Bus 1050 1st Edition Lecture 20 Outline of Last Lecture I. Saikaku, The Eternal Storehouse of Japan II.Defoe, from The Compleat English TradesmanIII. Polo, from The Travels of Marco PoloIV. Bacon, Of Riches Outline of Current Lecture V. Maimonides, from The Code of MaimonidesVI.Aquinas, Of the Sin of Usury from The Summa TheologicaCurrent LectureMaimonides (12th century thinking in the world of Judaism) According to Bacon, due to the fact that the wealth of the world is not equally distributed, we need to devise an incentive to get the people who have the majority of the wealth to spread that wealth. Maimonides is 12th century scholar who knew a lot about the relationship between lenders and borrowers. He starts off by looking at the bible. In the bible it states that usury is “neshech”, alsoknown as biting, which indicates that usury is an infliction of pain on others and it’s forbidden to harm another brother (a Jew to a Jew). In other words, when a Jew charges interest on a loanto another Jew, it’s considered “neshech”. Here Maimonides is stating that if one Jew charges interest on a loan to another Jew it would be against what the bible says.But… A Jew may charge interest on a loan to a non-Jew, aka Gentile, and the bible actually commands Jews to do this. If a Jew charges interest on a loan to a gentile and that gentile charges interest on a loan to another Jew, then this process technically doesn’t violate the letter of the law. But it does violate the spirit of the law and as a result it’s also forbidden! These rules can get very complex because economic rules can get very complex.These notes represent a detailed interpretation of the professor’s lecture. GradeBuddy is best used as a supplement to your own notes, not as a substitute.It’s stated in the bible that there is no punishment for establishing usury because one will eventually get paid back. Usury is restorable. In other words, if one commits usury than one must give the person whom they charged interest to their money back. But this has the potential to get complicated because if one dies before the money earned from charging interest is paid back (in cash), then the family of the person who passed away is obligated to give it back. This demonstrates that these rules can get complicated and we have tohave a way with dealing with them. Jews are permitted and commanded to charge interest to outsiders. In other words, the objective is to maintain a distance between insiders and outsiders. You don’t want non-Jews to be your friends. The amount of interest that may be charged to gentiles must be limited to the amount of money that one needs to support their family. One can also accept a loan from an outsider with interest. In other words, it goes both ways. It’sokay to do business with outsiders but not to invite them to your house. What if both a Jew and a Gentile want a loan from a Jew? It’s in the Jew’s economic best interest to loan to the Gentile. If one loans to Jew instead of Gentile, it’s a misfva (a religious duty) and it’s sacrificing one’s one economic gain in the interest of the community. Joint ventures/ partnerships have to do with usury. A Jew doesn’t have enough capital to start his own business and asks another Jew to go into a joint venture with him in order to start the business. The sharing of profits and losses should be 50/50. But if the person who puts in 50% of the capital refuses to do work, it’s unfair and this is considered quasi usury. Parents might agree to share in the losses but not the profits because they want their children to succeed. 13th century, Catholic point of View from Aquinas Read objection, read reply, and then read summary. The 1st Article asks whether it’s a sin to take usury from money that is lent. Usury is defined as any interest. (Today usury is defined as excessive interest, but in Aquinas’ time any interest was considered excessive)Given who Aquinas is, one would guess that it is a sin. Aquinas also goes to Deuteronomy 23:20.Pg. 356 According to Christianity, everyone is your brother and because you can’t charge interest to your brother, you can’t charge interest to any one. Aquinas does not leave it at that. On Pg. 355, line 63 he begins with a whole new logic. Selling something that doesn’t exist would be unjust, but how does he get to the idea that lending money is selling something that doesn’t exist? He has a category of things. One category is for things whose use is its consumption. If I come to someone and tell them I want to borrow a loaf of bread, but they say not only am I going to loan you the bread but you must pay me interest on it, so I’d have to go to the store to buy 2 loafs of bread, in order to pay for the one I initially purchased. But this is logical. So this is considered usury and unjust. You cannot charge for the use of something whose use is its consumption. If I loan you something whose use is its destruction, then how do you pay me back when it’s gone? It would be unjust to do so. We also have things whose use is not its consumption. A house is an example of this. Money, according to the Philosopher (Aristotle), was invented chiefly for the purpose of exchange and the proper use of money is its consumption. Hence, it’s unlawful to take payment for the use of money lent. Men are forced to pay back money earned from usury, the interest that is. One can’t be charged for the use of money, because its use is its consumption. But do we consume money? No! Money is not used for consumption purposes, but to buy something! Its primary use is to exchange it to purchase something. Is money something, whose use is its consumption? Not really because money is just something that facilities exchange. It should not be in the category for things whose use is its consumption or in the category for things whose use is not its consumption. Aquinas doesn’t want people to be able to charge interest on moneyloaned! It’s another reason! (In addition to the religious reason).If money is loaned for someone to build a house, or I build a house and loan it to someone, economically thinking (modern view) there is no difference. Aquinas did want people to charge rent on expensive property because the Catholic Church wasthe largest property owner in medieval Europe, but he forbid the act of charging interest on money. He did this because the Catholic Church was the largest property owner in