November 13, 2015 § 26 Comments
Pope Francis says:
“Before the problems of the church it is not useful to search for solutions in conservatism or fundamentalism, in the restoration of obsolete conduct and forms that no longer have the capacity of being significant culturally,” the pontiff said at one point during his remarks.
“Christian doctrine is not a closed system incapable of generating questions, doubts, interrogatives — but is alive, knows being unsettled, enlivened,” said the pope. “It has a face that is not rigid, it has a body that moves and grows, it has a soft flesh: it is called Jesus Christ.”
“The reform of the church then, and the church is semper reformanda … does not end in the umpteenth plan to change structures,” he continued. “It means instead grafting yourself to and rooting yourself in Christ, leaving yourself to be guided by the Spirit — so that all will be possible with genius and creativity.”
This of course can be interpreted in a way which is perfectly orthodox, depending upon the listener; but the overall thrust of Francis’ preaching is unmistakable. If I am interpreting him correctly, and I am pretty sure that I am, Pope Francis is telling us that intellectualism and hidebound rule-following is disconnected from real life and unmerciful; and that being a stickler for doctrine in the face of real pastoral situations in the peripheries is not walking with Jesus Christ.
Well, I have to say, he’s got my number. This blog is basically all about hidebound doctrinal rule-following, and justifying it intellectually. Probably the most prominent intellectualist doctrinal rule-following I am guilty of on this blog involves my condemnations of usury and torture. Close behind that is the way I am such a stickler for the just war doctrine, and how I don’t give people a break for voting for Republican candidates who stump for torture and unjust wars. I’ve been mean and judgmental toward poor beta men on the peripheries of culturally significant sexual life, by calling into question the practice of lying to get women to have sex with them. And I’ve even been known to criticize priests, on an intellectual technicality, for failing to follow the rules.
So maybe we should give unrepentant torture apologists, usury apologists, and unjust warmongerers tickets for Holy Communion, so they can get past the turnstiles and bouncers. If the Pope says that doctrine has to take a back seat to pastoral mercy, well, who am I to judge?
November 7, 2015 § 23 Comments
Dante did not put usurers and sodomites into the same circle of Hell by accident.
Reality always asserts itself, so nobody can get away with comprehensively ignoring reality all the time. When I say that all modern economic theories (including the ones you like, not just the ones you dislike) are anti-realist, I do not mean that they are postmodern. Postmodern theories look at the hopelessness of the positivist project – which is an anti-realist project, since it attempts to fully capture reality in formal representation, to reduce some demarcated part of reality to nothing but symbolic representation or a metaphysically neutral verification procedure – and pretend to give up on objective reality altogether. This becomes immediately rather ridiculous to sane and well adjusted onlookers, because directly and explicitly rejecting reality is something that it takes a peculiarly pointy-headed intellectual form of sociopathic stupidity to do.
Anti-realist economic theories (which is to say, all existing economic theories of which I am aware) therefore are not entirely disconnected from reality. There are true things which can be learned even from wrong theories: stopped clocks and all that. The sodomite’s understanding of reality is not comprehensively wrong in every respect: his understanding is a distorted and disordered view of reality, not a beaker of distilled and purified falsity. Every lie has to have some grounding in the truth in order to get any traction at all; although the more lies take hold, the less that is the case.
The thing that distinguishes anti-realist economic theories from a realist theory of economics, which as far as I know does not exist, is that anti-realist theories attempt in various critical places to reduce value and/or property to nothing but the projection of subjective human intentions, understandings, preferences, will, or desire. What you may notice is that this often involves abstracting together unlike things as if they were the same kind of thing: securitizing unreality, if you will, at least metaphorically speaking but sometimes literally. A realist perspective, in contrast, does not deny the importance of the subjective and psychological but recognizes that there is an irreducibly objective aspect at work too. (This is true in moral theology as well, where the morality of human action cannot be reduced to nothing but subjective intentions). As with all lies anti-realist economic systems would fall apart immediately if they were pure nothingness: if there were not some anchor in reality. So the thing to look for, if you really want to take the economic version of the ‘red pill’, are the places where metaphysically anti-realist finance marbles together the irreducibly real with the purely subjective into a thing it calls ‘cake’, and which it says we must all eat.
In sex, analogously, look at the manifest conflation of sodomy with intercourse. Look at the manifest conflation of the masculine with the feminine. Look at the more subtle conflation of ‘dating’ and serial fornication (as opposed to parallel fornication, which is Really Bad, at least for now) with marriage. Look at the conflation of self sacrifice (what a husband and father owes his family) with authority (the obedience the family owes to the father), and the labeling of these entirely unlike things ‘mutual submission’. Look at the conflation of committed self-sacrifice with fickle and fleeting emotions, both under the label ‘love’.
And continue looking from there, because the most important thing that waking up to the obvious examples shows is that we can be fooled by the obvious. Nominalist pseudo-categories conflating things rooted in reality with what human subjects want, intend, or expect are absolutely necessary for the lie to continue. This only works as long as most people carefully avoid noticing the introduction of anti-realist poison into their thoughts: as long as repentance is avoided at all costs.
It may help to think of accounting as the mathematics of property; of finance as the physics and engineering of property; of economics as the meteorology of property. In modern accounting, an “IOU” or “note receivable” can mean a claim against some actual pool of property, or it can mean the securitization through usury of nothing but a promise made by a borrower to personally repay. Said sightly differently an entry on the asset inventory of a balance sheet can mean a claim against some actual pool of property, or it can just be the counter-entry to a personal IOU. A note payable can mean the impairment of some actual property, or it can mean that a person is on the hook to come up with some amount of money — an IOU. The ‘fractional reserve’ is either cash and equivalent liquid property kept on hand that a property aggregator/securitizer (bank) can use to satisfy demand deposits under normal operating conditions, or it is a magical delegation of power by the sovereign which permits banks to create currency out of nothing but personal IOU’s through an accounting trick. You aren’t supposed to notice the difference; because as soon as you notice the difference, the jig is up.
The conflation of reality with unreality doesn’t just make folks think that unreal things are real though. It also makes folks think that real things are unreal. A husband and father’s authority is just tyranny, because people don’t feel like they should be morally obliged to obey flawed human beings (unless they agree with the command; that is, unless it isn’t a command). The wife’s commitment to satisfy the marriage debt is rape. Taxation is theft, because the sovereign’s role in the functioning of industries, markets, and property in general doesn’t exist. And sovereign currency is mere fiat not a security against actual valuable property, even though it actually does entitle the bearer to the settlement of tax liabilities which he incurs in carrying out public commerce in the sovereign’s marketplaces. (More on the backward troglodyte financially ignorant medieval perspective on sovereign marketplaces can be explored here).
Once the ‘red pill’ hits you, though, you’ve got a choice.
You can plant your triumphant flag right there at the starting line, next to the naked emperor and the madmen wandering about in the desolation, and enjoy the delightful company of fellow sociopaths.
Or you can start looking for the more subtle ways in which unreality has been mixed into your reality. You can become a digger.
 and : The ‘fiat currency isn’t real’ crowd, it seems to me, is rather too credulous about the willingness of private bankers to accept payment in literally meaningless bits of paper or numbers in computers which represent nothing but themselves, on nothing but the sovereign’s say so. I’ve never known a banker, of all people, to hand out actually valuable property in exchange for something literally worthless. That is the domain of timeshare purchasers and other victims of hucksters. Bankers may often be evil, but they are not stupid.
September 22, 2015 § 7 Comments
The way to figure out whether a contract for gain is usurious or not is to look for contract terms which treat a personal guarantee as if it were property. It is morally licit for an owner to profit from the use of his property, or of property against which he has claims. But a borrower’s promise to repay principal which has been consumed is not property. A mere promise of apples is not itself actually apples. And the historical fact that there used to exist some apples which were consumed or money which was spent is not — the historical fact is not — actual apples or money.
If a mere promise to repay in kind actually were property it could be alienated from the borrower and repossessed by the lender, in case the borrower stopped making payments. Charging rent or levying profits from a mere promise to repay – charging “rent” for “property” which does not exist independent of any particular person – is usury. The fact that what is owed under a mutuum cannot be recovered from reality, but must by definition be recovered from a person, demonstrates that it does not exist in the pertinent sense required to justify rents or profits.
I’ve said in a number of places (because it is true) that moral doctrine condemning usury does not depend on any broader economic theory or theory of just pricing, and is in fact compatible with many such theories. On the other hand it is true that usurers would often take advantage of price ambiguities in order to charge what the medievals called “hidden usury”. It is from this that the myth of interdependence between usury doctrine and medieval just price theory arises. As seems to occur in many areas of moral theology, if people weren’t trying to get a pass on doing moral wrong on a technicality the issue would never arise in the first place.
Suppose I lend you 100 apples and agree to be repaid in two months time. But instead of asking for repayment in apples, I ask for you to personally guarantee (ahem) repayment of 100 oranges. Because oranges are worth more than apples when we ink our contract – and this is where just pricing may come into play – this contract involves “hidden usury”.
That this is “hidden usury” is clear once we observe that the terms call for contractual profit to the lender in conjunction with a personal guarantee by the borrower. Personally guaranteed loans (mutuum loans) are only ever morally licit as acts of charity or friendship. They are not morally licit as profit-producing investments, even when the lender might have hypothetically made a profit in some other way had he, counterfactually, chosen to do something different.
This does not in any way impair legitimate investment for gain. (It also doesn’t give a free moral pass to every contract which is not, strictly speaking, usurious). The way to avoid entering into usurious contracts (including those involving ‘hidden usury’) is to avoid commercial contract terms calling for personal guarantees of repayment. The only reason ‘just pricing’ comes into play at all is because the parties are attempting to craft a de-facto usurious contract while avoiding usury on a technicality — on the ambiguity of the relative prices of apples and oranges. This would not be an issue at all if the contracts were nonrecourse, that is, if the contract were not a form of mutuum. But mutuum agreements are never morally licit for gain in the first place. The notion that they are or should be is rooted, as with many errors of the modern age, in metaphysical anti-realism.
I’ll leave you with this quote from St. Francis Xavier, giving counsel to confessors (emphasis mine):
‘When in the sacred tribunal of penance you have heard all that your penitents have prepared themselves to confess of their sins, do not at once think that all is done, and that you have no further duty to discharge. You must go on further to inquire, and by means of questions to rake out the faults which ought to be known and to be remedied, but which escape the penitents themselves on account of their ignorance.
Ask them what profits they make, how, and whence? what is the system that they follow in barter, in loans, and in the whole matter of security for contracts?
You will generally find that everything is defiled with usurious contracts, …’
June 11, 2015 § 37 Comments
Lots of folks have suggested that fiat currencies and fractional reserve banking create fake economic value out of nothing and are therefore, if not usury strictly speaking, somewhere in the moral vicinity of usury. So far when this has come up in discussion it has turned out that critics of both don’t really understand either. The former are options issued by the government which allow the bearer to settle tax liabilities; the ‘created money’ in the latter are options against the balance sheets of banks, denominated in the former. There is nothing usurious going on and no creation of fake wealth except to the extent that the balance sheets of banks carry usurious (as opposed to nonrecourse) loans. This should be at least mildly familiar territory to anyone who has read and understood the Usury FAQ.
But there is one kind of government activity that does bear close resemblance to usury: the levying of property taxes.
Here is a (slightly modified) comment I left on Kristor’s Orthosphere post (which itself is less about property tax than it is a preamble to another subject, the beginning of what I hope will be a series of posts well worth following):
Another prudential reason to oppose property taxes is that they encourage treating all property as liquid and fungible, discouraging ownership of anything illiquid and making ownership of illiquid things into something less than real ownership.
Property taxes are like the sovereign’s version of usury: the sovereign demands a fixed percentage repeatedly every tax period until the owner is destitute, independent of the owner’s actual fortunes during the period. The sovereign qua publican doesn’t care about the owner’s fortunes a bit: he just demands his pound of flesh every year.
Transaction taxes (sales, income, VAT, etc) on the other hand are one-time levies directly tied to the activities and fortunes of the person taxed — including property owners, because property owners who work, invest, and buy goods and services in the inevitable struggle against entropy pay transaction taxes when they do those things.
Property tax in contrast is not merely a form of economic double-jeopardy: it is a form of economic infinite-jeopardy. If property were a bucket of water, transaction taxes represent taking a scoop of water every time the bucket changes hands in public commerce. Property taxes represent a hole in the bottom of the bucket, a limitless demand against property owners, 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).
None of this excuses the property owner from his duty to steward his property well for the sake of the common good and those more directly in his care, of course — just as the sovereign’s authority does not excuse him from his duty to rule over his subjects well for the sake of the common good and those directly subject to him.
But it seems to me that deposing kings and stripping owners of all of their property (even when you rent it back to them) are serious matters requiring serious reasons, not to be undertaken in the ordinary course of things. The sovereign’s title to already-owned private property (as distinct from taking a share in public transactions) is like the poor man’s title to bread. I don’t think it is surprising that folks who are fond of democracy often tend to be fond of property taxes: they both reflect inherently brittle and cavalier modern attitudes about authority, where kingship and ownership are both forms of authority.
January 21, 2015 § 10 Comments
The usurer says, Care for my property and pay me for the opportunity. Keep it intact. Make good every loss and return to me an increase which you by your energy and effort may produce.
Not only does financial slavery exact more labor for the amount invested, but it is more heartless than chattel bondage. The master had a personal interest in the slave he bought. His health and strength was an object of his care and his death a great loss. There was also often a mutual affection developed, as is sometimes found between a man and his horse or affectionate dog. There was sometimes real unfeigned mutual love. The master had a tender care over his slaves in their sickness and in their decrepit age, and sorrowed at their graves. The slaves were inconsolable in their grief at the death of their master.
The usurer has no personal interest in his slave. He has no care for his health or his life; they are of no interest to him. He may live in a distant state and has no anxiety about those who serve him. Their personal ills give him no concern.
Many faithful, industrial and honest borrowers are unable to return the loan. It is as difficult to retain property as it is to earn it. New inventions, new processes, new methods, new legislation and the changing fashions and customs, often sweep property from the shrewd and careful. “Riches make themselves wings; they fly away.” If for any cause the borrower fails there is scant sympathy from the usurer.
Usury: a Scriptural, Ethical, and Economic View, Calvin Elliott (1902)
January 14, 2015 § 18 Comments
You can download my Usury FAQ as an ebook in either epub or mobi (for Kindle) format. If you find any errors or whatever by all means let me know. I am placing them in the public domain, so feel free to pass them around to whomever you like, and be sure to check out how you can join the Friends of St. Martin de Porres.
(NOTE: At the time of this writing, the on-line FAQ has been revised and is more up to date than the ebook version).
January 13, 2015 § 7 Comments
I first became interested in the subject of usury during the 2008-2009 financial crisis. I was primarily an investor at the time, having ‘retired’ some years earlier following an undeservedly successful stint as an entrepreneur during the ‘dot com’ explosion of the 1990’s. I remember investment bankers telling me that business credit was seizing up because nobody could tell what was real. Somewhere around the same time I read St. Thomas Aquinas’ description of usury as selling what does not exist; and I was intrigued by the connection. My response as an investor was to start buying up investments, especially corporate equity, which was on sale at a big discount. My response as a curious individual and blogger was to start collecting old books on the subject and learning about usury.
My background with startup companies certainly colored my understanding of what I was reading. I had been involved with quite a number of small companies and had founded a couple of my own. One was rather ludicrously successful (though of all of the successful dot com entrepreneurs I was clearly the most slow-witted). But most startup companies fail. This is true even during the crazy boom times. Failure is actually the norm, modest success is somewhat rare, and stratospheric success is the outcome for perhaps one of every twenty to fifty high quality startups.
So when you are putting together a small company, making sure that the i’s are dotted and the t’s are crossed on what happens when it fails is just good business. It is never a happy thing when a business experiment fails, but if you’ve done your job right there is no rash of lawsuits and recriminations: you just scuttle the ship, sell off the scrap, everyone gets what they agreed and you move on with life. Messy windups are for amateurs.
As a result of this background, when (for example) Pope Callistus III talks (in funny sounding language) about the liquidation preferences of mortgage holders terminating in the property but not in personally guaranteed notes, he is speaking a language I understand.
Prior to the financial crisis I hadn’t really thought about usury, and therefore held to fairly conventional opinion to the extent I had any view at all. My perspective as a Catholic (without so much as a second thought) was a kind of naive and vague impression that times had changed and money had changed and that the doctrine probably only applied to things like loan sharking. In other words, I more or less trusted the “conservative” narrative, and was certainly not sympathetic to the “progressive” notion that basic doctrines can be tossed out while pretending to retain them.
Imagine my surprise, then, when I found myself in perfect agreement – as best as I can tell – with St. Thomas Aquinas, notorious hard-liner on the subject of usury. Imagine the sense of irony as the straw armies sent against him by generations of the confused and the intransigent fell, as it became clear that – contrary to what we may have been led to believe – the authoritative Magisterial pronouncements on the subject support his view, properly understood, and are not confusing or contradictory themselves. Imagine my surprise – I should not have been surprised – that the simple, elegant, deeply moral wisdom of the Church was right all along.
What follows was originally posted on my blog “Zippy Catholic” in the format of an FAQ (a list of Frequently Asked Questions and their answers). It retains this basic format and the informal, conversational, opinionated style typical of the kind of blogging I do. It is somewhat ad-hoc and redundant, reflecting its genesis and development in many live discussions. It contains some links to external sites (especially my own blog) but I’ve tried to incorporate all of the essential material into the ebook. I do not represent myself as an expert or authority: the references, arguments, and explanations should all be evaluated on their own merits, and it is entirely possible that some proclamation or other of which I am unaware could toss a grenade into my understanding and require rethinking the whole thing. I do believe I have this right, but I’m only human and the Magisterium might come out with something new tomorrow which contradicts the views and understanding expressed. I offer it here as my contribution to what is probably a long overdue discussion among Catholics; a discussion which actually takes usury seriously as a grave and execrable moral wrong, and its prohibition as something which has real implications for how we live as Christians – though perhaps not the implications that you, dear reader, have been led to expect.
Virginia, January 13, 2015
(NOTE: This preface was edited slightly for inclusion in the ebook).
December 11, 2014 § 1 Comment
I did a pretty significant update to the Usury FAQ based on recent discussions at several web sites, adding several questions, revising a few, and improving the format a bit.
And a number of updates on on 12/13 and 12/14. At this point any significant revisions/additions will probably be a result of additional feedback that comes in, rather than me adding things that I am aware of having been left out of the original draft. I think the FAQ has a pretty solid foundation now.
November 10, 2014 § 252 Comments
“Are we not ashamed to pay usury? Not contented within the limits of our own means, we do by giving pledges and entering into contracts, fabricate the yoke of our slavery.” – Plutarch
We exhort you not to listen to those who say that today the issue of usury is present in name only, since gain is almost always obtained from money given to another. How false is this opinion and how far removed from the truth! We can easily understand this if we consider that the nature of one contract differs from the nature of another. – Vix Pervenit
Understanding usury requires an understanding of how the nature of some contracts differs, fundamentally and categorically, from the nature of others. Usury is not a matter of the same kind of contract differing only by ‘excessive interest’. Usurious contracts constitute a kind of contract which is intrinsically immoral by its very nature. This FAQ is intended to help people understand what usury is – and is not – and answer many of the questions which naturally arise.
[Note: this FAQ is also available in the form of a public domain ebook. This online version has been updated with additional questions and revisions to existing questions since the publication of the ebook.]
- What is Usury?
- What is “lending”?
- Is usury always morally wrong?
- What if the interest rate is reasonable?
- What is the key difference between a mutuum and other contracts?
- What if the borrower is an institution like a government or corporation rather than an individual?
- I don’t get it. Why is charging interest on a loan always morally wrong?
- But economic value is relative, isn’t it? Isn’t value reducible to whatever people’s preferences happen to be?
- What if the loan is secured by collateral?
- Does collateral have to be physical?
- Aren’t lots of non-mutuum contracts unjust?
- Why would I ever lend someone money if I can’t charge interest?
- Didn’t the Church allow the Franciscans to collect “interest” above and beyond the principal on their mutuum loans to the poor? What about “extrinsic titles?”
- Hasn’t the Church approved charging interest to recover opportunity costs? What about the time value of money?
- Shouldn’t an investor be compensated for giving up the opportunity cost of investing his money in something else?
- Doesn’t the future labor of a worker constitute a ‘real asset’ against which a loan can be collateralized?
- Traditionalist scholastics claimed that you can’t sell time; progressive scholastics asserted that the worker’s wages are a counterexample. Weren’t the progressives right?
- Traditionalist scholastics claimed that you can’t sell risk; progressive scholastics asserted that an insurance bond is a counterexample. Weren’t the progressives right?
- Is a corporate bond usury?
- Is a car loan usury?
- Is a home loan usury?
- Are credit cards usury?
- Does this mean that I can’t take out a student loan without committing mortal sin?
- What is wrong with contracts between consenting adults?
- Aren’t all unproductive loans usury? Wasn’t Belloc right when he said that the distinction between usurious and non-usurious loans was that the latter are productive?
- Haven’t commerce and currency changed in such a way that usury is no longer much of a concern?
- Isn’t the government the biggest violator of them all?
- Who the heck are you to be lecturing us all on usury, anyway?
- I know that usury was traditionally considered an execrable mortal sin. But didn’t the Church change canon law and pastoral practice to remove the penalties and stigma associated with usury? Haven’t most Catholic theologians accepted that the world has moved on from the time when the prohibition of usury made sense?
- If the sovereign should decline to enforce usurious contracts, doesn’t it follow that the sovereign should decline to enforce any contract of exchange whatsoever which empowers one party to pursue a deficiency judgment against the other party personally, independent of any real assets posted as security?
- I really don’t get it. Why again do you say that fixed-income investments in (e.g.) corporations (corporate bonds) are not usury?
- In question 16 you say that the value of future labor is not a real asset which can be used as collateral on a for-profit loan. But wasn’t it relatively common before the modern era for people to be sold into slavery to pay off a debt?
- Doesn’t St. Paul tell slaves to obey their masters?
- Doesn’t the safe harbor of personal bankruptcy imply that modern loans are really non recourse?
- What if the mutuum loan is made in wheat, gold, or rental cars rather than fiat dollars?
- Wait, does this mean that if I lend out my car and the borrower destroys it, he doesn’t owe me anything?
- I see that the Magisterium and Aquinas have actually been clear that lack of explicit recourse to real assets is central to usury: that full-recourse lending for profit is what is defined as the moral problem. But why is that the case?
- But you’ve said that intangible or only partly tangible things like patents and operating businesses can be ‘objects’, and thus can be property. So how do I tell the difference between what can be ontologically real property and what can’t?
- But wait, can’t a full recourse creditor go after Bob’s estate when he dies?
- Doesn’t the Vatican Bank make full recourse loans?
- What about that Catholic Encyclopedia article, anyway?
- Why do you say that the 2008 financial crisis was founded in usury?
- Does this mean that ideally consumers should always pay cash for things like houses and cars?
- Suppose I am thinking about agreeing to a financial contract which will produce some interest or other profit for me – say by opening a bank account. How can I be sure that what I am about to do is not usury?
- Is it morally licit to charge interest on a full recourse loan just to cover inflation?
- What about futures contracts? Are they inherently usurious?
- What is the evidence against Aquinas and in favor of the modern view that a reasonable amount of profit on a simple mutuum loan is morally licit?
- What about the Fifth Lateran Council’s definition?
- Is it acceptable for a merchant to charge penalties for late payment?
- John Noonan and other scholars have stated that we can’t grasp the usury doctrine without getting into medieval just price theory. Yet you say that usury doctrine doesn’t depend upon any economic theory or theory of just pricing. Why do some scholars say that there is a dependence between usury doctrine and medieval theory of just price?
- Isn’t it usury or something related to usury when banks ‘create money’ in a system of fractional reserve lending?
- I’m still struggling with the whole ‘loan for consumption’ thing. Why is it that a personal guarantee of repayment is equivalent to a loan for consumption?
- Why doesn’t the mutuum borrower owe at least enough interest to compensate for inflation?
- Are you suggesting that simply preserving the economic buying power of some property is a kind of gain?
- If you make a mutuum loan to a friend in need, shouldn’t that friend try to keep you from losing any economic buying power in the process?
January 1, 2013 § 6 Comments
“Are we not ashamed to pay usury? Not contented within the limits of our own means, we do by giving pledges and entering into contracts, fabricate the yoke of our slavery.” – Plutarch
In applying the Simple Usury Test it becomes obvious that the critical distinction between usurious lending and non-usurious lending is collateral. If the loan is secured by specified tradable collateral and only that specified tradable collateral, with no further moral or legal obligation beyond surrender of that collateral on the part of the borrower to repay principal or interest, it is not usury. This naturally shifts the focus to what constitutes legitimate tradable collateral, and commenter Antonym points out that in the past the custom of selling onesself into slavery to pay off a debt was common practice. If it is not intrinsically immoral to sell onesself into slavery, even in the most desperate of circumstances, it seems to follow that no lending contracts are usury.
An economic libertine has no principled way to oppose the practice of selling onesself into slavery, because for an economic libertine the essence of the justice of a contract is mutual consent: if the contract is mutually consensual that is sufficient for it to be “permitted”, that is, enforced by the police, courts, bully pulpit and guns of the government. So it is perfectly natural for economic libertines to fail to see what is unjust about usury.
I would suggest (perhaps counterintuitively) that it is not intrinsically immoral to sell onesself into slavery in desperate circumstances; but at the same time, it is intrinsically immoral for a lender to take usury on a loan. The reason is because the person who commits the intrinsically unjust act is the one who purchases and takes possession of the chattel slave (whether from the enslaved himself or from someone else). In the case of usury the person who commits the intrinsically unjust act is the lender who takes usury on the loan, not the borrower who acts out of desperation. The act of the borrower is asymmetrical to the act of the lender, as the act of the victim is always asymmetrical to the act of the criminal.
Now, this is not a blanket permission slip to sell onesself into slavery nor to borrow from a usurer on a whim. It is merely a conclusion that neither action is intrinsically immoral, and therefore may be justifiable in some circumstances under some rubric of material cooperation with evil. The work involved in justifying a particular act of material cooperation with evil – or concluding that it is not justified – always depends on the particular circumstances.
St. Thomas Aquinas gives us his view of the matter (ST II-II, Q78, A4):
I answer that, It is by no means lawful to induce a man to sin, yet it is lawful to make use of another’s sin for a good end, since even God uses all sin for some good, since He draws some good from every evil as stated in the Enchiridion (xi). Hence when Publicola asked whether it were lawful to make use of an oath taken by a man swearing by false gods (which is a manifest sin, for he gives Divine honor to them) Augustine (Ep. xlvii) answered that he who uses, not for a bad but for a good purpose, the oath of a man that swears by false gods, is a party, not to his sin of swearing by demons, but to his good compact whereby he kept his word. If however he were to induce him to swear by false gods, he would sin.
Accordingly we must also answer to the question in point that it is by no means lawful to induce a man to lend under a condition of usury: yet it is lawful to borrow for usury from a man who is ready to do so and is a usurer by profession; provided the borrower have a good end in view, such as the relief of his own or another’s need. Thus too it is lawful for a man who has fallen among thieves to point out his property to them (which they sin in taking) in order to save his life, after the example of the ten men who said to Ismahel (Jeremiah 41:8): “Kill us not: for we have stores in the field.”
 Someone who purchases a slave in order to gain his freedom is clearly doing something categorically different, since the purchaser does not ‘take possession’ of the ‘slave’ in the pertinent sense.