What is money? The obvious answer is that money is a means of exchange, a handy way of overcoming the inconveniences of the barter system. Originally, valuable goods were exchanged for equally valuable metals; gold weighed less than cattle, and its value was universally recognized, so it could be traded for anything. The sort of fiat money that we are familiar with today would have seemed alien, probably even frightening, to ancient man: on what basis would he have faith in the power of this token? Once he had given up his cow for a bit of colored paper, why would someone else be willing to take the paper in exchange for a cow?
Money is an abstraction of value. It is also a promise: implicit in the conversion of goods to money is the assurance that the abstraction can once more be made concrete. It is, in this way, similar to language: a word is both an abstraction of a concrete thing, and also a sign that points back towards that thing. Both words and money can be made to lie. If I say “There is plenty to eat in the cupboard,” and there is not plenty to eat, the words have been made to signify a reality that is not there. If someone’s life or freedom of action is dependent on the existence of the thing that is not there, then the lie assumes true moral gravity: it not only offends against truth, but also harms the person who believes the lie. If someone produces money that does not correspond to any genuine value, this is the financial equivalent of lying — and since money is generally used to vouchsafe the value of human labor and the ability to procure the means of survival, it is a grave lie indeed.
Financial gurus perennially point out that “rich people don’t work for their money; they make their money work for them.” What they mean is either one of two things:
Rich people buy up the means of production and charge other people for the right to use them.
Rich people lend their money at interest and make a profit from usury.
Both of these practices are problematic. The first violates the principle of private property because it tends to concentrate ownership in the hands of the few. “The right to private property, acquired or received in a just way, does not do away with the original gift of the earth to the whole of mankind. The universal destination of goods remains primordial, even if the promotion of the common good requires respect for the right to private property and its exercise” (CCC 2403). The Vatican is very clear in emphasizing that the right to private property is not a right to amass property at the expense of others, but rather a universal right which is best realized when the maximum possible number of people are enabled to share in ownership, for “every man has by nature the right to possess property as his own” (Rerum Novarum). This is a point that we will return to later.
Usury poses even greater problems. It is condemned in the Old Testament, particularly in relation to the poor: “If you lend money to any of my people, to any poor man among you, you must not play the usurer with him: you must not demand interest from him” (Exod 22:25). Until the Middle Ages, the Church forbade lending at interest, and today the Vatican continues to plead for the forgiveness of usurious debts which enslave individuals and nations.
Usury subtly changes the nature of money so that it ceases to express values that actually exist, and comes to express debt. It is a promise that something of value will come into being in the future. This kind of promise lacks integrity because it offers what it does not yet possess. A man who promises to bring his love back the heart of a dragon means that he will try to bring his love back the heart of a dragon, that he earnestly desires to do so, and will make an honest effort. It by no means ensures that a dragon’s heart will ever actually manifest on his lady’s table. It is a very different sort of promise than the promise to give himself lovingly to his lady for the rest of his life: a promise which he may make because he is already in possession of himself, and may certainly expect to continue in such self-possession until his death.
The condemnation of usury does not preclude speculative investment. The difference between usury and legitimate forms of investment is that the usurer is being paid for the use of his money, and he expects to get his money back, with interest, regardless of whether his debtor is able to pay. An investor joins his wealth to someone else’s project in the anticipation that the venture will succeed. He does not get a return on his investment, or even recoup his capital, unless his wealth is used to produce something of real value.
Usury on a private scale has caused countless social ills: indentured slavery, debtors prisons, and violent debt collections. On a public scale, it is catastrophic. The recent banker bail-outs are a case in point: the economic stability of the United States depended on the value of usurious loans which were made in bad faith. When it did not prove possible to redeem these debts, it was necessary to commit a universal robbery — to pay for the mistakes of the rich by taking money from the middle class and the poor. Such injustices are endemic to societies in which usury is the norm.
Excerpted from Slave of Two Masters
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