Money for Nothing: The Sin of Usury
16 Pages Posted: 4 May 2020
Date Written: November 25, 2008
I present an overview of the teachings of the Roman Catholic Church on usury. In 1515, the Fifth Lateran Council defined “the real meaning of usury: when, from its use, a thing which produces nothing is applied to the acquiring of gain and profit without any work, any expense or any risk.” I argue that the economic conditions of the Middle Ages could not have justified any interest, but structural changes to the economy, including the abolition of slavery, inflation, and the emergence of markets for investment, justify interest on the basis of default risk, the costs of inflation, and opportunity costs.
Keywords: usury, commutative justice, Catholicism, Scholasticism
JEL Classification: B11, Z12
Suggested Citation: Suggested Citation