The Late Salamancans

The Late Salamancans

The School of Salamanca, begun by Francisco Vitoria in the 1520s, reached its final flowering at the end of the sixteenth century. One of the leading lights of that era was the Dominican Domingo de Banez de Mondragon (1527-1604), professor of theology at the University of Salamanca, and friend and confessor of the famous mystic St Theresa of Avila. De Banez was renowned for the great controversy with his eminent Jesuit colleague Luis de Molina, on the crucial question of determinism versus free will. De Banez took the Dominican position, which leaned toward the 'Calvinist' - deter-minist stand that salvation is solely a product of God's grace, ordered from the beginning of time for God's own inscrutable reasons. Molina championed the Jesuit view, which upheld the freedom of will of each individual in achieving salvation. In the latter view, the free will choice of the individual is necessary to effectuate God's grace which is there for him to accept. A historian sums up Molina's view of free will with these inspiring words: 'Liberty is ours, so indisputably ours, that, with the help of God's gifts, it lies in our power to avoid all mortal sin and to attain eternal life. Freedom belongs to the sons of God'.

In a systematic discussion of money, its value, and foreign exchange, De Banez (in De Justitia et Jure, 1594), provided a cogent discussion of the purchasing-power parity theory of exchanges, a theory which had formed the scholastic main line since De Soto and Azpilcueta.

The last notable Salamancan economic thinker was the great theologian Luis de Molina (1535-1601). The ascendancy of Molina in Spanish scholas­tic thought was a fitting embodiment of the passing of the theological and the natural law torch from the Dominicans to the aggressive new Jesuit Order. By the late sixteenth century, the influence of the Order permeated all of Spain.

Though a Salamancan through and through, Molina only briefly studied and never actually taught at that university. Born in Cuenca of a noble family, Molina went briefly to Salamanca, and then to the University of Alcala. Entering the new Jesuit Order, Molina was sent to the University of Coimbra in Portugal, since the Jesuit Order was not yet fully organized in Castile. Molina was to remain 29 years as a student and teacher in Portugal. After Coimbra, the habitually shabbily dressed Molina taught theology and civil law for 20 years at the University of Evora. In retirement back in Cuenca, the learned and worldly Molina published his massive six-volume magnum opus, De Justitia et Jure. The first three volumes were published in 1593, 1597 and 1600, and the other volumes followed posthumously.

Luis de Molina was a solid economic liberal, and he provided a compre­hensive analysis, in the Salamancan vein, of supply and demand and their determination of price. The just price is, of course, the common market price. One important addition that Molina made to his forerunners was to point out that goods supplied at retail in small quantities will sell at a higher unit price than at bulk sales before the goods get to the retailer. This argument also served as an added justification for the existence of the much-abused retailer.

But Molina in economics was primarily a monetary theorist. Here, he endorsed and carried forward the purchasing-power parity theory of ex­change rates and the Salamancan analysis of the value of money, even explic­itly endorsing the work of his theological opponent, Domingo de Banez. Molina's analysis of the determination of the value of money and its changes was the most subtle to date, using explicit 'other things being equal' {ceteris paribus) clauses, and developing the analysis of the determinants of the demand for money.

Thus, on the causes of changes in price and particularly of the Spanish inflation of the sixteenth century, Molina wrote:

Just as an abundance of goods causes prices to fall (the quantity of money and number of merchants being equal), so does an abundance of money cause them to rise (the quantity of goods and number of merchants being equal). The reason is that the money by itself becomes less valuable for the purpose of buying and comparing goods. Thus we see that in Spain the purchasing-power of money is far lower, on account of its abundance, than it was eighty years ago. A thing that could be bought for two ducats at that time is nowadays worth five, six, or even more. Wages have risen in the same proportion, and so have dowries, the price of estates, the income from benefices, and other things.
After going through the standard Spanish scholastic analysis of how abun­dance of money causes a fall in its value, first and foremost in the New World, then in Seville and Spain, Molina noted the importance of the demand for money: 'Wherever the demand for money is greatest, whether for buying or carrying goods, conducting other business, waging war, holding the royal court, or for any other reason, there will its value be highest'.

It is not surprising that the economic liberal Molina strongly attacked any government fixing of exchange rates. The value of one currency in terms of another is always changing in response to supply and demand forces, and therefore it is meet and just that exchange rates fluctuate accordingly. Molina then pointed out that fixed exchange rates would create a shortage of money. He did not, however, go into detail.

Molina also inveighed against most governmental price controls, particu­larly the imposing of ceiling prices on farm commodities.

On usury, Molina, while still not going as far as the radical acceptance of interest by Conrad Summenhart a century earlier, took important steps in widening the accepted bounds of the charging of interest. He put his immense prestige behind Juan de Medina's entirely new defence of charging payment for the lender's assumption of risk. Indeed, he widened Medina's permitted bounds of using the risk defence. Not only that: Molina greatly widened the scope of lucrum cessans, and solidly entrenched that permissible title to interest as a broad principle permeating the market economy. One of the few remaining restrictions is intention: the loan is not permissible if the lender had not intended to invest the loaned funds.

Luis de Molina also played an important role in reviving active natural rights and private-property rights theory, which had fallen into a decline since the early part of the sixteenth century. Humanists and Protestants, as we shall see below, had little use for the concept of natural rights, while Vitoria and the Dominicans slipped into a determinist, passive or attenuated view of rights. Only the University of Louvain, in Belgium, began to serve as a centre of free will thought, along with the idea of absolute natural rights of person and property. The Louvain theologian Johannes Driedo stressed freedom of the will (in De Concordia, 1537) and active natural rights {De Libertate Christiana, 1548).
By the 1580s, the new Jesuit Order began to launch its assault on the Dominicans, whom they suspected of crypto-Calvinism - a suspicion not allayed by the fact that many Dominicans had converted to Calvinism during the sixteenth century. In the course of his championing free will against de Banez and the Dominicans, Molina also returned to the active natural rights view which had for long only continued to be upheld at Louvain. Attacking the passive claim theory of rights, Molina put the distinction very clearly:

When we say...that someone has a ius to something, we do not mean that any­thing is owed to him, but that he has a faculty to it, whose contravention would cause him injury. In this way we say that someone has a ius to use his own things, such as consuming his own food - that is, if he is impeded, injury and injustice will be done to him. In the same way that a pauper has the ius to beg alms, a merchant has the ius to sell his wares, etc.

Note that the astute Molina did not say that the pauper had the right to be given alms. For Molina, as for all active property rights theorists, a 'right' was not a claim to someone else's property, but was, on the contrary a clear-cut right to use one's own property without someone else's claim being levied upon it.

It was Molina's achievement to link this active natural rights theory with his libertarian commitment to freedom and the free will of each individual, both theologically and philosophically. Professor Tuck sums up this linkage with these stirring words: Molina's 'was a theory which involved a picture of man as a free and independent being, making his own decisions and being held to them, on matters to do with both his physical and his spiritual welfare'.

The School of Salamanca had begun with the distinguished jurist, de Vitoria, and so it is fitting that the last major Salamancan should be another renowned jurist, and perhaps the most illustrious thinker in the history of the Jesuit Order - Francisco Suarez (1548-1617). The last of the great Thomists, this celebrated theologian was born in Granada into an ancient noble family. Entering the University of Salamanca, Suarez applied to the Jesuit Order in 1564 and was the only applicant among 50 candidates that year to be rejected - as mentally and physically below standard! Admitted finally with an infe­rior rank, Suarez could hardly keep up with his studies and was known -ironically like St Thomas Aquinas before him - as the 'dumb ox'. Soon, however, the humble and modest Suarez became the star pupil, and it was not long before his theology professors were asking him for advice.

In 1571, Suarez became professor of philosophy at Segovia, then taught theology at Avila and Valladolid. Suarez soon attained to the famous chair of theology at the Jesuit College in Rome. From there, due to ill health, Suarez returned to Spain, teaching at Alcala, where he was virtually ignored, and then to Salamanca, where, as in Alcald, he lost academic disputes to inferior rivals. In 1593, the emperor insisted on Suarez's accepting the main chair of theology at Coimbra, where, in 1612, he published his masterwork, De Legibus ac de Deo Legislatore.

Francisco Suarez never achieved his due in life. His quiet, plodding lecture style made him lose academic influence to flashier though inferior rivals. Perhaps the crowning indignity heaped upon him is that, in 1597, at the age of 49, this brilliant and learned jurist and theologian, perhaps the greatest mind in the history of the Jesuit Order, was forced to leave the University of Coimbra for a year to obtain a doctorate in theology at Evora. Ph.D-itis in the sixteenth century!3
While Suarez contributed little on strictly economic matters, he added greatly to the weight of the Louvain-Molina rediscovery of the active natural rights view of private property, and he reinforced the great impact of Molinist freewill theory. In addition, Suarez had a much more restricted view of the just power of the king than did Molina or his other predecessors. To Suarez the power of the ruler is in no sense a divinely created institution since political power by natural and divine law devolves solely on the people as a whole. The community as a whole confers political power on the king or other set of rulers; and while Suarez believed that natural law requires some form of state, the sovereign power of any particular state 'must necessarily be bestowed upon him by the consent of the community'.

Suarez's theory, of course, held radical implications indeed. For if the people or the community confer state power on a king or a set of rulers, may they not then take it away? Here, Suarez fumbled; he was certainly not prepared to go all the way to a truly radical or revolutionary position. No, he declared inconsistently, once the sovereign power is conferred by the people on a king, it is his forever; the people cannot take it back. But then Suarez shifts once more, adopting the traditional Thomist doctrine of the right of the people to resist tyrants. If a king lapses into tyranny, then the people may rise up and resist, and even assassinate the king. But Suarez, like his forbears, hedged this powerful right of 'tyrannicide' with a thicket of restrictions; in particular, tyranny must be manifest, and a private person cannot rise up himself and kill the king. The act must in some way be mandated by the people or community acting as a whole.