The Philosopher-Theologian: St. Thomas Aquinas

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article is excerpted from An
Austrian Perspective on the History of Economic Thought,
vol. 1, Economic Thought Before Adam Smith.

St. Thomas
Aquinas (1225–1274) was the towering intellect of the High
Middle Ages, the man who built on the philosophical system
of Aristotle, on the concept of natural law, and on Christian
theology to forge “Thomism,” a mighty synthesis of philosophy,
theology and the sciences of man. This young Italian was born
an aristocrat, son of Landulph, count of Aquino at Rocco Secca
in the kingdom of Naples. Thomas studied at an early age with
the Benedictines, and later at the University of Naples. At
the age of 15 he tried to enter the new Dominican Order, a
place for Church intellectuals and scholars, but was physically
prevented from doing so by his parents, who kept him confined
for two years. Finally, St. Thomas escaped, joined the Dominicans,
and then studied at Cologne and finally at Paris under his
revered teacher, Albert the Great. Aquinas took his doctorate
at the University of Paris, and taught there as well as at
other university centers in Europe. Aquinas was so immensely
corpulent that it was said that a large section had to be
carved out of the round dinner table so that he could sit
at it. Aquinas wrote numerous works, beginning with his Commentary
on Peter Lombard’s Sentences in the 1250s, and ending
with his masterful and enormously influential three-part Summa
, written between 1265 and 1273. It was
the Summa, more than any other work, that was to
establish Thomism as the mainstream of Catholic scholastic
theology in centuries to come.

recently, historical studies of the just price typically began
with St. Thomas, as if the entire discussion had suddenly
leapt into being in the ample person of Aquinas in the thirteenth
century. We have seen, however, that Aquinas worked in a long
and rich canonist, Romanist and theological tradition. It
is not surprising that Aquinas followed his revered teacher,
St. Albert, and the other theologians of the previous century
in insisting on the just price for all exchanges and, not
being content with the more liberal legist creed of free bargaining
up to the alleged point of laesio enormis, in asserting
that divine law, which must take precedence over human law,
demands complete virtue, or the precise just price.

in discussing the just price, St. Thomas stored up great trouble
for the future by being vague about what precisely the just
price is supposed to be. As a founder of a system built on
the great Aristotle, Aquinas, following St. Albert before
him, felt obliged to incorporate the Aristotelian analysis
of exchange into his theory, with all the ambiguities and
obscurities that that entailed. St. Thomas was clearly an
Aristotelian in adopting the latter’s trenchant view that
the determinant of exchange value was the need, or utility,
of consumers, as expressed in their demand for products. And
so, this proto-Austrian aspect of value based on demand and
utility was reinstated in economic thought. On the other hand,
Aristotle’s erroneous view of exchange as “equating” values
was rediscovered, along with the indecipherable shoemaker-builder
ratio. Unfortunately, in the course of the Commentary
to the (Nichomachean) Ethics, Thomas followed
St. Albert in seeming to add to utility, as a determinant
of exchange value, labor plus expenses. This gave hostage
to the later idea that St. Thomas had either added to Aristotle’s
utility theory of value a cost of production theory (labor
plus expenses), or even replaced utility by a cost theory.
Some commentators have even declared that Aquinas had adopted
a labor theory of value, capped by the notorious and triumphant
sentence by the twentieth century Anglican socialist historian
Richard Henry Tawney: “The true descendant of the doctrines
of Aquinas is the labor theory of value. The last of the Schoolmen
is Karl Marx."1

It has
taken historians several decades to recover from Tawney’s
disastrous misinterpretation. Indeed, the scholastics were
sophisticated thinkers and social economists who favored trade
and capitalism, and advocated the common market price as the
just price, with the exception of the problem of usury. Even
in value theory, the labor plus expenses discussion in Aquinas
is an anomaly. For labor plus expenses (never just
labor) appears only in Aquinas’s Commentary and not
in the Summa, his magnum opus.2
Moreover, we have seen that labor plus expenses was a formula
generally used in Aquinas’s times to justify the profits of
merchants rather than as a means of determining economic value.
It is therefore likely that Aquinas was using the concept
in this sense, making the sensible point that a merchant who
failed in the long run to cover his costs and not to make
profits would go out of business.

In addition,
there are many indications that Aquinas adhered to the common
view of the Churchmen of his and previous times that the just
price was the common market price. If so, then he could scarcely
also hold that the just price equaled cost of production,
since the two can and do differ. Thus his conclusion in the
Summa was that “the value of economic goods is that
which comes into human use and is measured by a monetary price,
for which purpose money was invented.” Particularly revealing
was a reply Aquinas made as early as 1262 in a letter to Jacopo
da Viterbo (d. 1308), a lector of the Dominican monastery
in Florence and later archbishop of Naples. In his letter,
Aquinas referred to the common market price as the normative
and just price with which to compare other contracts. Moreover,
in the Summa, Aquinas notes the influence of supply
and demand on prices. A more abundant supply in one place
will tend to lower price in that place, and vice versa. Furthermore,
St. Thomas described without at all condemning the activities
of merchants in making profits by buying goods where they
were abundant and cheap, and then transporting and selling
them in places where they are dear. None of this looks like
a cost-of-production view of the just price.

and most charmingly and crucially, Aquinas, in his great Summa,
raised a question that had been discussed by Cicero. A merchant
is carrying grain to a famine-stricken area. He knows that
soon other merchants are following him with many more supplies
of grain. Is the merchant obliged to tell the starving
citizenry of the supplies coming soon and thereby suffer a
lower price, or is it all right for him to keep silent and
reap the rewards of a high price? To Cicero, the merchant
was duty-bound to disclose his information and sell at a lower
price. But St. Thomas argued differently. Since the arrival
of the later merchants was a future event and therefore
uncertain, Aquinas declared justice did not require him to
tell his customers about the impending arrival of his competitors.
He could sell his own grain at the prevailing market price
for that area, even though it was extremely high. Of course,
Aquinas went on amiably, if the merchant wished to tell his
customers anyway, that would be especially virtuous, but justice
did not require him to do so. There is no starker example
of Aquinas’s opting for the just price as the current price,
determined by demand and supply, rather than the cost of production
(which of course did not change much from the area of abundance
to the famine area).

A piece
of indirect evidence is that Giles of Lessines (d. c.1304),
a student of Albert and Aquinas and a Dominican professor
of theology at Paris, analyzed the just price similarly, and
flatly declared that it was the common market price. Giles
stressed, furthermore, that a good is properly worth as much
as it can be sold for without coercion or fraud.

should come as no surprise that Aquinas, in contrast to Aristotle,
was highly favorable towards the activities of the merchant.
Mercantile profit, he declared, was a stipend for the merchant’s
labor, and a reward for shouldering the risks of transportation.
In a commentary to Aristotle’s Politics (1272), Aquinas
noted shrewdly that greater risks in sea transportation resulted
in greater profits for merchants. In his Commentary to
the Sentences of Peter Lombard, written in the 1250s,
Thomas followed preceding theologians in arguing that merchants
could ply their trade without committing sin. But in his later
work, he was far more positive, pointing out that merchants
perform the important function of bringing goods from where
they are abundant to where they are scarce.

important was Aquinas’s brief outline of the mutual benefit
each person derives from exchange. As he put it in the Summa:
“buying and selling seems to have been instituted for the
mutual advantage of both parties, since one needs something
that belongs to the other, and conversely.”

on Aristotle’s theory of money, Aquinas pointed out its indispensability
as a medium of exchange, a “measure” or expression of values,
and a unit of account. In contrast to Aristotle, Aquinas was
not frightened at the idea of the value of money fluctuating
on the market. On the contrary, Aquinas recognized that the
purchasing power of money was bound to fluctuate, and was
content if it fluctuated, as it usually did, more stably than
did particular prices.

It was
the peculiar fate of the usury prohibition in the Middle Ages
that every time it seemed to be weakening in the face of reality,
theorists would strengthen the ban. At a time when the highly
sophisticated and knowledgeable Cardinal Hostiensis was seeking
to soften the prohibition, St. Thomas Aquinas unfortunately
tightened it once more. Like his teacher St. Albert, Aquinas
added the Aristotelian objection to the medieval ban on usury,
except that Aquinas also inserted something new. In the medieval
tradition of starting with the conclusion — the crushing
of usury — and seizing any odd argument to hand which
might lead to it, Aquinas added a new twist to Aristotelian
doctrine. Instead of stressing the barrenness of money as
a major argument against usury, Aquinas seized on the term
“measure” and stressed that since money, in terms of money,
of course, has a fixed legal face value, this means that the
formal nature of money must be to remain fixed. The purchasing
power of money can fluctuate due to changes in the supply
of goods; that is legitimate and natural. But when the holder
of money sets out to produce variations in its value by charging
interest, he violates the nature of money and is therefore
sinful and mindless of the natural law.

such arrant nonsense should swiftly assume a central place
in all later scholastic prohibitions of usury is testimony
to the way that irrationality can seize the thought of even
so great a champion of reason as Aquinas (and his followers).
Why the fixed legal face value of a coin should mean that
its value in exchange — at least from the side of money
— should not change; or why the charging of interest
should be confused with a change in the purchasing power of
money, simply testifies to the human propensity for fallacy,
especially when prohibiting usury had already become the overriding

But Aquinas’s
argument against usury involved another invention of his own.
Money, to him, is totally “consumed”; it “disappears” in exchange.
Therefore money’s use is equivalent to its ownership. Hence,
when one charges interest on a loan, one is charging twice,
for the money itself and for its use, although they are one
and the same. Highlighting this odd thesis was Aquinas’s discussion
of why it was legitimate for an owner of money to charge rent
for someone to display a coin. In that case, there is a bailment,
a charge for keeping one’s money in trust. But the reason
why this charge is licit, for Aquinas, is that the display
of money is only a “secondary” use, a use separate from its
ownership, since money is not “consumed” or does not disappear
in the process. The primary use of money is to disappear in
the purchase of goods.

are several grave problems with this new weapon invented by
Aquinas with which to beat usury. First, what is wrong
with charging “twice,” for ownership and use? Second, even
if somehow wrong, this act scarcely bears the weight of sin
and excommunication that the Catholic Church had loaded for
centuries upon the hapless usurer. And third, if Aquinas had
looked beyond the legal formalism of money, and at the goods
which the borrower purchased with his loan, he might have
seen that these purchased goods were in an important sense
“fruitful,” so that while the money “disappeared” in purchases,
in an economic sense the goods-equivalent of money was retained
by the borrower.

St. Thomas’s
stress on consumption of money led to a curious shift on the
usury question. In contrast to all theorists since Gratian,
the sin now became not charging interest on a loan per
se, but only on a good — money — that disappears.
Therefore, for Aquinas, charging interest on a loan of goods
in kind would not be condemned as “usury.”

But if
the usury prohibition on money was tightened with new arguments,
Aquinas continued and strengthened the previous tradition
of justifying investments in a partnership (societas).
A societas was licit because each partner retained
ownership of his money, and ran the risk of loss; hence profit
on such risky investments was legitimate. In the late eleventh
century, Ivo of Chartres had already briefly distinguished
a societas from a usurious loan, and the distinction
was elaborated in the early thirteenth-century by the theologian
Robert of Courçon (c. 1204), and in John Teutonicus”
Gloss on Gratian (1215). Courçon had made it
clear that even an inactive partner risked his capital in
an enterprise. This of course meant that types of inactive
partnerships, such as sea loans for specific voyages, slid
over into actual loans, and the lines were often fuzzy. Besides,
and this was a problem that no one at the time would face,
wasn’t any lender necessarily risking his capital,
since a borrower could always turn out to be unable to repay
even the principal of a loan?

now lent his enormous authority to the view that the societas
was perfectly licit and not usurious. He succinctly declared
that the investor of money does not transfer ownership to
a working partner; that ownership is retained by the investor;
so that he risks his money and can legitimately earn a profit
on the investment. The trouble with this, however, is that
Aquinas here abandons his own thesis that the ownership of
money is the same thing as its use. For the use of the money
was transferred to the working partner, and therefore on St.
Thomas’s own grounds he should have condemned all partnerships,
as well as the societas, as illicit and usurious.
Confronting a thirteenth century world in which the societas
flourished and was crucial to commercial and economic life,
it was unthinkable to Aquinas that he should throw the economy
into chaos by condemning this well-established instrument
of trade and finance.

of ownership going with the use of a consumable item, then,
Aquinas now advanced the idea of ownership going with incidence
of risk. The investor risks his capital; therefore, he retains
ownership of his investment. A seemingly sensible way out,
but flimsy; not only did Aquinas thereby contradict his own
bizarre ownership theory, he also failed to realize that,
after all, not all ownership need be particularly
risky. Another problem is that the risk-taker is making a
profit on the investment of money, which is supposed to be
sterile. Instead of stating that all profit should go to the
working partner, St. Thomas explicitly says that the capitalist
rightly receives the “gain coming thence,” i.e. from the use
of his money, “as from his own property.” It looks very much
as if St. Thomas is here treating money as fertile and productive,
providing an independent reward to the capitalist.


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despite the inner contradictions rife in St. Thomas’s treatment
of usury and the societas, his entire doctrine continued
to be dominant for 200 years.

Aquinas was a firm believer in the superiority of private
to communal property and resource ownership. Private ownership
becomes a necessary feature of man’s earthly state. It is
the best guarantee of a peaceful and orderly society, and
it provides maximum incentive for the care and efficient use
of property. Thus, in the Summa, St. Thomas keenly
writes: “every man is more careful to procure what is for
himself alone than that which is common to many or to all
since each one would shirk the labor and leave to another
that which concerns the community, as happens where there
are a great number of servants.”

developing the Roman law theory of acquisition, Aquinas, anticipating
the famous theory of John Locke, grounded the right of original
acquisition of property on two basic factors: labor and occupation.
The initial right of each person is to ownership over his
own self, in Aquinas’s view in a “proprietary right over himself.”
Such individual self-ownership is based on the capacity of
man as a rational being.

cultivation and use of previously unused land establishes
a just property title in the land in one man rather than in
others. St. Thomas’s theory of acquisition was further clarified
and developed by his close student and disciple, John of Paris
(Jean Quidort, c.1250–1306), a member of the same Dominican
community of St. Jacques in Paris as Aquinas. Championing
the absolute right of private property, Quidort declared that
lay property

acquired by individual people through their own skill, labour
and diligence, and individuals, as individuals, have right
and power over it and valid lordship; each person may order
his own and dispose, administer, hold or alienate it as
he wishes, so long as he causes no injury to anyone else;
since he is lord.

“homesteading” theory of property has been held by many historians
to be the ancestor of the Marxian labor theory of value. But
this charge confuses two very different things: determination
of the economic value or price of a good, and a decision
on how unused resources are to go over into private hands.
The Aquinas–John of Paris–Locke view is the “labor theory”
(defining “labor” as the expenditure of human energy rather
than working for a wage) of the origin of property, not
a labor theory of value.

In contrast
to his forerunner Aristotle, labor for Aquinas was scarcely
to be despised. On the contrary, labor is a dictate of positive,
natural and divine law. Aquinas is very much aware that God
in the Bible gave the dominion over all the earth to man for
his use. Man’s function is to take the materials provided
by nature and, by discerning natural law, to mould that reality
to achieve his purposes. While Aquinas scarcely has any conception
of economic growth or capital accumulation, he clearly posits
man as active molder of his life. Gone is the passive Greek
ideal of conforming to given conditions or to the requirements
of the polis.

St. Thomas’s most important contribution concerned the underpinning
or framework of economics rather than strictly economic matters.
For in reviving and building on Aristotle, St. Thomas introduced
and established in the Christian world a philosophy of natural
law, a philosophy in which human reason is able to master
the basic truths of the universe. In the hands of Aquinas
as in Aristotle, philosophy, with reason as its instrument
of knowledge, became once again the queen of the sciences.
Human reason demonstrated the reality of the universe, and
of the natural law of discoverable classes of entities. Human
reason could know about the nature of the world, and it could
therefore know the proper ethics for mankind. Ethics, then,
became decipherable by reason. This rationalist tradition
cut against the “fideism” of the earlier Christian Church,
the debilitating idea that only faith and supernatural revelation
can provide an ethics for mankind. Debilitating because if
the faith is lost, then ethics is lost as well. Thomism, in
contrast, demonstrated that the laws of nature, including
the nature of mankind, provided the means for man’s reason
to discover a rational ethics. To be sure, God created the
natural laws of the universe, but the apprehension of these
natural laws was possible whether or not one believed in God
as creator. In this way, a rational ethic for man was provided
on a truly scientific rather than on a supernatural foundation.

In the
subset of natural law theory that deals with rights, St. Thomas
led a swing back from the twelfth century concept of a right
as a claim on others rather than as an inviolable area of
property right, of the dominion of an individual, to be defended
from all others. In a brilliant work, Professor Richard Tuck3
points out that early Roman law was marked by an “active”
property right/dominion view of rights, while the later twelfth
century Romanists at Bologna converted the concept of “right”
to the passive listing of claims on other men. This “passive”
as opposed to “active” concept of rights reflected the network
of interwoven, customary and status claims that marked the
Middle Ages. This is, in an important sense, the ancestor
of the modern assertion of such “claim-rights” as “the right
to a job,” the “right to three square meals a day,” etc.,
all of which can only be fulfilled by coercing others to obtain

At thirteenth
century Bologna, however, Accursius began a swing back to
an active property rights theory, with the property of each
individual a dominion which must be defended against all others.
Aquinas adopted the idea of a natural dominion without, however,
going all the way to a genuine natural rights theory, which
asserts that private property is natural and not a convention
created by society or government. Aquinas was moved to adopt
the dominion theory because of the mighty late thirteenth
century ideological battles between the Dominican and Franciscan
Orders. The Franciscans, committed to total poverty, claimed
that their subsistence use of resources was not really private
property; this pleasant fiction enabled the Franciscans to
claim that, in their state of voluntary poverty, they had
risen above the ownership or possession of property. They
maintained oddly that purely consumption use of resources,
such as they engaged in, did not imply the possession of property.
Supposedly, the sale or giving away of a resource was necessary
to qualify it as property. Self-sufficiency or isolation did
not, according to the Franciscan view, allow property to exist.
The rival Dominicans, including Aquinas, understandably upset
by this claim, began to insist that all use necessarily
implied dominion, the possession and control of resources,
and therefore property.


  1. Richard Henry Tawney, Religion
    and the Rise of Capitalism
    (New York: Harcourt,
    Brace and World, 1937, orig. 1926), p. 36.

  2. There is controversy among historians on when the Commentary
    was written. The older view, that it was written in 1266
    or even earlier, would imply the simple explanation that
    Aquinas’s views had matured from his earlier close adherence
    to his teacher, St. Albert. The newer view, that the Commentary
    was written at the same time as the Summa, leaves
    the anomaly intact.

  3. Richard Tuck, Natural
    Rights Theories: Their Origin and Development

    (Cambridge: Cambridge University Press, 1979).

This appeared

N. Rothbard
(1926–1995) dean of the Austrian School
and the founder of modern libertarianism – was the
author of Man,
Economy, and State
, Conceived
in Liberty
, What
Has Government Done to Our Money
, For
a New Liberty
, and many other books and articles.
He was academic vice president of the Mises
and editor — with Lew Rockwell — of The
Rothbard-Rockwell Report
, and appointed Lew as his
literary executor.

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