Paradoxes drowned

This is just a pious thought that I shared with my friends the other day. What follows after the message screenshot[1] is just some elaboration upon it that I thought to do, and which is the reason this is a blog post at all. If you thought that the image that I attached to my message is pretty, and would like to see other such images, please check the “Concerning Faith of Things Not Seen” Facebook page (named after Augustine’s work of the same name); I run it, though not alone.

The Stoics were fond of saying various shocking sentences,[2] which they did believe to be literally true within their philosophy. “By a paradox is meant that which runs counter to general opinion,” as St. George Stock[3] explains it to us; the word meant something strange or incredible, which is still a sense in use today (esp. in the adjective “paradoxical”), although it has often been contracted to refer only to self-contradictory statements.

“It is perhaps these very paradoxes which account for the puzzled fascination with which Stoicism affected the mind of antiquity, just as obscurity in a poet may prove a surer passport to fame than more strictly poetical merits.” Some examples that he gives are, “Virtue is the only good”, “All faults are equal”, “Every fool is mad”, “Only the sage is free and every fool is a slave”, “The sage alone is wealthy”, “Good men are always happy and bad men always miserable”, “All goods are equal”, “No one is wiser or happier than another”, “No wise man is unhappy”.

I note that it is the same genre of things that are said in the “Admonition 5”, of St Francis of Assisi – reproduced here below, from the OLL edition of his writings. Compare the incredulity and doubt of the Greek audience of such statements with the reaction of a Christian audience to these quotes, which in my experience is usually one of immediate admiration and assent. May not a miracle have happened here?

Consider, O man, how great the excellence in which the Lord has placed you because He has created and formed you to the image of His beloved Son according to the body and to His own likeness according to the spirit. And all the creatures that are under heaven serve and know and obey their Creator in their own way better than you And even the demons did not crucify Him, but you together with them crucified Him and still crucify Him by taking delight in vices and sins. Wherefore then can you glory? For if you were so clever and wise that you possessed all science, and if you knew how to interpret every form of language and to investigate heavenly things minutely, you could not glory in all this, because one demon has known more of heavenly things and still knows more of earthly things than all men, although there may be some man who has received from the Lord a special knowledge of sovereign wisdom. In like manner, if you were handsomer and richer than all others, and even if you could work wonders and put the demons to flight, all these things are hurtful to you and in nowise belong to you, and in them you cannot glory; that, however, in which we may glory is in our infirmities, and in bearing daily the holy cross of our Lord Jesus Christ.

A similar, related writing was shared by Cal when I was talking about this, which I also reproduce here. Titled “True and Perfect Joy” (De vera et perfecta laetitia), I have copied it from this website without the philological information that was attached to it.

The same [Brother Leonard] related in the same place that one day at Saint Mary’s, blessed Francis called Brother Leo and said: “Brother Leo, write.” He responded: “Look, I’m ready!” “Write,” he said, “what true joy is.”

“A messenger arrives and says that all the Masters of Paris have entered the Order. Write: this isn’t true joy! Or, that all the prelates, archbishops and bishops beyond the mountains, as well as the King of France and the King of England [have entered the Order]. Write: this isn’t true joy! Again, that my brothers have gone to the non-believers and converted all of them to the faith; again, that I have so much grace from God that I heal the sick and perform many miracles. I tell you true joy doesn’t consist in any of these things.”

“Then what is true joy?”

“I return from Perugia and arrive here in the dead of night. It’s winter time, muddy, and so cold that icicles have formed on the edges of my habit and keep striking my legs and blood flows from such wounds. Freezing, covered with mud and ice, I come to the gate and, after I’ve knocked and called for some time, a brother comes and asks: ‘Who are you?’ ‘Brother Francis,’ I answer. ‘Go away!’ he says. ‘This is not a decent hour to be wandering about! You may not come in!’ When I insist, he replies: ‘Go away! You are simple and stupid! Don’t come back to us again! There are many of us here like you—we don’t need you!’ I stand again at the door and say: ‘For the love of God, take me in tonight!" And he replies: ‘I will not! Go to the Crosiers’ place and ask there!’

“I tell you this: If I had patience and did not become upset, true joy, as well as true virtue and the salvation of my soul, would consist in this.”

[1] I thought it fitting to include in the screenshot that it happened in a “Catholic Theology” group chat on Messenger, but please do not ask to be added to it. Do become Catholic, if you aren’t yet.

[2] In a famous sentence, the SEP tells us that “it seems clear that some Stoics took a kind of perverse joy in advocating views which seem so at odds with common sense”, although “they did not do so simply to shock”. It does seem clear.

[3] Not canonized; his first name was “St. George”. Full name “St. George William Joseph Stock”.

Titles to interest

This blog post is meant to define a new extrinsic title to legitimate taking of interest, in view of the Catholic doctrine on usury. I begin with some quotations that are helpful to my purpose. If you are not familiar enough with the doctrine to follow what is said, try checking the Catholic Encyclopedia on usury and interest.

6. Leo X, in the Fifth Council of Lateran, 1515, ruled that – “usury is properly interpreted to be the attempt to draw profit and increment, without labour, without cost, and without risk, out of the use of a thing that does not fructify.” In 1745, Benedict XIV wrote in the same sense to the Bishops of Italy: “That kind of sin which is called usury, and which has its proper seat and place in the contract of mutuum, consists in turning that contract, which of its own nature requires the amount returned exactly to balance the amount received, into a ground for demanding a return in excess of the amount received.” Mutuum, be it observed, is a loan for a definite period, of some article, the use of which lies in its consumption, as matches, fuel, food, and, in one respect, money. We shall prove this to be properly a gratuitous contract. (s. iv., n. 4, p. 254.)

7. Usury then is no mere taking of exorbitant interest. There is no question of more or less, but it is usury to take any interest at all upon the loan of a piece of property, which

(a) is of no use except to be used up, spent, consumed:

(b) is not wanted for the lender’s own consumption within the period of the loan:

(c) is lent upon security that obviates risk:

(d) is so lent that the lender foregoes no occasion of lawful gain by lending it.

8. When all these four conditions are fulfilled, and yet interest is exacted upon a loan, such interest is usurious and unjust. And why? Simply by reason of the principle that we laid down before, speaking of private exchange (n. 3), a principle that is thus stated by St. Thomas:

“If one party is much benefited by the commodity which he receives of the other, while the other, the seller, is not a loser by going without the article, no extra price must be put on. The reason is, because the benefit that accrues to one party is not from the seller, but from the condition of the buyer. Now no one ought to sell to another that which is not his, though he may sell the loss that he suffers. He, however, who is much benefited by the commodity he receives of another, may spontaneously bestow some extra recompense on the seller: that is the part of one who has the feelings of a gentleman.” (2a 2ae, q. 77, art. 1, in corp.)

— Joseph Rickaby, S.J., Moral Philosophy, 2.5, §5

It is in view of the conditions laid out by Leo and by Fr. Rickaby that moralists have often explicitly recognized certain legitimate “extrinsic titles” to interest, as explained below:

“Loss occurring (damnum emergens) and profit ceasing (lucrum cessans) are the two great titles to interest, as interest is understood today, a return owed without fault of the debtor.” If one could have made a profit with one’s money instead of loaning it (and can prove it!) then this becomes a legitimate title for interest. If I were going to purchase an orchard, but made the loan instead, the lender might also owe me the profit I lost from not owning the orchard. This title would become much more important as commercial centers and opportunities for investment became prevalent. Much later, it might even come to include the cost of one’s labor in making the loan (a just wage for bankers). “In the eyes of the Church, the most important and legitimate one [excuse], held that usury could be considered a salary, a remuneration for labor (stipendium laboris).”

— Fr. Gary L Coulter, The Church and Usury, ch. 3

Less commonly, some people have recognized inflation as a legitimate title to interest, so that a lender could lawfully charge an interest rate to cover the rate of inflation. Germain Grisez mentions this, in passing, in a passage quoted by Fr. Coulter:

Those who deposit or lend can fairly charge for various other factors: costs incurred in making and administering the loan, the risk of non-payment, probable inflation, taxes, the foregoing of other legitimate uses to which the money otherwise would be put, and so on.

— Germain Grisez, Living a Christian Life, vol. 2 of The Way of the Lord Jesus (Quincy, IL: Franciscan Press, 1993), 834

If someone were only familiar with the three titles just mentioned before – damnum emergens, lucrum cessans and stipendium laboris –, allowing for inflation could seem strange. It certainly did in the (rather extreme) opinion of the late Zippy Catholic. As my friend Calvin Engime once told me:

I used to accept inflation as a title to interest because Germain Grisez said it is one, but I don’t see the reason for this. It comes back to: what would have happened if you hadn’t made the loan? The money would still have declined in value while sitting in your pocket, and why should the borrower have to compensate you for that?

If someone were to object to Cal’s opinion by saying that the money could be invested to prevent its decline in value, Cal would certainly point out, correctly, that this fact could not be a reason for inflation as a title to interest, but only for lucrum cessans, which he does not dispute. So, is there any reason for Grisez’s statement?

I think there is, and I submit that it lies in the second condition laid out by Fr. Rickaby in the first quote from above, that the property loaned, being something consumed in use, “is not wanted for the lender’s own consumption within the period of the loan.” The difference between inflation, as a title to interest, and lucrum cessans, is that the inflation title represents foregone consumption, in an economic sense, as opposed to production, which is represented by lucrum cessans.

The inflation-title is the compensation for the decline in your power to consume, because you could have chosen to buy something instead of making the loan, and by making the loan you have delayed this consumption to a time when your money is worth less; it is only right that you be compensated for doing this, since it lowers your quality of life to some extent, and you do it only for the sake of making the loan.

This is fair enough, and certainly correct, but it is not usually seen because loans are usually made out of stored “savings”, which the lender did not mean to spend consumptively (as opposed to productively) any time soon. If the money was unlikely to be spent, anyway, why should there be compensation for the decline in value that it would have suffered while not being spent?

The answer is that, regardless of whether the money will be spent or not, it remains that, in a fundamentally uncertain world, there is always some usefulness to having cash holdings, because the probability that some desire to use it consumptively will arise is never zero. While holding cash, the saver enjoys the potential to consume whenever he wants, if he happens to want it, and this potential is itself useful. If it were not, then he would, of course, spend his cash instead of holding it, either productively or consumptively.

The service that money renders does not consist in its turnover. It consists in its being ready in cash holdings for any future use.

Money is never “idle.” It always renders to somebody the only service that it can render, namely being a part of a man’s cash holdings.

Cash holdings are sometimes greater and sometimes smaller with the same individual. But nobody ever has cash holdings greater than he wants to have. If he thinks that his cash holdings are excessive, he invests the surplus either by buying (producers’ or consumers’ goods) or by lending it. (Time deposits are one method of lending money.) [...]

— Ludwig von Mises, On the Velocity of Circulation

Now, once we acknowledge the usefulness of this potential to consume, which is undeniable, we have done more than explain the title of inflation. This is where my new legitimate title to interest comes in; I shall call it the potentiality title, or title of potentiality, after the potential to consume. I will explain it next.

There is no reason why only the decrease in the potential to consume due to inflation should be admitted as a legitimate title to interest. The potential itself, being useful, is of different usefulness to different persons, according to how they rate their probability of desiring to consume in the future. This can only be evaluated according to the lender’s foresight regarding opportunities to consume.

So, plainly, it is legitimate that the lender charge interest on a loan in order to be compensated for his loss of potential to consume, since this loss lowers his quality of life to some extent, and he incurs it only for the sake of making the loan. Because of the nature of the usefulness of the potential, the precise just rate of this interest can only be determined with knowledge of the lender’s mind. Which should allow almost any numerical rate to be justified, effectively; the exception would be when there are reasons to suspect the lender of allowing his estimation to be influenced by unjust motives.

To some people, this may seem like a rash conclusion. It may ease their minds to consider these facts which Cal told me about before, in an earlier conversation:

Up to the 19th Century, the burden was on anyone who had collected interest on a loan to affirmatively demonstrate that it was justified, or else he could not be absolved unless he made reparation of what he had taken. Then some theologians advanced the theory of “title of civil law,” according to which the fact that the civil law permitted a certain rate of interest was sufficient title to it, independent of any other claim. The Holy See ruled that, pending a definitive judgement on the legitimacy of this opinion, those who put it into practice were not to be disturbed, at least as long as the rate of interest is not flagrantly excessive, and there the matter has pretty much stood ever since.

Now, not only does this other theory also allow almost any effective rate of interest to be morally justified – at least in most countries, which tend to permit almost any interest – it is also much less reasonable. For it claims that a lawmaker can turn a natural injustice into a just act with the mere stroke of a pen; whereas my opinion of the title of potentiality does no such thing, but explains the justice of the act on the basis of the undeniable fact that it is useful to hold cash for the reason that it gives someone the potential to consume in the future. So, if the conclusion regarding the “title of civil law” was not too rash to be put into practice, then much less so is my conclusion, which is a much more reasonable one.

Addendum, 2023-11-05

I have recently been reading Rothbard’s Austrian Perspective on the History of Economic Thought, volume 1, where §4.8, on Lessius and de Lugo, points out that the former had a similar theory, the title which he called “carentia pecuniae” (charging for lack of money). As Rothbard describes it, having cited Lessius’s work De Justitia et Jure (1605) as his source:

But that is not all. For Leonard Lessius contributed his own, new and powerful, weapon against the usury ban: a new ‘title’ or justification for interest. The new justification – prefigured only by the neglected Summenhart – was carentia pecuniae: charging for lack of money. Lessius pointed out quite cogently that the lender suffers the lack of his money, the lack of his liquidity, during the term of the loan, and therefore he is entitled to charge interest for this economic loss. In short, Lessius saw perceptively that everyone derives utility from liquidity, from the possession of money, and that being deprived of this utility is a lack for which the lender may and will demand compensation. Lessius pointed out that unexpected situations can and do arise which could be met far more effectively if one's money were in one's possession and not absent for a period of time. Time, in short, can and should be charged for, for that reason, ‘for it can never be obtained that the merchants do not value a long-term concession higher than a short-term one’. And those who are deprived of their money ‘value more the lack of their money for five months than the lack of it for four, and the lack of it for four more than three, and this is partly because they lack the opportunity of gaining with that money, partly because their principle is longer in danger...’.

Furthermore, Lessius points out that bills of exchange, or rights to future money, are always at a discount compared to cash. This discount is, of course, the rate of interest. Lessius explains: ‘This is a matter of common experience in that money provides the means to a multitude of things which those rights do not provide. Therefore they may be bought at a lower price’. Lessius also notes that merchants and exchangers daily determine the ‘price of the lack of money’ on the Antwerp Bourse, averaging about 10 per cent; and foreign exchanges, of inestimable value to the economy, would perish if such prices could not be charged.

Thus, for Lessius, the price for a lack of money is established on organized loan markets. But to the extent that a loan market exists, there is no need to justify each merchant's loan on the basis of his particular opportunity cost or deprivation of funds. That price, which becomes the just price, is set on the loan market. As Lessius puts it:

Moreover, any merchant seems able to demand this price... even though there is no gain of his that stops because of his loan. This is the just price for the privation of money among merchants; for the just price of an article or obligation in any community is that which is put upon it by that community in good faith for the sake of the common good in view of all the circumstances... Therefore, even if through the privation of money for a year there is no gain of mine that stops and no risk of capital, because such a price for just causes has been put upon this privation, I may demand it just as the rest do.

With carentia pecuniae, therefore, Leonard Lessius delivered the final blow to smash the usury prohibition, while unfortunately still retaining the prohibition in a formal sense. It is no wonder that Professor Noonan, the great scholar of the scholastics on usury, holds Lessius to be ‘the theologian whose views on usury most decidedly mark the arrival of a new era. More than any predecessor he would probably have felt completely at ease in the modern financial world.’ [John T. Noonan, Jr, The Scholastic Analysis of Usury (Cambridge, Mass.: Harvard University Press, 1957), p. 222.]

Bicodicism

This blog post has the aim of coining a word for a thing I have sometimes seen.

Some people, chiefly liberals and libertarians, will sometimes speak as though law and morality operate under entirely different principles. Not only is it different for something to be illegal and immoral, but these things are actually thought to be unrelated by nature, so that the disconnection between them is right and good, and would also exist in a more perfect legal system.

More specifically, they seem to think that some acts are intrinsically legally permissible or impermissible, and that these acts are different from the acts which are intrinsically morally permissible or impermissible. The legal code and the moral code may overlap, but there can be no general proposition about whether immoral things can or must be illegal, or vice-versa.

As this doctrine is believed, only the legal code may be enforced by the courts; the moral code, if the speaker is a Christian, is only enforced in the day of Judgment.

I have coined the term bicodicism for this idea; plainly, the name derives from the opinion’s belief in “two codes” or codices.

Bicodicism may be contrasted, for instance, with the opinion of Thomas Aquinas, who thought that all immoral acts could, in theory, be forbidden by law, but human law rightly allows some immoral acts because it is not possible for the majority to abstain from them; which is a practical reason, rather than a reason of principle.

A bicodicist might, instead, say that some acts are immoral but are legally permissible, because people have a legal right to do them. This is different from mere legal positivism because the bicodicist regards this as a correct state of the law, and may even find it to be immoral, or against ‘the principles of law’ (or some such phrase), to change the law to forbid the immoral act.

Lysander Spooner plainly stated a bicodicist doctrine in his famous pamphlet Vices are Not Crimes, where he defined some acts as vices and some as crimes, claiming that only the latter are passible of legal prohibition. Spooner’s definition of a crime has nothing to do with whether an act is in fact forbidden by the laws, so that his doctrine is not positivist.

I note that it is not necessary for someone to adopt bicodicism in order to be a liberal or a libertarian. For supposing that a man believed in Thomas’s doctrine as I have stated it, but also believed that acts which do not harm others are never possible for the majority to abstain from – or supposing that he thought that there are always overwhelming practical reasons for the sovereign not to forbid such acts – then he would certainly agree with the common liberal and libertarian doctrine, that acts which do not harm others should always be tolerated by law.

Follow-up on intellectual property, to Catholics

Since making my post on intellectual property, I have learned a couple of things. That post is still mostly accurate, so this post will assume you have read it and make a few short corrections.

Intellectual property as a natural right

Regarding the first part, I may have been too quick to suppose that the idea that there is a natural right to intellectual property, construed as being of the same kind as the right to private property, is innovative. I have spoken with Brian Besong about the post, and he told me that Francisco Suárez had developed similar ideas as part of his defense of probabilism; he also seemed quite sure that there must have been even earlier precedents in history. That may be; at the time of the post, it was hard for me to find research materials on the topic, and it still is. No concept of intellectual property was mentioned in connection with any ancient or medieval discussion of property that I have looked into, though. If there were examples, besides, I doubt that they had any more reason than Ayn Rand to affirm the doctrine.

On the other hand, back when I wrote the post, I had no opinion on the fundamental purpose of private property. Now, I am strongly convinced that individual appropriation only serves, fundamentally, the purpose of preventing action conflicts, which happen because one same material thing cannot be used for two different purposes at the same time. Now, since it is impossible for there to be an action conflict about ideas, it makes no sense for them to be individually appropriated – if they are property in any sense, they are, by right, common property, as all things, originally, are. I had also discussed this principle with Dr. Besong, but I do not find any of our discussion worth relaying here.

Intellectual property laws are not laws

Finally, I have an addition to the third part. There is another way in which intellectual property laws, taken as civil laws, may be thought to be null and void. It turns out that Thomas says that all laws, by nature, are intrinsically ordered to the common good. So, if intellectual property laws are not intrinsically so ordered – regardless of the intentions of the lawgivers – they do not have the nature of law. Which is to say, they are actually no laws at all, and cannot bind in conscience. I believe that this fact is demonstrable in two different ways.

First demonstration

Thomas says, regarding the effects of law:

The precepts of law are concerned with human acts, in which the law directs, as stated above. Again there are three kinds of human acts: for, as stated above, some acts are good generically, viz. acts of virtue; and in respect of these the act of the law is a precept or command, for “the law commands all acts of virtue” (Ethic. v, 1). Some acts are evil generically, viz. acts of vice, and in respect of these the law forbids. Some acts are generically indifferent, and in respect of these the law permits; and all acts that are either not distinctly good or not distinctly bad may be called indifferent. And it is the fear of punishment that law makes use of in order to ensure obedience: in which respect punishment is an effect of law.

In view of the nature of law, as explained before, it seems that a law must treat these kinds of acts in these ways in order to be law; a law which commanded evil, or forbade good, would not be law. Now, what intellectual property laws have in common with each other is, that they grant the IP rights-holder the authority to freely permit or proscribe (by means of licensing or not) the production of objects embodying the productive idea in question. But production is, generically, a good action. It follows that the enforcement of this authority is always calculated to forbid a good action, which is contrary to the nature of law.

Second demonstration

Just as goodness in general is rightly divided between the virtuous, the pleasant, and the useful – with this last one existing only for the sake of the other two – I believe that the common good is rightly divided into the achievement of virtue by the populace, as conceived of by the moralists, and the general welfare as conceived of by the economists.

Now, intellectual property laws do not promote virtue. There is no reason to think they do, unless one were to hold the implausible opinion that such laws protect a natural right.

Such laws are not conducive to the general welfare either, and are in fact deleterious to it. The argument from the first demonstration also holds in economics; furthermore, economists have developed their own proofs of this proposition. One is seen in this paper, written from an Austrian School perspective; a more elaborate argument is made by this book, which is written from a neoclassical point-of-view. For these reasons, we have scientific certainty that these laws are, on balance, destructive of welfare.

Since intellectual property laws are not ordered either to virtue or to the general welfare, which are the two parts of the common good, these so-called laws are not ordered to the common good at all. Which means that they lack the nature of law, and so cannot bind in conscience.