Published by EH.NET (August 2003)

Diana Wood, Medieval Economic Thought. Cambridge: Cambridge University Press, 2002. xii + 259 pp. $20.00 (paper), ISBN: 0-521-45893-5.

Reviewed for EH.NET by Lawrin Armstrong, Centre for Medieval Studies, University of Toronto.

Medieval economic thought is a daunting subject. Not only has it generated a voluminous modern literature but the primary sources on which the scholarship is based — sermons, pastoral care manuals, legal opinions and technical (and usually unedited) commentaries on the theological, philosophical and juridical texts of the medieval university curricula — are scarcely easy reading. Moreover, because scholastic thinkers preferred the abstract to the empirical even when dealing with such matters as the economy it is often difficult to see how they conceived the relationship between theory and practice. The objective of Medieval Economic Thought, a recent contribution to the Cambridge Medieval Textbook series by Diana Wood of the University of East Anglia, is to introduce students and general readers to the key concepts of medieval economics and to suggest how they related to wider developments in economy and society.

Two themes, choice and balance, structure Wood’s treatment; choice because medieval economics was above all a matter of ethics rather than description or prediction, and balance because Aristotle’s idea of virtue as a mean between extremes provided an analytical model for many of the theorists who discussed economic relations. Medieval Economic Thought reviews how theorists interpreted ethical choice and balance in relation to property, wealth and poverty, money, standards of measurement, commerce, the just price and usury. Each topic is illustrated with concrete examples of economic practice drawn mainly from English sources. The whole is supplemented by an appendix of notes on the principal writers and primary sources referred to in the text and a glossary of specialized terms.

Property represented a problem for medieval economic thinkers because both scripture and natural law sanctioned the community of goods. Wood reviews a range of responses from the mendicant and monastic exaltation of poverty and corporate ownership to various secular and ecclesiastical theories that tried to balance private rights and the common good (chapter 1).

A closely related problem was that of poverty and wealth. Medieval society was one of gross material inequalities, and most writers considered avarice an impediment to salvation, although they also maintained that the moral risks associated with wealth could be obviated by liberality. However, as Wood emphasizes, discrimination between the “deserving” poor, such as clerics and rich people declassed through material adversity, and the “undeserving,” such as beggars, the destitute and unemployed, meant that such largesse ultimately served to prop up the social order (chapter 2).

Medieval conceptions of money were strongly influenced by Aristotle, who viewed money a measure of value and a sterile medium of exchange. Money functioned as a store of value when hoarded but the sterility doctrine meant that few theorists viewed money as a commodity whose value could fluctuate like that of any other (chapter 3).

The integrity of the coinage and other metrological standards were of vital importance both to governments and to ordinary people, and theorists accordingly reserved some of their most damning criticisms for those who tampered with weights and measures or debased the coinage (chapter 4).

Medieval reflection on economic issues was prompted by the “commercial revolution,” the extraordinary growth of trade and markets and the associated monetization of the economy evident from about 1100. Wood traces changing attitudes towards the merchant from the wholesale condemnation of trade by the canonist Gratian in the twelfth century to the fifteenth-century defense of wealth proposed by the Florentine humanists (chapter 5).

Wood dedicates three chapters to the just price and the usury prohibition, the topics readers will most readily associate with medieval economics. Although Aristotle’s conception of justice required strict equality in exchange, it is now generally agreed that medieval theorists understood the just price to be nothing more than the price commanded by a thing under normal market conditions, that is, in the absence of monopolies or artificially-created scarcities. Most writers, however, accepted the right of public authorities to regulate or fix prices in the common interest. Governments periodically attempted to control the price of labor — for example, during labor shortages that resulted from the plague — but most analysts seem to have favored the principle of free bargaining over wages (chapter 6).

Usury was defined as any charge for a loan of money or fungibles, that is, things whose use necessitated their consumption, such as wine or grain. Since the borrower acquired ownership of the thing lent, such charges were interpreted as a form of theft which could be rectified only through restitution. In the West the taking of usury was prohibited to both the clergy and the laity in the ninth century, and the sanctions against usurers were intensified by a series of conciliar decrees between 1179 and 1311 (chapter 7).

There were, however, circumstances under which a creditor could claim damages, as, for example, when a debtor failed to repay on time. Compensation was termed interesse and several theorists extended the concept to include payments from the beginning of a loan in certain cases, for instance, when a merchant lent capital that he would otherwise have invested in trade. Such developments, however, were fiercely contested with the result that economic actors turned to agreements that were less exposed to censure than straightforward loans, such as bills of exchange, rentes (annuities) and various kinds of risk-sharing partnership (chapter 8).

The textbook format, as Wood admits, lends itself oversimplification. For example, not every reader will be convinced by Wood’s view that the progressive monetization of the economy, the rise of national monarchies and the development of humanism fatally undermined the ecclesiastical critique of commerce and credit. There is evidence that even if the merchant eventually achieved a measure of toleration, commerce continued to be tainted by association with usury; indeed, the later Middle Ages witnessed an intensification of anti-usury measures. From this perspective, the Protestant reformers’ virtually universal condemnation of usury was not an aberration but rather an extension of trends in late medieval economic thought. Similarly, Wood’s emphasis on Aristotle reflects her debt to the work of Odd Langholm, who has published several authoritative studies of the economic ideas of scholastic commentators on the Ethics and Politics. Greater attention, however, to legal, particularly canonistic, sources would have revealed a more complex, case-oriented approach to economics which even if it is analytically messier than that of the Aristotle commentaries is perhaps more revealing in practical terms. Limitations of space also make comprehensiveness impossible, but in several areas that Wood herself singles out as particularly crucial readers will want to supplement the bibliography with, for example, the work of Kirshner on usury and public debt in the Italian city-states, Todeschini on Franciscan economics, Grossi on concepts of property, Clavero on gift in scholastic thought, Sapori on merchants and usury, Schnapper on the theory and practice of rentes, Henderson on poverty and charity in Renaissance Florence, Spicciani on interest theory, Shatzmiller on Jewish money-lending and the work of Nicolini, Savelli and Muzzarelli on the monti di piet?.

Lawrin Armstrong is Associate Professor of Medieval Studies at the University of Toronto. Recent publications include “The Politics of Usury in Trecento Florence: The Questio de monte of Francesco da Empoli,” Mediaeval Studies 61 (1999): 1-44, and Usury and Public Debt in Early Renaissance Florence: Lorenzo Ridolfi on the Monte Comune (Toronto, 2003). He is currently editing Gerard of Siena’s quodlibetal questions on usury and restitution for the Toronto Medieval Latin Texts series.