Reading it, my mind goes instinctively to one of my favorite quotations from Chesterton: “The Christian ideal has not been tried and found wanting. It has been found difficult; and left untried.”
This Chestertonian epigram has the great virtue, among other things, of stating the direct truth on usury in modern high finance. Many decades and even centuries of economic arrangements have found difficult, and left untried, the Christian teaching on how, in full charity to fellow men, we might profitably lend out our capital.
Great historically-minded writing can often have the peculiar accents of a kind of integral detective novel. Zippy’s treatise on usury, now helpfully available as a free ebook, exudes this character.
Our friend has discovered a bloody crime, a heinous murder, treachery and folly and the human arts bent on malice and wrong.
The veteran of many ugly crime scenes, he has arrived, like a saturnine private dick as adapted from a Raymond Chandler story, at the scene of another one: the assassination of Christian ethics on debt finance.
Like any real detective, Zippy’s work is painstaking and meticulous, more than it is flashy and energetic. It’s the hard labor of following the assassin’s clues, discovering his conspiracy, in order to expose his wickedness and vindicate his victim.
The ebook is written as an accessible FAQ. It can all be read in one sitting (though more sittings will be needed if, like me, you desire a sustainable understanding).
A real thing has been assassinated. More precisely: sound doctrine has been exiled. The teaching on usury across the centuries has been dishonorably driven from public discourse. Christianity is not, in fact, wholly silent on how we should structure our capital markets.
I hope I do not blunder into oversimplification by attempting the summary that follows.
In modern parlance, Zippy’s account hinges on the question of recourse and non-recourse loans. (The Latin word is mutuum — a loan for consumption.) What precise recourse does the creditor have to recover his capital in the event of default?
Recourse loans attach to the debtor himself. Non-recourse loans attach to staked assets. The former, if charged any interest, constitute usury; the latter do not. Loans which, in the event of a default or other credit event, terminate their claims in concrete assets staked in the original agreement are not usurious, even if the interest charged is comparatively high.
Zippy: “Any profitable loan is usury unless its recourse claims fully terminate in actual assets.”
From the creditor’s perspective, Zippy tells me, usury is an attempt to charge rent for opportunity costs. As useful a parameter as opportunity cost may be in economic theory, it is not an asset which can be rented: it does not actually exist. When you stake your capital in some venture, you cannot also justly claim the possession and appreciation of that capital.
From the debtor’s perspective, usury attempts to alienate his potentialities and transact in them as something distinct from the person. St. Thomas, very perceptively, called this, “selling what does not exist.”
From still another perspective, taking into consideration that a person’s potentialities cannot in fact be alienated from the person, usury involves selling the person as if he were property: a subtle form of chattel slavery.
From another angle, the practical one: In order to move our economy away from this very grave disorder of property and labor and obligation, we should work to gradually convert much of the structure of debt markets into equity investments and rental contract income. It is not usury to purchase an equity stake in someone’s business venture. Nor is it usury to rent out property or assets at a fee. But it is usury to contract a debt obligation which pretends that the creditor may possess, and enjoy the appreciation of, the very capital he has staked in the commercial enterprise.
So Zippy the detective has restored the meaning of the teaching on usury. His work reveals its intelligibility, its applicability, and its sanity. Usury is real, and it is an acute and pernicious sin.
It need hardly be mentioned that Zippy wrestles at length with common objections. As always, patient and concise excellence characterizes his approach to critical protestations: from the unthinking apologists for usury, from the Catholic modernists who, mistakenly, believe their church has abandoned the teaching, and from earnest but confused skeptics. If you bristle at my summary scribbles here, rest assured that your complaints have, very likely, already been answered.
Thanks to Zippy, we know that usury is real and it is destructive to healthy capital markets. Reforming them is part of that solemn duty of restoration which the Christian man finds when he realizes that his ideal “has not been tried and found wanting. It has been found difficult; and left untried.”
It’s a really valuable achievement of intellect and study. Everyone should read and understand it, that we might begin the hard work of applying it.