The School of Salamanca
The University of Salamanca, one of the oldest universities in the world (founded c.1218, certainly before 1230 by the King of Leon), and the earliest extant in Spain. It was a prominent Dominican bastion in the late Scholastic period. It was one of the homes of Thomistic theology, even after the doctrines of St. Thomas Aquinas were disintegrating elsewhere in Europe first under the Scotist and Nominalist onslaughts, and then from the Reformation.
The "School of Salamanca" usually refers to the 16th C. legal, political and economic commentaries through a merging of Thomist theology and Humanist philosophy, to create a body of natural, international and economic law. This approach was initiated by the leading figures of the university, notably Francisco de Vitoria in the 1530s. The Salamanca school counted Domingo de Soto and Navarrus as its most prominent theoreticians.
During the inflationary 16th century, theologians were appealed to repeatedly on economic affairs, particularly the status of contracts in those confusing economic times. In an effort to lay down guidelines for commercial practice and focusing on practical notions of the public good, they moved away from past dogma and approached their questions in the spirit of natural law philosophy. The result was reversal of centuries of Scholastic thinking on economic matters. It was the Salamanca school that defined the just price as no more and no less than the naturally exchange-established price. Their analysis led them to trace a scarcity theory of value and employed supply-and-demand with dexterity. They rejected Duns Scotus's "cost of production" conception of the just price, arguing that there was no objective way of determining price.
Before Bodin, but after Copernicus, Salamanca scholars independently uncovered the essential properties of the Quantity Theory of Money and used it to explain the general price inflation of the 1500s. They also providing a resounding defense of usury.
It is common to associate early Jesuit philosophers like Leonard Lessius, Luis Molina, and Juan de Mariana, with the Salamanca school. Although many Jesuit philosophers, notably Toledo, Suarez and de Lugo, passed through Salamanca and interacted with its scholars, their connection to that Dominican bastion was less tight and they can perhaps be set apart (some suggest calling them the 'Coimbra School', on account of Fonseca, Molina and Suarez, but that is also not quite right). Nonetheless, the Jesuits reached many of the same conclusions on many economic doctrines and certainly both contributed to the transition between Scholastic and Natural Philosophy. One may perhaps deduce a distinction between their approaches - the Dominicans of Salamanca, consulted so often by the government, had a practical eye on the smooth and proper functioning of the Spanish state and empire; the Jesuit commentators seemed to take a more theoretical approach, closer to social philosophy, an outcome of their underlying human-focused theology and a general urge to revise Catholic method away from traditional Dominican Scholasticism. However,
The Jesuit Order ('Society of Jesus'), founded in 1540 by St. Ignatius de Loyola, was erected to combat the appeal of Protestantism. Against the Calvinist doctrine of predestination, the Jesuits had taken to emphasizing the importance of free human will (sometimes to the point where they were accused of resurrecting the 5th C. Pelagian heresy by their Dominican rivals, as happened to Lessius in 1588 and Molina in 1597). The Jesuit emphasis on the human will translated into a more wide-ranging political and economic philosophy that stressed the human role (to the exclusion of divine providence) in all manner of things and thus brought it closer to a natural philosophy approach. The Scholastic doctrine of 'just price' was rejected out of hand as all-too-divine, the Jesuits arguing that value is a human affair and was determined by natural human interaction on markets. They followed much the same line on money and inflation. On moral defenses of usury and profit, the Jesuits were eager to reform Catholic doctrine to bring it more in line with current practice, to ease their efforts to overcome the resistance of Protestant towns to re-catholicization.
Quite more controversial was the Jesuit view of the basis of civil government, something the Salamanca scholars had largely and judiciously avoided. In line with their general approach, Jesuits like Molina, de Mariana and Suarez proposed that government rested on human consent rather than divine right. This landed them in hot water with royal authorities. Already resented as an ultramontanist agents (as the 'footsoldiers of the Pope', the Jesuits were not beholden to bishops, inquisitors or the national churches), Jesuit musings on the human rather than divine sources of government made them downright subversive to the established order. It did not help matters that, notoriously, the Jesuit philosopher Juan de Mariana (1598) openly contemplated that the murder of a monach might be justified, if he proved tyrannical to the people. This was uttered at a tense time of notorious political assassinations - Henry IV of France (attempted in 1595, succeeded in1610), James I of England (Gunpowder Plot, 1605), Paolo Sarpi of Venice (attempted, 1606), etc. - in which Jesuit activists were suspected of having a role (and may indeed have had one).
In the popular mindset of the time, the Jesuits became synonymous with regicide and political destabilization. The Jesuits were temporarily expelled from France in 1595-1603, and were kept under watchful eye elsewhere, their subversive treatises frequently proscribed and burnt at public trial. It was really only after the 1650s, when the Jesuits defeated the Jansenists (a French crypto-Calvinist Catholic sect, popular with parliaments and considered a threat to royal absolutism) in theological dispute, that the Jesuits earned their ticket into the royal courts of Europe and went from being regarded as nearly extra-statal terrorists to the reactionary upholders of royal power and the ancien regime.
[Although the old subversive 'regicide' label was resurrected by Enlightenment philosophers in the 1750s in an effort to dislodge the Jesuits from power and influence in the royal courts, a campaign orchestrated by the Marquis de Pombal, that ended up with the expulsion of the Jesuits from Portugal, Naples, Spain and France and the eventual reluctant suppression of the order by the Pope in 1773.]
Both the Salamanca scholars and the Jesuits had instrumental roles in the the easing of Church restrictions on markets, profits and, notably, the ban on usury. The growth of commerce and capitalism in the 16th C. had led to the development of financial instruments which seemed to mock the old restrictions, and the popes had been roused to issue bulls condemning them. Pope Pius V's 1569 Cum Onus condemned personal annuities (quite common in Germany) as usurious, his 1571 In Eam condemned interest replicated in many businesses partnerships by the famous 'triple contract' (contractum trinius), while Pope Sixtus V's 1586 Detestabilis Avaritia condemned the interest implied by bank bills of exchange, a growing practice in intra-European commerce. Nonetheless Salamanca scholars like De Soto and Navarrus and Jesuits like Lessius and Toledo, rushed to issue clarifications and commentaries that reduced the force of these bulls, found interpretations, exceptions and opened up loopholes which effectively legitimated the practices (althought their positions would not be formally reconciled with papal decrees until the 18th C.)
The theoretical accomplishments of the Salamanca theorists and the early Jesuits in defense of markets have led some economists such as Friedrich von Hayek to suggest that, contrary to Max Weber's thesis, it is perhaps the religion of the Catholics and not the Calvinists, that set the grounds for capitalism.
The Salamanca School (Dominicans)
Resources on the School of Salamanca
All rights reserved, Gonçalo L. Fonseca