Introduction

This file is a short scholarly introduction by Joseph A. Schumpeter to Father Dempsey’s Interest and Usury. Its scope is evaluative and methodological: Schumpeter explains why Dempsey’s study matters for the history of economic thought, for modern interest theory, and for the relation between moral theology and economic analysis.

Schumpeter’s central claim is that Dempsey overcomes a damaging division of labor between economists and historians. Economists usually neglect pre-eighteenth-century thought as “pre-scientific,” while historians often lack the analytical tools needed to recognize economic theory when it appears in older texts.

Economics as a field of intellectual interest boasts of a line of descent that can be traced from Aristotle to Francis Hutcheson, the teacher of Adam Smith.

Dempsey’s distinctive merit, for Schumpeter, is his double competence: he can read scholastic theology from within its intellectual world, and he can also judge it by modern economic standards. Schumpeter emphasizes that Dempsey first develops a substantial modern theory of interest before comparing it with Molina, Lessius, and de Lugo, making the book valuable both as history and as theory.

The introduction then turns to the renewed controversy over interest. Schumpeter presents interest as too central and complex to be explained by any single factor, warning against theories that absolutize one condition of the interest rate.

Interest holds so central a position in the capitalist organism that it intrudes in practically every economic consideration or valuation.

This prepares his account of the late Scholastics’ “modernity.” Their world already contained money markets, speculation, negotiable paper, large enterprise, and high finance; more importantly, their method was empirical and analytical. Schumpeter’s strongest historical move is to reject the assumption that theological purpose prevented genuine economic reasoning.

They had not our techniques, statistical and theoretical. But the scope and logical character of their procedure did not differ from ours.

The conceptual center of the introduction is Schumpeter’s distinction between moral judgment and economic diagnosis. A moral principle cannot decide a concrete case until the case has been analyzed; that analysis has its own standards of validity, regardless of the final ethical use to which it is put.

Similarly, economic analysis is economic analysis and valid or invalid autonomously, i. e., irrespective of whether or not its results are to form part of the material from which a moral judgment is to be derived.

This distinction allows Schumpeter to reconcile scholastic moral theology with scientific economic inquiry. The Schoolmen began from a religious and moral framework, but they did not corrupt their analysis by forcing facts to fit edifying conclusions. Their theology required judgment, yet judgment required accurate knowledge of economic relations.

What he is entitled to object to is the all too common practice which allows the analysis to be vitiated by the purpose or interest for the sake of which it is undertaken. This, however, the Schoolmen did not do.

Schumpeter also uses Dempsey’s book to criticize modern religious interventions in economic questions. He grants the legitimacy of moral concern but insists that complex matters such as money, banking, and interest require technical knowledge. The late Jesuits, he argues, possessed precisely that combination of moral authority and theoretical competence.

Their pronouncements rested as much on a mastery of economic facts and of the relations between these facts—that is to say, of “theory”—as they did on that hyper-empirical system.

The introduction’s relevance lies in this broader lesson: economic analysis can serve moral reasoning without losing its autonomy, and historical theology can contain serious scientific thought. Schumpeter presents Dempsey’s work as a model for recovering forgotten analytical traditions and for conducting morally serious economic inquiry without sacrificing technical rigor.