A Financial-Legal History of Money, Credit, and Capital and the Rise of Credit Capitalism

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Topic: A Critical Examination and Evaluation of Natural Law Theories in Formulating and Shaping Usury Jurisprudence 

Presenter: Joanne Lee, PhD candidate, UQ School of Law 

Advisors: Prof Nick Aroney, Dr Robert Mullins 

Online link: https://uqz.zoom.us/j/233846569

Time: 9-11am Tuesday, 31 March 2020

Abstract

This thesis will examine the legal underpinnings of the contemporary financial system which is based on usury or ‘interest’. It adopts a financial-legal analysis in examining how usury has transformed from being transactional to institutional. It argues that usury, which was once prohibited in the West (and still is in the Islamic world), has come to be justified over time to create what would become the contemporary system of debt-based finance, owing to changing legal theological frameworks. It will be argued that the legal institutions, debt contracts and private property led a credit-based system where usury became legitimised, though not institutionalised. With the emergence of private property as opposed to common property, credit became propertised, so as to create credit money, which subsequently became propertised so as to give rise to credit capital, rendering usury to be necessary. The underlying legal theological rationales of contract, property and sovereignty will be examined. Although the prohibition on usury had already started to erode, it was the radical new interpretation of the usury prohibition by John Calvin, that revolutionised the way in which usury as treated in natural law and theology. Usury was now treated as a prime facie right of the creditor. John Locke’s concept of private property not only solidified this right to private property, but set the propertisation process in motion. This propertisation, combined with contractualisation of money and subsequently credit, has led to the creation of futures contracts – which is the fundamental nature of ‘credit capital’, which is credit that function as both pure credit and capital.  Contrary to the assumption that usury is simply a charged added to money, where money is what gave rise to usury, the thesis will argue that usury is what created modern money. Usury is what has set the propertisation of money, and subsequently credit, and now capital, in motion, since gaining Calvinist endorsement. This was enabled by the propertisation and hence monetising money, by extracting capital value out of money – by making money out of money.