The World of Salamanca
The subject of the medieval period highlights the vast gulf that separates scholarly opinion from popular opinion. This is a grave frustration for scholars who have been working to change popular opinion for a hundred years. For most people, the medieval period brings to mind populations living by myths and crazy superstitions such as we might see in a Monty Python skit. Scholarly opinion, however, knows otherwise. The age between the 8th and 16th centuries was a time of amazing advance in every area of knowledge, such as architecture, music, biology, mathematics, astronomy, industry, and — yes — economics.
One might think it would be enough to look at the Burgos Cathedral of St. Mary, begun in 1221 and completed nine years later, to know there is something gravely wrong with the popular wisdom.
The popular wisdom comes through in the convention among nonspecialists to trace the origins of promarket thinking to Adam Smith (1723–1790). The tendency to see Smith as the fountainhead of economics is reinforced among Americans, because his famed book An Inquiry into the Nature and the Causes of the Wealth of Nations was published in the year America seceded from Britain.
There is much this view of intellectual history overlooks. The real founders of economic science actually wrote hundreds of years before Smith. They were not economists as such, but moral theologians, trained in the tradition of St. Thomas Aquinas, and they came to be known as the Late Scholastics. These men, most of whom taught in Spain, were at least as pro–free market as the much-later Scottish tradition. Plus, their theoretical foundation was even more solid: they anticipated the theories of value and price of the “marginalists” of late 19th-century Austria.
The scholar who rediscovered the Late Scholastics for the English-speaking world was Raymond de Roover (1904–1972). For years, they had been ridiculed and sloughed off, and even called presocialists in their thought. Karl Marx was the “last of the Schoolmen,” wrote R. H. Tawney. But de Roover demonstrated that nearly all the conventional wisdom was wrong (Julius Kirchner ed., Business, Banking, and Economic Thought [Chicago: University of Chicago Press, 1974]).
Joseph Schumpeter gave the Late Scholastics a huge boost with his posthumously published 1954 book, History of Economic Analysis (New York: Oxford University Press). “It is they,” he wrote, “who come nearer than does any other group to having been the ‘founders’ of scientific economics.”
About the same time, there appeared a book of readings put together by Marjorie Grice-Hutchinson (The School of Salamanca [Oxford: Clarendon Press, 1952]), recently republished by the Mises Institute. A full-scale interpretive work appeared later (Early Economic Thought in Spain, 1177–1740 [London: Allen & Unwin, 1975]).
In our own time, Alejandro Chafuen (Christians for Freedom [San Francisco: Ignatius Press, 1986]) linked the Late Scholastics closely with the Austrian School. In the fullest and most important treatment to date, Murray N. Rothbard’s An Austrian Perspective on the History of Economic Thought (London: Edward Elgar, 1995) presents the extraordinarily wide range of Late Scholastic thought. Rothbard offers an explanation for the widespread misinterpretation of the School of Salamanca, along with an overarching framework of the intersection between economics and religion from St. Thomas through to the mid-19th century.
What emerges from this growing literature is an awareness that the medieval period was the founding period of economics.
One must recall the opening words of Mises’s own Human Action here. “Economics is the youngest of all sciences,” he announces. “Economics opened to human science a domain previously inaccessible and never thought of.”
And what did economics contribute? Mises explains that economics discovered “a regularity in the sequence and interdependence of market phenomena.” In so doing, “it conveyed knowledge which could be regarded neither as logic, mathematics, psychology, physics, nor biology.”
Let me pause here with some comments on those who reject outright economics as a science. This tendency is not limited to the Left who embrace the fantasy called socialism, nor the environmentalists who think that society should revert to the status of a hunting and gathering tribe. I’m thinking in particular of a group that we might call conservatives. People who believe that all they need to know about reality and truth is contained in the writings of the ancient philosophers, the Church fathers, or some other time-tested source, whereas anything modern — defined as anything written in the latter half of the 2nd millennium of Christianity — is generally seen as suspect.
This tendency is widespread on the American Right, and extends to the Straussians, the communitarians, the paleoconservatives, and the religious conservatives. There are examples among them all. To seek economic wisdom, they brush aside everything of the last 500 years, and return again and again to the writings of early saints, of Plato and Aristotle, and to words of wisdom from many other revered nonmoderns.
Now, in these writings one can discover great truths. However, it is simply not the case that one can find rigorous economic logic. The writings of this period tend to be imbued with a bias against the merchant, a fallacy about the equality of value in exchange, and a general lack of conviction that there exists a persistent logic for understanding the development of the market.
Mises was right: the development of economics began much later, and the reason for this is rather straightforward. The appearance of widespread economic opportunity, social mobility driven by material status, the dramatic expansion of the division of labor across many borders, and the building of complex capital structures only began to be observed in the late Middle Ages. It was the appearance of the rudimentary structures of modern capitalism that gave rise to the curiosity about economic science. To put it quite simply, it was in the late Middle Ages that there appeared to be something to study at all.
It was in this period on the Continent that we began to see what was previously unheard of: large swaths of the population began to grow rich. Wealth was no longer limited to kings and princes. It was not available only to merchants and bankers. Workers and peasants too could
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