On this date in 1380, St. Bernardino of Siena was born. His life and work is a good tonic to those who would argue that God and economics do not mix. Bernardino (1380-1444) was a theologian with a great mind and was a great systematizer and developer of scholastic economics.
His understanding of the relationship between scarcity and value points toward a solution to the value paradox expressed but not solved by Adam Smith. Bernardino wrote "What in one land is abundant and of low price may be necessary, uncommon,and expensive in another."
Drawing on Olivi's extremely rare writings on economic value, Bernardino repeated that a good's value is based on it objective value or suitability in use, its scarcity, and its desirability. In other words, to Bernardino value was mostly based on subjective preferences. As he wrote in another sermon,
Water is usually cheap where it is abundant. But it can happen that, on a mountain or in another place water is scarce, not abundant. It may well happen that water is more highly esteemed than gold, because gold is more abundant in this place than water.
Bernardino followed and affirmed Aquinas' conception of the wage as the price of labor. Therefore Bernardino applied the same principles to wages as he did to prices. "Lawyers, medical doctors, diggers, wrestlers could all sell their labor at a higher price due to scarcity in the supply of their jobs." Therefore, "ceteris paribus, the jobs that require more labor, danger, art, and industry are more highly esteemed by the community."
While not able to fully break himself away from condemning usury, he did work that ultimately helped justify interest as compensation for time preference. While remaining in the Thomistic tradition that thought charging interest was illicit because it is payment for the sale of time and time is not something that anyone can own, Bernardino argued that, in some cases, time could be sold. He identified one aspect of time as a period relevant during which a particular good was used. A particular good could be used for a particular task for a specific period of time. In this sense, the time during which the good is used could be regarded as private property and therefore sold. His idea is that if someone lends his property to someone else for a specific time period, he could charge payment for such use and that payment is what we know call interest.
One of his most important contributions was the most full and cogent discussion of the entrepreneur up to his time. He emphasized the moral standing of the business man by noting that trade can be practiced either morally or immorally just like any other job, and that merchants provide several kinds of useful services, such as transporting, distributing, and manufacturing goods. Profits, therefore, are a legitimate return for the labor, expenses and risks of the entrepreneur. He goes further and lists four necessary characteristics of a good entrepreneur: efficiency, responsibility, labor, and assumption of risks. He also recognized that foreign money exchanges performed the very useful function of enabling foreign trade which was a great benefit to mankind.
All in all Saint Bernardino's work is a significant intellectual achievement relating to the theory and ethics of political economy. And all of his work drew upon early Scholastic theological tradition which itself drew upon the Old and New Testaments and the early church fathers as well as natural law theory as developed in ancient philosophy.
To those readers who are interested in more on the economic thought of the Scholastics I recommend the following works:
- Faith and Liberty by Alejandro A. Chafuen
- San Bernardino of Siena and Sant' Antonio of Florence, by Raymond de Roover
- Economic Thought before Adam Smith by Murray Rothbard
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