Usury and the fundamental option

December 1, 2012 § 6 Comments

Fundamental option moral theories, which separate a person’s inner orientation or intentions from his objective concrete chosen behaviours, have been condemned by the Magisterium as heretical, to wit:

distinction thus comes to be introduced between the fundamental option and deliberate choices of a concrete kind of behaviour. In some authors this division tends to become a separation, when they expressly limit moral “good” and “evil” to the transcendental dimension proper to the fundamental option, and describe as “right” or “wrong” the choices of particular “innerworldly” kinds of behaviour: those, in other words, concerning man’s relationship with himself, with others and with the material world. There thus appears to be established within human acting a clear disjunction between two levels of morality: on the one hand the order of good and evil, which is dependent on the will, and on the other hand specific kinds of behaviour, which are judged to be morally right or wrong only on the basis of a technical calculation of the proportion between the “premoral” or “physical” goods and evils which actually result from the action. This is pushed to the point where a concrete kind of behaviour, even one freely chosen, comes to be considered as a merely physical process, and not according to the criteria proper to a human act. The conclusion to which this eventually leads is that the properly moral assessment of the person is reserved to his fundamental option, prescinding in whole or in part from his choice of particular actions, of concrete kinds of behaviour.

A similar disconnection between concrete reality and an imaginary inner world is made in economics when it comes to usury.  It should come as no surprise that justifications for usury ultimately rest on an appeal to imaginary unreality: St. Thomas Aquinas after all tells us that what is morally wrong about usury is that it involves selling what does not exist.

Usury is when profitable interest is charged for the use of money -qua- money, independent of what the borrower does with the money and without reference to the purchase and rental of actual real assets from which principal may be recovered.

One reason usury is proposed to be morally licit – that is, one of the arguments against the Church’s teaching that usury is morally wrong – is that people have a preference for money now as opposed to money later.  In a purely interior way, without reference to any specific choice or behaviour (does this sound familiar?), value is created by the mere fact that the lender would, all other things equal, prefer to keep his money rather than lend it out.  His mere preference creates value out of nothing, which translates into a moral obligation on the part of the borrower to produce for him a profit.

I don’t have a theory of real economic value that can answer whatever questions people may raise about it.  But I do know that a theory of value which proposes it to arise from the mere preferences of individuals independent of concrete actions cannot be right.

This of course does not deal with all of the various arguments about usury over the past 500 years or so.  But I do think that arguments which rest on a preference theory of value can be dispensed with, because preference theories of value are not fully in touch with reality.

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§ 6 Responses to Usury and the fundamental option

  • aaronmorey says:

    One reason usury is proposed to be morally licit – that is, one of the arguments against the Church’s teaching that usury is morally wrong – is that people have a preference for money now as opposed to money later. In a purely interior way, without reference to any specific choice or behaviour (does this sound familiar?), value is created by the mere fact that the lender would, all other things equal, prefer to keep his money rather than lend it out.

    This sounds exactly like how supply and demand work for buying and selling goods. I have money and want a sandwich. Subway has sandwiches which it is willing to give me in exchange for my money. I would rather have a footlong than $5. Subway would rather have $5.

    So trading money for sandwiches is ok, but trading money for a promise of money later is not. What is the distinction? Is it because sandwiches are a good with some value in its own right, whereas money is a medium of exchange with no inherent value? That you’re “creating” value through clever manipulations of the means of exchange, as opposed to creating value by turning wheat and cows into an actual roast beef sandwich?

  • tz says:

    I think you are hung up on the word “preference”. I would hope you would have a “preference” for good over evil. There are different classes of concrete action, some are intrinsic evil, some conditional evil, some neutral, some conditionally good, some intrinsically good. Yet sin does make a distinction – a mortal sin requires the will and intellect. If you do an otherwise neutral act with the intent to harm, it is evil. It is still a sin if you intend good from an intrinsically or even conditionally evil act where the evil occurs. So it is both-and, not either-or.

    Time is not nothing as you seem to be asserting. Why are prison sentences based on time instead of working off a penalty so someone who works hard could get out earlier?

    If each day of our life is a precious gift from God, each to be enjoyed, each one is valuable. Each minute, each heartbeat is valuable.

    If I have 30 more days to enjoy something on this earth where my days are finite, it will be more valuable to have it for those 30 more days.

    What is the point of Lent if giving up something for 40 days is of no value?

    If I promised to deliver something to you today, but say instead “wait 3 months, it will have the exact same value then”, you would have no objection to the wait?

    Things I get today are actually and objectively more valuable than things I might or might not get in the future. I don’t put much value on things which might accrue to my estate after I die.

    But going to Pope John Paul II’s theology of the body, he notes we are subjects, not objects. The value of objects is not objective, it is the subjects that give value to the objects, and everyone may value different things. Some value music over paintings. Some value social venues over solitude.

    The way Marginal Utility works is to ask how much more do I value one more unit of something. I may value it more or less than you. Because water is abundant for me, I can get gallons of water to the point I don’t value one more gram of water much at all, but would value one more gram of diamonds or gold or something rare that I would have a purpose for.

    Interest is the price charge for renting my money for a time. You have to value the money enough to want to borrow it, but I have to value the return after both the risk and the time for me to lend. If you rent a house for 3 months, do you say “It will be the same house 3 months from now, or I should only pay for any repairs, and not any rent”. Or you will be nearly the same body tomorrow as you will be today, why should I pay you a wage just for time. It will be the same pile of money later as it is now.

    Values can be uninformed, much like we need to have a well-formed conscience. It is probably part of that – justice is the virtue that values thins correctly, yet it does not demand any strict equality.

    There is also the writings of the late spanish scholastics. http://en.wikipedia.org/wiki/School_of_Salamanca There is a section on economics, but there are entire books on the subject including market values and private property and time value.

    I would note that the Austrian School of economics is founded on these Scholastics.

  • Zippy says:

    aaronmorey :
    So trading money for sandwiches is ok, but trading money for a promise of money later is not. What is the distinction?

    In neither case are you actually concretely creating new value through specific concrete actions. It is not OK to pay for a sandwich and then demand two sandwiches either.

    It is fine to buy the means to build value and then actually go on to build that value; it is not fine to demand payment for value that was not in fact actually built, because the latter is not real.

  • Zippy says:

    tz:
    So it is both-and, not either-or.

    Right. I agree with all that on a cursory read, though I don’t see the connection to any point of contention.

    Time is not nothing as you seem to be asserting.

    I am asserting no such thing. But it would be unjust of you to demand payment for your time from an employer independent of what you actually did with your time. It is similarly unjust to demand payment for the use of your money over time independent of what was actually done with your money.

  • Kristen inDallas says:

    Zippy, you may already be aware of this, but if not, given the subject of this post I thought you might be interested in the rolling jubilee program. I find it really telling that when lenders don’t think a debt will be paid, it devalues to cents on the dollar. Yet debt collectors will still try to get the entire (or nearly) amount anyway. I understand TZs point about “paying rent” on money and time having value… to an extent. But I also think this side of the market is pretty clear proof that money lent is only worth what can reasonably become of it.
    http://rollingjubilee.org/

  • Zippy says:

    Thank you Kristen; I’ll have a look.

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