The Middle Ages

Backhouse, Chp 2

Following historical convention, Backhouse dates the Middle Ages from the fall of Rome in A.D. 476 to the fifteenth century, when Constantinople fell to the Turks (1453) and Portuguese and Spanish explorers began sailing to south Asia and the Americas.  As Backhouse notes, the Western Roman Empire fell not only because of the barbarian German tribes constantly assaulting the northern frontier but also because of internal economic problems.  With the fall of the Empire, the process of economic and social disintegration that had been underway for a century speeded up.  What had been for a long time a highly integrated system fell apart quite rapidly. 

Feudalism arose as the dominant economic form in medieval Europe.  No large, lasting states emerged.  Instead, political power was exercised by nobles of various ranks over relatively small areas under their control.  The basis of feudalism was allegiance.  Inferior nobles (e.g., barons) held their possessions subject to the performance of duties for superior nobles (e.g., dukes), who were ostensibly in control of larger areas.  Theoretically, the dukes held their possessions at the pleasure of the king, but in fact more than one king found himself virtually hostage to a united group of dukes, so that the political situation was usually dicey.

The economic basis of feudalism was the manor, a self-contained estate worked by serfs, who were tied to the land (regardless of who “owned” it).  Serfs, though low in the pecking order, were not slaves.  By law and custom, they had certain rights due them from the lords, just as they owed the lords certain goods and services.  Economic historians have demonstrated that the economic position of serfs also varied with economic conditions.  For example, as the population of serfs grew relative to the available land, the “customary” wages (paid in kind) allocated to the serfs tended to fall – as any labor economist would predict.  On the other hand, after the Black Death killed off a significant portion of the European population, the wages of the serfs rose; labor was relatively scarce, land plentiful.

Learning - in the sense of the arts, literature, and science - virtually died in Europe from the sixth to the tenth centuries.  Germanic invasions, constant raids by the Vikings, and movements of tribes from western Asia kept Europe in turmoil.  Had it not been for the Celtic monks of Ireland, southern European learning would have been lost to Europe.  In other places, learning flourished, for the Dark Ages in Europe were the ages of high learning in the Islamic world, which stretched from India through North Africa to Spain and southern France.  Much Islamic science and philosophy was based on Greek thought.  Islamic centers of learning arose in various places, including Spain.  Indeed, European scholars (Christian clerics) eventually began to study with the Muslims and Jews in such places as Toledo.

Even in Europe, learning of a more basic sort continued. A wide array of practical inventions were developed and improved during the "Dark Ages." Many of these inventions were crucial to the development of the European economy, which progressed considerably between the fall of Rome and the 10th century.

With the gradual civilization of Europe, higher learning once again began to spread.  By the eleventh century, Catholic scholars were actively devising a philosophical system that would unify all thought.  They drew on Greek, Jewish, and early Christian thought.

Hebrew Economic Thought

Much of the economic content found in Hebrew Scriptures antedates the ideas of the Greeks.  The Hebrews were an agricultural and pastoral people and the laws found in the Torah reflect that. 

Hebrew thought was not speculative, but practical.  The Torah (Law) records the truth of Yahweh revealed to his servants, beginning with Moses.  The Torah suits a pastoral/agrarian culture, such as existed for many centuries in Palestine.  Because of its source in the nature of God, the Torah presents a moral law, rooted in the Creator of the nation (and of the universe).

Several key ideas are obvious in the Torah.  First, the Hebrews respected private property, although they did not see it as rooted in some inalienable right, but in the provision of God.  Thus, because Yahweh provided the promised land for the nation of Israel, the land was inalienable:  a person could sell the use of the land to another outside his family for a period of up to 49 years, but in the Jubilee year, all agricultural land returned to the family to which it was originally assigned.  Houses in towns were another matter and could be sold permanently.  (Despite its clear statement in the Torah, there is no evidence the Hebrews actually kept the Jubilee.)  Similarly, although the Hebrews practiced slavery, Hebrew slaves were to be freed every Sabbath year and provided with enough economic goods to establish their households independently.

A strong element of concern for the poor runs throughout Hebrew thought.  Labor is regarded in a positive light.  Wealth earned through honest means was approved of, especially if the wealthy were liberal in their treatment of the less fortunate.  Prohibitions of dishonesty abound throughout the Hebrew Scriptures, as do condemnations of taking interest for loans made to the poor.  It appears that these loans were for basic necessities, not for business purposes, so the prohibition of usury reflects the injunction to be generous to the poor rather than a hostile attitude toward business. 

As Backhouse notes, the Hebrew prophets condemned dishonest gain, as well as wealth acquired by exploiting the poor.  However, those who were generous and kept the law, while also becoming wealthy, were looked upon as favored by God.  Motive is the issue.

Early Christianity

The early church expected Christ to return to earth soon, bringing an end to history.  Thus, neither the New Testament nor the writings of the early church fathers contain much economic content.  The New Testament contains numerous injunctions against loving money or wealth rather than God, as well as against greed and dishonesty.  The early Jerusalem church appears to have practiced a form of communism, but it was also quite poor.  The Apostle Paul even collected an offering for the Jerusalem church from churches he had planted in Asia Minor (western Turkey) and Greece.

The only early Christian writer to make an appreciable contribution to economic thought – and that only indirectly – was Augustine, Bishop of Hippo (354-430).  Raised in north Africa, Augustine was trained in philosophy and was a teacher of rhetoric in his younger years.  He converted wholeheartedly to Christianity at age 31 and gave up his teaching career in favor of serving the church.  Widely read and quite brilliant, Augustine defended the Catholic faith against heresies and, ultimately, against the charge that the Church was one cause of the fall of Rome.  In The City of God, Augustine looked forward to the creation of a new society, patterned more closely after God’s perfect society.  While Augustine made no signal contributions to economic thought, his major book did focus on the possibility of progress, rather than looking back as Christian writings previously had done.

Islam

Islamic literature drew its moral principles from the Qu’ran.  Some later Islamic philosophers blended Muslim thought with Greek philosophy.  Averroes (Ibn Rushd, 1126-98), who was the chief judge in the Spanish city of Cordobá, translated Aristotle into Arabic, from which it was translated into Latin.  Thus were Aristotle’s works made available to medieval Christian scholars, who had lost the ability to read Greek.  This was, in truth, the major way in which Islamic thought affected the development of modern economics, even though the Islamic world was far advanced economically, compared to Christian Europe, for several centuries.

Scholasticism

Europe slowly civilized over the centuries.  As wealth grew, so did the demand for understanding by priests of how the economy worked and thus the demand for learning.  In response to these demands, universities were established.  The most important of these, though not the oldest, was in Paris.  There, in the twelfth and thirteenth centuries, some learned doctors began to develop a systematic approach to social life based on the teachings of the church, Aristotelian philosophy, and a better understanding of the nature of economic forces.

Three topics drew especial interest:  usury, the just price, and the value of money. 

Q      What was the problem with usury?

Since we will be discussing the just price in a seminar, we won’t bother with it today.  Instead, we’ll spend the remainder of our time talking about Nicole Oresme’s writings on money.

Nicole Oresme and the Theory of Money

Q      Oresme wrote in the 14^th century.  Why is that significant?

Q      What was the major economic effect of the Black Death?

Q  Q  Powerful rulers in need of funds to finance their activities have always been tempted to manipulate the money supply.  In what way did kings manipulate money in those days?

Q      What was the effect of this?

Q      What was Oresme’s position on the king altering the value of money?

Q  Q   What happens when a king debases his coins?

Q      Did Oresme realize this?