The Spanish Scholastics - Founders of modern economics

Mentioned below in the Islamic Austrian Economics link was the work of the Spanish Scholastics of the 13th through 17th centuries. Serendipitously, the Mises Institute has a post detailing much of the critical teaching and theory of the medieval masters.

Some quotes from the Mises article that are especially relevant today, on public finance:

"Taxes are commonly a calamity for the people and a nightmare for the government. For the former they are always excessive; for the latter they are never enough, never too much." -Juan de Mariana (1535?1624)

The Scholastics' analysis of the fruitfulness of the exchange economy led them to be harsh critics of profligate public finance. Diego de Saavedra Fajardo recommended that budgets should be balanced by cutting spending because "power is mad and has to be restrained by economic prudence."

Chafuen writes of Pedro Fernandez Navarrete,

Discarding the notion that abundance of currency denotes wealth, Navarrete defined a rich province as a productive one. He stated that productivity is hampered when producers have to pay high taxes and cope with rampant inflation. . . . 'The origin of poverty is high taxes. . . . As king Teodorico said, the only agreeable country is one where no man is afraid of tax collectors.' (p. 54)

Mariana indicates the attitude of the Scholastics towards inflation as a method of public finance when he describes a desperate ruler looking for unusual means to pay his expenses:

It is not rare for the iniquitous and equally useless suggestion of altering the value of money to be whispered in the king's ear. . . . Such means, considered from every perspective, are and always will be plunder. . . . If money has come to be a general medium of exchange, it is precisely because of its stability of value, subject to only a few oscillations in times of great crisis. (p. 56)

The article also speaks to their positions on money, private property, and inflation, and how they anticipated the "subjective value" revolution in Economics several hundred years early. As they say, "read the whole thing."

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