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Review:Justice in the Marketplace in Early Modern Spain: Saravia, Villalón, and the Religious Origins of Economic Analysis

December 14, 2017 in Economics

By Eric C. Graf

Spain marketplace

By: Eric C. Graf

Quarterly Journal of Austrian Economics 20, no. 2 (Summer 2017)

Justice in the Marketplace in Early Modern Spain: Saravia, Villalón, and the Religious Origins of Economic Analysis
by Michael Thomas D'Mic
Lexington, 2014

For anyone wondering why the School of Salamanca is said to have founded the modern study of economics, tremendous insight is provided by D’Emic’s study of Cristóbal de Villalón’s El provechoso tratado de cambios y contrataciones de mercaderes y reprobación de usura (Valladolid, 1541) and Luis Saravia de la Calle’s La instrución de mercaderes muy provechosa (Medina del Campo, 1544), the latter with its important subsection, Tratado de cambios. The reason is the deep interest taken by everyone from academic theologians to street-level confessors in the thoughts and behaviors of Castilian merchants circa 1550. From a broad perspective, the new financial and commercial reality meant that business activity now attracted the attention of religious authorities worried about the souls of their congregants. Medieval trade in wool and wheat at seasonal fairs had become early modern trade in everything under the sun, involving complex international operations and calling for methodical moral evaluation. From a broader perspective, the new, impersonal and money-based bourgeois capitalist society was beginning to outpace the older agrarian one.

D’Emic wades straight into the financial details of mid-sixteenth-century Castile. The fact that modern merchants and financiers were forced to submit to moral authorities, who, for their part, maintained medieval perspectives on business, made for curious social feedback mechanisms. As one example, the instinctive antipathy toward usury on the part of religious and intellectual authorities—who were usually the same, and who usually appealed to Aristotle’s and Aquinas’s awkward, abstract view of the “unnaturalness” of making money with money—forced merchants to resort to elaborate financial instruments. And as these financial instruments became more elaborate, the churchmen entrusted with deciding whether or not they were moral labored to produce detailed accounts of their use. That is how D’Emic’s book is about the early modern birth of the field of economics in mid-sixteenth-century Spain.

An example of one of these elaborate financial instruments was the cambio seco, or “dry exchange,” which D’Emic calls loansharking (33). It allowed aggressive lenders to interact with desperate borrowers, the latter usually smaller or out-of-town merchants who had less access to credit. The interest payments on these contracts indicate a clear understanding of risk premium. Moreover, in order …read more


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