July 11, 2017 § 15 Comments
John Noonan’s basic thesis is that Church doctrine prohibiting usury doesn’t categorically prohibit anything at all: that the doctrine boils down to the idea that charging interest is either licit or illicit depending on circumstances and subjective intentions extrinsic to the contract itself. The putative coup de grace in reaching this conclusion for Noonan is what is called the triple contract.
The triple contract is an agreement between two parties, but in order to understand it you have to first consider a contract between three parties: lets call them the investor, the managing partner, and the insurance provider.
The managing partner proposes (say) to undertake a risky but potentially very profitable sea voyage. The investor provides funds to finance the voyage in return for a fixed profit. The insurance provider, for a fee, provides security to the investor: a guarantee that the investor will receive his money back and a fixed profit, even if the voyage fails.
In the triple contract the managing partner is also the insurance provider, and he imputes his fee as the insurance provider to himself. In effect he agrees to provide an insurance bond as an inducement to get the investor to invest, and then underwrites the insurance bond himself.
As with most attempts to turn the moral prohibition of usury into a decorative accessory which doesn’t actually prohibit any well defined objective behaviors, the part you aren’t supposed to notice is the whole matter of security for contracts. In this case the fact that insurance bonds (understood equivocally) were accepted as morally licit is supposed to make Noonan’s readers fail to notice the difference between actual property staked as security and a personal IOU.
A personal guarantee is not a licit “insurance bond”. Rent charged against a collection of property, set aside and held in escrow as a contingency if things don’t go according to plans, is licit.
Of course, if you game the scenario forward this raises the question of why a managing partner with the resources to fully insure the investor and his profit would bother with an investor in the first place. But it might make sense if, say, the managing partner had illiquid property like farms or estates to post as security: property he doesn’t want to sell unless the enterprise fails.
So if you encounter the triple contract as something supposedly problemmatic when you are reading about usury, you can rest assured that it is a nothingburger. The sleight of hand involved rests on all of the usual equivocations.
 Note that in insurance underwriting it is not typically the case for an insurance bond to cover even 100% of the possible loss, let alone the entire loss plus a profit, because of the perverse incentives this creates to destroy economic value.
June 23, 2017 § 10 Comments
“But let your speech be yea, yea: no, no: and that which is over and above these, is of evil.” – Matthew 5:37
“Fungible” means interchangeable for use: one cup of sugar is fungible with another (assuming similar enough qualities) because when we put that sugar to use, we are indifferent as to which particular cup of similar-quality sugar we use.
“Recourse” (or “full recourse“) means that when some property is transferred into an individual’s (or group’s) possession, that individual (or group) personally guarantees to return, not the actual property, but some property with equivalent use. In short, recourse means that what secures contractual performance is a personal guarantee to restore the equivalent of what was borrowed.
Once one grasps that in a mutuum loan “fungible thing” means “treated as fungible by the contract”, fungible thing and recourse become convertible into each other. Fungible and recourse are fungible contract terms, if that isn’t too confusing a way to put it.
Now the security on a contract is whatever it is that secures the contractual performance of the contracting parties: whatever it is that ensures that the contracting parties each hold up their end of the bargain.
If a contract intended to produce profits is to be morally licit, the thing(s) which secure the contract cannot be treated as fungible (alienable) by the contract. The collateral which secures a bank loan may not (as per the contract) be sold until the loan is fully discharged, because once the collateral has been sold by the borrower it can no longer act as security on the loan.
If the agreement is that certain property bound to the contract may be consumed or alienated without discharging the borrower’s obligation to repay, that specific property cannot act as what ultimately secures contractual performance. A complex contract (a societas or census) may include other property which acts as security; but property which the contract treats as fungible cannot act as security.
A recourse contract – even if it also includes collateral as partial security – is ultimately secured by a mere personal guarantee or IOU. If the collateral is completely consumed or alienated the borrower remains personally obligated to repay the loan in full; so the collateral on any recourse loan is treated by the contract as fungible in the pertinent sense.
This is reflected in Pius V’s words in Cum Onus where he insists that any licit census contract must be secured by “a fixed immobile good”: by some property which the contract does not treat as fungible/alienable from the borrower or managing partner.
A non recourse contract is a contract which by definition does not involve making promises which the parties may not be able to keep. And a recourse contract by definition involves the parties making promises they most certainly might not be able to keep. This in my view is why St. Francis Xavier admonishes confessors to:
Ask [penitents] 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, …’
And this is yet another way, in addition to all the prior ways discussed, in which we might intuit the wickedness of usury: it involves profiting by deliberately insisting that borrowers make promises which they may not be able to keep.
June 19, 2017 § 13 Comments
Discussing usury in a previous post, Wood asks:
Why are we so susceptible to this particular sin, or at least why did the Enemy choose to attack here? Why do we “want” to be so blind here?
The idea that wealth can be conjured out of nothing, that we can create wealth ex nihilo, is very alluring. Look at the appeal of lotteries, “who wants to be a millionaire” game shows, and other kinds of gambling. Wealth is even more appealing than sex: in fact most people assume that wealth is fungible with sex, and other things besides. So wealth is better than sex. Wealth is a superset of sex: greed consumes lust.
Usury creates the illusion that wealth can be conjured ex nihilo by making an incantation, by speaking a magic spell: the personal IOU. Usury empowers us to speak into the void and say “let there be money!”; and there was money, and also sex, because those with money get sex as a concomitant.
June 15, 2017 § 36 Comments
Denzinger, for those who don’t know, is a compendium of Catholic doctrines which is used to teach seminarians. What is notable about it is that it isn’t a catechism or commentary: it is a collection of actual authoritative magisterial statements on a wide range of moral and theological subjects, originally commissioned by Pope Pius IX. The content of Denzinger is actual epistemically authoritative pronouncements of the teaching Magisterium collected over the millennia, as opposed to some person’s explanation of “what the Church teaches”.
One of the things that struck me when I bought my first copy of Denzinger was how small it is, as a collection of the explicit authoritative communal beliefs of a millennia old institution with a global footprint: as the collected actual resolutions drawn from two thousand years of disputation and controversy. No one can hold the dimunitive single volume in his hands, and then witness the glory of medieval cathedrals and universities, without concluding that the production of true propositions on paper is not the primary activity of the Church.
Another unmistakable impression was that when you read someone’s commentary represented as “what the Church teaches,” what is most remarkable is how much of that commentary represents the imported and unexamined metaphysical baggage of the author.
But you don’t have to trust my impressions. You can form your own by carrying a copy of Denzinger into St. Mary Major in Rome or one of a thousand other churches and cathedrals.
June 14, 2017 § 36 Comments
Doctrine is to pastoral practice as [fill in the blank] is to farming.
I’ll start: “mathematics”.
June 12, 2017 § 34 Comments
The distinction between recourse contracts and nonrecourse contracts as central to understanding usury – the conclusion that personal loans charging any profit whatsoever are usurious, whereas corporate bonds are not usurious – is obviously something I just pulled out of that wacky traditionalist tinfoil hat I was insanely doffing to the King.
Or maybe not.
We do in this our perpetual decree, reprobate and condemn all contracts, pacts, and conventions whatever, to be celebrated in the future, whereby it will be provided on the part of persons putting into company money, animals, or any other things whatever, that if, even by mere accidence, any injury, loss, or damage, follow, the very principal, or capital be always safe and restored [fully by] the managing partner … Fellowships of this nature … are to be entered into honestly, sincerely and with good faith, with fair and just conditions, … so that the managing partner be not [personally] obligated to pay as gain a certain sum, or quantity, free, as aforesaid, from all risk or danger; nor to restore the capital, if, by any casualty, it should perish. But if the capital, at the dissolution of the partnership, be extant, let it be restored to him, who had contributed it to the company, unless it is to be shared with the manager, or otherwise distributed, according to law, between the contractors. …
— Pope Sixtus V, Detestabilis avarita ingluvies, 1586, cited in Usury, Funds, and Banks by Rev. Jeremiah O’Callaghan, 1834
Emphasis and [annotation] mine.
And of course it is sheer coincidence that the medieval Popes who were clearest in their condemnation of abortion, contraception, and the like are the very same popes who were clear in their condemnation of usury.
June 5, 2017 § 80 Comments
The pope is primarily a sovereign, that is, a flesh and blood man born of ordinary human parents who possesses supreme authority over the Church. He is the Vicar of Christ: a human representative of Christ who is – Christ is – absolutely and supremely sovereign.
Human beings really don’t like to serve their masters in general, and they especially don’t like to feel obligated to obey other flesh and blood human beings. Unlike God human beings are messy, smelly, fleshy, hairy, blood-and-bone animals with limited intellects, voracious appetites, narrow perspectives, egos well out of proportion to their ant-like personal significance in the scheme of things, mountainous lasagna layers of prejudice about matters they don’t understand, and prodigious helpings of vice. Who would want to be actually morally obligated to obey such a creature?
Atheists avoid the problem entirely by anointing themselves supreme intellect, but alas, this option isn’t available to believers. Protestants resolve the issue by appointing themselves Popes of their own personal Churches, projecting their own opinions onto pages of infinitely plastic interpretable text.
And one pervasive way for Catholics to be rid of this terrible and humiliating sense of obligation to obey a smelly beast with an oversized brain is to confound authority with degrees of epistemic certainty. After all, once we acquire knowledge of good and evil won’t we ourselves be like God?
So we are to obey Father because “Father knows best”, not because he is Father. If we knew better than Father our obligation to obey him would disappear. Father doesn’t actually have authority; he just happens to be in an epistemically superior position through accident of history, at least for the time being. Sovereignty is justified by the sovereign’s superior knowledge: by his capacity to infallibly declare doctrine, not by something so humiliating to us as actual possession of real authority. It is to this transcendent knowledge that we give assent, not to the flesh and blood king. And the tree of the knowledge of good and evil is always there to set us free.
Popes almost never make infallible proclamations of doctrine though. The primary concomitant to the doctrine of infallibility is that almost nothing that a Pope says or does is an expression of epistemic certainty. His power qua Pope resides almost entirely in his real capacity to bind us to obedience in certain matters in the juridical domain of day to day Church rule — whatever we may think of, and whatever may be the objective wisdom or folly in, his decrees.
Institutionally of course there is real content to the Deposit of the Faith, and over the millennia this content has clarified and developed. Individual Popes and Councils have certainly made contributions here and there; though at least one Council is claimed, by the very Popes who called and ratified it, to have been purely pastoral: that is, to have defined no doctrines or dogmas at all. “Pastoral” refers to the day to day life and actions of the Church as explicitly distinct from defending doctrine, that is, it refers to most of what the Church actually does as an authoritative living hierarchical institution headed by a flesh and blood monarch.
But the accumulated institutional body of knowledge at Ford is distinct from the authority of its CEO. The thing about Daddy is that on the sparse occasions when he actually tells you what to do you’d bloody well better do it, unless you have compelling contrary reasons and are willing to face the consequences of disobedience.
And the thing about individuals and whole societies with Daddy issues is that they usually don’t really want an actual Daddy. What they want is a flesh puppet with Daddy’s knowledge, competence, and authority to use his voice to speak their opinions and make them feel better about themselves.