But at the time of the conversion of Constantine, “the main strength of Christianity lay in the lower and middle classes of the towns, the manual workers and clerks, the shop keepers and merchant’s,” according to Peter Brown in his Eye of the Needle. They were engravers, glass makers, candlestick makers, traders, lawyers, merchants and bureaucrats who chose their pastors from among them. Christianity has always been bourgeois, so it is unlikely they would have agreed with Cicero's estimation of their livelihoods. They said of themselves,
It is good that we are middling persons [mediocres]. It is not for us to live in houses sheathed with marble, to be weighed down with gold, in flowing silks and bright scarlet. But all the same we have our little places in gardens and by the sea-side. We have good quality wine, neat little banquets and all that goes with a sprightly old age.
For more than a millennium, theologians condemned commerce as a necessary evil because, “While profits from trade can possibly be made by honest means, it is difficult to avoid the occasion of sin in the process of buying and selling,” according to Business, Banking, and Economic Thought in Late Medieval and Early Modern Europe edited by Julius Kirshner. Early Church fathers, such as Tertullian (160-240), had judged merchants “as necessarily stamped with the sin of greed, and as almost always accompanied by deceit and fraud,” wrote Murray N. Rothbard in Economic Thought Before Adam Smith. Jerome (c.340-420) preached, “All riches come from iniquity, and unless one has lost, another cannot gain. Hence that common opinion seems to me to be very true, ‘the rich man is unjust, or the heir of an unjust one.’”
How did the church hierarchy turn against the majority of its members and condemn their professions? The answer lies in the fact that the Church fathers learned their economics not from the Bible but from pagan philosophers such as Aristotle, Cicero, Seneca and mystics such as Plotinus. Ambrose (340 - 397), for example, was so impressed with Cicero's concept of the common good that he rewrote the philosopher's De officiis with a Christian twist as part of his effort to forge a Christian community along the lines of Cicero's res publica. Cicero had valued private property, though he thought most wealth should go to the state. So Ambrose borrowed from Seneca who perpetuated the ancient Roman and Greek belief that a Golden Age had existed in the past in which property did not exist and people lived in peace by sharing nature's bounty equally. Ambrose imported the fiction into his theology according to Peter Brown in Eye of the Needle and taught that a Christian Golden Age was possible if the rich renounced property and gave their wealth to the Church and the poor:
For nature generously supplies everything for everyone in common. God ordained everything to be produced to provide for everyone in common; his plan was that the earth should be, as it were, the common possession of us all. Nature produced common rights, then, it is usurping greed [usurpatio, in a negative sense] that has established private rights.
So while the Christian doctrine of salvation promoted individual rights and freedom, many Church fathers undermined them with their promotion of pagan mythology encouraging socialism. The ideal was the common good; anything private was evil. Avarice alone had created property, but it was a necessary evil until the Church could get rid of it. Augustine (354 - 430) in the generation after Ambrose based his City of God to a large degree on Cicero. Here is Brown again:
Augustine had doubtless repeated Cicero's opinions for years on end as a teacher, long before he became a bishop. What Cicero had passed on to him was an acute sense of the tension between the public and private good – between unity around a common goal and disunity caused by individual self-interest.
Augustine saw the private will as always opposed to the common good, but he went beyond Cicero. Drawing from the pagan mystic Plotinus, he denied the monks in his monastery any private property at all. Of course, asceticism in the East had preceded him in that notion, which they had learned from pagan Cynic philosophers and not the Bible. Augustine saw his monasteries to be something like beach heads for a new world. If they could exorcise private desire from their members, that fire might spread to the rest of Christianity and issue in the Kingdom of God. Theologians refer to Augustine's eschatology as amillenialism or post-millenialism, which refers to the thousand year reign of Christ at the end of the age. It taught that the Christian world would continue to grow more Godly, that is, more socialist, until the spiritual kingdom of God became political reality and Christ returned. The doctrine continues to afflict Western society as many theologians insist on using the power of the state to perfect society.
Some historians claim that the monasteries of Europe invented capitalism because they promoted work as being holy, were organized as corporations that produced and sold large quantities of goods, such as wine and used sophisticated accounting techniques. However, all socialist countries have done the same thing. The monasteries stifled Christianity’s greatest contribution to economics – individualism. All monks owned nothing and shared everything. The common good of the monastery as defined by the leadership determined the lives of individual monks. Monasteries were bastions of ancient socialism fighting the Christian gift of individualism to promote the common good.
In the ancient Greek and Roman world, the common good meant what was good for the survival of city or the empire, that is, the collective; individuals had no rights. Of course, the elite determined what the common good was and individuals could only comply. The collective was all important. Christian individualism broke down the city walls that protected the collective and established footholds for the rights of individuals, such as equality before the law. It was building a society in which the respect for the rights of individuals as defined by the Bible constituted the common good. But it advanced the least against the section of wall reserved for economics (wealth and commerce). The fathers furiously re-bricked with pagan philosophy as quickly as Christian individualism tore down a section. Pagan collectivism concerning wealth and commerce masquerading as the common good would push economic development into the future for over a thousand years.
Still, Jerome was correct about most cases of how wealth was gained because the “noble” ways to gain it had always been through plunder in war, kidnapping for ransom or taking bribes as a bureaucrat. But he was wrong about commerce unless the merchant defrauded customers. Church fathers had fallen victim to one of Aristotle’s errors regarding a just price, as Murray Rothbard wrote:
Another grave fallacy in the same paragraph in the Ethics did incalculable damage to future centuries of economic thought. There Aristotle says that in order for an exchange (any exchange? a just exchange?) to take place, the diverse goods and services ‘must be equated’, a phrase Aristotle emphasizes several times. It is this necessary ‘equation’ that led Aristotle to bring in the mathematics and the equal signs. His reasoning was that for A and B to exchange two products, the value of both products must be equal, otherwise an exchange would not take place. The diverse goods being exchanged for one another must be made equal because only things of equal value will be traded.
The damage in Aristotle’s thinking came from his insistence on equality of value in exchange, which led theologians to assume that merchants conducted a just exchange only if the value of the goods exchanged were of equal value. That was the just price. If not equal, then the party that gained had cheated the other. Further confusing matters, Aristotle thought that goods had an intrinsic value based on their nobility or cost of production. Merged with St. Jerome’s idea that one person cannot gain except at the expense of another, equality of value in exchange lead to the conclusion that all merchants who earn a profit are cheating their customers.
Today, good economists would say that trade will not happen unless both parties profit. After all, why would a consumer trade one item for another of equal value to him? Consumers trade money for goods because they value the goods more than the money. The profit might not be monetary; it could be psychological satisfaction or simple necessity, the need for food for example. The merchant wo
uld make an explicit profit while that of the consumer was more concealed so theologians condemned the visible profit while ignoring the less visible one.
How would merchants know if the value in exchange was equal? Theologians partly followed Roman law and determined that if merchants sold goods at the commonly estimated price, that is, the price in a market with many buyers and sellers and no monopoly or coercion, they had sold at a just price and their profits were legitimately earned. But they added that state-determined prices were also just. Of course, most states throughout the world in the middle ages set prices for food and theologians allowed them that right in spite of their insistence on private property rights.
St. Augustine rescued wholesale merchants from total depravity by insisting on his usefulness in transporting goods from long distances and alleviating scarcity. Therefore such merchants deserved compensation for such labor, but Cicero and other pagan philosophers had already made that concession. To the charge of endemic deceit and fraud, he replied that farmers and shoemakers were capable of the same. The fault lay with the person, not the occupation.
Augustine did not convince every theologian much less the people. Later theologians frequently revived the ancient stigma against commerce. With the exception of Venice, the majority of people never allowed commerce to shake the scarlet letter. It did not help that the hated Jews clustered in the vocation, though not by choice. Success in most nations required entrance into the military or the government but Christians blocked Jews from both while preventing them from owning land. Left only with commerce, Jews excelled at it, but the wealth it brought them inflamed envy and led to many episodes of persecution.
As a result of the wide-spread condemnation of their trade, wealthy merchants often used part of their wealth to buy land and titles to nobility, following Cicero’s advice, in order to protect their wealth from taxes and confiscation by aristocrats, while assigning another large portion to the Church in the desperate hope of buying a ticket to heaven and redeeming a life spent in the wicked vocation of commerce. Wealthy merchants rarely invested in expanded production or labor saving equipment that would promote economic development.
In addition to the influence of Aristotle, Cicero and early Church fathers, teaching on commerce flowed naturally from the medieval situation. Peasants did not wander far from their villages and each village usually boasted of a single baker, brewer, cobbler, or moneylender, etc. Each business enjoyed a monopoly on its products or services in its village. R. H. Tawney wrote in Religion and the Rise of Capitalism, “Indeed, a great part of medieval industry is a system of organized monopolies, endowed with a public status, which must be watched with jealous [envious] eyes to see that they do not abuse their powers. It is a society of small masters and peasant farmers. Wages are not a burning question.… usury is… for loans are made largely for consumption, not for production.” Or, loans were made to peasant farmers for seed.
St. Thomas Aquinas advanced Augustine’s tolerance for long distance commercial activity in the thirteenth century, adding that in addition to compensating him for his labor and providing for his family, profits repaid the merchant for the risk he had taken to bring goods to sell to the people. Rothbard wrote,
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.
Finally...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).
As with Augustine, Aquinas merely reflects Cicero’s grudging acceptance of long distance trade. Theologians found it impossible to extricate their minds from the tar pits of pagan economics inherited from Plato, Aristotle and Cicero. But the rise of Venice as a commercial power motivated theologians to investigate business practices more closely. Their quest set scholarship on a path of discovery that would transform economic theory. Several theologians began to endorse commerce as a worthy vocation. By the fifteenth century, the Scholastics had begun to accept trade as a permanent institution, but profits continued to endanger the merchant’s soul. Scholars considered profits good if motivated by the need to support one’s family, provide relief to the poor, or improve the welfare of the community. But gain for its own sake constituted covetousness and pushed the merchant’s soul to the edge of the abyss.
Medieval scholars condemned monopolies (except the monopoly of the state) and gave the term a much broader definition than what we use today by including cartels, guilds, unions, state-sponsored monopolies, and any effort to corner the market or control prices. They rarely discussed competition, but promoted the freedom of every man to enter the profession of his choice, the goal being to encourage production in the midst of chronic shortages.
The Church controlled an enormous portion of the economy through its ownership of large tracts of land and through the hundreds of thousands of priests, nuns and monks it supported. Also, the Church hired thousands of artisans in the construction of hundreds of churches, abbeys, monasteries and schools. In the Netherlands, the Church employed about 15,000 people, which amounted to more than one percent of the population. Jonathan Israel wrote in The Dutch Republic, Its Rise, Greatness, and Fall 1477-1806 that the “Church in the Netherlands in the early and mid-sixteenth century was rich and powerful and exerted, as it had for centuries, an immense influence in society.”
To curtail monopolies today, economists encourage competition, but competition was anathema to the medieval Church, which pictured society as an organism with the government ensuring that the parts cooperated. Clergy asserted “Every social movement or personal motive which sets group against group, or individual against individual, appears, not the irrepressible energy of life, but the mutterings of chaos,” according to Israel. Economic individualism was no less abhorrent than the religious kind, which equaled nonconformity at best, heresy at worst.
In spite of the Church’s insistence on private property, Europeans kept alive the ancient myth about property throughout the Middle Ages. As Richard Pipes wrote, they perpetuated the belief in a
Golden Age when man had been innocent and property unknown. Some believed that even in their own time remote regions existed, often pictured as islands on the edge of the world, where people continued to live in such bliss. Because of Original Sin, most humanity was excluded from these realms, but they were accessible to heroes and saints able to surmount great perils. The church fathers debated for centuries whether an earthly paradise still existed. This may have been one of the factors that inspired Columbus to undertake his voyage of discovery.”
When Columbus stumbled upon the natives
of the Americas, many people believed he had found one of those remote societies on the edge of the earth still living in the Golden Age without property and envy. That gave rise to the idea of the “noble savage.” The myth inspired a body of fictional literature parading as fact, culminating in the writings of Karl Marx.
Unfortunately, the Church inherited its doctrines on property from pagan Greece and Rome instead of the Bible. It adopted Aristotle’s utilitarian view that property works better than property held in common. Humans, not God, created property in order to maintain peace. Augustine displayed that spirit when he responded to the Donatist heretics who complained when the emperor confiscated their property in the fifth century, as Lifshitz wrote:
Since every earthly possession can be rightly retained only on the ground either of divine right, according to which all things belong to the Righteous [i.e., God], or of human right, which is in the jurisdiction of the kings of the earth, you are mistaken in calling those things yours which you do not possess.
Augustine used the power of the Roman government to confiscate the property of the rival Donatist churches and give it to the Roman Catholic churches. He limited the right to property to only those possessions which the owner properly used, which for the most part meant that merchants who profited more than they needed to live a modest lifestyle should give the excess to the Church or the poor, inferring that the state had the right to take it from him if he hoarded wealth. According to Lifshitz, Ambrose, Augustine’s teacher and an eminent Church father, wrote, “It is no less a crime to take from him that has, than to refuse to succor the needy.” Augustine agreed with his mentor in another quote provide by Lifshitz:
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