Maybe financial hermeneutics isn’t one of your talents

June 13, 2016 § 37 Comments

It is a fairly common misunderstanding to invoke the Parable of the Talents as a kind of ‘gotcha’ against the Church’s universal and constant condemnation of usury, that is, of any and all profit from mutuum loans.  As is the case with most modern pro-usury apologetics, this rests on an equivocation which studiously fails to distinguish between mutuum loans (personal IOU’s) and other agreements: an equivocation which uses the same label “loan” to refer to fundamentally different kinds of contracts.

Here is the money quote from the parable:

Therefore, you ought to have committed my money to the bankers, and at my coming I should have received my own with interest!

But of course someone who has familiarized himself with what usury is and is not knows that loans to the bank or deposit accounts are not mutuum loans in the first place.  Loans to the bank are claims against the balance sheet of the bank: against the aggregation of all property in which the bank itself has claims.  They are not personal IOU’s from bank employees.

Studiously avoiding clarity on the essential differences between mutuum loans for profit and other contracts is like studiously avoiding clarity on the essential differences between marriage and other sexual relationships.

§ 37 Responses to Maybe financial hermeneutics isn’t one of your talents

  • Scott W. says:

    They are not personal IOU’s from bank employees

    So I guess I won’t ask the teller to come mow my lawn since the ATM was out of order on Sunday. 🙂

  • Zippy says:

    Some might find the citations in the linked comment thread of interest, if only as examples of the rhetoric and selective quoting employed by the Walter Kasper / Charles Curren types of the 1800’s.

  • Mike T says:

    I don’t even see how that would make a good gotcha case since the Bible never explains how the talents were invested and what recourse was laid out between the slave and borrower.

  • Zippy says:

    Mike T:
    Right, in order for the passage to apply at all one has to simply assume, out of thin air without any textual support whatsoever, that the investment the master was contemplating was a mutuum for interest as opposed to nonrecourse debt.

  • […] we’ll be treated to references of saints and popes whose families were bankers along with citations of Jesus chiding a servant for failing to make an interest-bearing bank deposit in the New […]

  • Zippy says:

    Reblogged this on Zippy Catholic and commented:

    Re-posting this since the Parable of the Talents was yesterday’s Gospel reading.

  • If we define a mutuum loan as a “loan [which] is a contract wherein the borrower is personally obligated, by his own agreement, to return the principal amount of the loan to the lender at some future time: not a specific object lent, but a specific amount lent”, how can you say that a bank deposit does not fit this definition?

  • Zippy says:

    A bank deposit is a claim against the property of the bank: no person has personally pledged to give depositors any money. COMMENT UPDATE: In other words the “borrower” in that definition is a human being making a personal pledge, not a managed collection of property (like a bank).

    I’ve explained how this works from a number of different perspectives. See here, here, and here, for example, with this as ‘required reading’ background.

  • Thanks for the references. I read them but I am still wondering why a person is treated differently than an organization as it relates to usury. Couldn’t we see a personal loan from one person to another as a claim against the property of the borrower? Isn’t it a bit of a fiction to treat a bank differently in this way? Or am I missing something?

  • Zippy says:

    If it is a nonrecourse loan secured by actual specified property and only that actual specified property then it is not a mutuum and interest is not usury. It could still be unfair or unjust for other reasons; but it does not, in the phrasing of the English translation of Vix Pervenit, “fall under the precise rubric of usury.”

  • Rhetocrates says:

    To be specific, because I think it might be helpful:

    Couldn’t we see a personal loan from one person to another as a claim against the property of the borrower?

    Yes, we could, and we do and should see it that way, if the contract is written so that the liability of the borrower does fully terminate in some piece of property that could be taken away from him. Such a loan is not usurious.

  • Rhetocrates says:

    Eh, specific’s not the right word. Sorry, Zippy; I didn’t mean to accuse you of vagueness or inaccuracy. I had in mind your recent post about broadening intuition pumps for wider appeal, and I’m tired enough to word my introduction badly.

  • TomD says:

    The missing term is that a company (or business, or bank, or whatever) is itself property (someone can own it and sell it), whereas a person never is (even parents don’t own their children in that way).

  • Alex says:

    Also, I think it is worth noting that banks don’t (at least around here) give you any guarantees on interest rates. In fact, they can, I believe, be negative. Thus, putting your money on the bank is more akin to investing on them than lending with interest.

  • Different T says:

    TomD:

    It seems you’re pointing at the concept of “alienation.”

    whereas a person never is (even parents don’t own their children in that way).

    You may enjoy this from C.S. Lewis’ “Screwtape Letters”:

    We produce this sense of ownership not only by pride but by confusion. We teach them not to notice the different senses of the possessive pronoun-the finely graded differences that run from “my boots” through “my dog”, “my servant”, “my wife”, “my father”, “my master” and “my country”, to “my God”. They can be taught to reduce all these senses to that of “my boots”, the “my” of ownership. Even in the nursery a child can be taught to mean by “my Teddy-bear” not the old imagined recipient of affection to whom it stands in a special relation (for that is what the Enemy will teach them to mean if we are not careful) but “the bear I can pull to pieces if I like”. And at the other end of the scale, we have taught men to say “My God” in a sense not really very different from “My boots”, meaning “The God on whom I have a claim for my distinguished services and whom I exploit from the pulpit-the God I have done a corner in”.

  • Wood says:

    Zippy,

    In commenting on some other blogs discussing usury, I found a fair amount of interest in Michael Hoffman’s “Usury in Christendom.” I haven’t read it, but it seemed from what I can gather that while he does wish to educate people on the evil of usury he also seems to go off track on things such as extrinsic title and especially investments providing interest that don’t fall under usury per se (societas investment). I think I see his book on your digital bookshelf header at the usury FAQ post. Have you read him? Did you find him useful or helpful?

  • TomD says:

    You can see the large version which shows it’s there.

    And from what I understand, you’re correct – the side-questions distract from the basic question of what usury is – and make it harder to answer.

    Not all financial sins are usury.

  • Bedarz Iliachi says:

    Does the present day concept of bank–institution with employees and deposits as claims against the bank property–apply easily to the first century “bankers” of the parable?

  • Rhetocrates says:

    @Bedarz:

    Sure. Why wouldn’t they?

    Any banker of the parable would be securing your investment against some property over which they had some claim. Or they’d be usurers. People have been making venture capital investments forever, for example.

  • MMPeregrine says:

    I found a spiritual reading book on confession (a very good one IMO) that included this parable with the word interest replaced with the word usury. The context had nothing at all to do with usury though. The book didn’t mention which version of the Bible the Scripture quote was from and I couldn’t find it either when looking in the Douay-Rheims, NRSV-2CE, or NABRE. The version of the book I read was itself a translation so maybe the translator didn’t look up quotes from the primary source and simply attempted to translate the best he knew how.

    That’s just something to look out for and be aware of when defending the traditional teaching and condemnation of usury.

  • Rhetocrates says:

    Zippy,

    This post (or the repost of this post) has prompted me to start going back through your old work on finances of all sorts, and I’ve started in a hamfisted way to try to think about the topic of what a science of sovereign finance might look like. (This makes both the labor theorists and the agriculturalists more attractive, though still very wrong. They at least have an answer to what the sovereign balance sheet could be measured in.)

    For the moment, though, I have a question: in your thinking, is there a third category for taxation beyond ‘transactional’ or ‘property’? I can’t think of one.

  • Zippy says:

    Rhetocrates:

    … in your thinking, is there a third category for taxation beyond ‘transactional’ or ‘property’?

    It depends on how abstractly we consider those categories. A poll tax might be considered a transaction tax, and a head tax might be considered a property tax.

  • TomD says:

    There are levies, too, where a group/person/family/community/area is required to produce X, which is a form of head tax. There are also fees which might be considered transaction taxes.

    One thing that interests me is looking at taxes and seeing how, if in anyway, they can be avoided. Property tax can be avoided by not owning property, income tax by having no income, but a head tax cannot be avoided save by having no head. Note that not being avoidable doesn’t mean that it’s inherently evil or anything.

    Church taxes exist, too. Some relevant law.

  • Rhetocrates says:

    I think Church taxes, while relevant, are more confusing to the issue than helpful. It’s another sovereign meddling in the market protected by the first sovereign.

    Head taxes are an interesting case. I’m not sure how I’d treat them. I’m tempted to say that they’re property taxes, but that doesn’t quite cover it. Still, any sane head tax will have clauses of avoidance for those without sufficient property.

    Poll taxes in my view are definitely transaction taxes. Don’t want to pay the poll tax, don’t vote. You’re probably better off not voting anyway, even in smaller republics than the modern State’s shadow-play.

    I was also thinking that the condemnation of property tax found here (https://zippycatholic.wordpress.com/2015/06/11/property-taxes-sovereign-usury/) could be viewed as a condemnation of feudalism, but:

    …in effect making the sovereign into the property owner and the notional “owners” into rent-paying tenants. (Some folks might like it that way — but they ought to be forthright about the fact that their preferred social arrangement involves de-facto abolishment of private property).

    doesn’t have to be taken as an evil arrangement. Under simplification, this is exactly the state of feudalism: vassals explicitly leasing property from the sovereign, with terms and conditions drawn up and agreed to. Of course, disagreements arising when the sovereign takes the land of his vassals back, even according to the wording of the contract, betray that the terms of the contract are not always considered just.

    Saying what’s on the sovereign’s balance sheet is rather easy: lands, peoples, and industries under his power belong on the balance sheet. We could quibble over exactly what that entails – trade? Foreign investments? – and there’s further the problem of laying out his exact rights to those assets, but I think that problem might be represented, with some violence, as a problem of liquidity. (We’re leaving aside the moral issues of sovereignty for the moment, which would make any such theory incomplete at best.)

    The problem remains, however, in what units to denominate the balance sheet. This problem could be solved by just picking a commodity/security that we expect to remain ‘stable’ (definitions of stability being themselves problematic) and not directly subject to the sovereign’s power of issue, such as gold, land, or Picassos, and being very explicit that we don’t mean that these units are somehow natural or privileged against any other basket of goods.

    I suspect this is where the attraction to gold-backed currency comes from: people not understanding the nature of currency, but looking for some independent commodity to use as a unit.

  • Zippy says:

    Rhetocrates:

    I suspect this is where the attraction to gold-backed currency comes from: people not understanding the nature of currency, but looking for some independent commodity to use as a unit.

    Agreed, much of the gold bug motivation is to find some concrete measure and store of economic value which is independent of authority/sovereignty. And some things at least have the “feel” of greater value in the presence of weak, dysfunctional, or evil sovereignty, which creates an illusion of independence between wealth and sovereignty.

    But in reality the bulk of the wealth of any nation depends upon the sovereign, just as the wealth of a family depends upon its father. These (wealth and sovereignty) aren’t reducible to each other but neither are they independent; not even in principle.

  • TomD says:

    It’s been instructive to watch what’s happening around bitcoin because it can be used to disentangle some of the rhetoric around gold.

    I suspect it is NOT a coincidence that gold buggery and liberalism start around the same time, as both are searching for stores of value independent of authority (though liberalism is more incoherent as it searches for a store of authority independent of authority).

  • Rhetocrates says:

    I do also want to leave the small corrective that the ‘real’ or ‘natural’ value of gold comes not just from industrial applications, but because it’s pretty. When you say industrial applications I think of making semi-conductors and sulfuric acid, and not statues and jewelry. But markets exist for gold separately from any monetary value it may have precisely because there is enough psychological uniformity among men that most agree that things made of gold are pretty.

    Nothing written on this site about gold is incompatible with that, but it might be a stumbling block for some. (It was for me, at first.)

  • Zippy says:

    Rhetocrates:

    FWIW I do mention the Varna Necropolis in this post.

    Required reading here.

  • Zippy says:

    A less famous but perhaps the most important quote from that Fortune article by Buffet:

    Whether the currency a century from now is based on gold, seashells, shark teeth, or a piece of paper (as today), people will be willing to exchange a couple of minutes of their daily labor for a Coca-Cola or some See’s peanut brittle.

    All exchange is barter. There is absolutely nothing whatsoever about ‘currencies’ which distinguish them essentially from other property/securities.

  • Mike T says:

    Unrelated, but I saw a stat on slashdot or some other place saying that assuming linear growth, BTC is going to eat up more electricity globally than the US economy.

    So buy buy buy because that can only mean it’s going to top $18T in worth!

  • TomD says:

    BTC is designed to have the same 10-minute difficulty period, which means as it gets more “valuable” the amount of electricity “worth wasting” becomes more – there’s nothing preventing BTC from consuming the entire power of the sun, assuming there are fools great enough.

  • Rhetocrates says:

    “But you’ll never be able to afford the construction of a Dyson sphere to afford mining more bitcoins!”

    “Sure I will; I’ll finance it with bitcoins.”

    Right until the bottom comes out, because that Wisdom that springs from the mouth of God, well, He has a way of getting His own in the end.

  • TomD says:

    GOD is infinite, therefore inflationary, whereas buttcoins are limited, and deflationary and therefore better! Or something.

  • Mike T says:

    Buttcoin…

    Did you see this video?

  • TomD says:

    No, but I hang out on the appropriate subreddit. Sometimes I even get to mention usury now and then.

  • Zippy, Merry Christmas where ever you are.

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