Is usury evil? Is Capitalism?

Lending at interest has seemed wrong to many people through history.
Charging interest is classed in the Book of Ezekiel as being among the worst sins.  The Koran does not like it either, and one famous devotee of the Koran, Osama bin Laden, said this in his ‘Letter to America’ (2002):
You are the nation that permits usury, which has been forbidden by all the religions.  Yet you build your economy and investments on usury.  As a result of this, in all its different forms and guises, the Jews have taken control of your  economy, through which they have then taken control of your media, and now control all aspects of your life making you their servants and achieving their aims at your expense..
binladen
Jihadist kills thousands of Americans, then educates us on “Usury”
Throughout history some have assumed  that all economic gain not derived from physical labor was suspect, and in its extreme form, that led them not only to condemning finance, but also to condemning trade and commerce.
Most writers of the Classical period (of ancient Greece and Rome) saw no justification for deriving income from the merchant’s role of buying and selling goods.  The material wealth of humanity was assumed fixed, so one person’s gain must mean another person’s loss.  This reminds me of modern leftists who believe the “middleman” is unnecessary, and getting rid of him saves money.
But lending at interest makes sense.  You can give a loan of money to a friend who is willing to pay it back, but why should you give a loan to a stranger unless he gives you something in return?  He could pay you an initial sum for the loan, but obviously he doesn’t have the money to do that (otherwise he would not ask for the loan) so he promises to pay you in future.  That payment is interest.  Also you have to factor in risk – even if he is honest, he might not have the money to repay you at the end of the lending period, due to factors beyond his control.  And since you have choices in what to invest in, you should be rewarded in directing your money to more productive uses rather than less.  That is also factored into interest.
Obviously a peasant who got a loan from a Jewish moneylender in the Middle Ages might not feel it was fair if his harvest failed, and the loans came due.  In that period, Christians were not allowed to lend interest, but Jews were allowed to lend to Christians.  Moreover, Jews were often pushed out of the standard occupations, so they ended up in commerce and finance.  Unfortunately, the Jewish moneylenders had to charge high interest, because they had high risks.  One of the risks was that their loans often had to be written off because of pressure from the Christian public.  And royalty put high taxes on any money the Jews made.
jewishmoneylender
Karl Marx, one of the most disastrous thinkers in history, had a problem with usury – to him it was making money from money.  In his view there was no real value to it.
Marx argued that private property in general led to egotism, and cutting oneself from others.  In a bourgeois society, supposedly everyone is interested only in one thing – getting richer.   And Marx believed that capitalists got rich on the backs of the workers.  Marx uses metaphors of vampires and werewolves and cannibals for capitalists.  Lenin called capitalists bloodsuckers. Neither believed that people who started companies, such as Bill Gates or John D Rockefeller, actually created value.
paul-allen-and-bill-gates-in-the-early-days-jpg
Paul Allen and Bill Gates in the early days of Microsoft
It is interesting that various Nazi thinkers believed that Capitalism had to be rescued from its “Jewish” aspects.  Aryan Capitalism was supposedly industrial and creative, but Jewish Capitalism was parasitic. Idealists who liked romantic communitarianism saw Capitalism as a negative force.
The influential economist, John Maynard Keynes, did not like the deferred gratification that came with Capitalism.   It supposedly detracted from the enjoyment of life here and now.
Keynes said this:
I see us free…to return to some of the most sure and certain principles of religion and traditional virtue–that avarice is a vice, that the exaction of usury is a misdemeanor, and the love of money is detestable, that those walk most truly in the paths of virtue and sane wisdom who take least thought for tomorrow.
Admittedly Capitalism can be very disruptive.  For instance when a big box store moves into town, little stores go out of business.  It is natural for people who own little businesses to want stability, security, and a steady income without worries.
Perhaps this desire for stability, security, and predictability explains this observation by  Friedrich Hayek, who was pro-Capitalism.  He said that there was a common thread in Socialism, Nazism, and Fascism – and that was the notion that the state “should assign to each person his proper place in society.”
On another issue that comes up periodically: Capitalism is about satisfying needs, but what if those ‘needs’ are just vices?  For instance, suppose you are a drug dealer providing heroin to heroin addicts, or a salesman offering marijuana gummy bears to kids.  The consumer wants the product, the salesman wants to sell it to him, so what’s the problem?  And yet there is a problem, in that the consumer wants a product that harms him, and harms the wider society as well.
Capitalism also implies that some people will do better than others.  This can cause resentment.  In our society, people who are good at math generally get better jobs than those who do not.  Is that fair?  And if not, is the blame to be laid, for example, at the feet of the callous employer who won’t hire Pierre, who is poor at math, to the well paid computer-analyst job, even though Pierre has four children to support plus two divorced spouses?
Capitalism also engenders movements that have an anti-economic focus. Once you have a wealthy class with time for leisure, its members may join movements that damage the jobs of ‘the little guy’. For instance, environmentalists have put whole communities that used to make their money out of natural resources, out of work. (one such community is Del Norte, California).
So does anyone praise Capitalism? There were pro-Capitalist intellectuals. One of the early modern ones, Georg Simmel (born 1858),  pointed out that Capitalism led to the virtue of weighing tradeoffs, and having a less impulsive and emotional way of making decisions.
Some of the information above was taken from a book titled “Capitalism and the Jews’ by Jerry Muller.  The part that interested me was not the Jews per se, but the general animosity that eventually targets a free-market society.  Some of that animosity got directed at Jews, and Protestant Huguenots, and overseas Chinese in various parts of the world where they took on specific roles and succeeded disproportionately.
Free markets have created great wealth in some places – like Hong Kong, Singapore, Taiwan, and the Western countries at some periods of their history.
The ideas of anti-capitalists have created huge misery and death, which is surprising – if, as I believe, Marx was sincere in his desire to help the workers.  Nonetheless, the ideas of Marx and Engels and Lenin have led tens of millions of needless deaths, and horrible regimes like Pol Pot’s Cambodia, Mao’s China, and Stalin’s Russia.  There is a mystery there.
 I don’t think Capitalism in general deserves the kind of opposition it has engendered.   Nonetheless, many of the Western countries are staggering with high debts and high unemployment and huge bureaucracies.  The big irony now, if we deplore usury, is that many desperate Capitalist countries are charging negative interest rates.
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One thought on “Is usury evil? Is Capitalism?

  1. I think your analysis is extremely fair and objective. It seems to me that the best general approach is that of the mixed economy, which was characteristic of the UK economy for around 30 years, with a blend of capitalism and socialism. Basic needs such as health, the mail, the railways and the utilities were run by the state, and everything else — production of consumer goods and services — by the private sector. When Mrs Thatcher privatised most of the public sector (excluding the NHS) a lot of capitalists inherited the results of years of national investment and many cashed in and made a huge and unjustified profit. Moreover, not only did the charges for these services rise dramatically, but there were many examples of the new owners making short cuts in safety issues, and crashes on the railways, pollution of water supplies (unheard of before this), and mistreatment of customers became commonplace. I for one would vote for a return to a pre-Thatcher era in this respect. We do need venture capitalists and people with a gift for business, but we also need to recall that a large percentage of the population lack the IQ and the enthusiasm to take any active role in those processes, and when automation (as it does) reduce the number of jobs available for such persons, we need to accept that the state has a responsibility to take care of them.

    You didn’t mention the idea, often promoted by the right wing, that capitalism is inherently more efficient than socialist economies. Since capitalism has had the whip hand here I can see little evidence that this is the case.

    Basically I don’t think that any particular system is ideal — to me everything depends on the values and competence of people in the system. If the majority are decent and unselfish they will be able to make any system work as best it can. If the reverse is the case, misery and disaster will ensue.

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