Episodit
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Puuttuva jakso?
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Three Modern Functions (Plus One)
* Medium of Exchange
* Unit of Account
* Store of Value
* Established by Convention/Law
Account of Money
* Necessity of exchange
* Commutative Justice
* Equality in exchange
* How many shoes is a house?
* Money enters as a measure of diverse goods
* measure of human need or desire
* Measure must contain that which it measures
* Law - measures human behavior (definition of murder)
* time - measures motion (clock)
* Established by Convention
Aristotelian Causes
* Final Cause - Faciliate exchange (medium of exchange)
* Formal Cause - Measure of value (unit of account)
* Material Cause - Something valuable (store of value)
* Efficient Cause - Legislator or Community agreeement
Implications
* In order to be money, a thing must be valuable
* cigarettes are valuable before they become money
* USD is valuable as a tax coupon
* Bitcoin is not valuable and is a waste of time and energy
* acts as money only as a sort of similitude
* money as measure of human desire, but desire can be irrational
* see podcast on economic value
* Good Money - Final Cause
* needs to be stable
* needs to be apt to receive the form
* easily divisible and transferable
* Bank accounts
* securities in themselves, but are not USD
* Anything valuable in principle can be money
* Money is not a different sort of thing, but a way of using things
* All exchange is fundamentally barter
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Nota Bene
I am not a financial or tax advisor. Take everything I say with a grain of salt and do your own research and find professionals for additional help.
Facts
Options for retirement
* 401k
* Employer sponsored retirement account
* Invest a percentage of salary
* Typically involves an employer match of 3%-5% (https://www.fidelity.com/learning-center/smart-money/average-401k-match)
* Invest in small set of mutual funds
* IRA
* Individual Retirement Account
* Invest your money
* Depending on manager can invest in the whole market
* Mutual funds, stocks, bonds, options, real estate, infrastructure, etc.
* Different types of accounts - Traditional vs. Roth (https://investor.vanguard.com/investor-resources-education/iras/roth-vs-traditional-ira)
* Tax advantaged accounts with eligibility and contribution requirements.
* Traditional
* Deposit pre-tax, withdrawal as income tax
* Advantage
* Income tax bracket lower in future than today
* Can use for a regular expenses
* Have more money to invest sooner
* Roth
* Deposit post-tax, withdrawal tax free
* Advantage
* Can withdrawal for bigger expenses
* Can also be valuable if you expect taxes to go up in the future or to be in a higher bracket
* Limitations on when you can withdrawal and have minimum distributions after retirement
* Other Accounts
* Brokerage Account
* Can invest in the whole market
* No limitations on deposit/withdrawal levels or timing
* Involves various capital gains taxes
* Various bank accounts
* Low profits, but limited risk
Stocks
* Ownership claim in the company
* Includes certain rights to the company
* Voting rights at shareholder meeting - offer proposals, vote for directors, etc.
* Rights to certain financial information
* Limited rights to dividends - especially if board is unjustified in not holding reserves
* Profits
* Can gain cash dividends - there are companies specifically meant to generate dividends.
* Some stocks can pay dividends as high as 9%
Bonds
* Debt obligations against company
* As I've argued these are not usurious
* Pay a lump sum and receive interest or "coupons" relative to the "face" and at the end of the term receive the face back
* Paying for a series of payments
* Similar to the medieval census contract
* Very different rights
* Generally don't involve rights over the company like stock
* Can include certain obligations
* In default, typically a hierarchy of seniority, more senior bonds are paid first while more junior bonds paid after, if nothing left after paying seniors then juniors may get nothing
Mutual Funds
* Company that invests in a range of different securities
* Various types of mutual funds
* Active/Passive
* Stocks/Bonds/Mixed etc.
* Investing in fund not underlying assets
* Investor does not own underlying assets
* Investor owns shares in the company itself
* Voting rights
* Stock give you shareholder voting rights
* A mutual fund investor doesn't own the shares, so never had the rights
* However, some mutual funds are allowing investors a say in voting
Morality
Investment is a moral act and not merely technical
* Need to consider not merely the return but also the morality
Is saving for retirement good?
* Yes.
* Similar to any other future planning we do.
* Buy food to save for tomorrow, save money for expenses tomorrow
Benefits of retirement savings
* Prepare for future expenses
* Share with family in retirement
* Provide for living closer to children, supporting children in retirment
Other Moral Considerations
* Vast Range Of companies to invest in
* Money in companies do evil
* need to consider moral principles
* Legitimate Cooperation with Evil Criteria
* Cooperator’s act must not be intrinsically evil
* Cooperator is motivated by good intention
* Cooperator’s reason proportionate to (i) gravity of perpetrator’s wrongdoing and (ii) his proximity to wrongdoing
* Principle of Double Effect Criteria
* Act considered independently of evil effect is not intrinsically evil
* Agent intends good and does not intend evil as an end or as a means
* Agent has proportionately grave reasons for acting
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Performing Intrinsic Evils
* Meaning of Catholic Podcast - https://www.youtube.com/live/q8VDT1jbKRA?si=Lw_ZiD9GJC-qWSD8&t=3079
* “Just because something is intrinsically evil does not necessarily mean you can never do it.”
New Polity Shareholding Essay - https://newpolity.com/blog/should-christians-invest-in-the-stockmarket
Declaration that money is evil or has the appearance of evil
* Jacob Imam’s Dissertation - https://ora.ox.ac.uk/objects/uuid:c1dbc396-a8de-49ec-9f0c-3bfd8e89f4c8/files/d1c18dg33r
* Note: In the video I said “royal courts” when the canon discusses courts of law. This does diminish the overall point that the Council is not declaring money evil or having the appearance of evil, but with respect to the behavior of the Franciscans especially in light of their vows.
Almost nothing is said about the nature of money in conciliar statements. The most notable exception to this claim comes from the Council of Vienne in 1312. Determining a very special case of the Spiritual Franciscans, canon 38, stated that monks ought never have money on their persons, declaring money to be “evil” (malum) or having “the appearance of evil,” (quod speciem habet mali).
Toward a Catholic Theolog of Money, 10
* Council of Vienne - https://www.papalencyclicals.net/councils/ecum15.htm
Further, not only what is known to be evil, but also everything which has the appearance of evil, should be specially avoided by perfect men. Now, to be present in court and urge their case, when the law is concerned with matters of advantage to them, leads people to believe from external appearances that the friars present are seeking something as their own. In no way, therefore, ought the friars who profess this rule and vow, to meddle in legal processes in such courts. By abstention they will be thought well of by outsiders, and they will live up to the purity of their vow and avoid scandal to their neighbour. Indeed, the friars are to be complete strangers not only to the acceptance, possession, ownership or use of money, but even to any handling of it, as our said predecessor has repeatedly and clearly said in his interpretation of the rule. Also, the members of this order cannot go to law for any temporal thing. The friars may therefore not lend themselves to such legal processes, but rather consider them forbidden by the purity of their state, because these activities cannot be concluded without litigation and the management or administration of money. Nevertheless they do not act in a manner contrary to their state if they give advice for the execution of these affairs, since this advice does not confer upon them any jurisdiction or legal authority or administration with regard to temporal goods.
Council of Vienne, 36
Gospel Simplicity - Insurance is a structure of sin - https://www.youtube.com/watch?v=azINTDiFNuc&t=2471s
* List of some papal statements in favor of insurance:
https://twitter.com/LendHopeNothing/status/1724552930345226492
Pius XI on Ownership and Justice - https://www.papalencyclicals.net/pius11/p11quadr.htm
In order to place definite limits on the controversies that have arisen over ownership and its inherent duties there must be first laid down as foundation a principle established by Leo XIII: The right of property is distinct from its use.[30] That justice called commutative commands sacred respect for the division of possessions and forbids invasion of others’ rights through the exceeding of the limits of one’s own property; but the duty of owners to use their property only in a right way does not come under this type of justice, but under other virtues, obligations of which “cannot be enforced by legal action.”[31] Therefore, they are in error who assert that ownership and its right use are limited by the same boundaries; and it is much farther still from the truth to hold that a right to property is destroyed or lost by reason of abuse or non-use.
Quadragesimo Anno, 47
Benedict XVI on shareholders
Today's international economic scene, marked by grave deviations and failures, requires a profoundly new way of understanding business enterprise. Old models are disappearing, but promising new ones are taking shape on the horizon. Without doubt, one of the greatest risks for businesses is that they are almost exclusively answerable to their investors, thereby limiting their social value. Owing to their growth in scale and the need for more and more capital, it is becoming increasingly rare for business enterprises to be in the hands of a stable director who feels responsible in the long term, not just the short term, for the life and the results of his company, and it is becoming increasingly rare for businesses to depend on a single territory. Moreover, the so-called outsourcing of production can weaken the company's sense of responsibility towards the stakeholders — namely the workers, the suppliers, the consumers, the natural environment and broader society — in favour of the shareholders, who are not tied to a specific geographical area and who therefore enjoy extraordinary mobility. Today's international capital market offers great freedom of action. Yet there is also increasing awareness of the need for greater social responsibility on the part of business. Even if the ethical considerations that currently inform debate on the social responsibility of the corporate world are not all acceptable from the perspective of the Church's social doctrine, there is nevertheless a growing conviction that business management cannot concern itself only with the interests of the proprietors, but must also assume responsibility for all the other stakeholders who contribute to the life of the business: the workers, the clients, the suppliers of various elements of production, the community of reference.
Caritas in Veritate, 40
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Ways in which the financial economy supports the real economy
* Direct financing
* Liquidity
* Risk management
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Introduction
* Interest in speculation
* Original NewPolity podcast
* Saw mistakes about societas
* Read Aquinas and saw more mistakes
* Discussed with people on Twitter
* Read NewPolity article and started reading citations
Essay
* Four Arguments - ordered by authority
* From Scripture
* From St. John Paul II
* From The Tradition
* From Reason
* From Scripture
A Christian should not own stocks any more than he should pursue individual wealth apart from work in any other area of his life. In 2 Thessalonians, St. Paul recalls:
When we were with you, we gave you this rule: ‘If a man will not work, he shall not eat.’ We hear that some among you are idle. They are not busy; they are busybodies, not doing any work. Now such persons we command and exhort in the Lord Jesus Christ to do their work quietly and to earn their own living.... Take note of those who do not obey what we say in this letter; have nothing to do with them, so that they may be ashamed. (2 Thess 3:10–14)
The Greek word that St. Paul uses, badly translated as “busybodies,” is the participle of περιεργάζομαι (periergazomai). Dictionaries of ancient Greek say this word literally means to “tell others how to buy and sell,”43 or to “bargain, haggle, ‘περὶ τῆς τιμῆς’ ” over, that is, saleable goods in the market.44 If these dictionaries are indeed correct, then the apostle hereby makes plain the Christian orientation toward wealth: a person must engage in productive labor in order to deserve his place in the community.
* Need to read from the tradition and not merely from a dictionary
* First is "busybody" a bad translation
* Chrysostom reading in the Greek tells these men, not to stop trading in the markets, but to be quiet and do their work (https://www.newadvent.org/fathers/23055.htm)
* Oldest Latin Translations - translate as curiose agentes, or curiously meddling
* Aquinas' understanding https://aquinas.cc/la/en/~2Thess.C3.L2.n76
* The precept to work is a precept to care for one's own life
* He admits this can be done through lawful business, which we'll see later includes trading
* Those curiously meddling are those interfering in the affairs of others, namely busybodies
* The idle are condemned because when they have no work, they'll seek unlawful things
* Haydock's commentary is similar citing Chrysostom - https://www.ecatholic2000.com/haydock/ntcomment205.shtml
* Silent Partnerships
* Census Contract
* Purchase a claim against productive property
* Purchaser did not engage in productive labor
* That the purchaser could live off the census without work but approved in spite of this - https://archive.org/details/scholasticanalys0000noon/page/163/mode/1up?view=theater
* Argument from John Paul II
* For John Paul, just because one has a legal claim to a share in a company, and is thus, in some sense, an owner, does not mean that this ownership is just. He categorically denounces pure speculation.[39]
* Two questions
* What does JPII mean by "speculation"?
* Is the condemnation categorical?
* Passages cited:
* These general observations also apply to the role of the State in the economic sector. Economic activity, especially the activity of a market economy, cannot be conducted in an institutional, juridical or political vacuum. On the contrary, it presupposes sure guarantees of individual freedom and private property, as well as a stable currency and efficient public services. Hence the principle task of the State is to guarantee this security, so that those who work and produce can enjoy the fruits of their labours and thus feel encouraged to work efficiently and honestly. The absence of stability, together with the corruption of public officials and the spread of improper sources of growing rich and of easy profits deriving from illegal or purely speculative activities, constitutes one of the chief obstacles to development and to the economic order. (#47)
* Ownership of the means of production, whether in industry or agriculture, is just and legitimate if it serves useful work. It becomes illegitimate, however, when it is not utilized or when it serves to impede the work of others, in an effort to gain a profit which is not the result of the overall expansion of work and the wealth of society, but rather is the result of curbing them or of illicit exploitation, speculation or the breaking of solidarity among working people.87 Ownership of this kind has no justification, and represents an abuse in the sight of God and man. (#43)
* Speculation definition
* In footnote 37, claim that speculation means buying high and selling low
* Because, this is the technical economic definition
* Also, term used in medieval times for usury and unjust trading
* Cites but otherwise ignores the way it is discussed in the Catechism
* speculation in which one contrives to manipulate the price of goods artificially in order to gain an advantage to the detriment of others"
* Problem
* The two passages use different Latin terms for speculation
* There is no reason to assume that JPII is using a technical economic definition is given and none is offered
* In fact elsewhere, he uses "ownership" in a none technical sense when talking about a new form of ownership of skills and knowledge
* Its also not obvious he's using the term "ex questibus faciendas" in its technical medieval meaning either
* Unable to check dictionary since didn't have access
* This was not present in either of Aquinas discussions on usury or trading
* The way speculations is characterized in Catechism seems to fit
* In first, State is to seek the security of the economy and its stability
* This is indeed undermined by manipulating prices to the detriment of others
* In the second, JPII specifically notes using ownership to not use the means of production or impede works
* This could be part of manipulating prices, as we've seen OPEC by reducing production to drive up oil prices
* Conclusion
* We have little reason to believe JPII is using the proposed technical economic definitions
* The Catechism characterization approved by JPII fits
* Is it Categorical?
* In the first, here he discusses activities in so far as they undermine economic stability or development. Even if this is taken as categorical against these sorts of activities, it is not clear that stock trading in itself is part of this
* In the second, he is specifically talking about when the ownership of the means of production is used to stop work or impede laborers
* This is not categorical but under these specific circumstances.
* Even if it is, stock trading is simply and manifestly not part of this activity. Trading stocks does not keep a ship in habor or tear holes in the sails.
* From Essay: But within investments on the stock market, the activity is intransitive; no operation is done to the object and so no dominion, no creative control is expressed over it; and thus he goes even further than Sheen, by stating that this sort of ownership is in itself illegitimate. It is a form of gaining wealth without giving to others.
* Unclear what Jacob and Marc thinks JPII is citing. The "transitive" section is much earlier.
* Seems obvious that JPII is referencing passages such as this: [Means of Production] cannot be possessed against labour, they cannot even be possessed for possession's sake, because the only legitimate title to their possession- whether in the form of private ownerhip or in the form of public or collective ownership-is that they should serve labour, and thus, by serving labour, that they should make possible the achievement of the first principle of this order, namely, the universal destination of goods and the right to common use of them.
* Consistent with the circumstances that JPII is condemning, either not using the means or impeding workers
* From the Tradition
* Here we reach Marc's clarification. I read the original essay too chartiably. My interpretation of Jacob and Marc assumed a possible though implausible misinterpretation of the tradition, but their real position is not only not in the tradition but contradicted by it.
* "The fact that one is able to increase in wealth while not putting in any productive labor to attain that increase—or without dignifying the labor of someone else, leading to an overall increase in productive labor—means that someone, somewhere, is worse off.[41]"
* Two conditions for increasing wealth
* Add productive labor
* Dignify and increase productive labor
* The tradition cited includes: Pseudo-Chrysostom, Gratian, Cassiodorus, Astesanus, Alexander of hales, and Aquinas
* The second is found in JPII, but not the tradition
* Even in JPII it is far from clear he is proposing a general condition for increasing wealth
* If he was that would put him in conflict with prior Magisterial teaching as we'll see
* The first is only plausibly found in Pseudo-Chrysostom
* "He that buys a thing in order that he may sell it, entire and unchanged, at a profit, is the trader who is cast out of God’s temple." (taken from Aquinas' Summa)
* Here then we may take "productive labor" as bettering the things so that it is not "entire and unchanged."
* First note, Pseudo-Chrysostom is an Arian heretic. The tradition address him, because they think he is the Church Father
* Moreover, as we'll see the tradition interprets this passage in such a way that the requirement of productive labor is removed
* Gratian's passage is merely a quote of Pseudo-Chrysostom that he put in the Decretals
* Cassiodorus is similar to Chrysostom and interpreted similarly as well
* Astesanus - couldn't find a readable copy of his work
* According to secondary sources, he follows Alexander of Hales closely
* Alexander of Hales - Read in the Latin
* On the question of trading, which is buying low in order to sell high
* He says the act is licit, quoting Augustine
* Provides 6 criteria or circumstance where it may not be licit
* Wrong person: clergy
* Wrong time: feast day
* Wrong place: temple or church
* Wrong mode: fraud or deceit
* Wrong cause: avarice
* Wrong association: unclear but seems to be selling at different prices to those passing through
* Comments on Pseudo-Chrysostom
* Focuses on intention of trader
* Seeking profit for good (sustenance of family, provide for poor, etc.) is licit
* Seeking profit for itself is evil
* Include multiple reasons
* Labor: the traveling merchant taking goods from one place to another (notably not "productive" labor)
* Risk: the goods may be lost to fire
* Care: holds the good to sell for the common good
* Comments on Cassiodorus
* Discusses wealthy mean who buy up all the goods (e.g. wheat) causing scarcity
* They then sell back at a profit
* Conclusions
* No discussion of expanding labor, discussing specifically merchants buying and selling
* Says buying low and selling high can be licit
* Explicitly for allows for reasons apart from productive labor, including a traveling merchant, risk and care
* Alexander of Hales stands against Jacob and Marc
* Aquinas - https://aquinas.cc/la/en/~ST.II-II.Q77.A4
* Jacob and Marc oddly do not quote his discussion on trading, but only his commentary on Aristotle discussing trading and usury
* Aquinas is similar to Alexander
* Trading is licit when it is ordered to a virtuous end, such as care of family, or the poor or providing for the common good
* Discussing Pseudo-Chrystotom, he interprets him as referring to those who seek profit for its own sake, which places creature over Creator as one's final end
* He concludes that if the end is virtuous and good, the profits are licit
* In the response to the second objection, he gives several reasons one could licitly profit, among which are changes in the price due to time and place
* No one requires productive labor
* Scotus
* Requires that trading be done for the common good
* Allows for retailer, who buy goods to be sold to the community for a profit (no productive labor)
* Reasons for a profit include labor, risk and care as with Alexander
* None of these authors, nor the following tradition such as Cajetan, Billuart, Liguori
* Strange to wonder where Jacob and Marc even got this idea, since it is contradicted by the very sources they cite
* Logic given by Jacob and Marc
* The shareholder grows in wealth, and so in purchasing capacity, without working, starting businesses, providing jobs, or otherwise improving the world for others. On the one hand, this is a sort of sin of omission: the shareholder does not contribute to the common good. On the other hand, his increased purchasing capacity increases the prices of goods and services in the society in which he is embedded. This can be clearly seen in real estate prices: if he buys houses with the money produced by shareholding, he will raise rents and house prices for his neighbors, without providing them with any social benefit to make up the difference. The fact that one is able to increase in wealth while not putting in any productive labor to attain that increase—or without dignifying the labor of someone else, leading to an overall increase in productive labor—means that someone, somewhere, is worse off.[41]
* Shareholder is blamed for increasing house prices and rents
* Implausible first of all, one house does not move a market
* Blameworthy for a tertiary act by another
* Primary act: sell stock
* Secondary act: buying a house
* Tertiary act: prices go up
* Cuts both ways
* Sells stock, gives to poor/starts business/etc., common good supported
* Support of common good cherry picking
* Exchange in itself supports common good, another can grow his wealth
* Someone is able to sell their house and provide for their own needs
* Ignore the social benefit of company owned
* All else equal, it provides dignifying labor
* It produces goods for society
* If its real value has increased, it has succeeded in this
* The shareholder plausibly falls under the second condition
* Contrary to the Magisterial Approval of Census
* From Reason
* It is difficult to buy or sell stocks in a mutually beneficial exchange—the only way one may licitly earn money. A shareholder sells his shares because he believes that the asset is bad. He may be wrong—but he would not risk it; it is time to get out. He sells to another what he considers to be a liability. Now, the buyer may know more than him—that the company will soon sign a new contract, that its sales will rise, that the impression of the company will duly improve, and thus also the share price. But the seller does not believe this is so; he offloads what he considers to be rotten eggs. The buyer, meanwhile, buys because he thinks the seller is wrong in his assessment. Structurally speaking, both assume that they are getting the better of the other, the seller that the buyer is a dupe, and the buyer the seller is foolish, and so conclude their business in an act of mutual disdain, however impersonal their trading platforms make it.
* An obvious caricature of exchange that could apply to any exchange and so "structurally" all exchange is treating each other as the greater fool
* Two scenarios, you know its worth less or you don't
* In the first case, something like insider trading, you are buying and selling at unjust prices which is categorically evil and selling "rotten eggs"
* In the second, there is risk involved and there may be prudential disagreements
* Even if they agree on the risks, each may have their reasons
* One prefers to get out and pursue other needs or ventures
* The other prefers to get in and grow his wealth
* Bad intentions may be involved about trying to dupe the other, but this isn't "structural" any more than a grocer selling fresh eggs.
* Conclusion
* Argument against buying low and selling high fails in general
* Arguments against stock trading per se also just fail
* There are ways to trade rightly and this is what we ought to aim for
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Introduction
* Essay up on NewPolity’s blog: https://newpolity.com/blog/should-christians-invest-in-the-stockmarket
* I wrote essay published in 4.2: https://newpolity.com/single-issues/vol-4-2
* Marc wrote response to me
* Interesting objections from essay in livestream recently put up:
* I’ll address some of that here
* Two part podcast
* First deals with shareholding
* Second deals with trading or speculation
Initial Distinction
* Evil per accidens vs per se
* Per accidens - evil from intention or circumstances
* Giving to poor from pride
* Giving to poor when impoverished
* Per se - evil from its nature
* Adultery is evil from its nature, it can never be done righteously
* These acts are call intrinsically evil and are never to be done
* Importance
* Jacob publicly claimed it is Catholic moral theology that intrinsically evil acts can be done
* Meaning of Catholic Podcast: https://www.youtube.com/live/q8VDT1jbKRA?feature=share&t=3080
* This is false
* It shows in part where Jacob is coming from
* He may not be a reliable witness or interpreter when it comes to moral theology
* Focus of podcast
* Jacob and Marc on per accidens evils
* There are several points made
* Apple buybacks merely to drive up price
* Flippant buying/selling via phones
* This is to say that stock trading can be done better and I agree
* I focus on the per se arguments
* This is the central claim I want to focus on
* If shareholding/stock trading are per se evil, then the other points just merely add fuel to fire
* If it is not per se evil, we can discuss how to trade rightly and how to bring this about
* Shareholding vs. Stock Trading
* Shareholding
* Involves ownership of the business and the rights that accrue to that
* Not necessarily a behavior, but certain behaviors are involved which are worth discussing
* Stock Trading
* The actual buying and selling of shares of companies
* This is certain a behavior that we can clearly discuss
* Shareholding often arises from stock trading and ends with trading, but the two are distinct
The Essay
* Three areas against shareholding
* Proportionate profits
* Dominion of use
* Shareholder responsibility
* Proportionate profit
* The societas
* Medieval contract that goes back to Roman Law
* Various arrangements
* Terminal contracts, sometimes serial
* Silent partnerships
* Profits shared according to how much put in
* Silent partnership could be 75/25
* Place of societas
* Taken as paradigmatic or central
* Dividends are a “radical break”
* Giving up due to proportionate profits is deranged
* An essential difference of structure
* Societas is terminal, profit shared when venture liquidated
* Company not terminal
* Profit need to be treated differently
* Continued growth
* Emergency reserves
* Paid profits
* Growing value of business maybe more valuable than cash payments
* Dominion of use
* The common shareholder does not even have a right to visit the assets of the company. If someone who owns some shares in Ford decides he wants to see the famous assembly lines and walks into the factory, he will not be greeted as a member of the company—rather, he will be dragged out by the security team. There is no proper category for a shareholder who does not work for the company or sit on the board of directors. His claim is ethereal and his ownership does not entail dominion, control, or use of what is owned; there is no metaphysical reality behind his “ownership.”[27]
* This is simply the nature of a partnership
* Sole proprietor may make use of the goods of the business as he pleases
* A partner may not, because the ownership is shared and no longer exclusive
* Example of restaurant
* Shareholder Responsibility
* Here consider both the article and the recent livestream
* Distinguish between authority and responsibility
* Degree of authority
* Shareholders authority is proportionate to the shares they own, how invested they are in the business
* This is not essentially different from partnerships
* Investing more will entail greater authority
* Can invest in smaller companies or invest with others
* Jacob/Marc argue for a qualitative difference
* Authority is extrinsic and isn't a fruit of labor
* This appears problematic
* Through our juridical systems, we have enabled one to lay claim to a possession that he never operates or a property he has never even seen—to call a piece of the earth “his own” without working it. This creates a pretense of ownership in conflict with “the very nature of these means [i.e., capital] and their possession” (Laborem Exercens 65).
* They appear to be saying that labor is not merely primordially the origin of ownership, but exclusively. This would entail the exclusion of exchange as a real mean of obtaining ownership, which is manifestly false. If exchange is, then the one who buys possession or land without working on it is a real owner, not merely a pretense. He has real authority.
* There is no qualitative difference, because shareholders are real owners with shared ownership of the business who have delegated authority to manage the business to the board. This also answers the claim that control and ownership are separated.
* Objection regarding whether shareholder have real authority
* The board of directors is not bound by majority decision of shareholders
* Shareholders with some minimal requirements can put for proposals to be voted on
* The board has to work with SEC to exclude these proposals if there is something wrong
* If majority votes in favor, the board can reject
* Thoughtful person should ask "Why?"
* The board as given delegated authority to manage the business by the shareholders
* The board consequently has a fiduciary responsibility over the business
* Dog Argument
* Fundamentally equivocates authority and responsibility, and moral and legal responsibility
* You are responsible for the dog and you have the authority to act to achieve that responsibility
* The authority may or may not be "activated" or exercised
* If he bites someone, you may or may not do something about it
* You may or may not train, feed, etc. the dog
* You have responsibility regardless.
* There is a moral responsibility over the dog and a legal responsibility
* Not every moral responsibility is enforced in law
* This is no different than stocks
* You have voting rights, right to propose changes, ability to lobby management etc.
* If the company is not acting rightly, you may or may not do any of these
* You have a responsibility to however and this is the USCCB's point
* You have both moral and legal responsibilities, but just because the state doesn't come after you doesn't entail you are not responsible
* Indeed, sometimes shareholders are legally responsible as when the company acts as an "alter ego" of the shareholder
* However, given the shared owners and delegated authority, there is a question to what extent shareholders ought to be held liable
Mutual Funds and USCCB
* Plain reading of the text is that it is referring to shareholders in the company, not mutual fund account holders
* Shareholding and mutual funds account are different
* A shareholder owns a claim against a company with all of the right that accrue to that
* The mutual fund account holder buys a claim against the mutual fund, the mutual fund invests that money
* The amount you invest may not be enough to buy any or all shares invested in the mutual funds
* The cash may indeed sit in the fund for awhile and everyone has a partial claim to it, because they have account value over the whole fund
* Even if this did exclude stock mutual funds, it would not exclude bond mutual funds, so saying it excludes mutual funds as such is misleading
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Three Reasons
* Practical
* Theoretical
* Theological
Practical
* Usurers may be few, but borrowers suffering usury are many
* Examples of usurious debt (personally secured loans for profit)
* Credit cards
* Pay Day Loans
* Student loans
* Car loans
* Most mortgages
* Impoverishes many people, e.g. student loan debt
* Leads to hatred of the wealth not suffering the debt
* Hatred of institutions involved in it, such as universities
* Destabilizing force on the economy
* Aquinas: usury is selling what does not exist
* Usurers have fake wealth on their balance sheets
* Can't sell a person if he defaults
* Bad risk management
* 2008 Financial Crisis
* Implications of enforcing usury
* Healthier economy more based on real property and assets
* Almost all business credit would still be in place
* Consumer credit would be gone
* Universities would suffer
Theoretical
* Usury is generally excused because of theoretical financial/economic concepts
* Time value of money, opportunity cost, risk premiums, etc.
* Usury doesn't invalidate these, but limits their scope
* Time value of money is an abstract way of measuring the value of a productive good in terms of the goods it produces
* Example of an apple tree - power to generate apples has value, can abstractly measure value of tree in terms of the future apples, but it is the tree that has the value
* A mutuum has no productive property, the one paying the claim is a person
* Legal Theory
* Moves us to a more classical understanding of contracts
* Since usury is based on property rights and the nature of contracts
Theological
* Reintegration of dogmatic and moral theology
* Fundamental moral determination in light of the moral object
* Reaffirmation of the dignity of the human person
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Introduction
The Current problem - many different positions
* Usury is rent on money
* Usury not present today
* Thomas Woods - doctrine has implicit assumptions - https://archive.org/details/churchmarketcath0000wood
* Destroys all moral doctrine
* Thomas Divine, SJ - merely oppression of the poor, objective market rates prevent oppression of the poor - https://archive.org/details/interesthistoric0000thom
* Doesn't account for consistent condemnation of usury against wealthy
* Both fail to realize time preference as an excuse for usury was condemned by Innocent XI - https://archive.org/details/sourcesofcatholi00denz/page/326/mode/2up?q=innocent+xi&view=theater
* Attempts to reconcile modern economics with usury doctrine
* Brian McCall - takes up Belloc's position - https://angeluspress.org/products/church-and-usurers
* Confuses ancient argument of consumption of lent good, with consumption of good bought with lent money
* Dr. Storck - Tries to give extrinsic titles some teeth - https://thejosias.com/2017/06/05/usury/
* Still thinks savings accounts may be usurious
* Usury is nearly everywhere in modern economies
* Heinrich Pesch - the "general" sin of usury is taking any surplus value in a business transaction - https://archive.org/details/heinrichpeschons0000pesc
* Some people have called this the position that capitalism is "usury-ism"
* Typcially take this from canon law, where usury is very vaguely and generally condmened
* Any interest on any loan is usury
* Others
* Usury depends on the nature of money
* Nature of money has changed and become rentable capital
* Nature of money hasn't changed and loans of money are either always or generally usurious
Previous discussion
* Mutuum is central to the definition
* Mutuum is there contract where usury arises
Aquinas leads the way
* De Malo q. 13, a. 4, ad. 15
* When good is given such that it may be consumed -> usury
* When good is given otherwise, we have other considerations
* Sale
* Immediate transfer of full ownership
* Commodatum and Locatio
* Grant of the use of a thing for a time
* Commodatum - gratuitous loan, think grant of books at a library
* Locatio - lease of a good for a rental
* Census and leaseback
* Grant of ownership apart from the use
* The seller retains the use of the thing for a time and may pay rent for that use
* Mutuum
* Lender grants the use such that borrower may consume it
* This entails that the lender transfer the whole ownership
* This means that the lender does not hold a usufruct from which to charge some rent
* Usury then is attempt to sell what does not exist, namely the usufruct which the lender does not hold
* Aquinas dicussion that usury is the price of the use of money
* Discusses in a few places the absence of a usufruct
Evils of Usury
* A sort of theft
* takes what does not belong or is not owed to the lender
* A sort of slavery
* Since the lender has no claim except against the person of the borrower, the usurer claims he can rent the person of the borrower.
* Means that the mutuum is fundamentally an act of charity
* Not for profit, but out of love of a friend in need
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Is it generally immoral to invest in 401k's for retirement? w/ Jacob Imam Vs Trent Horn
New Polity Blog Post: https://newpolity.com/blog/replies-to-trent-horn-401k
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Last Episode
* Showed tradition definition is "exacting profit from a mutuum"
* Three key terms: exacting, profit and mutuum
* Exacting - obligating or requiring in the agreement
* Profit - anything over the principle, increment, addition, superabundance
* Here focus on mutuum
What is the mutuum?
* Great deal of disagreement
* Loan for consumption - Belloc and McCall
* Neither specifies mutuum, but takes this as the sort of loan where usury arises
* Loan of fungibles
* Fungibles as goods that can be returned in kind
* Loan of consumptibles
* Loan of things that are consumed in use
* Sometimes authors will put consumed in "first use"
* Some author equate fungible with consumption, which is obviously wrong
* This seems somewhat reasonable
* Roman Law - Justinian Institutes (Book III, Title XIV https://www.gutenberg.org/files/5983/5983-h/5983-h.htm) "…loan of such things as are estimated by weight, number, or measure, for instance, wine, oil, corn, coined money, copper, silver, or gold: things in which we transfer our property on condition that the receiver shall transfer to us, at a future time, not the same things, but other things of the same kind and quality…"
* Mutuum is often translated as a "loan for consumption"
* Aquinas: focuses on consumption in the Summa Theologica
* Mutuum = Personally Secured Loan
* First Point
* Outside of discussions of usury this is entirely uncontroversial
* However, when I've suggested this to people, I've received "How dare you defined that!"
* Personally vs. Asset secured debts
* Roman Law
* In law of obligations there are two sorts of actions or rights: in rem and in personam
* An action in rem is a right over a thing, which potentially involves everyone, since for example my ownership is a right that I can exercises against everyone else
* An action in persona is a right over a person. This is in every contract because every contract is made with a person. It allows me to pursue the person for a failure of performance in the contract.
* A mutuum gives rise to a condictio which is an action in persona and this is the only action. That is the only right or action the lender has is against the person of the borrower and this for the return of the principal
* St. Ambrose in De Tobia
* Discusses people that have to sell themselves and their families into slavery
* People who are reduced to destitution and commit suicide over usury
* Dr. Reyerson - Medieval practice in Montepellier
* "Mutuum loans were generally guaranteed by the borrower with the obligation of person and goods." https://archive.org/details/businessbankingf0000reye/page/63/mode/1up?view=theater
* Defaulting debtors were sent to debtors prison until the whole was paid off
* Fr. Patrick Cleary
* Mentions that the mutuum involves a "personal claim"
* "In a contract of loan [mutuum] then the lender is not owner of what is bought with the money lent, he has merely a personal claim on the debtor for the amount…" (page 82) https://www.google.com/books/edition/The_Church_and_Usury/WiMtAQAAMAAJ?hl=en&gbpv=1&bsq=personal
* St. Thomas Aquinas
* ST II-II, q. 78, a. 2, ad. 5: "Hence the borrower holds the money at his own risk and is bound to pay it all back…" https://aquinas.cc/la/en/~ST.II-II.Q78.A2.Rep5
* That is whatever happens to the money he is responsible for the return
* Comm on Sent Bk III, Dist 37, a. 6, ad. 4 "However, I ought not try to sell him his own industry, just as neither ought I to have less because of his own foolishness." https://aquinas.cc/la/en/~Sent.III.D37.A6.C.4
* That is even if the borrower loses it all through his foolishness, he is still obligated to make a return in the same amount to the lender.
* ST I-II, q. 105, a. 2, ad. 4: "Fourth, the Law prescribed that debts should cease together after the lapse of seven years. For it was probable that those who could conveniently pay their debts, would do so before the seventh year, and would not defraud the lender without cause. But if they were altogether insolvent, there was the same reason for remitting the debt from love for them, as there was for renewing the loan on account of their need." https://aquinas.cc/la/en/~ST.I-II.Q105.A2.Rep4
* That is if the borrower is wholly insolvent he is still obligated to make a repayment. However, the lender should forgive the debt from charity, not that the obligation is dissolved from the insolvency itself.
* Magisterium
* As noted, usury arises specifically in the mutuum. Hence, wherein usury arises a mutuum is present. Thus if in discussing other contracts as usurious, we are talking about a mutuum present in some manner or other. We can then infer the nature of the mutuum from the way that usurious contracts are talked about
* Regiminis Universalis - Callistus III (1455)
* Discusses census grounded in real estates where the fruits, rents or profits arise from those goods
* Someone was refusing to pay the rents, claiming that they were usurious
* Very likely infallible
* Discussing an issue of faith and morals
* Invokes apostolic authority
* "But the buyers, on the other hand, even though the said goods, houses, lands, fields, possessions, and inheritances might by the passage of time be reduced to utter destruction and desolation, would not be empowered to recover even in respect of the price paid."
* Licit census is full secured by the property, there is no personal guarantee
* Cum Onus - St. Pius V (1568)
* "We by this our constitution decree, that rent or an annuity, can by no means be created, or constituted, unless in an immoveable thing, or a thing that may be considered as immoveable, of its own nature fruitful, and that may be nominally designated by certain limits."
* That is a licit census must be grounded in some real property
* "Let the pacts providing that the remiss debtor of the rent be liable to pay the loss, expenses, or salaries of the creditor, to lose the thing, or any part of the thing, subject to the rent, or to forfeit any right arising to him from that contract, or otherwise, or to incur any penalty, be entirely null and void."
* "But when the income is to be extinguished, by delivering the price, we wish that this be intimated two months beforehand, by the person, to whom the price ought to be delivered; and that, subsequent to the notice, the price can be recovered, however, within a year, from him, even against his will : and when he is not willing to demand the price within the year, we wish, however, that the rent can be extinguished at any time — the notice, however, being given, as said before, and notwithstanding the things that are mentioned above; and we command that the same course be observed, even when the notice had been often and often given, and the effect never produced."
* Confirms what was implied by Callistus, contracts that require the census seller to guarantee the rents are usurious
* Destabalis Avartia - Sixtus V
* "We do in this our perpetual decree, reprobate and condemn all contracts, pacts and conventions whatever, to be celebrated in future, whereby it will be provided on the part of the persons putting into company money, animals, or any other things whatever, that if, even by mere accidence, any injury, loss, or damage, follow, the very principal, or capital be always safe and restored in full by the managing partner ; or that he guarantee to pay yearly, or monthly during the existence of the company a certain sum or quantity."
* "…not even, whether they stipulate for a definite or indefinite profit, to obligate by pact or promise the managing partner, to restore in full and entire the capital or principal, if by casual accidence it be lost or destroyed."
* "If any man do in future rashly presume to contract under the foregoing pacts or conditions ; or under the veil of such conventions, pacts, or contracts formed in the name of a company heretofore existing, do presume to take proceedings for the recovery of the said capital or principal, or the value or price thereof, after it be casually lost or perished, in the whole or in part, or of an annual or monthly specified sum or quantity, We decree that they, and every one of them do, ipso facto, incur the penalties decreed and promulgated by the Sacred Canons and General Councils against notorious usurers, and that they could and ought to be proceeded against as against notorious ururers with the law and with other suitable remedies."
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* Introduction
* Many divergent opinions
* Taking advantage of the poor - Divine
* Excessive rates in loans
* Any surplus taken on a transaction - Pesch
* Any interest on any loan
* Interest on loans for consumption - Belloc, McCall
* Scripture
* Hebrew (Divine, 6) https://archive.org/details/interesthistoric0000thom
* Masah: to take interest and to oppress
* Nesek: to bite, oppress or take interest
* Passages:
* Exodus 22:25 - lend to the poor, oppress with usuries
* Leviticus 25:35-37 - take no usury from brother
* Deuteronomy 23: 19-20 - tolerance of usury against foreigners
* Ezekiel 18:4-9: places usury among idolatry, adultery, theft and murder
* All usuries are forbidden
* Jermone reads this as part of a development culminating in the words of Jesus
* Luke 6:35 - lend hoping nothing in return
* Fullness of the revelation
* Medievals disputed
* Counsel vs. precept
* Hope not for interest or even principle
* Church Fathers - https://www.jstor.org/stable/1582909
* Greek Father
* Gregory of Nyssa, Basil and Gregory Nazianzen
* Based on Aristotelian "sterility of money" argument
* Latin Fathers
* Augustine and Jerome
* Ambrose - significant development - De Tobia - https://babel.hathitrust.org/cgi/pt?id=uc1.$b109460&view=1up&seq=5
* And do you think you are acting piously because you receive as it were a loan [mutuum] from the merchant? Thereby he commits fraud in the price of his goods from which he pays usury to you. You are the cause of this fraud, you are a partner; whatever he gets by fraud is to your profit. Food too is usury and clothing is usury, and whatever is added to capital is usury.
* Links the Scriptural masah and nesek to the Roman law usura and mutuum
* Studied Roman law, was a judicial councillor and governor in the Roman Empire
* Also mentions other Roman law contracts: hypotheca, pignus, fiducia, etc.
* 12th Century canonists - McClaughin - https://archive.org/details/MediaevalStudies/Mediaeval%20Studies%20-%20Volume%2001%20-%201939/page/80/mode/2up
* Renewed study of Roman law
* Usury is anything on a mutuum
* Usury is found only in a mutuum
* Early Scholastic and Doctors
* All agree that usury is more taken on a mutuum
* Bonaventure - https://archive.org/details/05636860.5.emory.edu/page/527/mode/2up?q=usura
* Albert - http://watarts.uwaterloo.ca/cgi-bin/cgiwrap/albertus/searchAlbertus.cgi?browse=%3B+Lib.III%3B+dist.37%3B+art.13%3B+p.705a&chosenTexts=48&normalized=0&exclude=0&language=0&word=usura&newstart=1&quantity=0&scope=paragraphs+and+titles&format=Edited
* Aquinas
* Some confusion around Aquinas, because appears to tie specifically to money and consumption
* Links to mutuum contract
* https://aquinas.cc/la/en/~ST.II-II.Q78
* https://aquinas.cc/la/la/~QDeMalo.Q13.A4.Rep15
* Late Scholastics
* All agree that usury is profit from a mutuum contract
* Cajetan, de Soto, Vitoria, Molina, De Lugo, etc.
* Bernard Dempsey, SJ says that everyone agrees what usury is at this point: https://archive.org/details/InterestAndUsuryDempseyBernardW.S.J.1905277/page/n173/mode/2up
* Lateran V - https://www.papalencyclicals.net/councils/ecum18.htm
* Some will note this definition in discussing usury
* Definition: For, that is the real meaning of usury: when, 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.
* Reasons not given by Council
* Arises in context of explaining those opposed to the Montes Pietatis, a position rejected by the Council
* Contemporaries don't seem to accept as Scholastics don't cite Lateran V in defining usury
* First appears in late 19th/early 20th century by Neo-Scholastics (e.g. Prummer) who cites Bucceroni, SJ's Enchirdion Morale which take it out of context
* Even given it is from the Council
* It is radically deficient as a definition: mentions only a thing that does not fructify and not what contract. What are we to make of the sense of labor, risk or expense here?
* Needs to be put in the context of the broader tradition that takes usury as exacting profit from a mutuum. Here the ambiguities and deficiencies are resolved.
* Vix Pervenit - english https://www.papalencyclicals.net/ben14/b14vixpe.htm, Latin - http://www.domus-ecclesiae.de/magisterium/vix-pervenit.html
* Benedict XIV writes in the mid-1700's to address problems and settle the question
* Defines the sin of usury as arising from the mutuum contract and taking anything over the principle
* Confirms what has always been held by the faith
* Degradation
* Silence of the Magisterium since Vix Pervenit
* Holy Office in the 1830's and French Bishops
* https://archive.org/details/TheSourcesOfCatholicDogmaDenzingerHeinrichDeFerrar6229_201903/page/n431/mode/2up
* Parisian Priest - Le Correr https://archive.org/details/dejustoauctario00roeygoog/page/n54/mode/2up?view=theater
* Mutuum consumptionis et productionis
* Similar to Belloc
* Rejected contemporaneously by Benedict XIV
* Goes back to extrinsic titles
* Cajetan admitted that business men could take more the principal on mutuum loans from each other. https://archive.org/details/the-scholastic-analysis-of-usury/page/253/mode/2up?view=theater
* Some priest simply read canon law
* See ambiguity in canon law and take it as on any transaction
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