Two days ago, Professor Brian M.
McCall of the University of Oklahoma College of
Law, the focus of our last substantial post, wrote me to
correct an impression my critical words may have given. Upon my request, he
kindly gave me permission to post that email and my reply (of the same date). Only minor
punctuation changes (a comma here, italics there) were made.
Dear Mr.
Flood,
A friend
recently showed me your web posting that touched upon one of my articles on
usury. (Several others are available from the link below.*) I wish
to reply to your criticism of my lack of critique of the Federal Reserve
System. This topic was too large to discuss in a law review article with
its constraints on length. The serious problem of the Federal Reserve
System and its government enforced ability to create money for its own cartel
profit purposes is discussed at some length (although confined to a chapter) in
my forthcoming book, The Church and the
Usurers: Unprofitable Lending for the Modern Economy (Sapientia Press
of Ave Maria University). As will be demonstrated in my book, the
combination of the abandonment of usury law with the public/private cartel of
the Federal Reserve System and fractional reserve banking is the deadly tonic
that has driven many of our current financial problems. I briefly allude
to this topic in a footnote to Father Dempsey in the Cardozo article,** but certainly did
not have the space to do the topic justice. If you are interested in this
topic I encourage you to read the book which is anticipated as being available
in print this summer.
Thank you.
Brian M.
McCall
Associate
Professor
University of
Oklahoma College of Law
* “To view my [i.e., Brian
McCall’s] published and unpublished works or sign up for email updates of new
content please go to either [here] or [here].
Dear
Professor McCall,
Thank you for
the news of your upcoming book, which I expect to be very much worth
reading. I am more than happy to distinguish one ethical question (the
moral permissibility of entering into a contract that involves charging
interest on a pure money loan) from another (the fraud of fiat money and the central
bank facilitation thereof), and look forward to seeing how you approach both. I
apologize if I seemed to have regarded you as guilty by association with
Christopher Ferrara. May I make a post of your message to me, followed by this
one? Besides alerting people to your book, it will give my visitors a sense of
where the blog stands.
My blog's 85
posts examining the first part of Mr. Ferrara's book has left me allergic to
the whole business of responding to defenders of empirical Catholic Social
Teaching. That is unfair to writers like you. Perhaps if we were to
restrict our engagement to the work of gentlemen who honor the ethics of
controversy, they and Austro-Libertarian Catholics could learn from one
another.
Kind regards,
Tony
It is good to have agreement with
Professor McCall over the morally problematic character of central banks, for it
reduces the number of things about which proponents of scholastic and Austrian
economic thought have yet to achieve mutual understanding. One of them is the ethical
question of whether justice in
exchange requires (in part) the exchange of equivalents,
a notion that informs the footnote to which Professor McCall refers. Those familiar with the
Austrian School know that it regards every economic exchange as involving a
double inequality of evaluation, that
is, each party values what the other is offering more highly
than what he is giving up.
Another
is the epistemological problem of how one ascertains
whether or not there is equivalence or disparity of value between things exchanged, apart from the
question of equivalence’s being a condition of catallactic justice. In his
message to me Professor McCall referred
to his citation, in a half-dozen or so places in the linked article, of a 1943
book by Bernard Dempsey, S.J. (1903-1960).* The work is Interest and Usury, for which Joseph Schumpeter (the Austrian, but
non-Austrian School, economist) wrote the introduction. In Professor McCall’s final citation of
Father Dempsey (page 610, note 287) he wrote:
Such
considerations led Dempsey to speculate about the presence of institutional
usury within a monetary system allowing fractional reserve banking (even before
the abandonment of the gold standard).
In summary he speculates that when lenders (government or bankers) can
create (by printing more or lending more than deposited) the money they lend,
there is no cost incurred or lost opportunity of investment (since the money
did not exist before the request arises to lend, the money is not being
diverted from another profitable enterprise). . . . Dempsey’s critique suggests
a broader debate about the justice or injustice of modern monetary policy and
reserve banking outside the scope of this article.
In the paragraph to which the
above-quoted note is appended, Professor McCall wrote:
. . . due to
the nature of the money at that time [of the scholastics], people assumed money
would retain a relatively stable value and thus its future value was not
subject to real doubt. Under the modern
monetary system, there is likely real doubt that the value of money remains
constant.
The logical distinction between
these two topics, i.e., catallactic justice as requiring equivalence and the variability of
the purchasing power of money due to the low transaction costs of designing and
printing certificates (compared to mining, refining, and coining precious
metals), was certainly “outside the scope of this article.” We look forward to
his exploration of this and related issues on a wider canvas.
This is as good an occasion as any to
address this blog’s “hiatus” status. As
noted in the “About this blog” box (right column), we have left room for reasonable
doubt about whether our apologetic effort is, or even has been, “worth it.” We
believe that the lines of criticism indicated in our
treatment of Part 1 of TCATL could help accordant efforts by others. But are there others?
It may be that resources would
be better spent engaging Mr. Ferrara’s propaganda selectively (rather than
seriatim) or, alternatively, ignoring
him altogether (as those in the Austro-libertarian camp have generally done)
and instead engage from time to time more responsible and scholarly representatives
of empirical Catholic Social Teaching.
In any case, the “thrill is gone,”
at least for now. Other claims on our
resources grow in urgency. We’ll see how
the Spirit moves us in the future.
* For an
introduction to Father Dempsey’s economic thought, see D. Stephen Long, “Bernard Dempsey’s Theological Economics: Usury, Profit, and
Human Fulfillment,” Theological
Studies, 57 (1996), 690-706.
