Avoiding Usury

Monday of 25th week in course

22 Sept 2008

Psalm 15

“Market meltdown. . .wild roller-coaster ride. . .investor lack of confidence. . .flight to safety. . .historic market swing.” These are all phrases that described recent stock and bond market activity throughout the world. What does the Church have to say about it, and what can we do to apply Gospel teachings to the world of economics? Psalm 15 gives us a start: Who is the just man? the psalmist inquires: he who does not put out his money at usury, and does not take a bribe against the innocent. He who does these things shall never be moved.

So what is usury? In a non-monetary economy such as early Israel, any charging of interest on a short-term loan was considered abuse of family. In fact, if someone gave you his cloak as collateral, you had to give it back to him at the end of the day so he could sleep.

Economies are more complex now, and investors have huge numbers of options available to put their money without getting their hands dirty. The Compendium of Social Doctrine says some relevant things about investing for profit:

The social doctrine of the Church recognizes the proper role of profit as the first indicator that a business is functioning well: “when a firm makes a profit, this means that productive factors have been properly employed”.[709] But this does not cloud her awareness of the fact that a business may show a profit while not properly serving society.[710] For example, “it is possible for the financial accounts to be in order, and yet for the people — who make up the firm’s most valuable asset — to be humiliated and their dignity offended”.[711] This is what happens when businesses are part of social and cultural systems marked by the exploitation of people, tending to avoid the obligations of social justice and to violate the rights of workers.

1. It is essential that within a business the legitimate pursuit of profit should be in harmony with the irrenounceable protection of the dignity of the people who work at different levels in the same company. These two goals are not in the least contrary to one another, since, on the one hand, it would not be realistic to try to guarantee the firm’s future without the production of useful goods and services and without making a profit, which is the fruit of the economic activity undertaken. On the other hand, allowing workers to develop themselves fosters increased productivity and efficiency in the very work undertaken. A business enterprise must be a community of solidarity,[712] that is not closed within its own company interests. It must move in the direction of a “social ecology” [713] of work and contribute to the common good also by protecting the natural environment.

341. Although the quest for equitable profit is acceptable in economic and financial activity, recourse to usury is to be morally condemned: “Those whose usurious and avaricious dealings lead to the hunger and death of their brethren in the human family indirectly commit homicide, which is imputable to them”.[714] This condemnation extends also to international economic relations, especially with regard to the situation in less advanced countries, which must never be made to suffer “abusive if not usurious financial systems”.[715] More recently, the Magisterium used strong and clear words against this practice, which is still tragically widespread, describing usury as “a scourge that is also a reality in our time and that has a stranglehold on many peoples’ lives”.[716]

I submit that we who invest have a responsibility to watch for the social impact of our investments, not just on workers, but on all of the family of man. Ideally, we should strive for direct ownership of productive property, or at least invest with money managers who are guided not only by a search for short-term gain, but by the long-term good of society and adherence to the social teachings of the Church.