Marx quotes extensively from Luther's An die Pfarrherrn wider den Wucher zu predigen. Vermanung, Wittemberg, 1540, dealing with “trading (buying, selling) and lending”, which shows that, unlike Proudhon, he was not confused by these different forms. In this tract, Luther illustrates that what was hitherto a vice had become normalised, and then conceived as a virtue, as the usurer promotes themselves as providing a service to the borrower. The same is seen today with payday lenders, but also from the capitalist employers, who would have workers believe they are doing them a favour by employing them so as to exploit their labour and thereby line their own pockets.
Luther quotes Seneca,
“Deest remedii locus, ubi, quae vitia fuerunt, mores fiunt. (There is no remedy where that which was regarded as unvirtuous becomes the habit.” (p 533)
In a different context, something similar could be said of the way Donald Trump normalised the use of racist and misogynistic language.
Luther lists a series of such instances of “service”.
“The poets write about the Cyclops Polyphemus, who said he would do Ulysses an act of friendship, namely, that he would eat his companions first and then Ulysses last. In sooth, this would have been a service and a fine favour. Such services and good deeds are performed nowadays most diligently by the high-born and the low-born, by peasants and burgesses, who buy goods up, pile up stocks, bring dear times, increase the price of corn, barley and of everything people need; they then wipe their mouths and say: Yes—one must have what one must have; I let my things out to help people although I might—and could—keep them for myself; and God is thus fooled and deceived… The sons of men have become very holy… So that now nobody can profiteer, be covetous or wicked; the world has really become holy, everyone serves his fellows, nobody harms anybody else…” (p 533)
Marx notes that this description showed that usury increased considerably during Luther's time, and that the justification for it is already described as providing a “service”, which is the basis later used by Say and Bastiat. In Adam Smith, we have the concept of the market and competition, which follows a similar path that “everyone serves his fellows”, but driven not by any motives of altruism, only by individual self-interest.
“In the world of antiquity, during the better period, usury was forbidden (i.e., interest was not allowed). Later [it was] lawful, and very prevalent. Theoretically the view always [predominated] that interest in itself is wicked (as was stated by Aristotle).
In the Christian Middle Ages, it was a “sin” and prohibited by “the canon”.” (p 534).
During this period, the role of money lending, therefore, becomes the function of non-Christian communities. As Marx explains in Capital, high rates of interest are prevalent under usury, because the number of lenders is small, whereas those that resort to borrowing do so out of desperation. The same applies with payday lenders. Those who resort to such borrowing do so because they have no savings or access to other cheaper forms of credit, whilst he high risk of default of such borrowers means that other lenders are not inclined to lend.
“Modern times. Luther. The Catholic-pagan view still [prevailed]. Usury became very widespread (as a result partly of the monetary needs of the government, [partly] of the development of trade and manufacture, [and the] necessity to convert the products into money). But its civic justification is already asserted.” (p 534)
Holland was the first capitalist nation, but based primarily on commerce rather than production.
“The first apologia for usury. It is also here that it is first modernised and subordinated to industrial or commercial capital.” (p 534)
In England, in the 17th century, capitalism again takes hold, but again, as with Holland, primarily in the realm of commerce, rather than production. It is merchant capitalists, alongside the landed aristocracy, that provide the driving force of Mercantilism, and the establishment of colonies and colonial trade. It provides the material foundation for the theories of Mercantilism and the Money School, as explanations for profit, and the wealth of nations based on unequal exchange and profit on alienation. It is this merchant class, along with the town bourgeoisie, and an increasingly differentiated peasantry into capitalist Yeoman farmers, like Cromwell, who, together with sections of the landed aristocracy form the opposition to Charles I, in the Civil War.
“The polemics are no longer directed against usury as such, but against the amount of interest, and the fact that it dominates credit. The desire to establish the form of credit. Regulations are imposed.
Eighteenth century. Bentham. Unrestricted usury is recognised as an element of capitalist production.” (p 534)
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