For the fourteenth century we choose Buridanus and Oresmius as representatives. The latter’s treatise on money is usually described as the first treatise entirely devoted to an economic problem. But it is mainly legal and political in nature and really does not contain much strictly economic material—in particular, nothing that was not current doctrine among the scholastics of the time—its chief purpose being to combat the prevalent practice of debasing money, a topic that was treated later on in a copious literature to be briefly noticed presently. Our fifteenth century representatives will be St. Antonine of Florence, perhaps the first man to whom it is possible to ascribe a comprehensive vision of the economic process in all its major aspects, and Biel. For the sixteenth century we select Mercado and, as representatives of the literature on Justice and Law (De justitia et jure) that in the sixteenth century became the main scholastic repository of economic material, the three great Jesuits whose works have been recently analyzed by Professor Dempsey—Lessius, Molina, and de Lugo.

All that need be said about the sociology of the later scholastics is that they developed, in greater detail and with a fuller perception of implications, the ideas that had crystallized in the works of their thirteenth century predecessors. Their political sociology in particular retained the same method of approach to the phenomena of state and government and also the same ‘radical’ spirit. Their economic sociology, especially their theory of property, continued to treat temporal institutions as utilitarian devices that were to be explained—or ‘justified’—by considerations of social expedience centering in the concept of the Public Good. And this social expedience might, according to historical circumstances, sometimes tell in favor, and sometimes tell against, private property. They no doubt believed that in civilized societies, that is, in societies that were past the early or natural law state in which all possessions were common to all (omnia omnibus sunt communia), these considerations told in favor of private property (divisio rerum); but there was neither a theoretical nor a moral principle to prevent them from arriving at the opposite result whenever new facts should suggest it. Some methodological aspects of this will be dealt with in the next section. But another point should be briefly mentioned.

The scholastics were not primarily concerned with the problems of the national states and their power politics. This is precisely one of the most important links between them and the ‘liberals’ of the eighteenth and even the nineteenth centuries. But some of the phenomena that accompanied the rise of these states were, nevertheless, bound to attract their critical attention, and among them was fiscal policy. I mention this here, and not in connection with their economics, because they hardly went at all into the specifically economic problems of public finance, such as incidence of taxation, economic effects of government expenditure, and the like: even when they did discuss government borrowing (which, following the lead of St. Thomas, they mostly condemned) or the question of the relative merits of taxes on wealth and taxes on consumption (Molina, Lessius, and de Lugo, among others, touched upon this question), they produced nothing that qualifies as economic analysis. What they were most interested in was the ‘justice’ of taxation in the widest acceptance of the term—such questions as whether and when taxes might be rightfully imposed, by whom and on whom, for what purposes, and to what extent. And below their normative propositions there was some sociological analysis of the nature of taxation and of the relation between state and citizen. Both these norms and this analysis, along with the rest of their political and economic sociology, went into the work of their laical successors though the later science of public finance grew mainly from other roots. But while the economic sociology of the scholastic doctors of this period was, in substance, not more than thirteenth century doctrine worked out more fully, the ‘pure’ economics which they also handed down to those laical successors was, practically in its entirety, their own creation. It is within their systems of moral theology and law that economics gained definite if not separate existence, and it is they who come nearer than does any other group to having been the ‘founders’ of scientific economics. And not only that: it will appear, even, that the bases they laid for a serviceable and well integrated body of analytic tools and propositions were sounder than was much subsequent work, in the sense that a considerable part of the economics of the later nineteenth century might have been developed from those bases more quickly and with less trouble than it actually cost to develop it, and that some of that subsequent work was therefore in the nature of a time and labor consuming detour.

In what may be described as the applied economics of the scholastic doctors, the pivotal concept was the same Public Good that also dominated their economic sociology. This Public Good was conceived, in a distinctly utilitarian spirit, with reference to the satisfaction of the economic wants of individuals as discerned by the observer’s reason or ratio recta (see, below, next section)—and is therefore, barring technique, exactly the same thing as the welfare concept of modern Welfare Economics, Professor Pigou’s for instance. The most important link between the latter and scholastic welfare economics is the welfare economics of the Italian economists of the eighteenth century. So far as appraisal of economic policy and business practice is concerned, the scholastics’ idea of what is ‘unjust’ was associated—though never identified—with their idea of what is contrary to public welfare in that sense. To give at least one example: Molina declared that monopoly was in general (regulariter) unjust and harmful to the public welfare (tract. II, disp. 345); though he did not identify the two, their juxtaposition is nevertheless significant.

The welfare economics of the scholastic doctors linked up with their ‘pure’ economics through the pivotal concept of the latter, Value, which also was based upon ‘wants and their satisfaction.’ Of course, there was nothing new in this starting point itself. But the Aristotelian distinction between value in use and value in exchange was deepened and developed into a fragmentary but genuine subjective or utility theory of exchange value or price in a manner for which there was no analogue in either Aristotle or St. Thomas, though there was in both what we may describe as a pointer. First, by way of criticizing Duns Scotus and his followers, the late scholastics, particularly Molina, made it quite clear that cost, though a factor in the determination of exchange value (or price), was not its logical source or ‘cause.’ Second, they adumbrated with unmistakable clearness the theory of the utility which they considered as the source or cause of value. Molina and Lugo, for instance, were as careful as C.Menger was to be to point out that this utility was not a property of the goods themselves or identical with any of their inherent qualities, but was the reflex of the uses the individuals under observation proposed to make of these goods and of the importance they attached to these uses. But a century before that, St. Antonine, evidently motivated by the wish to divest the relevant concept of undesirable ‘objective’ meanings, had employed the unclassical but excellent term complacibilitas—the exact equivalent of Professor Irving Fisher’s ‘desiredness,’ which also is used to express the fact that a thing is actually being desired and nothing else.

Third, the late scholastics, though they did not explicitly resolve the ‘paradox of value’— that water though useful has normally no exchange value—obviated the difficulty by making their utility concept, from the first, relative to abundance or scarcity; their utility was not utility of goods in the abstract, but utility of the quantities of goods available or producible in the individual’s particular situations. Finally, fourth, they listed all the price determining factors, though they failed to integrate them into a full fledged theory of demand and supply. But the elements for such a theory were all there and the technical apparatus of schedules and of marginal concepts that developed during the nineteenth century is really all that had to be added to them.

There are two more aspects of this theory of exchange value that deserve to be noticed. On the one hand, the late scholastics identified their just price not, as Aristotle and also Duns Scotus seem to have done, with normal competitive price but with any competitive price (communis estimatio fori or pretium currens). Wherever such a price existed, it was ‘just’ to pay and to accept it, whatever the consequences might be for the trading parties: if merchants, paying and accepting market prices, made gains, this was all right, and if they suffered losses, this was bad luck or else a penalty for incompetence so long as gain or loss resulted from the unhampered working of the market mechanism though not if it resulted, for example, from price fixing by public authority or monopolistic concerns. Molina’s disapproval of price fixing, though qualified, and his approval of gains arising from high competitive prices in times of scarcity are no doubt ethical judgments. But they reveal a perception of the organic functions of commercial gains and of the price fluctuations that are responsible for them, a fact that marks a considerable step in analysis. This should be borne in mind, for we are not as a rule in the habit of looking to the scholastics for the origin of the theories that are associated with nineteenth century laissezfaire liberalism.

On the other hand, the late scholastics analyzed economic activity itself—St. Antonine’s industria—and particularly commercial and speculative activity, from a standpoint that was diametrically opposed to Aristotle’s. The Economic Man of later times put in an appearance in the conception of ‘prudent economic reason’—a Thomistic phrase which acquired an entirely unThomistic connotation by de Lugo’s interpretation, which was to the effect that this prudence implies the intention of gaining in every legitimate way. This did not spell moral approval of profit hunting. As far as that goes, it is safe to assume that neither de Lugo’s nor any other scholastic doctor’s feelings differed from Aristotle’s; St. Antonine, for example, was very explicit on this point. But it spelled an improved analysis of business facts that was, of course, partly induced by observation of the phenomena of rising capitalism. This realistic character of the work of the late scholastics should be particularly emphasized. They did not simply speculate. They did all the factfinding that it was possible for them to do in an age without statistical services. Their generalizations invariably grew out of discussions of factual patterns and were copiously illustrated by practical examples. Lessius described the practice of the Antwerp exchange (bursa). Molina sallied forth from his study to interview businessmen about their methods. Some of his investigations into the economic conditions of his time and country, such as his study of the Spanish wool trade, amount to little monographs.

As regards money, it will suffice to record the four following points. First, reasoning on Aristotelian lines, the doctors presented, practically to a man, a strictly metallist theory of money which, in fundamentals, did not differ from that of A.Smith; we find the same genetic or pseudohistorical deduction from the necessity of avoiding the inconveniences of direct barter, the same conception of money as the most saleable commodity, and so on. Second, they were not only theoretical but also practical metallists, disapproving, with varying degrees of severity, of debasement and of any gain that accrued from it to princes. As mentioned before, the outstanding authority on this matter, Oresmius, only formulated the doctors’ common opinion, which in this case was evidently shared by most people. The modern student of monetary theory, who may possibly sympathize with those princes and feel inclined to regard them as worthy predecessors of the governments of his own day, should observe that the doctors went but a very short way into the economic effects of devaluation. They saw the effect on prices and felt that creditors and holders of money were being defrauded but that was about all.

Even in these matters their analysis did not go beyond the obvious, and the idea that devaluation—and other methods of increasing the amount of circulating monetary units—might stimulate trade and employment was quite foreign to them; it first occurred to those businessmen who wrote on monetary policy in the seventeenth century (see below, ch. 6). Since this idea was almost entirely lost on the English ‘classics’ of the nineteenth century, we have here another of those curious doctrinal affinities that exist between J.S.Mill and Father Molina. Third, we note for future reference that some of the doctors, among whom Mercado is the most important instance, adumbrated more or less clearly what came to be called the quantity theory of money, at least in the sense in which Bodin can be said to have held it. And, fourth, they dealt with a number of problems in coinage, foreign exchange, international gold and silver movements, bimetallism, and credit in a manner that would merit more attention and that compares favorably in some points with much later performance.

Contrary to an opinion that has some adherents, the scholastic doctors did not work out any theory of the physical aspect of production (‘real capital’), though they did eventually—since St. Antonine—block out a theory of the role in production and commerce of monetary capital. Nor did they possess any integrated theory of distribution, that is to say, they failed to apply their embryonic demand-supply apparatus to the process of income formation as a whole. Moreover, the rent of land and the wages of labor had not as yet become analytic problems to them. In the case of rent, this was perhaps due to the facts that, with farmers who tilled their own soil, the element of rent does not readily display its distinctive character, and that rents paid to landlords were in the times of the doctors so mixed with dues of a different nature that the economic rent, which was moreover traditionally fixed, did not show up very distinctly even in this case.

In the case of wages, too, they did not ask the theoretical question; presumably they felt that nobody needs to be told what it is wages are paid for. They proffered indeed moral considerations and recommendations as to policy. However, even St. Antonine’s recommendations, noteworthy because of the broad social sympathies that inspired them, do not rest on any analytic foundations of the kind we are interested in. The same applies to the considerable literature that developed in the sixteenth century on relief of the poor, unemployment, mendicancy, and the like, to which the doctors contributed copiously. Much more important were their contributions to the theories of the two types of income that they did feel to be analytic problems, business profits and interest. The risk-effort theory of business profit is undoubtedly due to them. In particular, it may be mentioned that de Lugo—following a suggestion of St. Thomas—described business profits as ‘a kind of wage’ for a social service. No less certain is it that they launched the theory of interest.