Sunday, June 9, 2013

In praise of usury... a pedagogical device.

Imagine you want to get across to students that actually the history of economic thought is not one big middle school cafeteria food fight over the size of government. It's actually not a war between Smith, a couple of French guys, and pretty much everyone from Austria vs. everyone else.

In fact, it's a science. The economy is complex so authoritative scientists looking at complex problems often result in dominant views waxing and waning but generally everyone makes solid contributions that are built into each other and increasingly formalized over time (and all of that is a good thing).

Usury is a great subject for presenting in a nutshell that this is how we ought to understand the history of economic thought.

First, it's easy to begin at the beginning with usury: Bible, Aristotle, Scholastics.

Second, lots of major figures talked about it (understood broadly now as charging interest): Smith, Bentham, Fisher, Keynes, Stiglitz - and surely lots of others in between but those are five really good milestone people.

Third, many of these people referred to each others arguments, and they all took slightly different perspective or looked at it from different angles.

Fourth, even the technical arguments in this series aren't too technical (except perhaps Stiglitz).

Fifth, all the contributions are relatively short.

And sixth, if you asked an economist today what to think of things like interest rates on payday loans they would give a response that was cognizant of all the contributions of all five of those thinkers as well as the concerns of the Scholastics and Aristotle.

I think that is a nice lesson in how the history of economic thought works that is a good way to set the tone for a four month exploration of the subject.


  1. Sounds interesting. :)

  2. If you are going to discuss usury, Daniel P. Kuehn, are you going to consider this paper as additional reading for the undergraduates?

  3. Jct: I'd love to hear how the group can all expect to repay 11 when the group all only got 10 in their mort-gage death-gamble contracts?

  4. You first paragraph kind of sounds like a dig at the LvMI, but Rothbard actually didn't care for Smith.


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