to overcome the resistance of Protestant towns to re-catholicization.”

      The Salmancan scholars were notable heretics of their day, now bastions of tradition just as Boston College and the Cardinal Kapsers will be held up by conservatives centuries hence for their advancing of sexual morality and helping to not lift the ban on adultery and fornication and sodomy but just showing how human relations have changed so much that there really isn’t adultery or fornication any more or at least they’re not sinful.

      • Where do you get the idea they were heretics? When the King tried to execute Mariana the Pope protected him. The early church got its ideas on economics from Aristotle and pagan philosophers like Cicero, not from the Bible. Salamanca merely corrected that.

        • For Catholics interested in orthodoxy, here is a smattering of quotes from “Usury, Funds and Banks” by Jeremiah O’Callaghan here

          Usury is consistently condemned by reason, Scripture, the Church Fathers, Councils and Popes. Moreover, by the teaching of the First Vatican Council, men are required to interpret Scripture in a manner consistent with the Church Fathers, who consistently interpreted Scripture as condemning usury.

          The quotes below in addition to others from Fr. O’Callaghan’s book show there is nothing new under the sun for time value of money as an excuse for usury has been proposed and condemned as well as a “moderate” interest.

          “If you lend your money to a man from whom you expect more than you gave, not money alone, but any other thing, whether it be wheat, wine, oil or any other article, if you expect to receive any more than you gave, you are an usurer, and, in that respect, reprehensible, not praiseworthy:” St. Augustine on Psalm xxxvi

          “Some person imagine that usury obtains in money alone; but the Scriptures forseeing this, has exploded increase of all sorts; so that you cannot receive more than you gave. Others also have the habit of receiving presents of different sorts for the usurious loans, not understanding that Scriptures calls usury also increase whatever it be, if they received any more than they had give:” St. Jerome on Ezech. C. 18

          “Many person evading the precet of the law, when they give money to merchants, require the usury, not in specie, but take some of their goods in payment of usury. Let them therefore hear what the law says. You shall not, it says, receive the usury, nor any other thing: DEUT. xxiii. 19. The food is usury, the cloth is usury, whatever is added to the principle is usury; whatever name you give it, it is usury:” St. Ambrose. Lib. De Tobias, C. 14

          “Whatever is received above the principal lent, or that capital that was given, whether it be money or any thing else, that may be purchased or estimated for money, is usury: for it is written in Ezech. 18, Thou shalt not take usury and increase; and, in Luke vi. 35, Our Lord says, Lend hoping for nothing thereby. Even among the Gentiles usury was always considered a most grievous and most odious crime.” Catechism of the Council of Trent

          “Our Lord, by the mouth of the Evangelist Luke, has bound us in a clear precept not to hope for any thing above the principal from the loan that is made.” Pope Leo X

          “If any clergyman, laying aside the fear of God, and the Scriptures that say, He, who lent not his money at usury, will after this decree of the great Council, lend at usury, or demand per centage, or seek sordid gain from any sort of traffic, or receive any increase… let him be deposed and suspended.” Council under Pope Martin

          “Because the crime of usury so much prevails in all places, that many person having omitted all other traffics exercise usury as if lawful, and by no means care how it is condemned in both Testaments; we have therefore decreed that notorious usurers be not admitted to the communion of the altar…” 3rd Lateran Council

          “It is lawful for the lender to require something above the principal, if he binds himself not to remand the principal for a certain time.” Condemned by Pope Alexander VII 1666

          “As money in the hand is better than money on time, and as there is no person who does not set greater value on the present than on future money, the creditors can demand something more than principal from the borrower, and on the that title he can be excused from usury.” Condemned by Innocent XI 1679

          “That sort of sin which is called usury, and which has its proper seat and place in loan [mutuum] contract, consists in man’s desiring, form the loan itself, which, of its own nature, demands as much only to be restored as was received, that more be restored to him than was received; and, consequently, maintaining that some gain above the principal is due to him, by reason of the very loan. Every gain, therefore, of this description, that exceeds the principal, is illicit and usurious.” Benedict XIV in Vix Prevenit 1745

          • Yeah that’s the problem with tradition. If you make it infallible you can’t get rid of it when you find it’s wrong. What if the Church had taken the same attitude toward the astronomy of the early fathers. We would be forced today to say that the sun revolves around the earth.

          • “If you make [the Holy Tradition of the Catholic Faith] infallible…”
            You’ll have to take that up with Jesus as it is by his promise and authority. He awaits you in all the Tabernacles of the world to lovingly embrace you in His Holy Catholic Chuch.

          • Well being a Baptist I disagree but it’s a friendly disagreement. After I posted I remembered that most of the Salamancan scholars/theologians promoted the Church doctrine on usury until Lessius who came in very late, if I remember correctly. Check out Alejandro Chafuen’s “Faith and Liberty.”

          • In favor of straight talk, given your absurd uninformed comment about astronomy, I think the disagreement is far less than friendly on your part. I would suggest Mark Shea’s “By What Authority” as an elementary introduction to the Magesterium you already rely on. Moreover, on usury the disagreement can be no more friendly than my disagreement with today’s apologists for adultery and sodomy.

          • I haven’t read his book but I have heard him on Catholic radio. I listen to Catholic radio almost every day on my drive home from work. I’m pretty familiar with those arguments. I just disagree with them.

            I think that in these times when all of Christianity is under attack in the West Catholics and Protestants need to stick together as much as possible but the only way to do that is to focus on the essentials (of salvation) and tolerate diversity on the non-essentials. If you consider usury and the authority of the church to be deal breakers then I guess we can’t have a friendly discussion.

            On the subject of usury, as you know the Church always borrowed and lent at interest and today has a bank that does so. That suggests that the Church never considered all loans at interest to be usury. Protestants agreed. Sound hermeneutics suggests that the prohibition of charging interest in the Torah applied to lending to poor people.

          • It would be foolish to make a pact with Saruman or his followers against Sauron as long as they is still bent on their evil designs. To save the West, we have to repent of the evil anti-realist philosophy that makes usury appear like a financial reality among other horrific problems from mass drownings to infanticide to regicide.

            On adultery, “Due to advances in sexual theory, contraception, etc. etc., the nature of sex has changed in the course of time…” Moral principles are time-dependent and what was intrinsically and gravely wrong yesterday, is now good and laudable today. This is of course the typical justification.

            On usury, the author gets off on the wrong start by thinking usury is about money which everyone from Augustine to Benedict XIV disagrees with as seen in my earlier comment. The quote from the Lateran Council is consistent with the teaching of Benedict XIV, but does hide some of the details. If you read the sentence before, it states:

            “[O]ur Lord, according to Luke the evangelist, has bound us by a clear
            command that we ought not to expect any addition to the capital sum when
            we grant a [mutuum] loan. ”

            The problem is not money, but the mutuum contract, which is more-or-less equivalent to a full-recourse personal loan, which Benedict XIV makes explicit above in my earlier comment. In a mutuum, the borrower takes full ownership of whatever property it may be, money or not, and the lender has no risk or justification for charging interest from the contract itself.

            One thing you are partially correct about is that not every contract that is referred to today as a “loan” is usurious. It is precisely the mutuum contract that is usurious when more than the principal expected in return, because of the nature of the contract itself which does not change with time.

          • So you see the wonderful things capitalism has done for the poor over the past 300 years and you can see nothing but usury? Poverty of the kind known by most Europeans 300 years ago has been abolished. Famine and mass death have been extinguished in the West. Health and longevity are much greater, all of which takes much greater wealth. But that is all worthless because of usury?

            China and India have lifted over 500 million people for starvation poverty and that means nothing to you?

          • I have no idea how you got that from what I said. Contempt for murder doesn’t mean I’m opposed to healthcare though most healthcare providers are murderers or ready to be ones. Being opposed to the theft and enslavement that is usury doesn’t mean I’m opposed to what is morally licit in Capitalism though most capitalists are usurers or ready to be ones.
            Also, I’m not a consequentialist like you. Just because something produces good consequences, say the ending of the War in the Pacific, doesn’t make it, naming murdering countless innocents in a nuclear explosion, morally licit.
            Usury is never morally licit or financially sensible even if it produces the illusion of wealth creation.

          • To help with clarity on the problem of usury, consider different contract, namely a corporate bond and a mutuum contract.

            A corporate bond in general is a contract of exchange whereby the lender exchanges some property, typically money in the form of currency, to the borrower for a claim against the property of the company. The property of the company is represented on the balance sheet. The claim against said property appears on the liability side of the balance sheet. So, the bond represents a real exchange of property, such that if the company defaults the lender can receive the return of his claim by the liquidation of the property. Therefore, there is some real property that securitizes the bond against which the lender has a claim and charges some agreed rate.

            In a mutuum contract, the lender exchanges some property, typically money in the form of currency, under the pretext that is will be used up in some manner, that is alienated from the borrower in such a way that a return in kind is expected, for the promise from the borrower of a return in kind. In this case, the lender has no real property claim, for the ownership of the property has been transferred to the borrower and there is no other property in the exchange. What securitizes the mutuum is the promise of the borrower, which is not property. Therefore, there is no property against which the lender has the authority to charge anything.

            The charging of interest on a mutuum contract can be viewed from a few perspectives. If it is taken that there is really no property claim, then the lender has no authority to demand a return and his demand is an act of robbery. If on the other hand, we consider wrongly that the promise is property then the lender is making a property claim against a person, which is a claim of enslavement. Hence, the reason usury is a heinous act deserving of perdition.

  • Excellent! It’s important to keep in mind that a lot of church fathers brought their pagan philosophy into Christianity. According to Peter Brown, bishops in the second century warned churches against making bishops out of new converts from the wealthy nobility. (James warns against something similar in he book in the NT.) But churches didn’t listen because they wanted the nobility’s wealth and power. It’s pretty clear that many of the church fathers carried over the economics of Plato and Aristotle without criticism. It took the church 1500 years to expunge the paganism in its economics. As Joe notes, the scholars at the University of Salamanca accomplished that and distilled the principles of capitalism.

    The early church veneration of virginity was no different than the pagan Roman vestal virgins. The asceticism of the eastern fathers was pure pagan Greek. And the emphasis on the “common good” came from the Greek/Roman idea that all citizens should sacrifice their lives to whatever the city leaders determined was necessary for the city.

    Reading church fathers is important, but they didn’t write scripture and weren’t infallible. Some of it is brilliant and some ridiculous.

    I really like the analogy with medicine. I often use it in discussions. I don’t know anyone who would limit their medical treatment to prayer and anointing with wine and oil. The scholars of Salamanca advanced the science of economics by light years and we should not ignore their increase in knowledge because the church fathers didn’t understand it. Their principles are Biblically based, but not all of them are easily discerned in the Bible.