Consumed by greed and sold into slavery by friends
January 8, 2015 § 29 Comments
Much bafflement, real or polemical, is made over St. Thomas Aquinas’ claim that money is “consumed in its use” like apples or wine. This bafflement in turn creates a discursive environment in which many people actually or at least polemically fail to understand the moral prohibition of usury, despite its objective simplicity.
Usury, recall, is charging profitable interest on a mutuum loan. A mutuum loan is a loan of something which is, in St. Thomas’ terminology, consumed in its use: anything which is consumed in its use, not just money. Usury is always morally wrong without exception.
The terminology I use in the Usury FAQ means the same thing: what Aquinas refers to as things which are consumed in their use I refer to as things which are agreed to be returned in kind as opposed to in particular. Particular things actually exist; kinds of things are not particular things which actually exist. The idea of $100 or a bushel of wheat is not itself actually $100 or a bushel of wheat.
The reason that what is loaned under a mutuum (which is only morally licit as a gratuitous act of friendship or charity) must be returned in kind, as opposed to in particular, is that what was originally loaned in particular has been consumed in the pertinent sense. In a mutuum it was loaned for the very purpose of consumption in the pertinent sense (otherwise it is not a mutuum). What was originally loaned is consumed by the borrower, used up and departed from his estate, and must be replaced by something else – something else of that kind, but not that particular thing, which is gone – in order to repay the loan. The fact that the mutuum borrower does not possess the actual thing that he owes back to the lender demonstrates that any rent charged (interest) is rent charged for no thing, nothing.
In a non-mutuum contract, the borrower (recipient of investment funds) always does possess everything – every actual thing – that the lender (investor) is owed, by definition. The non recourse home mortgage borrower really does possess the actual house, and if he stops making payments the non recourse lender can exercise his foreclosure rights and claim his agreed share of the actual property.
Because a mutuum loan terminates by definition in the borrower’s personal guarantee to repay the principal in kind, that personal guarantee – which is not itself a piece of property which can be bought and sold independent of particular persons – is no actual thing but is, unless reciprocated under purely gratuitous terms of friendship, just a piecemeal enslavement of the borrower.
So in a financial transaction X is consumed, in Aquinas’ terminology, whenever the borrower either literally consumes it himself or exchanges it for something else. The point is that the original actually lent things are gone from both the borrower’s and the lender’s possession; and that is all that matters for the rest of the usury doctrine to follow. The borrower may (or may not) now possess whatever was purchased with the loan proceeds, but the money itself is no longer in the possession of either party. Unless the lender’s contractual rights terminate in something named and specific that the borrower actually does possess, any “rent” he attempts to charge in the form of interest is, literally, a rent payment for nothing.
What the mutuum borrower owes back to the lender is by definition not a specific thing: it is no thing, nothing.
And it is intrinsically immoral to charge rent – interest – for what is literally nothing.
Those who disagree, who think that the idea of a house is as real as an actual house, are welcome to rent one of my imaginary houses. You can send the rent to the Little Sisters of the Poor.