Download THE POLITICAL THEOLOGY OF TRADE LAW: The Scholastic

THE POLITICAL THEOLOGY OF TRADE LAW:
The Scholastic Contribution
I
In his massive opus on legal and political theory, the Jesuit Francisco Suárez
(1548-1617) addresses at great length the distinction between natural law and
the ius gentium. The latter, he suggests, is deprived of the kind of absolute
necessity that characterises the former and should be rather understood in
instrumental terms. While natural law is always the same and never varies, the
ius gentium contains those legal provisions that have been historically adopted
so as to contribute to the fulfilment of the necessity embodied in natural law in
the context of actual human communities. Among institutions of ius gentium,
Suárez, lists the freedom of trade. For , as he puts it:
“…it has been established by the ius gentium that commercial
intercourse shall be free, and it would be a violation of that system
of law if such intercourse were prohibited without reasonable
cause”.1
This is a remarkable statement by someone writing at the peak of mercantilism
and as Spain itself was claiming a monopoly of trading routes to the “Indies” and
Seville’s famous Casa de Contratación was scrupulously (though inefficiently)
controlling transatlantic commerce and seeing to the proper payment of the
duties to the crown.2 Nevertheless, from the premises from which Suárez was
writing – and those were religious premises – freedom of trade seemed an
absolutely compelling proposition. For many, that proposition seems equally
compelling today – although its religious foundation is seldom laid out. In this
essay, I will briefly revisit the ideological ancestry of the World Trade
Francisco Suárez, ‘On Law and God the Lawgiver ‘(De legibus, ac Deo legislatore’), in Selections
from Three Works. Vol II the Translation (G. Williams transl., Oxford University Press, 1944) Bk II,
Ch XIX § 7 (347).
2 See e.g. C.H. Haring, The Spanish Empire in America (New York, Harcourt Brace Jovanovich
1975), 297-313.
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Organization (WTO) in the Christian narrative of the power of humans over
things (and thus on each other) through the worldwide application of dominium
proprietatis – the right of free use and exchange of private property.
The foundation of ius gentium – of which freedom of trade was a part – in Suárez,
did not lie in natural law, as one might think, but in a modification or deviation
from natural law. The original, immutable natural law derived from God at the
creation of the world and as Suárez and the whole tradition in which he writes,
including St Thomas Aquinas agree, provided for common ownership of all
things. 3 With the Fall, however, the requirements of the government of human
societies had necessitated the division of things, divisio rerum. This had been
undertaken gradually in the practice of all or most peoples so that it had become
consecrated as a custom-based ius gentium. It arose as a concession to human
sinfulness, a necessary aspect of social life among egoistic individuals. Even as its
present validity was unquestioned, it looked backwards to an original Christian
ethics for which freedom was also freedom from private property and resources
of the earth were managed jointly among humans. It accepted the distinction
between present reality and Christian utopia. Although Suárez separated the two
from each other more strictly than many of his predecessors, the boundary
between the two was still policed by theologians and ultimately the pope’s
power to intervene in secular government if basic Christian values were
threatened.4
The basis of free trade lay not in natural law but in expediency. It was a natural
concomitant of a system of private property that enabled bringing goods and
prosperity to those who would lack the things they needed. Suárez compares the
usefulness of free trade to that of diplomacy. The custom of receiving
ambassadors and granting them “immunity and security” is also a matter of the
For a brief overview of the Christian doctrine from Ambrose to Ockham of common property in
the original state, see Peter Garnsey, Thinking about Property. From Antiquity to the Age of
Revolution (Cambridge University Press, 2007), 125-135.
4 The Pope’s indirect power of intervention is written into the polemical tract, Defensio fidei that
Suárez wrote against the absolutist claims made by King James I/IV of England especially against
his Catholic subjects. See ‘A Defense of the Catholic and Apostolic Faith’, in Selections, supra note
1, Ch XXIII (685-702).
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ius gentium. While peace is a command of natural law and diplomacy has been
established to maintain peace, diplomacy is not itself natural law inasmuch as
there exist other means, too, towards peace. But once diplomatic relations have
been established a matter of customary practice, obstructing it would be “a sign
of enmity and a violation of ius gentium, although it would not be in
contravention of natural reason”.5 As ius gentium, diplomacy has universal
validity so that violating ambassadorial immunities will always constitute an
“injury” (iniuria) and trigger the right of just war. Analogously, free trade is part
of the positive law of ius gentium. For while it is not based on natural reason, it
still enjoys universal validity so that disrupting it would be an injustice to which
it is rightful to respond with violence. In his discussion of the theological virtue
of “charity” – under which scholastic tradition had, since Aquinas, discussed the
concept of just war – Suárez lists the types of injury that operate as just causes of
war. These include “the seizure by a prince of another’s property and his refusal
to restore it” as well as “his denial, without a reasonable cause, of the common
rights of nations, such as right of transit over highways, trading in common
&cet.”6 This applies to injury to the prince as well as to his subjects; to disrupt
private trading will trigger the right of the prince to go to war – “for the prince is
the guardian of his state and also of his subjects”.7
In explaining the nature of free trade as ius gentium, Suárez further specifies its
relationship to civil laws of particular nations and to natural law. The specific
form of “any contract or commercial agreement” is a matter of civil law, the law
of particular nations, while its binding force “as is evident, pertains to natural
law”. But alongside the form and the binding force there is a third aspect –
namely “the freedom to contract commercial agreements with persons not
actively hostile or unfriendly in sentiment”. 8 This freedom belongs to all humans
by virtue of natural law but the way they use it – for example by engaging in
Suárez, ‘On Law and God the Lawgiver’, supra, Bk II, Ch XIX § 7 (347).
Suárez, ‘On The Three Theological Virtues: On Charity’, Disp XIII: On War, Sect IV § 3 (817). See
also Josef Soder, Francisco Suárez und das Völkerrecht. Grundgedanken zu Staat, Recht und
internationale Beziehungen (Frankfurt, Metzner, 1973), 261. The third type of injury is “any
grave injury to one’s reputation or honour”, id.
7 Suárez, ‘On The Three Theological Virtues: On Charity’, Disp. XIII: On War, Sect IV § 3 (817).
8 Suárez, ‘On Law and God the Lawgiver’, supra Bk II, Ch XIX § 7 (347).
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trade – is a matter of human law, either civil law or ius gentium. For Suárez, as
for the whole tradition he is following, the most important social institutions –
the power of the prince over the commonwealth, private property and servitude
– all have this character; they are not matters of natural law but of ius gentium;
although they are universally valid, they do not embody the principles of
Christian ethics . They are not “precepts or moral principles which are plainly
characterized by the goodness necessary to rectitude of conduct.”9 Instead, they
arise as supplements, modifications or deviations from these principles,
undertaken in specific historical situations so as to respond to urgent demands
of social life.
In this, Suárez follows closely not only Aquinas but the mainline of the Christian
tradition beginning with St Paul and elaborately articulated in the view of the
“two cities” by St Augustine of Hippo (354-430). For both Paul and Augustine, it
was important not to make the spiritual commitment to equality of all before
God appear as a revolutionary critique of Roman social hierarchies and
inequalities of power and property. Hence their distinction between a “higher”
spiritual realm of universal freedom and goodness, and a “lower” secular one
that embodied the hierarchical and coercive institutions of the polis.10 Augustine,
for example, viewed life of human beings from two perspectives: from the
perspective of their participation in the “City of God”, represented , the Church
under which humans devote themselves to the service of God and Christian
ethics, and the “City of Man” in which they go about their daily pursuits as
subjects of secular commonwealths and members of their communities. This
made it possible for Augustine to “demonstrate to…imperial elites that
Christianity was not their enemy, that it was not inconsistent with earthly
government, social order or duty to the state – or, indeed, to property and social
inequality”. 11
Suárez, ‘On Law and God the Lawgiver’, supra, Bk II Ch VII § 4 (210).
See in particular, Ellen Meiksens Wood, Citizens to Lords. A Social History of Western Political
Thought From Antiquity to the Middle Ages (London, Verso, 2008), 144-154.
11 Wood, Citizens to Lords, supra, 155.
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The same concerns are captured in the distinction made by Suárez and the
tradition in which he writes between natural law and ius gentium. Natural law
represents the divine order as it emerged from the creation and applied to the
lives of human beings in the original state. It is “truly and properly divine law, of
which God is the author”.12 Even as the theologians disagreed over just how
natural law emerged from divinity (was it an effect of God’s “will” or was it part
of divine “reason”?) , there was no disagreement that it emanated from God and
that this was the reason for which it or at least its general principles – including
for example the notion that contracts are binding – were eternal and
unchanging.13 However, after the Fall human beings were chased out of the City
of God and compelled to live as sinners in the City of Man. This meant that they
had to adjust and supplement the normative order so as to be able to live in the
new circumstances. They could no longer live only under natural law. Those
modifications and additions were then embodied in what Aquinas called “human
law” that consisted of two parts. One was civil law that was the law of specific
communities and whose relationship with natural law Aquinas characterized in
terms of specific “determinations” – that is to say, applications of the principles
of natural law in specific, geographically limited communities. The other type of
human law was ius gentium that in the terminology of Aquinas emerged as
“conclusions” from the general principles of natural law whose validity was not
limited to particular communities. It existed as a kind of universal sociology or
philosophical anthropology, as rules that were necessary for social life among
sinful humans. These included “for example, just buyings and sellings and other
such things without which men cannot live together”. 14 Aquinas further
characterised ius gentium by making a distinction between two ways in which
things (or human beings) may relate to each other. They could exist in a
naturally commensurate relation – the case of the male and the female producing
offspring. Or their relationship might be created artificially, by reasoning from
the consequences of a thing. An example of the latter situation – a relationship
Suárez, ‘On Law and God the Lawgiver’, supra, Bk II, Ch VI § 13 (198).
For as Suárez explains, natural law “cannot of itself lapse or suffer change, whether in its
entirety, or its individual precepts, so long as rational nature endures, together with reason and
freedom [of will]”. Suárez, ‘On Law and God the Lawgiver’, supra, Bk II, Ch XIII § 12 (259).
14 Aquinas, ‘Summa Theologiae’ [ST] I-II Q 95 A 4 resp. in Political Writings (R.W. Dyson ed.,
Cambridge University Press, 2002), 135.
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that does not come under natural law but under ius gentium because it involves
consequential reasoning – was that of property.:
“For there is no reason why a piece of land considered simply as such
should belong to one man rather than another; but considered with
respect to how best to cultivate the land and make peaceable use of it, it
has a certain commensuration to be the property of one man rather than
another, as the Philosopher [i.e. Aristotle] shows at Politics II. 15
Suárez and other followers of Aquinas ended up in assuming two types of
universal law. Natural law contained the basic elements of Christian ethics as
they emerged from creation. By contrast, ius gentium (as “human law”) included
those adjustments, modifications and supplements that became necessary for
the organization of social life among sinful humans. Through this binary
structure the theologians avoided condemning the cultural and social reality in
which they lived. At the turn of the 17th century, European princes were making
increasingly absolutist claims over their subjects and the economic and
commercial system was based on the use and exchange of private property.
Judged by the principles of natural law, the world of early modern politics and
economy could only be viewed as a moral abomination.
Suárez had no intention of making such a revolutionary point. Instead, like the
Spanish theologians of the 16th century, he hoped to assist the leader of the
Christian world – the king of Spain – in his struggle against heretics and the
infidel as well as to secure a stable order at home. An increasingly important
aspect of both was the regular functioning of the economic system under which
Spain had become dependent on long- distance trade. Its stability and its
fortunes in its endless wars were by now tied up with its access to bullion (gold
and silver) and to markets in its American colonies, its trade in the
Mediterranean and with northern Protestant communities. Against the silver
brought from the mines at Potosi, Bolivia, Philip II and his son were able to
receive funds from the international credit market while domestic taxation
15
Aquinas, ST II-II Q 57 A 3 resp. in Political Writings, supra 164.
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relied on the presence of a functioning trade system on the Spanish soil and on
the access of Spanish merchants to the expanding international trade fairs. By
the turn of the 17th century, however, Spanish silver migrated to foreign hands,
revenues from the Low Countries were no longer available and the country
began the feel the consequences of its having neglected to develop its domestic
economy. The empire was already in decline. Its political and religious influence
was waning as a combined result of the population growth and the “price
revolution” that the massive imports of gold and silver had brought about. Not
even the steady availability of credit to the Spanish crown from bankers in Genoa
or Germany could prohibit successive bankruptcies of the Spanish state leading
up to the collapse of 1620s.16
Suárez was aware that the prevailing economic system did not correspond to the
original state of creation. Indeed, as we shall see, his predecessors were very
cautious about the compatibility of professional engagement in commerce –
buying cheap and selling dear– to begin with. They regarded it as a kind of
melancholy faute de mieux – a concession to the necessities of life among sinners.
The tradition did view property as a consequence of human freedom – but no
more so than other aspects of the good of the community against which it was to
be weighted.
II
The Spanish scholastics of the 16th and early 17th century – especially the
members of the “School of Salamanca” – have been frequently designated as the
“founders of international law”. However anachronistic such a label might
appear, and however much it runs against the Salamancans’ self-conscious
On the economic and financial foundations of the Spanish empire, see e.g. J.H. Elliott, Imperial
Spain 1469-1716 (2nd ed. Harmondsworth, Penguin 2002), 181-211; Henry Kamen, Spain’s Road
to Empire. The Making of a World Power 1492-1763 (Harmondsworth, Penguin, 2003), 285-298;
Douglass C. North & Robert Paul Thomas, The Rise of the Western World. A New Economic History
(Cambridge University Press, 1973), 127-131; Ángel, García Sanz, ‘El contexto económico del
pensamiento escolastico: El floreciemento del capital mercantile en la España del siglo XVI’, in
Francisco Gómez Camacho & Ricardo Robledo (eds), El pensamiento económico en la escuela de
Salamanca (Ediciones Universidad Salamanca, 1998), 17-42.
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identification, often expressly against colleagues in the law faculties, as
theologians, it is true that they did develop a relatively coherent view of the
nature and operation of law outside the limits of the single commonwealth. This
is hardly a surprise. They came from a religious tradition that had always
spoken in universal terms and had in the 12th century formalised canon law in
successive codifications of Papal ordinances. Suárez and his predecessors
contributed to Catholic legal and political thought by joining parts of the
vocabulary of Roman law with the systematic theology in the Summa theologiae
of Aquinas, supplemented by ideas from 14th and 15th century Parisian
“moderns”. Especially from the latter they received a notion of dominium as an
individual right (ius) that they would use to discuss problems of commutative
justice – including the justice of private commercial relations, trade and profitmaking on a universal basis as ius gentium. This lay the basis not only for the
views on trade and warfare of the Protestant Hugo Grotius (1583-1645) –
Grotius’ debt to Suárez and such other Spaniards as the humanist lawyer
Vazquez de Menchaca (1512-1569) is well-known and acknowledged by the
Dutchman himself – but also for the tradition of the Ius naturae et gentium as it
developed at such German universities as Halle and Göttingen in the 18th
century and peaked in the critical philosophy of Immanuel Kant (1724-1804).17
If today’s international (trade) lawyers, at moments of enthusiasm, invoke the
name of Kant, they also invoke a whole tradition of political theology going back
via Suárez to medieval Christianity and early Church fathers.18 The gaping
distance between requirements Christian morality and the reality of life in the
empire compelled the latter to examine extensively the relations between the
spiritual and the secular realm, most famously as they appeared in the
jurisdictional battles between the pope and the secular ruler. The strategies
recommended to individual Christians varied from St Paul’s “rendering to Caesar
what belongs to Caesar” to withdrawal into contemplation and a life of poverty
outside the worlds of trade and government. Augustine’s juxtaposition of the
See further my ‘The Advantage of Treaties. International Law in the Enlightenment”, 13 The
Edinburgh Law Review (2009), 27-67
18 See e.g. Ernst-Ulrich Petersmann, ‘European and International Copnstitutinal law: Time for
Promiting ‘Cosmopolitan Democracy’ in the WTO’, in G De Búrca & J. Scott, The EU and the WTO.
Legal and Constitutional Issues (Oxford, Hart 2001), 81-84.
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“City of God” and “City of Man” was an extended contemplation of just such
alternatives, with emphasis on the mortal dangers of participation in the
practices of corruption and vice that were accounting for Rome’s collapse. In due
course, and with especial force in the 13th and 14th centuries, the Church began
to look with suspicion at the advocacy of withdrawal from the secular world by
members of the mendicant orders, specifically of the doctrine of apostolic
poverty by the pupils of St Francis of Assisi, a doctrine that contained an implicit
(and sometimes quite explicit) critique of the world of riches in which the
Church of Rome was living.19 The Dominicans in particular, with Aquinas as their
spiritual leader, moved away from the old Augustinian image of secular life as
one of sin and misery, adopting from Aristotle the ideal of active citizenship at
the service of the community as part of the image of the good Christian.
As part of this, Aquinas discussed the law and justice of economic activity in
connection with his theory of commutative justice – that is to say, justice
between individuals. Neither Aquinas nor the Spanish (neo-)scholastics who
followed him in the 16th century developed a theory of “economy” as distinct
from their moral theology; they were less interested in analysis than in
prescription, hence their treatment of economic exchanges within “law” and
“virtue”, the twin aspects of God’s government of human life as laid out in the
“Second part” of the Summa. There, Aquinas concentrated on three questions
that would be fundamental for the later emergence of mercantile capitalism:
private property, engagement in trade and the search for profit (interest).20 He
accepts private property as a modification of the original state of common
ownership on a utilitarian basis: for “everyone is more diligent in procuring
something for himself that something which is to belong to all or many” and
overall “human affairs are conducted in a more orderly manner if each man is
responsible for the care of something which is how own”. 21 Aquinas shared
See e.g. Janet Coleman, ‘Property and Poverty’, in J.H. Burns (ed), The Cambridge History of
Medieval Political Thought c. 350-c.1450 (Cambridge University Press, 1988), 607-648.
20 These three questions are included in the Summa theologiae (ST) as Quaestiones 66, 77 and 78
of the second part of the second part (secunda secundae, II-II). For discussions of Aquinas’ views,
see Henri Denis, Histoire de la pensée économique (2è éd. Paris PUF 2008), 76-91; Joseph A.
Schumpeter, Histoire de l’analyse économique. I. L’age des fondateurs (Des origins à 1790) (J-C
Casanova trad. Paris, Gallimard 1983), 131-141.
21 Aquinas, ST II-II Q 66 A 2 resp in Political Writings, supra, 208.
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Aristotle’s aversion towards professional buying and selling, stressing the way
commerce brings dangers to one’s soul. Nevertheless, he points out that in itself
buying and selling are morally and legally neutral; one may even do this with a
profit in case that is necessary for the livelihood of one’s family or for the good of
the community.22 Aquinas also condemned interest-taking initially as usury. In
the course of his discussion, Aquinas allows moderate interest in cases of
foreseeable damage (damnum emergens – but not lucrum cessans) if that is
agreed in the contract for the loan itself – an opening in the Church’s rigorous
doctrine “qui réduira bientôt à néant la portée pratique de la condamnation de
l’usure”. 23
The founders of the Salamanca school, the Dominicans Francisco de Vitoria
(c.1492 – 1546) and Domingo de Soto (1494-1560), took up these themes in
their extensive treatments of property, commerce and interest-taking. They were
aware of the opening of trade routes to the Americas that led to the introduction
of untold quantities of gold and silver into the European and Asian markets and
the consequent intensification of trade links within and beyond Europe. The
principal European centres of trade – Seville and Medina del Campo in Spain,
Antwerp, Lyon and Venice – became buzzing centres of commercial activity in
which merhants engaged in routine speculation for profit and accumulation,
inspiring the emergence of a commercial culture that sat uneasily with the
traditional image of the virtuous life. Vitoria’s views on the prevailing business
ethics were cautious; like Aquinas he accepted commercial activities only if they
were valuable for the community, especially with respect to the production and
distribution of goods for daily use.24 Profit-making for private gain only was a
Aquinas points out that “trading, considered in itself, has a certain debasement attaching
thereto, in so far as, by its very nature, it does not imply a virtuous or necessary end.
Nevertheless gain which is the end of trading, though not implying, by its nature, anything
virtuous or necessary, does not, in itself, connote anything sinful or contrary to virtue: wherefore
nothing prevents gain from being directed to some necessary or even virtuous end, and thus
trading becomes lawful. Thus, for instance, a man may intend the moderate gain which he seeks
to acquire by trading for the upkeep of his household, or for the assistance of the needy: or again,
a man may take to trade for some public advantage, for instance, lest his country lack the
necessaries of life, and seek gain, not as an end, but as payment for his labor.” Aquinas, ST II-II Q
77 A 4 resp. in http://www.newadvent.org/summa/3077.htm
23 Denis, Histoire de la pensée économique, supra, 89.
24 Daniel Deckers, Gerechtigkeit iund recht. Eine historirich-kritische Untersuching der
Gerechtigkeitslehre des Francisco de Vitoria (Freiburg, Universitätsverlag, 1991), 258-263.
22
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mortal sin. Vitoria explained this as follows: if you engage in trade only in order
to receive profit, you will do injury to others. Say you buy a horse that you do not
need and only to sell it at a higher price. In that case, you cause injury to the
original seller who could have received higher price by dealing directly with the
person to whom you sold it. And you injure that third person because in
interacting directly with the original seller he might have had a better bargain.25
But this still left room to argue for the general usefulness of profit-making as
long as it ended up bringing goods to markets that would otherwise be scarce. 26
Soto, too, began his discussion of mercantile activities in his De iustitia et iure
(1553/56) by confessing that “present times” raised an infinity of situations of
commerce, contract and exchanges that involved so many possibilities of
ambition and injustice that it was hard to see the truth.27 Books IV and V of the
work then engage in detail with prevailing business practices concerning priceformation, profits, banking and exchange, currency debasement and the justice
of taxation, often with examples taken from international commercial relations.28
Soto took a somewhat more positive view of commercial exchanges than Vitoria.
Contracts of sale and purchase were acts of bilateral justice that were necessary
for society.29 The introduction of money in commercial exchanges had made life
more cultured and distinguished so that only “barbarians” lived in exchange
economies without the common measure that money brought to all things. “How
many shoes does it take to pay for a house?” Soto asks and points to the necessity
for some common rule or measure in an advanced society with division of
labour. In providing it, money works like law – “nummus seu numisma quasi id
Francisco de Vitoria, Comentarios a la Secunda secundae de Santo Tomás [ComST II-II], (Edition
preparada por Vicente Beltrán de Heredia (Salamanca, 1934/1952) Tomo III, Q 77 A 1 § 2 (117118).
25 “Dicunt ergo omnes doctores supra allegati quod tales peccant mortaliter”. Vitoria, ComST II-II
Q 77 A 4 § 4 (149).
26 See further, Horacio Rodriquez Penelos, ‘Contribución de Domingo de Soto a la gestatación del
pensamiento económico hispanoamericano’, in Juan Cruz Cruz, La ley natural como fundamento
moral y jurídico en Domingo de Soto (Pamplona, Eunsa, 2007), 230-231..
27 Domingo de Soto, De iustitia et iure Libri decem / De la justicia y el derecho en diez Libros (Intr.
By P.V.Diego Carro, Spanish transl. by P.M. Gonzalez Ordonez, Madrid 1967), Bk VI
Proemio,(505a).
28 See generally Jaime Brufau Prats, El pensamiento politico de Domingo de Soto y su concepción
del poder (Universidad de Salamanca 1960), 73-118.
29 Soto, De iustitia et iure, supra, Bk VI Q II A 1 (541b).
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quod lex est et norma”.30 Like most of his contemporaries, Soto was highly
critical of the frequent efforts to manipulate the value of money by the
debasement of currency – by using cheaper metals for example – that may have
positive short-term consequences but be harmful in the long run..31
Like Vitoria (and Aquinas), Soto accepts that while the ars mercatoria is a
necessary part of the development of the community, it also brings grave risks to
the soul.32 Its justification is based on its utility: it provides for the necessities of
household and keeps available goods that would otherwise be scarce. For this
activity, the merchant is also entitled to a reasonable profit inasmuch as the
commodity has been improved between buying and selling for example by
changing the place or time of its sale. Engaging in commerce solely for the
purpose of profit, however, remains morally suspect and even a mortal sin if it
encourages practices such as artificial augmentation of prices to the detriment of
the community’s interests.33
Vitoria and Soto were religious scholars whose writings on natural law and the
ius gentium presuppose that their purpose is to lead humans to virtue and
happiness but also to supernatural beatitude.34 Their involvement in discussions
of government or society takes place in the context of teaching students who
were preparing for clerical career in ecclesiastical institutions in Europe or in the
colonies on the proper management of the sacrament of penance. This required a
robust casuistic on the status of particular activities that they would in due
Soto De iustitia et iure, supra, Bk III Q V A 4 (248b).
Soto De iustitia et iure, supra, Bk III Q V A 4 (248b). See also Chafuen, Faith and Liberty, supra
65-68.
32 “Humanum enim generem ab imperfecto ad perfectum progressum est. Et ideo in initio, dum
rude erat, incomptumque; ac pauciborum necessitatibus implicitum, per rerum cambia sibi
sufficiebat: post vero iam cultius politiorem ornatioremque; vitam instituens, necesse habout
novas excogitare commerciorum rationes:inter quas consultissima commerciorum usus; licet
humana avaritia nihil non depravat”, Soto, De iustitia et iure, supra, Bk VI Q II A 1 (543b).
33 Soto, De iustitia et iure, supra note_ Bk VI Q II A 2 (544a-545b). Soto treats profit in the context
of games and accepts that as such, when they are not prompted by the sin of avarice and remain
in the limits of the reasonable, they are neither good nor bad. Seeking to sell a product with a
higher price than what one had paid himself sometimes succeeds, sometimes not. As long as the
conditions of profit-making are not otherwise manipulated or unjust, they involve no sin or
illegality. Soto, De iustitia et iure, supra, Bk IV Q V A 2 (312b-317b).
34 See especially Franco Todescan, Iustus ordo e ordine della natura. Sacra doctrina e saperi
politici fra XVI e XVIII secolo (Milan, CEDAM, 2007).
30
31
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course have to judge in their capacity as confessors to merchants or government
administrators. In their own work as confessors at the Convent of St Esteban in
Salamanca Vitoria and Soto had already met with soldiers and clerics whose
conscience was heavily burdened by what they had done or witnessed in the
conquistador expeditions on Hispañola (Haiti) or Yukatan. As is well-known, the
Dominicans – including the most famous of them, Bartolomé de Las Casas (14841566), the Bishop of Chiapas and the “defender of the Indians” – became the
leading critics of these activities in the Spanish realm. He and the later
Salamancans had a strong hand in guiding official Castilian policy in the Indies –
their input was visible in the Nuevas Leys of 1542, for example, as well as in the
many consultations invited by Charles on the treatment of the Indian
questions.35 The debate at Valladolid in 1550-1551 between Las Casas and the
Emperor’s historiographer, the humanist Juan Gines de Sepúlveda (1489-1573)
on the question of the conditions of evangelization in the Indies, was presided
over by Soto himself and ended in a prohibition for Sepúlveda for publishing his
views.36 But the Salamancans never advocated Spanish departure from the
Indies; they supported the evangelization of the native population as well as the
establishment of a civilizing trusteeship over them. They never suggested that
Indian communities or customs were equal to the Europeans.
The fame or notoriety of the Salamancans as “fathers of international law”
results predominantly from their engagement in the Indian question, an
engagement which, as Vitoria makes clear, they undertake specifically as
theologians . Since these “barbarians… are not subjects [of the Spanish Crown]
by human law…their affairs cannot be judged by human statutes, but only by
divine ones, in which jurists are not sufficiently versed to form an opinion of
their own”.37 The teaching by the Salamancans on economic matters such as
contracts, trade, profit-making, lending and borrowing, including international
commerce are, however, even more voluminous and certainly no less important
for their effect in thinking about the international normative world. As
See e.g. Luciano Pereña, La idea de justicia en la conquista de América (Madrid, Mapfre 1992),
For a good recent review, see La controverse entre Las Casas et Sepúlveda (introd, trad et
annoté pas N. Capdevila, Paris Vrin 2007).
37 Francisco Vitoria, ‘On the American Indians’, § 3 in Political Writings, (A. Pagden & J. Lawrance
eds., Cambridge University Press, 1991) , 238.
35
36
14
confessors to men having engaged the “Indians” they were naturally prompted to
examine the various new problems: did the Indians – although pagans – enjoy
ownership and jurisdiction? When was war against them justified? Could they
be taken as slaves? But they had no less of a reason to pose analogous questions
regarding the engagement of the Spaniards in the novel economic and
commercial practices. How did one become owner of a natural resource? Could
ownership be enforced against the poor or the needy? What was a just price?
Was one entitled to require interest for lending activities? Was the accumulation
of riches sinful? Vitoria, Soto and their followers such as the Dominican Tomás
de Mercado (1530-1576) and the canon lawyers Martin de Azpilcueta (14911586) and Diego de Covarrubias (1512-1577) discussed these questions with
their starting-point firmly on Thomistic views regarding justice in individual
relations.38 Their interest in commercial exchanges was above all religious: when
was commerce sinful and when not? Nevertheless, in developing their detailed
casuistic, they came, Joseph Schumpeter has noted, as close as any other group to
being the founders of a “science of economics”.39
But even more they could be seen as founders of modern economic law.
Precisely because their perspective was normative and not descriptive (even as
their writings contain long descriptions of novel economic practices), and
because they did not make a distinction between different forms of normativity –
morality and law – their contemplation on permissible and impermissible
economic activities, buying, selling, lending, just price and when is restitution
owed, among others – developed into a complex legal system that seeks to
accommodate the basic principles of Christian ethics with the social and
economic reality of emergent mercantile capitalism. The distinction between
natural law and the ius gentium is absolutely crucial to this effort.40 The
distinction is not always uniformly made – a fact that testifies to the difficulty of
Cirilo Flórez Miguel, ‘La escuela de Salamanca y los origins de la económia’, in Francisco Gómez
Camacho & Ricardo Robledo (eds), El pensamiento económico en la escuela de Salamanca
(Ediciones Universidad Salamanca, 1998), 144 and generally 124-144. Also very usefgul is
Rayomend de Roover, La pensée économique des scolastiques. Doctrines et methods (Paris, Vrin
1970).
39 Schumpeter, Histoire de l’analyse économique, supra, 144.
40 On the way that distinction is made by the Spaniards., see generally Peter Haggenmacher,
Grotius et la guerre juste (Paris, PUF 1986), 333-351.
38
15
the task – and often appears to vanish altogether, as for example ion Vitoria’s
slightly modified quote from Gaius in the lecture on the Indians– “What natural
reason has established among all nations is called the law of nations” .41 But this
is lapse is not repeated in Vitoria and his extended discussion of the most
important early modern institutions, namely the power of the prince as head of
the civil commonwealth and private ownership, he contrasts their emergence as
ius gentium against the original natural law that had provided for human
freedom and equality as well as ownership of all things in common.
III
The starting-point of the scholastic perception on trade lies with the general
theory of legitimate power addressed under the Roman law vocabulary of
dominium. This had originally been “Christianized” in St Isidore’s 6th century
Etymologies and in Gratian’s 12th century codification of Canon law. In Aquinas,
the theory of dominium was systematized under the view that originally only
God had had legitimate authority over all his creation. It was passed on to
humans as an incident of their having been created in God’s image. Or as Aquinas
chose to express the matter, like God, human beings had dominium over their
actions (“dominium actiorum suarum”) .42 However, according to Genesis, and
as accepted within tradition, human beings enjoyed this dominium originally in
common. On the other hand, by the time Vitoria was lecturing on the matter in
1534-35 most of Europe’s economy and indeed the growing trade between Spain
and the rest of the world was based on private ownership. Even as the common
property was accepted among some mendicant orders (such as the Franciscans) ,
Vitoria and his contemporaries had adopted the view put forward by Aquinas,
laid out above, that the right of private property had been established alongside
a permissive or merely recommendatory natural law: “dominion and supremacy
(praelatio) were introduced by human law, not natural law”.43 But how could
Vitoria, ‘On the American Indians’ Q 3 A 1 § 2 , supra, 278.
See Kurt Seelmann, Die Lehre des Fernando Vazquez de Menchaca vom dominium (Cologne,
Heymanns, 1979), 77.
43 Vitoria, ‘On the American Indians’, in Political Writings, supra, Q 2 A 1 (254).
41
42
16
merely human law possibly deviate from a divinely origined natural law? Were
the princes and merchants living in sin?
Vitoria resolved the problem by making a distinction between binding and
merely recommendatory provisions of natural law. Freedom and common
ownership were not based on a binding prescription (praescriptio) but only a
recommendation, (concessio). They provided for common property but did not
prohibit the divisio rerum – either in its public law form as independent
communities or in terms of private property. 44 The division had been carried
out in the course of history by consensus – not by a formal consensus but by a
“virtual” one (“non aliquo consensu formali, sed virtuali”), by the taking into use of
pieces of land and others following suit. Because this division was valid
everywhere it could not have been based on the civil law of this or that state. It
had to have been undertaken by ius gentium.45 This was the reason, for example,
that neither the pope nor the emperor had any basis for claiming authority over
the whole world. The dominion of Christ had not been “of this world” and could
not, therefore, have devolved to Peter or the latter’s successors. Nor had such
dominion ever been granted to or exercised by the (Roman) emperor. 46
Dominion lay with all humans on the basis of natural law, and the communities
they had established as well as the properties they divided among themselves
were rightly theirs on the basis of the ius gentium.47
As we have seen, Aquinas had justified the move from common to private
property on a utilitarian argument: “everyone is more diligent in procuring
something for himself than something which is to belong to all or many”.48 The
Salamanca scholars followed him. They accepted private property as a pragmatic
Vitoria, ComST II-II, supra, Q 62 A 1 n 20 (77). This technique had already been used buy the
canonists and through Vitoria and Suárez, it continued to be put forward by such enlightenment
thinkers as Wolff and Achenwall.See Brian Tierney, Permissive Natural Law and Property:
Gratian to Kant’, 62 Journal of the History of Ideas (2001), 381-399.
45 Vitoria, ComST II-II, supra, Q 62 A 1 n 23 (79).
46 Vitoria, ‘On the American Indians’, in Political Writings, supra, Q 2 A 1 & Q 2 A 2, (252-264).
47 Vitoria, ComST II-II, supra Q 62 A n 22-27 (78-81).
48 Aquinas, ST II-II in Political Writing (R.W. Dyson ed, Cambridge University Press, 2002), 66 A 2
resp. (208).
44
17
“addition” to natural law (instead of a sinful deviation from it).49 Soto, for
example, attacked Plato’s communist utopia in Timaeus and Republic. The
effective use of resources required that each was given his own property to use
and administer. Moreover, only such division ensured the right distribution of
burdens. There may have been sufficient fruit for everyone in Paradise. But since
the expulsion, humans have had to work in order to earn their living. In such
conditions, common property would lead to some working excessively while
others would simply lay back to enjoy the fruits of their neighbours’ labour.
Peace, tranquillity and friendship would be inevitably thwarted.50 Moreover,
Soto points out following Aristotle, under conditions of common property it
would be impossible to cultivate the virtues of generosity and liberality. The
same fate would befall the virtues of hospitality and gratitude – without private
ownership none of them would serve any point. 51
The same structure is carried over to Suárez’ De legibus (1612). Ius gentium is
human and not natural law. Through it, private property (as well as lordship and
slavery) have been established in a situation where the original common
property had not prohibited its contrary. And when private property is
established, it emerges as a specific type of subjective ius breach of which is
prohibited by natural law: “although division of property may not be prescribed
by natural law, nevertheless, after this division has been made and spheres of
dominion have been distributed, the natural law forbids theft, or the undue
taking of another’s property”.52
49 Aquinas, II-II Q 66 A 2 in Political Writings, supra note 48, 208 and Coleman, ‘Property and
Poverty’, supra, 621-625. On the Franciscan poverty controversy, see id, 631-648; Brett, Liberty,
Right and Nature, supra, 13-20.
50 Domingo de Soto, De iustitia et iure Libri decem / De la justicia y el derecho en diez Libros (Intr.
By P.V.Diego Carro, Spanish transl. by P.M. Gonzalez Ordonez, Madrid 1967), Bk IV Q III A 1
(296a-297a). ”Hac ergo delira communitate praetermissa…demonstrandum [est] quam sit
congruens naturae corruptae possessionum divisio…nempe ex humana negligentia et ex
cupiditate”, id. (296b). See also Alejandro A. Chafuen, Faith and Liberty. The Economic Thought of
the Late Scholastics (Oxford, Lexington 2003), 33-34.
51 “Qui enim proprium non habet, liberalis esse non potest et qui omnia possidet, alienae
liberitatis non eget”, Soto, De justitia et de iure, supra note 50 Bk IV Q III A 1 (297b). See also
Aristotle, The Politics (trans. By A.T. Sinclair, rev. and re-pres. By T.J. Saunders, Harmondsworth,
Penguin 1981), 1263a (115).
52 Suárez, ‘On Law and God the lawgiver’, supra, Bk II, Ch XIV § 17 (279).
18
Everything the Spanish theologians wrote about the laws of contract and
inheritance, prices, money, and commerce at home and with foreign countries as
well as of objectives and limits of public power presumed not only the existence
but the beneficial nature of private property and the transactions connected with
them.53 Such transactions had been discussed in Roman (civil) law but no
systemic view of them had emerged until the scholastics brought them under the
title of commutative justice “intimately bound with the sacrament of
confession”.54 For Vitoria and Soto were keenly aware that accumulation of
wealth could easily cross the threshold of the sin of avarice. Their commentaries
to questions 77 and 78 of the Secunda secundae of Aquinas thus undertook the
task of balancing their concern for the souls of the merchants with their
utilitarianism. The result was an extremely detailed casuistic of different types of
commercial practices – contracts, usury and such other economic operations. 55
Within this casuistic, the universal freedom of trade in private property, based
neither on God’s grace nor on natural law, but on utility in actual societies plays
an important role. It allowed Vitoria and Soto, as well as Suárez half a century
later, to argue that the right of free trade would be applicable all over the world.
It would, for example, provide the basis on which Catholic merchants from Spain
could engage in mutually profitable transactions with Islamic or Jewish traders
(as they had done for centuries), travel to Protestant markets in Germany and
the Netherlands and to trade and exchange goods with the inhabitants of the
In this, they departed significantly from medieval writers who were usually dubious about
economic activity and accepted it only to the extent it was directed towards satisfaction of
necessities or caring for offspring. See e.g. Antonio Garcia Garcia, & Bernardo Alonso Rodriquez,
‘El pensamiento económico y el mundo del derecho hasta el siglo XVI’, in Gómez Camacho &
Ricardo Robledo (eds), El pensamiento económico en la escuela de Salamanca (Ediciones
Universidad Salamanca, 1998), 66-75 Diane Wood observes that it was the Church that put a
brake on economic activity. For “to be socially ambitious, to want to be upwardly mobile, was a
sin”, Medieval Economic Thought (Cambridge University Press, 2002), 3, 2-5.
54 Thomas Duve, ‘La teoria de la restitución en Domingo de Soto: Su significación para la historia
del derecho privado moderno’, in Juan Cruz Cruz, La ley natural como fundamento moral y
jurídico en Domingo de Soto (Pamplona, Eunsa, 2007), 190, 187-190.
55 Juan Belda Plans, La escuela de Salamanca y la renovación de la teologia en el siglo XVI (Madrid,
Biblioteca de autores cristianos, 2000), 926; José Barrientos García, ‘El pensamiento económico
en la perspectiva filosofico-teologica’, in Gomez Caracho & Robledo, El pensamiento económico,
supra note 53, 94-95. To give a sense of the detailed nature of the result, it might be noted that
the mere discussion of the question “whether it is allowed to receive for loan something else than
money in exchange” is divided into 75 paragraphs that discuss 51 “doubtful cases”, many of them
developed in several “corollaries”, all of which takes from the modern Latin edition altogether 68
pages, Vitoria ComST II-II supra, Q 68 A II (167-235).
53
19
New World. The most famous sketch of this worldwide system of dominium is
contained in Vitoria’s discussion of the right of the Spaniards to travel and trade
in the Indies (ius pergrinandi & ius negotiandi), accompanied by dominium that
was articulated as ius gentium. Vitoria portrays trade and commerce as part of
the “natural partnership and ´communication” between humans. Since the
beginning of times, “everyone was allowed to visit and travel through any land
he wished [and t]his right was clearly not taken away by the division of property
(divisio rerum).56 It was a practical consequence of this that all nations were to
show hospitality to strangers and everybody had the right to “all things that
were not prohibited or others to the harm or detriment of others”.57
To make sure that he was not only discussing some special (colonial)
relationship between the Spanish and the Indians, Vitoria added that the same
principles would apply between Christian commonwealths. For the Spanish or
the French kings to intervene in the travel of private traders would be
“unjust…and contrary to Christian charity”.58 All of this begins to sketch an
international system of commerce, based on the free use of their dominium by
private merchants and bankers that the princes were not entitled to impede
“unless this is necessary for the defence and government of the nation”. 59 Nor
could he limit hunting, fishing, or collecting firewood from the forest, without
just cause. The right to use all this flows from the original natural law provision
that humans may use everything that is necessary for their conservation.60 To
expropriate subjects arbitrarily – something that had been a persistent reality in
15th century Spain – would turn the prince into a tyrant and perhaps even trigger
the right of resistance of the commonwealth. Expropriation was possible only
when the prince had a permissible causa, that is to say, only so far as needed by
the commonwealth – “[b]eyond that, man must not only have his own rights as
Vitoria, ‘On the American Indians,’, Political Writings, supra Q 3 A 1 § 2 (278).
Vitoria, ‘On the American Indians,’, Political Writings, supra Q 3 A 1 § 2 (278).
58 Vitoria, ‘On the American Indians,’, Political Writings, supra Q 3 A 1 § 3 (280).
59 “nisi quando eidem reipublicae tuendae & administrandae necesse fuerint”, Soto, De iustitia et
de iure, supra Bk IV Q IV A 1 (301a). See also Barrientos García, ‘El pensamiento económico’,
supra, 120.
60 Vitoria, ComST II-II supra, Q 62 A 1 § 13 (72-73. See also Deckers, Gerechtigkeit, supra 210-211.
56
57
20
an individual, but he must also have their exercise in his own control: in other
words, he must be sui iuris, have dominium of himself or his liberty.”61
A particular point of concern was constituted by the novel forms of credit that
facilitated long-distance trading as well as helped to sustain the government and
engagement in the unending wars of the period. For the Crown, the problem was
that the gold and silver that it needed to pay for its expenses arrived in Seville
only twice a year; meanwhile, it would issue letters of exchange or credit for its
bankers so as to pay for its suppliers and to provide salaries to its soldiers. These
letters then “became the oil that kept the wheels of the empire turning”. As
Kamen explains:
“The notes could travel rapidly with the mail, making credit available
immediately; real payment would come later, when the relevant bullion
arrived. As countries spent more money on war and foreign policy, the
credit that they demanded stimulated the business of international
financiers and traders, who arranged themselves into consortiums to take
on the huge loans (or ‘asientos’) asked for by the Spanish empire”.62
The “credit boom” that was legally organized by the instrument of the letter of
exchange (as well as the famous “asientos” issued by the crown) extended to
private trading. This was hugely significant as almost two-thirds of the bullion
came to private contractors, further contributing to the emergence of an
economy based on paper money that nevertheless completely depended on the
availability of bullion and with it, speculation about availability. 63 The letter of
exchange was also an important instrument in the private trading that took
place as merchants were moving between the trade fairs in Medina del Campo,
Lisbon, Rome Flandres and other locations. These were two reasons for this.
First, travelling these distances with loads of money (gold and silver were the
only shared currency in Europe) was hazardous business. It was much better to
carry a paper note against which the banker or the cambista in the destination
would pay the amount needed for trading purposes. Second, in long-standing
Brett, Liberty, Right and Nature, supra 159.
Kamen, Spain’s Road to Empire, supra 293.
63 For some of these numbers, see Dennis O. Flynn & Arturo Giraldez, ‘Born with a “Silver Spoon”:
The Origin of World Trade in 1571’, 6 Journal of World History (1995), 209-212.
61
62
21
business contacts it was practical for traders to provide such letters to each
other whereby they could credit their payments at later fairs against what they
had sold at earlier ones. And they could of course also use these as independent
instruments for making payments to third parties that would ultimately be
guaranteed by the banks and other professional credit providers with whom the
original letter had been signed and issued. 64
With this, the Salamancans began to think of money as not just a sign or an
instrument of exchange but as possessing value in itself so as to accumulate for
investment purposes and capable of being exchanged for profit (interest). In
traditional scholastic doctrine, this raised the question of usury. Was the whole
economic system based on it?65 Vitoria’s extensive treatment of usury opens
with an apparently unconditional prohibition of interest-taking for loan: money
was “sterile” and making it produce thus contrary to natural law.66 Nevertheless,
in the course of his discussion, he made several qualifications to that principle
and ended up positively endorsing the operations of the professional money
exchangers (banks and cambistas), as the credit and letters of exchange they
provided enabled merchants to move between fairs in Europe without having to
carry large quantities of money with them.67 Soto accepted that a modest
interest could be raised for lending activities inasmuch as they facilitated
international exchanges and created the basis for accumulation that could be
useful for investment purposes. Even as usury was a violation of commutative
justice, in complicated international exchanges that involved several parties it
was often difficult to determine the equilibrium or reciprocity commanded by it:
one flexible basis for accepting interest was provided by the assumption that
lending caused some damage to the lender and that interest could be understood
See e.g. Antonio García García & Bernando Alonso Rodriquez, El pensamiento económico y el
mundo del derecho’, in Gómez Camacho & Robledo, El pensamiento económico,, supra, 81-90.
65 For this section, see De Roover, La pensée économique des scolastiques, supra, 76-90.
66 Vitoria, ComST II-II, supra Q 78 A 1 § 1, 3 (153-154, 155).
67 Vitoria, ComST II-II, supra Q 78 A 2 § 61-75 (223-235). The cambista provides a service that is
useful for the community and for which it is lawful to require a benefit. However, unlike his
Dominican predecessor Cardinal Cajetan, Vitoria extends this right beyond professional bankers
to the transactions that merchants do on a permanent basis and that have the objective of
facilitating long-distance trade (but not between nearby cities), id. § 66, 69 (227-228, 229),
64
22
as a compensation (damnum emergens) even in some instances for unattained
profit (lucrum cessans).68
Vitoria and Soto witnessed the unprecedented rise of prices in Spain and
elsewhere as a result of the importation of gold and silver from the Indies. This
led them to subscribe to the quantity theory of money (that the value of money is
relative to its quantity on the market) that departed from assessing lending
activities from the perspective of individual cases of conscience. As Soto
explains:
The more plentiful money is in Medina the more unfavourable are
the terms of exchange and the higher the price that must be paid
by whoever wishes to send money from Spain to Flanders, since
the demand of money is smaller in Spain than in Flanders. And the
scarcer money is in Medina the less he need pay there, because
more people want money in Medina than are sending it to
Flanders”.69
Four hundred dinars in Spain may thus have the value of three hundred in
Flanders without anybody along the way making themselves guilty of the sin of
usury. Price fluctuations between the fairs may be justly taken into account in
determining the value of money to be exchanged or indeed of a letter of
exchange issued in one place to be cashed in another. In fact, Soto seems to have
been “among the first scholastic writers to describe and approve of the credit
creation of the banks”.70 The matter is no different from profits emerging from
exchanges of regular commodities. In case the profit/interest relationship is not
unreasonable (e.g. there is no laesio enormis), then it is lawful.71 The discussion
assumes that the exchanges are valid and that the practices that go to assist in
them are lawful inasmuch as the profits are reasonable, there is neither fraud
nor coercion and that prices are not manipulated to the detriment of the
community.
Vitoria, ComST II-II, supra Q 78 A 2 2 167-168); Soto, De iustitia et iure, supra Bk VI Q I A 1 and
A 3 (508a-514b, 521b-525b).
69 Soto, De iustitia et iure, supra Bk VI Q XII A 2 (595a-b). Translation in Marjorie GriceHutchinson, Early Economic Thought in Spain 1177-1740 (London, Allen & Unwin 1978), 103.
70 Grice-Hutchinson, Early Economic Thought, supra 104.
71 García García y Rodriguez, ‘El pensamiento económico y el mundo del derecho’, supra 70;
Diana Wood, Medieval Economic Thought (Cambridge University Press 2002), 148-9.
68
23
Steps towards such a “systemic” view of money and economic exchanges were
taken by Vitoria’s contemporary Tomás de Mercado whose Suma de Tratos y
contratos (1553) contains a long chapter on the prevailing international trade
practices that required different types of credit and money-lending to be
available all around the world at all times. Cambistas, he suggested, emerged less
out of spontaneous interest for profit-making as parts of a universal network of
economic operations.72 The significant fact was that demand and supply were
now being organised at an international scale by bankers in Italy, Germany,
Flanders and England so that as a result, the princes started to become for the
first time even theoretically unable to control the price-levels of goods in their
territories. As the network of international exchanges widened, it began to
operate increasingly with different types of paper-money the value of which was
determined by its users, the bankers and merchants, and the credit policies of
international banks and other financial institutions. As these same institutions
also lent the funds needed by Charles V to carry out his incessant wars, he was
compelled to direct whatever domestic sources of revenue he could muster
directly as payments for his debts, thus binding his hands in regard to domestic
policy as well. There was nothing new in this. As Charles’ grandfather Maximilian
I died in 1519, his debt to the Fuggers and the Welsers of Germany amounted to
18 times his annual income – and late in his regime Charles’ son Philip II was
compelled to pay two-thirds of his income as interest for his debts.73
The notions of dominium, price-formation and debt on which the emerging
commercial world was based were largely accepted by subsequent generations
of Spanish scholastics.74 The Jesuit Luis de Molina (1535-1600) , for example,
expanded the utilitarian justification behind private property. In his De iustitia et
iure he tells the old story about how the move had taken from natural law-based
common ownership through the ius gentium into private property. To the
Tomas de Mercado, Suma de tratos y contratos (edición preparada por Restitution Sierra Bravo,
Madrid, Editoria nacional 1975), 313-318. L. Baeck, ‘Monetarism y teorias del desarrollo en la
peninsula Iberica en los siglos dieciséis y diecisiete, in Gomez Camacho y Robledo, El pensamiento
económico, supra 176.
73 M.N. Pearson, ‘Merchants and States’, in James D. Tracy (ed), The Political Economy of Merchant
Empires (Cambridge University Press 1991), 80 and Thomas A Brady. ‘The Rise of Merchant
Empires. 1400-1700: A European Counterpoint’, in ibid, 145-146.
74 See further Grice-Hutchinson, Early Economic Thought, supra 98-102.
72
24
objection – “How can human law go against (God-enacted) natural law?” – he
retorts that God had inserted a natural light (“lumen naturale”) through which it
was understood that among sinners, to avoid worse evils, properties needed to
be divided. This was not a natural light about what was “necessary” but what
was “expeditious” (“expediens”).75 On the other hand, Molina as well as some
other second and third generation Salamancans were already cognizant of the
dangers to which unfettered rights of travel and appropriation of things not
taken to active use by the Spanish might lead and sometimes advocated the right
of the (indigenous) community to decide for itself how its resources ought to be
used. 76Such views would not, however, be incorporated in the more influential
works such as those by Grotius or Vattel, that endorsed a strong and principled
view on the freedom of commerce.
IV
The theory of dominium as the sphere of freedom – especially economic freedom
– belonging to human beings by ius gentium opened now a wholly new way to
speak of universal authority beyond dubious claims about papal or imperial
power. Any statement under the via antiqua that laid out duties connected with
an office or rule could now be re-described as a statement about what (some)
human beings had an entitlement to. “And the important thing about the
sixteenth-century Spanish theologians and lawyers was that they did frame those
issues in terms of the individual”.77 The universal structure of private rights that
emerges from Vitoria and Soto was articulated as a special type of ius
dominativum by Suárez that set up a universal field of individual rights that
enabled the establishment of the most varied types of social institution and
arrangement. As regarded “such things as the holding of things in common,
human liberty and the like” – “the natural law lays down no precept enkoining
that they shall remain in that state; rather does it leave the matter to the
Ludovici Molinae, De iustitia et iure. Tomi sex (Antverpiae, Keerberginum, 1615), T II Disp 20
(43b).
76 See Frank B. Costello, The Political Philosophy of Luis de Molina (1535-1600) (Roma Inst.
Historium, 1974), 128-132..
77 Annabel Brett, ‘The Development of the Idea of Citizens’ Rights’ in Quentin Skinner & Bo Stråth,
States and Citizens. History, Theory, Prospects (Cambridge University Press, 2003), 100.
75
25
management of men, such management to be in accord with the demands of
reason”.78 Wherever authority was being exercised, it could now be assessed by
universal rights of property, self-defence, travel, trade, taking of possession of
ownerless things and so on. This was an inevitable consequence of the fact that
the followers of Aquinas dealt with dominium in the context of commutative and
not distributive justice, that is to say, as relationships between subjects
themselves, excluding ideas about the intervention of public power.79
The further development of these ideas is well known. As advocate for the Dutch
East Indies company (VOC), as theologian and natural lawyer, Grotius followed
the jurist Fernando Vazquez de Menchaca (“the honor of Spain”) in rejecting the
idea that prescription, or any other title, might lead to ownership of the seas.80 In
Mare liberum (1609) he endorses the view of common property as the original
situation of humankind from which the distinction of dominions had departed
little by little, by practice and occupation – but for those things that could not be
occupied (such as the seas), there would remain free use for all: “The liberty of
trading is agreeable to the primary law of nations which hath a natural and
perpetual cause and therefore cannot be taken away…”. 81 And Grotius ends by
admonishing those who would want to obstruct the enjoyment of this right that
is to say the Portuguese) with just war as the right remedy – a position more
widely defended in the original work (De iure praedae, 1605 ) of which Mare
liberum was a part.82
Suárez, ‘On Law and God the Lawgiver’, supra, Bk II Ch XIV § 6 (270). On ius dominativum in
Suárez as the basis on which individuals may create social institutions (such as property) in the
absence of a prohibition by natural law, see especially Markus Kremer, Den Frieden verantworten.
Politicshe Ethik bei Francisco Suárez (1548-1617) (Stuttgart, Kohlhammer 2008), 90-95.
79 “Late-scholastic theory analyzed profits, wages and rent as matters of commutative justice and
applied rules similar to those used to analyze the prices of goods. The Schoolmen determined
that wages, profits and rents are not for the government to decide. Since they are beyond the pale
of distributive justice, they should be determined though common estimation of the market.”
Chafuen, Faith and Liberty, supra, 102-103 (footnote omitted).
80 Hugo Grotius, The Free Sea (Richard Hakluyt transl. ed. with an intr. By David Armitage
(Indianapolis, Liberty Fund 2002 [1609]), Ch 7 (43).
81 Grotius, The Free Sea supra Ch 8 (51). In this early work Grotius still followed Vazquez in
distinguishing between “primary” and “secondary” law of nations, the former being part of
natural, the latter of positive law.
82 Grotius, The Free Sea supra Ch 13 (57-60). See further Commentary on the Law of Prize and
Booty (Ed. with an intr by M. van Ittersum, Indianapolis, Liberty Fund 2006), Ch IV (for the two
cases of just war that provide for “recovering out own property” and “inflict[ing] punishment for
offences”, (73, 74).
78
26
That larger work famously contained the argument whereby a private company
(such as the VOC) may engage in just war against a state (in this case the
Portuguese) or a subject of a state and to take the property belonging to the
latter as prize and booty in order to compensate for the “injury” caused by
preventing the free enjoyment of the rights of trade. Indeed:
“spoils are beneficial primarily because the individuals honourably
enriched thereby are able to benefit many other persons, and because it is
to the interest of the state that there should be a large number of wealthy
citizens”. 83
Gone are the Spaniards’ doubts about the benefits of free trade in Grotius.
Commerce now has a providential function and the rights of private property
and engagement in trade are both wished by God and defensible by war if
necessary. 84 Later, in Book II of De iure belli ac pacis Grotius provides an
extensive justification of private property, its forms of acquisition, contracts and
war as a means of reparation and punishment for the injury that is done to the
owner by depriving him the rightful use of his property.85 In this way, not only
was the public power of the State enlisted for support of access by private
merchants to all parts of the colonial world but these merchants themselves
were understood as representatives of the state and competent to undertake
just war in both its “private” and “public” forms.86 “In other words”, Miéville has
written, “for Grotius the ‘political’ and the ‘economic’ are not separate in the
international sphere. The international legal argument for free and equal access
Grotius, Commentary on the Law of Prize and Booty, supra Ch XV (464).
See further the excellent analysis in Ileana M. Porras, ‘Constructing International Law in the
East Indian Seas: Property, Sovereignty, Commerce and War in Hugo Grotius’ De iure praedae –
the Law of Prize and Booty, or “On How to distinguish merchants from Pirates”, 31 Brooklyn J.
Int’s L. (2006), 741-804.
85 Hugo Grotius, The Rights of War and Peace, Book I (Ed. with an intr by Richard Tuck,
Indianapolis, Liberty Fund, 2005 [1625]), Prelimnary discourse XVIII (94). See further Alfred
Dufour, ‘Les “Magni hispani” dans l’oeuvre de Grotius, in Frank Grunert & Kurt Seelmann, Die
Ordnung der Praxis. Neue Studies zur Spanishen Spätscholastik (Tübingen, Niemeyer 2001), 351380.
86 See Grotius, Commentary on the Law of Prize and Booty, supra Chs XII (privatye war) and XIII
(public war) (300-436).
83
84
27
to trade was simultaneously an argument to strengthening of the violent
mercantile state”. 87
In order to support the aggressive trading policy of the VOC and to provide the
company with a right of just war Grotius needed to think out the principles of
international relations in a way that “fundamentally revised Western political
thought itself”.88 An offshoot of this rethinking was the founding of private
property and the right to defend it by war on a wide notion of self-preservation
that was only tempered by a sociability that Grotius assumed humans had
received from God at creation. Where Grotius still saw that sociability in terms
of a natural love and fellowship, Samuel Pufendorf (1632-1694) and the later
proponents of natural philosophy depicted it in artificial terms – as an inference
self-loving humans had better to draw from their experience: what was it that
they would needed for their self-preservation and flourishing? The answer
would be: commercial society.89 Emer de Vattel’s (1714-1767) hugely successful
view of the law of nations, (1758) used this argumentative basis so as to liberate
the nations to seek their own self-perfection by setting up a balance of power
that would allow the uninterrupted pursuit of trade relations even in wartime.90
Nevertheless, the natural law expounded in it would powerfully institute inside
classical legal thought a tension between what Emmanuelle Jouannet has
instructed us to think in terms of liberalism and providentialism, two aspects of a
consciousness earlier united by religion.91
In the last third of the 19th century European liberals began to imagine
international law as teleologically oriented towards a cosmopolitan order of free
87 China Miéville, Between Equal Rights. A Marxist Theory of International Law (Leiden, Brill
2005), 210.
88 Richard Tuck, The Rights of War and Peace. Political Thought and the International Order from
Grotius to Kant (Oxford University Press, 1999), 81. For a very thorough elaboration of this point,
see Martine van Ittersum, Profit and Principle. Hugo Grotius, natural Rights and the Rise of Dutch
Power in the East Indies 1595-1615 (Leiden, Brill 2005).
89 See further, Istvan Hont, ‘The language of Sociability and Commerce’, in Jealousy of Trade.
International Competition and the Nation-State in Historical Perspective (Harvard University Press
2005), 176-184.
90 See e.g. Isaac Nakhimovsky, ‘Vattel’s Theory of the International order: Commerce and the
balance of Power in the Law of Nations’, 33 History of European Ideas (2007), 157-173.
91 Emmanuelle Jouannet, Le droit international libéral-providence. Une histoire de droit
international (Brussels Bruylant, to be published in 2010).
28
individuals – an “international community” – whose relations with each other
would be determined by spontaneous exchanges, especially of an economic
nature. The 19th century was of course the great period of liberalism and free
trade, as well as a methodological individualism in its thinking about society and
government. The international law it inspired at European universities and
foreign ministries was committed to believe that progress would mean the
expansion of individual rights across the globe, including rights of free trade. It
was for public (international) law to provide an institutional frame within which
this teleology could operate so as to bring peace and prosperity to all. 92
The notions of individual freedom and private ownership that were part of this
teleology were received from the debates about dominium in its private and
public forms among scholastic theologians from the thirteenth to the sixteenth
century. For the latter, however, dominium was not at all something independent
from the laws of the polis, or indeed from the effort of the rulers to govern their
communities for the common good. On the contrary, the private rights and
faculties were constantly justified, defined, and delimited by reference to
governmental policies and dominium iurisdictionis. The assumption was that
although trade would be useful in a world of sinful humans, the more important
aspects of the social and individual lives in the polis would be directed to
spiritual good and protection against enemies, and that it was to these that those
other aspects should yield. It was only during the 18th century when Western
thought about property and trade began to situate the latter as part of a selfcontained or self-regulating “system” in which they would begin a life of their
own as legal principles or social practices operating autonomously from a
limited “public realm”.93 This would allow free trade to emerge as an apparently
natural activity against which other human pursuits would need a special
justification.
For this legal tradition, see my The Gentle Civilizer of Nations. The Rise and Fall of International
law 1870-1960 (Cambridge University press 2002).
93 On the emergence of a naturalized idea of economy in French 18th century thought, see
Margaret Schabas, The Natural origins of Economics (Chicago University Press, 2005), 7-12, 4257.
92
29
For the scholastics, however, ownership and free trade were not foundational at
all but social and historical constructs, designed as instruments for the welfare
and security of actual communities. They did not represent nature but human
invention. Whatever extension they had was dependent on governmental
choices whose justification was derived from the common good. Vitoria, for
example, began with his discussion of the transfer of dominium with the simple
assumption that there were two ways in which such transfer could be operated,
either by contract or by a decision by the prince in accordance with the law.94 A
system of ostensibly “commutative” justice among individuals is cut across by
the distributive justice that it is task of the prince to realise – and which has been
given to him by the people.95 When Suárez discusses the establishment of a
private property regime, he insists on its social and instrumental character.
Dominium for him, as for the whole tradition he represents, is
“…dependent, in the individual persons, either upon their own wills, or
upon the state, insofar as the latter has lawful power over all private
individuals and over their property, to the extent necessary for right
government”. 96
It follows, for example, that the rich are duty-bound to give everything
superfluous to the poor: “for the opposite conduct would be contrary to the end
of these goods…”.97 For the whole scholastic tradition starting with Aquinas and
looking back to the ethics of the Gospel, property and the free exchange of
property were simply instruments for government, and amenable to variation in
view of other, more important governmental objectives understood either in
terms of a supernatural beatitude as in Vitoria, or a secular felicity, as in Suárez..
There was nothing natural about them – on the contrary, they emerged against a
natural state of absence of dominium among humans and a state of common
ownership.
Vitoria, ComST II-II Q 62 A I § 33 (86).
“Praeterea, princeps est electus a populo. Sed populus dat ei istam auctoritatem ut posit
disponere bonis civium”, Vitoria, ComST II-II Q 62 A I § 33 (86).
96 Suárez, ‘On Law and God the Lawgiver’, supra Bk II Ch XIV § 19 (280).
97 Francisco Suárez, Opera Omnia, XII tr.3 VII ii 2, quoted in Reijo Wilenius, The Social and
Political Thought of Francisco Suárez (Helsinki, Societas philosophica fennica 1963), 90.
94
95
30
From that religious tradition, the notions of dominium and its derivatives –
including free trade – were lifted as parts of a natural philosophy in the 18th
century that inserted them in what it assumed was a self-regulating and
autonomous mechanism, the “economy”. In Adam Smith, still, the “science of the
legislator” consisted in governmental interventions to see to the proper play of
the instincts that in individuals would fuel the operation of the mechanism.
Among the “gentle civilizers” a century later, and their successors, they were
enlisted for an anti-sovereignty struggle that looked at the world from the
perspective of methodological individualism and built institutions such as the
WTO that would rely not on “government” but on impersonal “governance” to
attain that miraculous coincidence of private and public good in which we hear
the tone of a new political theology.