I previously left the story with Aristotle and his admittance of domestic wealth management versus his rejection of personal enrichment per se, the modern idea of economics. (See Blackthumb’s great blog). But… what happened later? Let’s jump to the XIIIrd century…
In those days many would worry about being able to distinguish between the authentic values of God and the distorted inclinations of humans. There was an ongoing discussion about what was right or wrong, and what God wanted humans to do. Reason or faith, which to follow? Was nature a reflection of the divine reality? As in Plato, was what they could see just a shadow of a superior reality?
Averroes, an islamic spanish phylosopher, had his answer. He, who was known as the great comentator of Aristotle, asserted the separation between faith and rational knowledge. There was no incompatibility: religious knowledge and reason just followed different paths.
But averroism fell in disgrace. And with it the aristotelian point of view, heavily criticised by agustinism. The same fate had the separation between faith and reason, radically rejected and condemned by both muslims and christians. They were bad days for both reason and Aristotle.
And then there was San Tommaso d’Aquino, aka Saint Thomas Aquinas (1224-1274). Saint Thomas inherited both the aristotelian point of view and the defense of the ability of rational to operate in its own laws without leaving the frame of faith. That was because the mystery of God was incarnated in human language. Thus it was possible to derive new rules from those that existed as certain because they had been revealed by God. And as long as the previous were according to faith, the latter would be no matter how they were converted, ellaborated and transformated following the rules of rational activity.
Aquinas denied the possibility of money being productive. Following his reasoning, what had not been created by God but by humans and did not have the ability to reproduce, couldn’t be multiplied. It was an unnatural thing. That meant that what we know as interest was not justified but condemned. It was not possible to earn anything from lending money. Interest was usury. It still is, under Roman Law.
On the other hand that was totally coherent with Aristotle’s rejection of commerce. Of course that was a real problem in a society that desperately needed commerce to emerge from dark ages, that and also the ilegitimacy of accrued interest.
Fortunately there would be a way out of this, although it would still take a couple of centuries to get out of this mess. Mediterranean merchants -specially north Italians- not only would thrive on commerce -it would be the Renaissance-, but they would exchange foreign currency to be delivered at a future date.
The beginning of futures? Not yet. It would be a way to accrue interest for the lender without falling into usury and without actual trade of goods or foreign currency. They had invented the dry exchange.