Economic views of St.Thomas Aquinas (1225-1274 ad)
St. Thomas Aquinas was the most renowned ‘scholastic philosopher’. He can rightly be called as the prince of scholastics. St. Thomas Aquinas economic ideas were found in his famous book, namely, ‘Summa Theologica’. This book is a complete and authoritative work on medieval economic thought. Regarding his education, he carried out his early education in ‘Benedictine Monastery’ of Monte Casino. He continued his university education in the University of Naples. Later, he went to Paris and Cologne for completing his educational career. He was a disciple of Albert, the Great. He became professor of theology and philosophy. He received his doctoral degree in 1257 AD from Sor Borne University. He wrote many books numbering 60. The ideas of St.Thomas were influenced by the Bible, Canonists and Aristotle. His economic ideas include the institution of private property, usury, and just price. On many an occasion, St.Thomas more or less repeats the views of Aristotle. He had a distinct tendency to reconcile theological dogma with the existing conditions of economic life. Most of his economic ideas are centered on religious and moral issues.
Definition of scholasticism
Scholasticism refers to a system of thought which combines the teachings of the Bible, the Church and the views of Aristotle. It is considered as a happy and ingenuous association. In this blended union, we find only theological teachings and rules of conduct of the Church and their application to the concurrent situation. No one could find something related economic phenomenon. Therefore, St. Thomas Aquinas was a famous scholastic or schoolman of the medieval period. He tried to attempt unification of medieval thinking process with the help of his ideas under the influence of the Bible, the Church and Aristotle.
On private property
St. Thomas Aquinas did not uphold the exclusive and unrestricted rights on property as stipulated by Roman law. In this context, he adopted Aristotle’s line of thinking. In this context, he mentioned Aristotle’s two aspects of property, namely, firstly, the power of acquisition and administration, and secondly, the mode of its use. The former confers rights on the individual and the latter put an obligation upon the individual in the interests of the community. Therefore, he stated that it is not the institution but the manner of using it determined whether it was good or evil. Suppose the property is used by an individual for the benefit of the community, it is considered as good, and if it is used for self, it is an evil. What is that mattered is the conduct on this earth which is to be judged in the light of ultimate salvation. St Thomas believes that the institution of property is in accord with the law of nature. He did not regard that wealth was natural or good in itself because it was subject to inevitability of imperfections of mortal world. Hence, he suggested that wealth should be made as good. This implies that property has to be used for the benefit of fellow citizens. Then such property can be regarded as natural or good. In essence, like Aristotle, St.Thomas Aquinas suggested that “property should be private in possession, but common in use”.
While advocating the restriction of rights over property, St. Thomas Aquinas justified theft by the needy. According to him, theft is permissible in the case of extreme necessity. He advocates the giving of alms, but it does not endanger the giver’s or his family’s status in society. The giver should not be made to live below his status in the society. Therefore, he was well aware of the implications of status in the medieval society, while advocating charity to the needy.
St. Thomas Aquinas follows the line of thinking of Canonists regarding his views on trade. Following Aristotle, he regards trade as unnatural. But this evil was inevitable due to the imperfections in the world. Therefore, trade could be justified only when it attempted to satisfy the needs of his household and when the object of trade was good of the society. He justified trade if it was done therefore as a service to the public by providing goods. St. Thomas also justified a measure of profit on the grounds of support, charity or public service. The profit received was nothing but the reward for labour.
On Just Price
There was another justification given by St. Thomas for trade. This was whether the exchange was just. This can be understood with reference to ‘just price’. While exchanging goods, their exchange value must be justified. There should be an element of justice in the transaction. No party should be at loss of value. The value of what is given and that of what is received must be the same. This is referred to as ‘just price’. It was indirectly referred by Aristotle while explaining the concept of ‘exchange value’. Early Christian Fathers also, though they were against trade, stipulated the principle of just price. According to them, that price was objective and inherent in the values of goods in exchange. Any deviation from this objective price was an infringement of moral code of conduct. This price was determined by the cost of production which includes labour. According to Aristotle, goods containing the same amount of labour and expense should be exchanged. While estimating the cost of labour, the social status of the labourer was to be taken into account. Therefore, in order to estimate the cost of labour, they had fixed rules regarding the standard of living for each status. St.Thomas also has in mind a vague cost of production theory of to exchange value. The cost of production is determined by the principle of justice. So it has an ethical character. The concept of just price connotes value and usefulness of a good. The value thus fixed was not necessarily the price which prevailed in the market. It was just and was to be determined by law. It may be remembered that during the medieval ages there was, therefore, price regulation. This regulated price was the just price.
During the medieval period, the markets in the towns and cities were not adequately integrated and as a result there was no free play of supply was permitted oscillations round the ‘just price’ according to some market fluctuations. He also justified taking of a higher price where the seller would otherwise likely to incur loss. Also, he held that a seller can lawfully charge higher, “either because he has improved the article in some respect, or because the price of the article has been changed on account of the danger to which he exposes himself in transferring the article from place to place or in causing it to be transferred”. Therefore, students are required to understand the distinction between ‘just price’ and ‘market price’.
St.Thomas Aquinas adopted the line of thinking of Aristotle and the Bible regarding usury. The teachings of Christ and Gospels unmistakably condemned the receipt of interest on lending. In the words of Jesus, “lend freely hoping nothing thereby”. To them, enriching through lending of money at interest was regarded as the very worst form of the pursuit of gain. The Hebrews had also done the same. With the growth of money economy and with the expanding opportunities for profitable investment of money the concept of usury has underwent gradual change in the thinking process. The development of trade and commerce and opportunities for monetary transactions in the latter medieval period, two tendencies were fast developing, first increasing justification for lending of money on interest, and secondly, the Church became more strict and loud in its general condemnation of taking interest.
St. Thomas Aquinas based his doctrine against usury as much if not more on Aristotle’s argument as on Scripture. Aristotle condemned usury because he regarded money as barren. To develop his argument he made use of Roman law. Under the law, goods were of two kinds – consumptibles and non-consumptibles or ‘fungibles’. The former goods are those which are consumed in use and the latter goods are those which are not consumed in use. He and Canonists put money in the first category and concluded that “to demand interest in addition to the return of the loan was to seek an unnatural and unjust gain” (Eric Roll). St. Thomas Aquinas allowed certain exceptions to this rule. St. Thomas opined that under certain circumstances interest could be charged on loans given. Firstly, where a lender was suffering a loss by means of a delay in the repayment, then the lender was entitled to exact a penalty as compensation. The Church opined that there was a bonafide loss on the part of lender due to the genuine delay. The arguments opened the doors to the charging of interest. Secondly, where a person has lost the chance of getting a gain via lending money, there was a justification for receiving interest. Thirdly, if a lender suffered any damage because of having parted with his funds, he could charge interest. Lastly, if there was any risk involved, interest could be charged. Some of the thinkers of the medieval period went so far to say that a merchant who borrowed money might justly be expected to pay 5 percent rate of interest. After the close of the medieval period, the Scholastic doctrine gradually approved of interest on loans.
On division of labour
St.Thomas Aquinas agreed with Aristotle regarding the division of labour. The Schoolmen did not agree with the ignobility of certain forms of labour unlike Greeks. Any type of labour was considered as noble. But the condition is that labour must lead to some kind of service to the citizens. The Schoolmen laid great emphasis on the use of anything, including labour, which is then regarded as natural and desirable. But to Greeks, only agriculture labour was natural and therefore productive.
On economic functions of the state
The medieval state was likened to a private economy. The office of the state was regarded as private property. This was the case particularly in 12th and 13th centuries. The head of the state received its income from estates under its jurisdiction, properties of resident foreigners, royalty on land sales, rights over purchase of lands, rights of purveyance, properties of diseased persons, national treasures and from the ruler’s inherited rights of property. Almost the tax system was absent. The functions of the state included maintenance of population, provision to the poor, the establishment of safe and free roads, of weights and measures, and special coinage. The establishment of an exact and unchanging system of coinage was the most important duty of the ruler. St.Thomas Aquinas opined that by money the king could buy food for his people in times of war. Also, the king had the power to control and regulate the monetary system and to make laws for the prevention of counterfeiting of coins. This power enabled the king to stabilize the prices.
The medieval rulers were mostly inefficient administrators and lacked human touch. Also, the working of the legislative measures taken up was not up to the mark. The administrative machinery used to be highly corruptive.