NOTES FOR STUDENTS OF ECONOMICS

1. MEDIEVAL ECONOMIC
THOUGHT:
ECONOMICS DEPARTMENT | GOVERNMENT POSTGRADUATE COLLEGE JHELUM
COURSE INSTRUCTOR : USAMA TAHIR [usamatahir1993@gmail.com]

2. MEDIEVAL ECONOMIC
THOUGHT:
 In the history of Europe, the Middle Ages (or Medieval
Period) lasted from the 5th to the 15th century. It began
with the fall of the Western Roman Empire.
 The period of the fall of the Rome empire in 476 A.D to
1453 A.D , the years in which Constantinople fall into the
hands of Turks, is generally regarded as the middle ages.

3. OVERVIEW OF MEDIEVAL ECONOMIC THOUGHT:
The thinkers of the middle
ages had emphasized on
the negative aspects of
life.
The view of middle ages
thinkers on money, prices
and interest are similar as
of Greeks.
The society of middle ages
may be described as a
feudal system.

4. People enjoyed status according to ranks.
Medieval life was commercial and cooperative in character.
There were merchants union and craft union.
The union were associations for mutual benefit and protection of the members.
The people of middle ages lived altogether in a “ Natural Economy”
The actual volume of trade was small, there was shortage of money and difficulties of transport.

5. Men lived largely in small and self sufficient units.
The church dominated in the lives of men.
After the fall of the Rome empire, it tried to regulate the lives of men.
It thought them that their early life was only a preparation for
another.
Aristotle influenced the views of the thinkers of middle ages on
many matters.
Their views on nature of justice , function of money , usury ,
exchange system all were taken from Aristotle.

6.  Christianity:
Christianity had a greater influence on the life and
thought of middle ages. It appeals to the poor and the
oppressed.
 In the first place, Christianity taught the universal
brotherhood of man.
 All men were the children of a common father. So
they were brothers.
 So it difficult to defend the institution of slavery
which was a part of Greek, and Roman civilization
Religion:

7. Firstly: Slavery was considered a sinful institution .
Secondly: Christianity taught that life in the world is only the preparation for another.
As God created all men equal, even slave may enter the kingdom of Heaven.
Thirdly: Christianity taught men about the dignity of labor .
This is in contrast to the Greek view that labor was to be performed by slaves.
MAIN POINTS OF MEDIEVAL ECONOMIC THOUGHT:

8.  The concept of “Just Price” and “Prohibition of Usury” are the
two dominant economic ideas of the middle ages.
 In short , Medieval economic thought are based on the idea of
“Justice”
The salient feature of medieval economic thought are seen in
the writing St. Thomas Aquinas.

9.  He has been regarded as the Prince of Scholastics.
The scholastics or the schoolmen were medieval men of science.
 The economic ideas of St. Thomas are found in his book “ Summa Theological”
 His arguments are based on the Bible, Aristotle and Christian fathers.
He represent, more or less, views of Aristotle.
 Private Property:
He believe that the institution of private property is in accord with the law of
nature.
 It may be regarded by Govt. for common good and the owner to share the use of
his possession with others.

10.  To suggested like Aristotle that property should be private but common in use.
 He advocate charity.
 He argue that theft is permissible in the case in extreme necessity.
Trade:
He argue that profit should be for self support and for charity.
He justified moderate profit.
The Just Price:
According to him, The worth of a good is its just price.

11.  Just price described as, the current price prevailing at a given place and at a
given time.
He said ,‘To sell a good, more then its price or less than its price is unjust’.
 Only under exceptional circumstances, seller change more than just price.
E.g. if a seller incurred a loss he could change a price slightly higher than just
price.
 Aristotle emphasized that the value of a thing depended on its demand , St.
Thomas believed that the value of a thing , reflected its utility.
 He said that a different values is set upon each thing proportionately to its
use.

12.  Usury:
His views related to Bible that “ Lend freely, hoping nothing there
by.”
He however , said that under certain circumstances interest
could be changed on loans lent.
First: if lender suffer any damage.
Second : If a lender lost an opportunity to make a gain by lending
money.
 Third: if the borrower did not repay the money on time ,then
lender can change money for compensations

13.  Lastly if there is any risk involved then lender can charge interest.
 After the middle ages, the scholastic doctrines gradually approved of
interest for investment.
 St. Thomas Nicole Oresme:
He was a great thinker.
He had made beautiful comments on use and misuse of money.