"The goal of scholasticism, in the tradition forged by Saint Thomas Aquinas, was to develop a body of logic and philosophic thought built on a Catholic understanding of the world, including an emphasis on natural law. This body of thought sought to address a wide number of scientific and social problems. This ambitious project provided an opportunity for Scholastic theorists to explore areas now classified as economic, including property, trade, money, interest, prices, and wealth creation. The Scholastics agreed, in line with Catholic social teaching, generally, that the way to understand economics was by reflecting on the preferences, purposes, outlook, and intentions of economic actors themselves and observing how they impress themselves on a physical world of limited resources. This approach differs from that of the Greeks, who began their analysis from the “things” that the economy produced. The Scholastics, being proto-personalists, and in another sense, even proto-phenomenologists, offer a foundation for economic science that begins with an analysis of human action and human nature. From this foundation in human cognition, Thomist economic thought became progressively liberal and refined through the centuries, culminating in the sixteenth-century School of Salamanca in Spain, a primary center of learning and commerce.
The history of Scholastic economics begins with the Franciscan San Bernardino of Siena (1380-1444), who raised the status of businessmen to a higher moral plateau than had previous theorists. The transitional figure from Bernardino to the Late Scholastics is Thomas De Vio, Cardinal Cajetan (1468-1534) who spelled out what was then the state-of-the-art in monetary theory. From Cardinal Cajetan’s Italy, the torch passed to Salamanca and to the Dominican founder of Salamancan economics, Francisco de Vitoria (1485-1546). Like other Scholastics, Vitoria viewed the “just price” as the common market price.3
Dominican student Domingo de Soto (1494-1560), for example, said “the price of goods is not determined by their nature but by the measure in which they serve the needs of mankind.”4 He also regarded it as a “natural right” that a man can “donate or transfer the things he legally owns in any way he wants.”5 Martin de Azpilcueta Navarrus (1493-1586) even developed a clear and logical refutation of all price controls in the form of either ceilings or floors, and an equally clear theory that the value of money is inversely related to the amount available in the economy.6
The middle generation of Salamancans include such thinkers as Covarrubias y Leiva (1512-77),7 Tomas de Mercado (d.1585),8 and Francisco Garcia.9 The late generation of Salamancans was led by the Dominican Baqez de Mondragon (1527-1604), a friend and confessor of Saint Theresa of Avila.10 We can also include Luis de Molina, Francisco Suarez (1548-1617),11 Juan de Mariana (1536-1624),12 Leonard Lessius (1554-1623),13 and Cardinal Juan de Lugo (1583-1660).
In all, the School of Salamanca phenomenon represents a major episode in the history of economic thought. It forged the beginnings of a tradition of economic theory that deserves closer study. Joseph Schumpeter, in his History of Economic Analysis, observes that “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.”14
The link between the Late Scholastics and the late-nineteenth-century Austrian School is the theory of economic value. The value of any good, or service by implication, resides not in the objective qualities of the good itself but, rather, in how people personally regard the good. That is, economic value derives from individual impressions and intentions and is, ultimately, subjective.
Understanding economic value as intrinsic to the thinking and acting person necessarily precludes the idea that outside parties, including governments, can better impose prices and plans than those intended by individual economic actors themselves. The economy “works” so long as people’s individual intentions are allowed to be realized in the course of enterprise and exchange, and without third-party intervention designed to impose new values and priorities.
By placing the locus of analysis on the individual human mind and rejecting utopian fantasies of transforming the natural law to accommodate another view, the Late Scholastics created an economics that is both theocentric and anthropocentric. Economics, like all worldly philosophy, must center on God because the world is God’s creation and the individual is created in God’s image; likewise, man’s creative intentions and purpose, to an extent, reflect the creative intentions of God Himself.
This way of approaching value is personalist in the best sense of the term. We see the themes of the Early Scholastics later echoed in the writings of John Paul II on the human person. The Scholastics, as does John Paul, do not attempt to address economics prior to anthropology. As John Paul’s Christian Personalism utilizes a “bottom-up” anthropology–beginning with concrete human experience and culminating with reflection on the persons of the Trinity–so, too, does Scholastic economics employ a “bottom-up” methodology that begins with an understanding of human need and desire.
A community of enterprise made up of acting individuals does not result from a mysterious design imposed from the outside; it results from acting individuals spontaneously impressing their values on the material world and cooperating to improve the world around them. An attempt by the sovereign to upset this natural order of enterprise overrides the intentions of actors, generates imbalances, and violates justice."What we have now is a neo-merchantilist debt based economy not capitialism and it is unjust to its core.