Reviving Scholastic Usury Theory

Brian McCall, University of Oklahoma College of Law, wrote with his reaction to the recent article by Professors Peterson & Graves, "Usury Law and the Christian Right," the subject of a recent post.   Brian has just written an article concluding that modern credit regulation could benefit from application of a scholastic theory of usury.  Brian's comments:

I saw your post about the article of Professors Peterson and Graves on usury and the Religious Right.  I have read their article which presents some excellent empirical research about the location of abusive pay day lenders.  Their paper shows a correlation between concentrations of payday lenders and states with significant numbers of Christians committed to social issues informed by the Faith.  The article implies the question, “why would states with large sections of the population seeking to conform secular law to biblical truth apparently not exhibit concern over usury?” 

Coincidentally (or providentially) I have just submitted a draft article to various law reviews which may contain an answer to this question.  For the past year I have been studying the philosophy of usury as it developed in the West from the biblical texts to modern rate regulation.  The conclusion I reached was that a significant philosophical shift occurred in the sixteenth century that caused Christians to depart from the original theory.  This new subjectivist approach only found offenses when a bad intention was present.  Rate limitation was seen as a substitute for finding bad intention.  This shift caused the original objectivist approach (some transactions are by their nature unjust and need to be prohibited regardless of intention) to usury regulation to fall out of fashion.   My objective is to reintroduce the principles of the original scholastic theory into the modern credit regulation debates we are seeing almost daily in our newspapers.  By returning to these principles we could redesign usury law to bring more coherence, consistency and fairness to our credit markets.

The current draft of the paper can be found at http://works.bepress.com/brian_mccall/3/