Usury
Firstly, economics in the Middle Ages worked very differently from how they operate in the modern age. The Fifth Lateran Council defined usury as "from its use, a thing which produces nothing is applied to the acquiring of gain and profit without any work, any expense or any risk", and that the modern idea of what the usury is cannot be applied to Thomasian thought.
St. Thomas asserted that usury was a violation of natural moral law. All things are created for their natural end (Aristotle). Money is not an end but a means of buying goods and services. Putting money out for the generation of more money is an evil unto itself. The formal value of money is the face value. Yet usury allows this face value to fluctuate, and hence the value of money can be diminished, thereby robbing the person who has purchased the money for use. Money stands alone as a non-vendible substance which is degraded from its natural end by selling.
Another argument used by Aquinas was that of the Roman distinction between consumable goods and non-consumable goods. Food and clothes are consumable in that once they are used, they are gone. A piece of land is non-consumable since it can produce crops for years, yet never lose its value. Money as defined by Aquinas is a consumable. To put it out for profit betrays its purpose in natural law. This is the view that prevailed for the next three centuries following St. Thomas' death.
Yet it was the one Realistic Scholastic interpretation of natural law that was completely disconnected from the economic reality of the day. The time of Aquinas was one where land feudalism was ceding prominence to money capitalism. Over the next several centuries it became clear that capitalism would provide a greater amount of goods and services than any other system.
Even in the time of Aquinas (and before), kings and popes engaged in usury. Some of the effects of Protestantism were a clarification of the views and acceptance of the practice of usury. Profit from lending became an acceptable goal. The Council of Trent (1545–1563) adopted Aquinas' view of usury, calling it a sin of equal gravity to that of homicide. This included putting money out for any return, no matter how minimal. It can be argued that this rigid stance may have encouraged the Protestant movement in larger money and trading centers.
Our views concerning capitalism, unfair labor practice, living wage, price gouging, monopolies, fair trade practices, and predatory pricing, inter alia, are remnants of the inculcation of Aquinas' interpretation of natural moral law. (See Colish p. 333–334).
The issue was never as clear as the stance Aquinas took would indicate. From Pope Gregory IX (written about 1241, when Aquinas was 16 years old): "He who loans a sum of money to one sailing or going to market, since he has assumed upon himself a risk, is not to be considered a usurer who will receive something beyond his lot. He also who gives ten solidi (a monetary unit), so that at another time just as many measures of grain, wine and oil may be paid back to him, and although these are worth more at the present time, it is probably doubtful whether at the time of payment, they will be worth more or less, for this reason, should not be considered a usurer. By reason of this doubt he is also excused, who sells clothing, grain, wine, oil, or other wares so that as a set time he receives for them more than they are worth at that time, if however, he had not intended so to sell them at the time of the contract." (See Denzinger, p. 178). In other words, if the lender of the money "assumed the risk" ("assumpsit" in Latin), along with the borrower, it was not usury.
A century earlier, in the Second Lateran Council, (Second Council of the Lateran), under the aegis of Pope Innocent II (1139) called the practice of loaning money "detestable and shameful... insatiable rapacity of money lenders, forbidden both by divine and human laws throughout the Old and New Testament, we condemn, and separate from the ecclesiastical consolation..." (Denzinger p. 148–149).
The Council of Vienne (1311–1312) under Pope Clement V declared: "If anyone shall fall into that error, so that he obstinately presumes to declare that it is not a sin to exercise usury, we decree that he must be punished as a heretic." (Denzinger p. 189). The distinction between usury and putting money out while "assuming the risk" was not mentioned. However, it could be argued that any time one assumed the risk, it was not considered usury.
There was always some confusion, and variance, in this teaching during the Middle Ages. The Fifth Lateran Council, (1515) decreed that a "reasonable degree of return" was allowable. (Denzinger p. 238). The social evil that was associated with usury was the fact that poor tenant farmers and city dwellers were often thrown into prison, or even killed if they could not repay the money they borrowed, and the interest charged. In these cases, the lenders of the money had assumed no risk. The Franciscan St. Anthony of Padua (1195–1231 AD) preached against this evil.
These events were occurring at a time when the Ecclesiastical Courts had great judicial power. There were several philosophical cross currents at play. On the one hand, the Canon Lawyers looked favorably on the products of labor, wages and profit, while holding suspect speculation, banking and finance. The Church discountenanced the fluctuations of wages and prices caused by the law of supply and demand. There was an attempt to maintain fixed standards of value. At the same time, there was a liberal and equitable view toward the old Roman idea of "contract". The Church Courts invented and refined the idea of "consideration" ; the quid pro quo in modern contract. This was something that was lacking in Roman contract. Insurance, assignability and negotiability were developments in the Church Courts. These areas were largely ignored by the Common Law, or secular law of the day, especially in England (Plucknett p. 302,304).
The Catholic Church's teaching on social doctrine has grown significantly more complicated since that time. It is beyond the scope of this article to delve into modern teaching. A summary can be found in the new Catechism of the Catholic Church, sections 2419–2463.
Read more about this topic: Thought Of Thomas Aquinas