The Spanish Scholastics & Economics

[Geremia]

[yt]http://www.youtube.com/watch?v=u_j04HaR9Ak[/yt]
(source)

[james03]

Just checked this out.  Thanks for posting, it is a great talk.  Explains how Catholicism contrasts with various errors of Adam Smith and ends up with Austrian economics.  de Soto is a great Catholic.

de Soto is a sick dude in a cool way.  He was curious why Latin America and other fever swamps were stuck in decay.  He went to a few countries and followed exactly the government requirements to do a few sample tasks, like forming a company and selling land.  He calculated in some cases it would take 3 years to do.  In a few cases it was impossible to do if you followed the law.  He wrote up his findings in "The Mystery of Capital".

[Geremia]

Check out this freely-available 906 page e-book:

Huerta de Soto, Jesús, and Melinda A Stroup. Money, bank credit, and economic cycles. Auburn, Ala.: Ludwig von Mises Institute, 2002.

[Geremia]

• Huerta de Soto, Jesús. "Biography of Juan de Mariana: The Influence of the Spanish Scholastics (1536-1624)." Article. Mises Institute (blog), August 1, 2007:

the Jesuit Cardinal Juan de Lugo, wondering what the price of equilibrium was, as early as 1643 reached the conclusion that the equilibrium depended on such a large number of specific circumstances that only God was able to know it ("Pretium iustum mathematicum licet soli Deo notum").⁹ Another Jesuit, Juan de Salas, referring to the possibilities of knowing specific market information, reached the very Hayekian conclusion that it was so complex that "quas exacte comprehendere et ponderare Dei est non hominum" (only God, not men, can understand it exactly).<sup>10
9. Juan de Lugo (1583 1660), Disputationes de iustitia et iure (Lyon, 1642), vol. 2, d. 26, s. 4, n. 40, p. 312.
10. Juan de Salas, Commentarii in secundam secundae D. Thomae de contractibus (Lyon, 1617), vol. 4, no. 6, p. 9.</sup>

[Geremia]

• Huerta de Soto, Jesús. "Biography of Juan de Mariana: The Influence of the Spanish Scholastics (1536-1624)." Article. Mises Institute (blog), August 1, 2007:

the Spanish scholastics were the first ones to introduce the dynamic concept of competition (in Latin concurrentium), which is best understood as a process of rivalry among entrepreneurs. For instance, Jeronimo Castillo de Bovadilla (1547 ?) wrote that "prices will go down as a result of the abundance, rivalry (emulacion), and competition (concurrencia) among the sellers."

[Heinrich]

I am 4 minutes into this. Is Economics treated here as a material science or a moral science? Austrian Economics is a fat, patient fox in a henhouse, lending time at interest to self satiate and get fatter. Human behavior, when reduced to primal behaviors, does not affect towards positive Grace. The Spanish Scholastics are being hijacked in order to sell the "free market" side of binary materialism. That the 20th Century was so tumultuous belies the JQ qua emancipation by Napolean. Full comment when finished with video.

[Geremia]

Is Economics treated here as a material science or a moral science?

What do you mean by "material science"?

[james03]

The Spanish Scholastics are being hijacked in order to sell the "free market" side of binary materialism.

They developed the basis of Austrian Economics 300-400 years before it existed.

Is Economics treated here as a material science or a moral science?

Agnostic behavioral science.  One of the key books is "Human Action", which should tip you off.  Also this quote:

Another Jesuit, Juan de Salas, referring to the possibilities of knowing specific market information, reached the very Hayekian conclusion that it was so complex that "quas exacte comprehendere et ponderare Dei est non hominum" (only God, not men, can understand it exactly).

Basically it is a protest against the Keynesians on one hand, who think an omniscient State can manipulate the economy to "optimize" it on one hand, and the monetarists who propose using an omniscient Central Bank to "optimize" interest rates.  The Austrian School states that economies are simply a reflection of billions of human actions, therefore trying to "adjust" it is absurd.

On economics, they are quite correct.  Since they are agnostic anarcho-capitalists for the most part, their APPLICATION of their correct understanding of economics is problematic in certain areas.  So for example an Austrian will point out that Free Trade will result in the most optimal economic system.  They are correct.  We can look at the example of China.  Using grab numbers, free trade lifted 200 million Chinese out of poverty, and put 10 million Americans in poverty.  So all-in-all the economic system was more optimal under free trade.  I think you can see the problem.  I'm an American.  I don't care about the Chinese.  I care about the 10 million Americans.  Therefore I oppose Free Trade and support flat tariff and abolishing corporate income taxes on domestic companies.  The revenue lost would be compensated by the tariff income.  So a US company would have the advantage of the tariff and the advantage of not paying corporate income tax.  It's not hard to figure out the effect on good paying jobs in the US.

The current system of Free Trade will result in the US being reduced to a raw material supplier, especially ag, though the Chinese will own the farms and ranches.  It's akin to comparing the coco bean harvester in Togo working on a plantation owned by foreigners, to the Swiss Chocolatier making candy in Switzerland.  The difference is that the capital in Togo is owned by the foreigner, and it is located in Switzerland at the candy plant.  Capital formation and capital accumulation are the key to wealth.

Which gets us back to de Soto who did a deep dive in crap countries on why they can't seem to leave their crap economies behind. 

[Heinrich]

The Jesuits were founded mid 16th Century. When was Austrian Economics codified as the supposed gold standard of informing and delineating the optimal "truth" of human consumption? An economic system whose ethos is Cartesian and Newtonian will ensure, as your Chinese example highlights, that the powerful will exploit and devour the weak. Darwinism. If we can't agree what Economics should be, then there is no point discussing anything here. I'm pretty sure the Jesuits weren't considering usury. Does the JEW School of Economics condemn this practice?

[james03]

When was Austrian Economics codified

Late 19th century / early 20th

as the supposed gold standard of informing and delineating the optimal "truth" of human consumption?

Austrians are more focused on production.

I'm pretty sure the Jesuits weren't considering usury. Does the JEW School of Economics condemn this practice?

None of the major schools of economics, except the Jamesian School, discusses usury.  If I were to force rank them in terms of supporting usury, I'd go with this:

Keynesian > Monetarist > Austrians

Keynesians consider usury a good thing, relying on government usury to "adjust" the economy.
Monetarist take usury as a given.
Austrians oppose government usury.  But they don't deal with usury qua usury.  I suspect they have no problems with usury among private parties.

I'll provide the Jamesian School treatment of usury in a separate post.

[james03]

Jamesian School Analysis of Usury

You must start with two fundamental ideas on usury presented by the Church:

1.  Usury is charging for the use of money.

2.  Money is sterile and can produce nothing.

These ideas are fundamental.

I have one problem with the standard Catholic MORAL analysis of usury, and that is in identifying it as an offense against Justice.  An example is the best way to explain.

Suppose a young adult lad is talking to you about starting a landscaping business.  There's one problem, he needs $10,000 to purchase a used truck and trailer.  Knowing that he is an honest man and a hard worker, you tell him: "Go ahead and get started.  When the times comes, I'll give you the money to buy the truck."  So he goes out and buys various pieces of equipment: mowers, weed wackers, trimmers, etc... and comes to you for the truck money.  You say, "I've realized that I get nothing in return for the money, so as not to offend Justice, I've changed my mind and won't give you the money.".  The obvious reply is to point out you are actually offending justice because you gave your word.  And that's a big problem, because you have defeated your moral argument against usury in that usury involves signed contracts.  Now AFTER you established that usury is morally reprehensible (and an economic nightmare, but I digress), THEN you can apply arguments from justice.  However it is not the basis of condemnation as it devolves into circular reasoning and and reduces to a tautology:  Engaging is usury is unjust because usury is unjust.

So what is the proper moral argument against usury?  If you go back and review the two fundamental concepts above, you'll smack yourself in the head when I give you the answer, because the answer is right there.

Usury offends the Cardinal Virtue of Prudence.  What is you "interest" in an economic activity which produces nothing?  Apply any interest rate and the answer is always the same: precisely zero.  Therefore charging usury is immoral.

Usury is the second worst economic evil.  As you can see how rapid inflation set in after the COVID money printing, inflation has to be the worst.  It also curb stomps poor people.  But usury is really bad regardless; it just takes longer to set in.

What would happen in the US if you could Thanos snap and all government debt was set to zero, and all credit card debt was set to zero, with the holders of that debt ending up holding interest in a dividend stock ETF that paid the same?  And where in the future government debt and credit cards were outlawed?  And where it was the law of the land that all investments were required to be made in only economic activity that at least on paper required a return.  Obvious we would have massive real growth in productivity and it wouldn't be surprising to see average standard of living triple.

For a detailed discussion, purchase "The Economics of Catholic Subsidiarity" available on Amazon for an embarrassingly low price.  Makes a great Christmas stocking stuffer for your wife.  She'll proudly show off the book to all of her gal pals, "Look what MY husband gave to me!".