Morally ruled behaviour: The neglected contribution of Scholasticism *

*Oscar de Juan is a Professor of Economics at the University of Castilla – La Mancha (Spain). In the course 2003 – 04, when this paper was written, he was a visiting scholar at the University of Cambridge (UK). Fabio Monsalve is an Associated Professor of Applied Economics at the University de Castilla – La Mancha. The authors are indebted to Francisco Gómez Camacho and José Antonio García-Durán, who provided the stimulus for this paper and some basic hints. Thanks are also due to Tony Lawson, Paul Twomey and other members of the ‘Cambridge Seminar on Realist Economics’, where the paper was first presented. The comments of two anonymous referees have contributed to improve the paper.

Abstract

In the analysis of ‘justice’ in market exchanges, the scholastic doctors made some contributions to the theories of prices and money. But probably the most important (and neglected) contribution lies in the domain of anthropology, i.e. in the explanation of human nature and human behaviour. In this paper the authors are going to work out two scholastic ideas that provide an alternative to the individualist and utilitarian approach of neoclassical economics. (1) Persons are morally ruled beings; a sense of ‘duty’ is a key element in their behaviour; (2) Persons are social beings competing and cooperating to achieve certain goals. Dominant positions and privileged information grant them special powers that should not be abused.

Keywords:

• History of economic thought
• ethics and justice
• dominant position
• asymmetrical information

Notes

*Oscar de Juan is a Professor of Economics at the University of Castilla – La Mancha (Spain). In the course 2003 – 04, when this paper was written, he was a visiting scholar at the University of Cambridge (UK). Fabio Monsalve is an Associated Professor of Applied Economics at the University de Castilla – La Mancha. The authors are indebted to Francisco Gómez Camacho and José Antonio García-Durán, who provided the stimulus for this paper and some basic hints. Thanks are also due to Tony Lawson, Paul Twomey and other members of the ‘Cambridge Seminar on Realist Economics’, where the paper was first presented. The comments of two anonymous referees have contributed to improve the paper.

1 Dempsey 1948, Schumpeter 1954, Roover 1971, Grice-Hutchison 1993, Lapidus, 1994.

2 St Augustine and St Thomas Aquinas continue to be the most quoted authors in the Catechism of the Catholic Church.

3 In Aquinas's vision of the universe, natural law is inserted in a hierarchy of laws. ‘First in order they place the eternal law or lex aeterna by which God himself acts. Next comes the divine law or lex divina which God reveals directly to men in the scriptures, and on which the Church is founded. Next comes the law of nature or lex naturalis (sometimes called the ius naturale) which God ‘implants’ in men in order that they should be able to understand his designs and intentions for the world. And finally comes the positive human law, variously described as lex humana, lex civilis or ius positivum, which men ordain and enact for themselves in order to govern the commonwealths they set up’ (Skinner 1978, vol. II: 148).

4 The ‘just price’ was not envisaged as a definite number but as a ‘bounded region’ with an upper and lower limit.

5 St Albert the Great related the ‘just price’ to the cost of production. The majority of scholastic doctors, on the contrary, linked prices to personal utility and other subjective factors. They were right in criticizing St Albert because an objective theory of value was not possible in an economy where each producer had its own technology and costs; and where most market transactions consisted in non-produced goods.

6 Contrary to ordinary commodities, the ‘just price’ for money loans was not a ‘bounded region’ but a concrete number: zero. A positive interest rate was considered ‘usure’ or ‘robbery’, because the lender was not selling anything. Lessius and Lugo extended the number of ‘extrinsic titles’ that could justify interest payments in an age where an increased proportion of credits was demanded by merchants and producers. From the moment that money was considered ‘capital’, the foregone gain (lucrum cessans) and the actual losses (damnum emergens) became valid justifications. ‘Gratitude’ was another one.

7 The topics to be considered are so diverse and well known that bibliographical references seem unnecessary. The reader can find them in The New Palgrave (Eatwell et al., 1987). Field (2004) does consider a greater array of examples, although he is interesting in highlighting the altruistic component of human behaviour, while for us altruism is just one manifestation of morally ruled behaviour.

8 The sublimation of individual preferences is not a realistic approach to economics and may be politically dangerous: minority groups could be crashed by the majority. Fortunately, this is more often the exception than the rule in democratic societies. The explanation lies, probably, in the fact that many people accept the prevalence of moral principles over material interests. They consider it unfair to take advantage of minorities and they are willing to sign a chart of human rights that restricts their own powers. Rawls's (1971) Theory of Justice explains how individuals are able to produce a ‘just constitution’. If they do not know the position they are going to occupy in the society (if they are covered by the ‘veil of ignorance’), they can more easily agree on reasonable and fair principles. This conclusion reminds us of the scholastic trust on ratio recta, which is able to discover the ‘just precepts’ of natural law.

9 The example was suggested to us by J.A. García-Durán (University of Barcelona). Written references to similar experiments can be found in Frank et al. (1993).