The Idler

Medieval Economic Systems Are Starting To Look Like A Good Idea, says Tom Hodgkinson

14 October 2008

IF THERE’S ONE element of my book How To Be Free that the scoffers really rounded on, it was the positive light I threw on various medieval institutions and approaches to life. To see anything good in the Middle Ages contradicts our neophyte conditioning. But the medievals really did have some excellent ideas. Community rather than individuality was at the heart of the medieval approach to things. For example, Florence and the city states called themselves communes, and governed themselves with a revolving panel of guild master craftsmen.

Well, the medieval approach to economics is particularly interesting given what is happening in the financial world right now, because it specifically banned usury, that is, the lending of money at interest. Usury was reserved for the lowest of the low. It was not the done thing. The medieval society had taken to heart Biblical injunctions against usury and also the example of Jesus turning over the tables of the money-changers.

Usury was wrong for a variety of reasons. Firstly, by charging interest on loans, you were taking advantage of the bad luck of your fellow human. The medievals had a stronger belief in Providence than we do today. So it did not necessarily mark you out as a loser if you needed to borrow money. And your bad luck, which was caused by God, should certainly not provide an opportunity for another to exploit you. This of course is the precise opposite to the situation we’ve been living with for the last two or three hundred years, where the whole financial system revolves around usury and indeed, till recently, those who most successfully exploited others were known as the Masters of the Universe. usury is a profoundly selfish and unneighbourly practice. Usury is robbing the poor to feed the rich (and it is still banned today in Islam).

Money for the medievals was not for hoarding or for lending, but for spending. To accummulate it for is own sake would be to commit the sin of avaritia, or greed, a deadly sin. Medieval cathedrals are full of unsympathetic carvings of the spend thrift “money bags” character, the miser who jealously hoarded his cash. Greed was bad.

Usury was also banned because in committing it, you committed the sin of sloth: you had not worked, you had not created anything, you had merely waited and you had made a profit. This was was wrong.

Furthermore, in lending money at interest, you were in effect selling time, and time did not belong to man. It to belonged to God. It was later, in the 18th century, that the dynamic Benjamin Franklin changed things when he wrote: “Time is money” and “Credit is money”. For the medieval to think in such terms would be a colossal arrogance. All through the ethical system, constraints were placed on man growing too big for his boots. A certain kind of humility in your dealings with the world was essential. Pride would lead to a fall.

Another economic idea, which, like the ban on usury, precisely guarded against the tottering Tower of Babel whose fall we are witnessing today, was the Just and Fixed Price. There was an enormous amount of productivity in the Middle Ages, and an enormous amount of global trade, particularly before the Black Death. But, as G. K. Chesterton points out, it was trade based on the values of cooperation rather than competition. Work and commerce was arranged around the guild system, later more or less destroyed during the Reformation. Guilds were brotherhoods of workers who banded together to protect their own interests (think of doctors today). To undercut your brother in the Guild of Linen-dyers, for example, by offering the same cloth at a cheaper rate, was profoundly unethical behaviour, because you were acting in your own interest rather than the broader interest of the guild. It was unbrotherly to overcharge or undercut. Thus prices were fixed and pinned on to the front door of the guildhall each morning. The Net Book Agreement is a recent example of a Guild-type practice which has been dismantled by the forces of the free market.

Overwork, too, another damaging feature of contemporary civilization, was frowned upon. To work too hard showed a lack of faith in God’s providence. “Consider the lilies of the field,” Jesus had said in the Sermon on the Mount, his great Taoist line: “They toil not, neither do they spin.” Do not worry about tomorrow, Jesus had said. Do not store up your wealth. Things will be all right. It was the exact opposite of what we have been conditioned to believe today, which is that you should get pensions and insurance and worry about the future.

Now far from being somehow creatively or technologically inferior to our own age, this was the system that produced the cathedrals, architectural feats that have yet to be bettered. It produced the beautiful city states such as Florence and Arezzo. It produced illuminated manuscripts, and the freedom-loving republics of Amsterdam and Antwerp. It was a less exploitative system: all that sailing around the world and plundering came later. The people were more closely connected to the land. In short, it was an anti-capitalist system of trade and production. But it was not communist because it was not statist. This is where the right wingers get it so wrong when they state that the only alternative to capitalism doesn’t work and it’s called communism.

Today we are seeing a swing back towards medieval economics. The usurers are being punished and their faces paraded on the front of newspapers. Our ethical pundits are calling for the top bankers to be named and shamed, to do penance, to confess. In the same way, the medieval usurer, on his deathbed, was required to give back all the profits of his extortion if he wanted to go to heaven.

Almost overnight, we have turned against free market philosophy, and we are already creating a system with much tighter controls. Usury and greed are being attacked. The bankers have fallen from grace, and it wouldn’t surprise me if some of them surreptitiously remove their pinstripes, Hackett tie and Church’s brogues before the long tube ride home to Fulham, and slip into a hoodie, jeans and trainers in order to avoid disapproving looks—or worse—from the public.

Our economists might do well to explore further the medieval system. It tried to be fair, it tried to guard against exploitation, it produced many things of great beauty and it lasted until Calvin. And at its heart was a sense that we are all this together, we are brothers and sisters, and we should behave as cooperators and not competitors.

ENDS