Usury – For Good or Bad?

usury

I’ve been pondering as to what benefit or detriment usury has caused in our society.

Arguments Against Usury:

“Legalized usury commits the human race to the unceasing pursuit of economic growth. Usury imposes an unstoppable expansion on the process of wealth creation; it sets in motion a driving force whose velocity increases exponentially along with compound interest, impelling us to transform all the world’s human and natural resources into the form of financial representation. As the people of Renaissance England clearly saw and often said, usury is inherently insatiable. The history of the human race since restraints on usury began to be lifted has involved the sudden and dramatic colonization of the globe by money, the evaluation of human activity and the natural environment in terms of money, and the direction of an ever-increasing proportion of physical and psychological energy toward the production of money.” – David Hawkes

Does usury and uncontrollable debt go hand in hand? It seems it does. Does usury and inflation go hand-in-hand? Again it seems it does. The problem with money, unlike tangible goods is that it can be easily counterfeited without the public ever finding out. Counterfeiting is something the government and banks do on a regular basis by printing money or creating loans out of thin air. The US economy over time has become one that was once based primarily on the production of tangible goods to that which produces mainly speculative financial goods. I believe even under a system in which money is issued 100 percent privately, there would be abuses although far less than in the current system. Perhaps the church since the early days foresaw the predicament we are currently in.

Michael Hoffman argues that usury and capitalism make society less human and more “robotic”. It places emphasis on numbers, profits, production, and materialism rather than love, compassion, family, and tradition. (Marx), too, admired ‘naked self-interest’ (in its time and place), and for much of the same reasons as Miss (Ayn) Rand: because, he believed, it cleared away the cobwebs of religion and led to prodigies of industrial and cognate accomplishment. (Hoffman, p277)

Arguments for Usury:

My thinking is that if the church constantly finds themselves in a fight against usury, then there must be something inherently natural about it. Fighting usury is akin to the church’s fight against promiscuity or even their fight against sex in general. It goes against human nature. The Von Mises Austrian school of economics explains capitalistic activities, which includes usury, as being a natural part of human behavior to better themselves and better their status by mutually exchanging their property for someone else’s property. In a two way trade, both parties benefit because each has something the other wants. Murray Rothbard in Man, Economy, and State says that “All action is an attempt to exchange a less satisfactory state of affairs for a more satisfactory one.”

Austrian school economics recognize that time is scarce and finite. People have different time preferences. Like any other free-market activity, interest-rates are determined by supply and demand. Those with a high time preferences are more willing to pay more for something now (and borrow money to do it) while those with low time-preferences are willing to fore-go consumption in the present by saving money and/or lending it out now.

It could be argued that societies that discourage usury remain backward states, such as much of the world before the 16th century or the Islamic states today. The average standard of living, wealth, and health has risen exponentially since that time and much of that can be attributed to capitalism and usury.

– AD

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