The online edition of Crisis
magazine recently (December 8, 2014) had an article on the perennial problem of
usury, “Did the
[Catholic] Church Change Its Doctrine on Usury?“ Although it might seem like re-plowing old
ground, we thought we’d weigh in again with a few brief thoughts.
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| Pope Benedict XIV |
The article struck us as unnecessarily complex. Usury can be stated very simply: taking a profit
where no profit is due. Pope Benedict
XIV explained this in his encyclical Vix
Pervenit in 1746, “On Usury and Other Dishonest Profit.”
The right to a pro
rata share of the profits of a joint endeavor is a right of private
property, one of the limited and socially determined bundle of rights that
define how an owner may exercise that inalienable and absolute right to be an
owner that inheres in every single human being by nature. When someone lends existing savings for a
productive or capital project, he is entitled to a share of the profits, just
as he risks a share of the losses.
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| 15th Century Usurer |
When new money is created for a productive or capital
project, e.g., by discounting or
rediscounting bills of exchange (whether merchants, trade, or bankers
acceptances), no interest (profit sharing) is due. The acceptor, however, is due a fee for
creating money to compensate for services rendered and for assuming risk. This fee comes out of the discount, often
misconstrued as an interest rate.
Recent (i.e., the
last couple of centuries) confusion over usury in Catholic circles can be
traced to two sources: 1) the prevalence of Keynesian economics, which relies
on usurious government manipulation of the currency in an often unsuccessful effort
to impose desired results. 2) John
Thomas Noonan, Jr.s’s analysis that distorted the non-objective evil of
government borrowing allowed under the principle of double effect into approval
in his book The Scholastic Analysis of
Usury (Cambridge, Massachusetts: Harvard University Press, 1957).
Problems with Keynesian economics from a natural law
perspective have been addressed many times on this blog. It is unnecessary to go over them yet again —
at least for now. Noonan, however, is
another story.
Catholics almost always cite Noonan in studies of
usury. Noonan’s approach is similar to the
methods employed by Msgr. John A. Ryan in the early twentieth century to
distort understanding of the natural law, and thus Catholic social teaching as
a whole, although there does not appear to be any direct connection. (Vide
John A. Ryan, A Living Wage. New
York: Grosset and Dunlap, Publishers, 1906; Distributive
Justice. New York: Macmillan and
Company, 1916.)
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| A lasting, global problem. |
The method is a curious mix of idealism, exemplified by
Immanuel Kant in his philosophy, and positivism, epitomized by David Hume — a
combination that G.K. Chesterton described as a sort of Manichean mutability
(G.K. Chesterton, Saint Thomas Aquinas:
The “Dumb Ox”. New York: Image
Books, 1956, 106). This, in somewhat
diluted form, is popularly known as “Cafeteria Catholicism.”
The problem is that, in order to retain one’s faith-based opinion
in the face of reason and objective knowledge (logical argument and empirical
evidence), one is forced to edit or alter facts to avoid the consequences of
being wrong. As Mortimer J. Adler
described the results of this confusion between knowledge and opinion,
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| Paul VI and Mortimer Adler |
“The positivism or scientism that has its roots in Hume’s
philosophical mistakes, and the idealism and critical constraints that have
their roots in Kant’s philosophical mistakes, generate many embarrassing
consequences that have plagued modern thought since their day. In almost every case, the trouble has
consisted in the fact that later thinkers tried to avoid the consequences
without correcting errors or mistakes that generated them.” (Mortimer J. Adler, Ten Philosophical Mistakes.
New York: Macmillan and Co., 1985, 100)
Thus, Noonan also distorted and misstated the Catholic Church’s
teaching on slavery (vide Rev. Joel
S. Panzer, The Popes and Slavery. New York: Alba House, 1996) and contraception
(John T. Noonan, Jr., Contraception: A
History of Its Treatment by the Catholic Theologians and Canonists, Enlarged
Edition. Cambridge, Massachusetts:
Belknap Press, 1986). He thereby
advanced modernism, the religious equivalent of the legal positivism that has
infected civil society.
For an in-depth treatment of the positivist theory of the
“living constitution” that has wrought havoc in U.S. law, resulting in such
decisions as Roe v. Wade and Citizens United v. the FEC, see William
Crosskey, Politics and the Constitution
in the History of the United States (1953).
For an overview of positivism in general, see Mortimer Adler, Ten Philosophical Mistakes (1985), especially
the chapter on “Knowledge and Opinion” with the analysis of David Hume’s philosophical
errors.
For a non-usurious reform of the tax and monetary system,
see the book Capital Homesteading for Every Citizen
(2004).
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