De Roover, Raymond (1955) “Scholastic Economics: Survival and Lasting Influence from the Sixteenth Century to Adam Smith”, The Quarterly Journal of Economics, 69/2, 161-190.
However economics textbooks sometimes mention Thomas Aquinas, they generally overlook the fact that he was followed by almost five centuries of refined followers who greatly improved and expended his system. Of course, those scholars never considered economics as a field in itself but as an appendix to ethics and law (p.162).
“In dealing with questions of justice, the Doctors unavoidably hit upon economic matters and were forced to consider them”. They initially limited themselves to the matters of just price and usury, but soon got interested in a wealth of other subjects: “just wage, debasement (inflation), justice in taxation, public debts, monopoly, foreign exchange, partnerships”. The main problem remained whether such or such type of contract was licit or not (p.163).
The first to refine considerably Aquinas’ theory was Jean Buridan (1300-1358); by measuring value based on human wants, the made clear that the market price was indeed the just price. He was completed by Bernardino da Siena (1380-1444) who added to pleasurableness (complacibilitas), utility (virtuositas) and scarcity (raritas) as sources of value. The just price is thus determined by “the estimation made in common by all the citizens of a community” (p.164).
Clearly, San Bernardino writes, the difficulty to produce a good makes it scarcer and consequently more valuable. Noticeably, both the vocabulary used and the theory exposed by those Scholars would be reused by authors as distant from them as Thomas De Quincey and John Stuart Mill. San Bernardino even went as far as suggesting that capital invested in a venture was different from the one involved in a loan and could be something else than sterile (p.165).
After a period a diminished activity at the end of the 15th century, scholastics were revived by the school of Salamanca and Francisco de Vitoria (1480-1546). In the 16th century, market conditions had evolved and the Scholars had “to bring their principles into harmony with the requirements of expanding business and finance” (p.168).
They remarked that the prices were “as changeable as the wind”. They also noted that “rivalry among buyers will enhance prices”. They also seemed to take for granted that prices evolve in accordance with the relative scarcity of money (p.169). However, in their observation of international exchange they remained shy of the balance-of-payment theory preferring interpreting exchange rates based in differences in buying power (p.170).
The development of fairs which both involved international trade and strong suspicions of usury greatly interested the later moralists. However the countless subtleties of the fairs soon led these jurists to devise a “web of technicalities and contradictions which contributed not a little to the discredit of scholastic economics” (p.171).
The world had overgrown their method
Cartesian philosophy even more than the humanists forced the scholars to face their limits and contradictions (p.172). Their reasoning was too obscure, worse: the base of their corpus dated back to the early Middle Ages when the economy and chiefly the credit market was utterly different (p.173). Over the 18th century, they gradually abandoned their interest of usury which was finally allowed by the Church in 1830 (p.176).
Before the Enlightenments, the scholars had to face the mercantilists. Most of the latter were self-trained merchants, not university professors. Most noticeably, the mercantilists contributed to the economic debate by introducing the concept of the balance-of-trade (p.177). Most of the mercantilists, as merchants or civil servants, had a direct interest in fostering protectionist policies.
The internationalist and anti-colonialist position of the scholars was of course at the opposite of the mercantilists’ point of view. “Did not St. Thomas justify international trade by pointing out the fact that no nation is self-sufficient?”. But on the other hand, the scholars made no effort to incorporate the mercantilists’ discoveries into their corpus (p.178).
The influence of scholastics in the 16th and 17th century remained extremely strong. Grotius who was opposed to their conclusions used their method and recognized Aristotle as the base of his thinking (p.181). “Mercantilists, of course, were unable to escape from the impact of several centuries of culture […] they absorbed some of the ideas bequeathed by former generations”. For instance, the mercantilist never openly advocated monopolies and it represented for the scholars an illicit gain and an infringement on man’s God-given freedom (p.184).
Overall, the Doctors were mostly interested in the economy as it should be rather than as it was (p.185). Ultimately, they just buried themselves in the technicalities over the licit and illicit contracts.
The scholars were not opposed to the intervention of the public authorities on the market in case of crisis, but in general they considered that the law of supply and demand was just. They never supported the price-fixing guilds unlike the later Catholic doctrines (p.186).
The scholars also had a direct impact on the real economy. Partly by inspiring legislations, partly through personal advices given through the confessional. Not only were usurers constantly brought to court, but they also tended to restitute their gains after their death by bequeathing large sums to charitable institutions. But it cannot really be said that “the medieval Church neither favored nor hindered the development of capitalism”, they were just in another sphere (p.187).
Traces of scholastic influence can be found in Diderot’s Encyclopédie and even in Adam Smith’s writings (p.188). The Scotsman opposition of mercantilists reflects the position of the scholars on the matter. Earlier economist such as Condillac also clearly followed the scholastic insights regarding utility and scarcity (p.189).