Soon after I was complaining about social science and praising natural sciences, a brilliant historian showed me how humanities can be done with methodological rigour, empirical richness and a sharp philosophical eye. Joel Kaye’s Economy and Nature in the Fourteenth Century: Money, Market Exchange and the Emergence of Scientific Thought (Cambridge University Press, 1998) is a real gem with so many themes unfolding and bringing to different directions. What made me discover this book rather coincidentally at British Library was some background reading in medieval markets and economic history. I am working on the anthropology of the market in capitalist society. Since market, price, merchant, speculation, competition existed also in pre-capitalist society, I was thinking of what is the qualitative difference between markets in pre-capitalist and capitalist societies. (In fact I am convinced that apart from the extreme complexity of the markets today, the real difference is not a qualitative property inherent in the marketplace, but rather its relation to other things, which I cannot fully develop here at all) In other words, my interest in medieval markets emerged from my desire to better understand the contemporary market.

In this post, I want to explore a significant thread in the book. Kaye argues that the expansion of trade and marketplace had disturbing implications for the medieval scholastic thinking since it was extremely difficult to come to terms with the economic reality of the time by the dominant philosophical and religious vocabulary. For Kaye the texts of the period on price, merchants and markets reflect an attempt to compromise the evolving empirical reality with the existing worldview, which inevitably generated a set of ambiguities and tensions. The Medieval thinkers either tried to find some compromises, making the new findings fit into the existing framework or they started developing new formulations which evolved to challenge slowly and gradually some of the ideas of their period. The result was that people had to start living with increasing contradictions about the reality of their world and the interpretations about it.

Kaye looks into the argument about what a just price is in medieval thinking. He finds out that in certain cases, contrary to the mainstream arguments just price does not reflect the medieval desire to control economic activity in the name of religious ideals and social equilibrium (p. 88). In fact, just price was equated to market price, which was considered to be natural price. With reference to the economic historian Odd Langholm, Kaye explains that economic equality between the interests of the buyer and the seller was, in certain sources, considered as the outcome of a process of common estimation, which occurred in the market place unintentionally ‘through the impersonal workings of the economy’ (p. 93).

How would the dominant scholastic thinking react to such a view? An impersonal, self-equalising, self-ordering model of market place would not fit in the religious and philosophical universe of the thirteenth century based on the intervention of a higher intelligence. For instance a leading intellectual figure such as Thomas Aquinas was not ready to link just price to market price. If he were to do so, he would need to accept equality as ‘an accidental product of competing desires within an impersonal process where value (price) is detached from individual judgement’ (p. 98), which clearly contradicted a value system based on hierarchy and permanence. What would happen if the competing desires governing the marketplace were to change and thus the corresponding common estimation would shift? If the individual judgement under divine guidance is detached from the natural/just/market price, then wouldn’t this, as Kaye notes, remove the ethical individual responsibility in economic activity? (p.98).

The observations of the economic order contradicted the older conceptions of natural order, argues Kaye and this can be further traced in the thought of another thinker, Henry of Ghent. Henry de Ghent wanted to keep the identity of the value of a good with the price at which it is sold. But he was also aware of the complexities of the process before which goods are sold. For instance a merchant might have special expertise in knowing when and where goods were short in supply, he might show special care in carrying out his affairs, he might have special reputation as compared to others (p. 101). It was then legitimate that such qualities are translated into an increase of price. While finding ways to explain the price determination mechanism of the market, de Ghent was not ready to sacrifice the intelligent order and the individual judgement. The (arithmetic) solution lied in the merchant’s subjective judgement to add (or subtract) to the initial price on the basis of those additional qualities. De Ghent did also accept that out of ignorance of the current price and out of the urgent need to buy a product a price, which is not just could be accepted (p. 106).

For both Aquinas and de Ghent equality could be achieved by the conscious efforts of the individual exchangers who seek for it (p. 114). In contrast, Godfrey did not consider just price as something one could approach to by conscious efforts. Common estimation itself was the just price. Equality was achieved thanks to the estimation by individual exchangers. In other words as long as a price finds buyers to accept it, it was simply the just price (p. 111)

Kaye argues that in the context of the growing significance of a monetised market place within society, Godfrey tried to address the question of how something which is so central to the good of the community could be unnatural, thus he tried to overcome the traditional theological distinction between natural equality and market equality. According to Kaye, Godfrey did not try to force economic realities to conform to ideal definitions of natural order; he expanded ‘the very definition of natural order to comprehend the dynamic of market exchange’. He argued that equilibrium achieved in market exchange is natural. In that sense he started developing a new concept of nature, defined ‘more by the expanding and contracting line than by the point, better described by geometry than arithmetic estimation, approximation and probability’ (p. 115)

In order to elaborate this new avenue, Kaye then turns to a very interesting thinker Olivi and the way in which he deals with the problem of usury. In the classical Medieval thinking, the money lender who charges interest rate is selling a probable future profit which does not exist, thus irrational and unacceptable. One could argue that by agreeing to pay back more than the sum, the merchant borrowing the money has bought the right to whatever profit he can make from the money, which is lent. ‘But since the profit is in the future, he has no way of making a rational decision of how much he will make, but both equality and rationality are essential to proper non-usurious economic transactions’ (p. 119). Scholastic thinking would then say that such future uncertainties would make the transaction usurious. Olivi would accept this in the first place. But then he would continue and argue that ‘the probability of profit has a certain real existence and value in itself’. According to Kaye, following the merchants of his own day, Olivi recognised that ‘merchants had learned how to rationally discount the probable’. It is also telling to see how Olivi thought natural workings of the market as contributing to the communal good, rather than harming it. To the question of whether it was legitimate to change high prices for grain in times of scarcity, Olivi would answer ‘yes’ since ‘greater damage to the common good would be caused if prices did not rise during famine. It was precisely the rise in price, pegged to the rise in scarcity, that induced the possessors of the rain to sell to the community rather than hoard for their own use’ (p. 126-7).

Here we see a gradual transition from the criteria of subjective judgement to achieve equality to the market mechanism for equalisation of exchange. There is no longer a point of equality to be known and reached in exchange as thinkers such as Ghent would expect. Rather we can talk about latitude, which will contain diverse judgements differing in estimation, latitude of ‘equivalence between the amounts of utility attached to things in exchange’ (p. 126). The discomfort with static and arithmetical formulations leads to the gradual rise of a geometric solution allowing multiplicity of and variety of individual estimations and calculations.

In Before Darwin, Keith Stewart Thomson (2007, Yale University Press) tells a similar story with respect to the development of the ideas of evolution and natural selection before Darwin. He investigates how natural scientists in seventeenth and eighteenth century came to terms with new empirical findings (such as fossils) and interpreted them within the confines of Biblical text (flood and Noah’s ark) or how, although their conclusions contradicted the existing ideas, they could not use those conclusions to radically challenge the scientific paradigm of the day. However in the light of new evidence, it became extremely difficult to explain those findings with religious references. In certain cases, thinkers did not refute religious narratives themselves, but the way in which they presented their findings threatened the coherence of the theological narrative. Look at the words of Hutton on geological movements, which challenge the Biblical story about the age and formation of the earth:

‘Here are three distinct successive periods of existence, and each of these is, in our measurement of time, a thing of indefinite duration… in nature there is wisdom, system and consistency. For having, in the natural history of the earth, seen a succession of worlds, we may from this conclude that there is a system in nature; in like manner from seeing revolutions of the planets it is concluded that there is a system by which they are intended to continue those revolutions. But if the successions of worlds is established in the system of nature, it is in vain to look for anything higher in the origin of the earth. The result, therefore, of our present enquiry is, that we find no vestige of a beginning – no prospect of an end.’

 ‘We find no vestige of a beginning, no prospect of an end’. Such a brilliant and brave sentence! Much later, Laplace would say to Napoleon who criticised him of not mentioning the name of the Creator in a large book in the system of universe, that he did not need such a hypothesis.

I do not think attempts to reconcilie market place with theological thinking or geological discoveries with Biblical texts are backward or regressive. On the contrary such thinking creates perturbations in the existing paradigm and gradually undermine the well-established positions and prepare the breakthrough. A really conservative attitude (or an attitude with conservative implications) would be to refuse engaging with the new realities and stick to the existing paradigm. Attempts to accommodate the new in the old are more likely to change the old. They imply that people take changes seriously and do not remain indifferent. Unfortunately in some of the current debates by Marxists, when people say something really new and challenge others, the response remains rather conservative. Rather than taking seriously those novelties, scholars tend to ignore them or argue that the new voice is simply ‘wrong’ or the person is not loyal to the ‘Marxist roots’. Then the whole debate turns into a race for who is more marxist than the other. I am planning to explore a couple of recent polemics which illustrate such a problem. But what the debate on pre-Darwinian period and medieval thinking teach me is that we should not be scared of new findings which we find hard to accommodate in our framework. If something looks strange or unusual, we should take the challenge.

Apart from this theme, Kaye’s narrative tells also important points regarding how we should re-think the market in capitalist society. But this is for another post since my reading was interrupted by what is now known in friends’ circles as the Demetitis disease. Each time I passed by British Library the book whispered to my ears and invited me with such a seducing voice, I had to reject the invitation. I wonder when scientific passion will eventually defeat my stubborn and painful disease. Or when I will be really a good scientist.

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