Scholasticism, Fair Value and Ursury, According to Odd Langholm

Abstract

Odd Langholm, a prominent Scandinavian scholar of early economic thought, provides us with cues on how to re-consider the fundamental assumptions that go into economic valuation and modelling. “Fair value” was not controversial among the scholastics. A thing is obviously worth what it can be sold for! Problems arise when the parties to a contract disagree – when the market is too thin to produce a fair price. Use a model, and/or give an account of how you calculated, is today’s solution. The scholastics, not yet accustomed to econometric models, assumed that contracts are entered into by competent individuals with free will, and given that money, the counting medium, has no intrinsic value (it is worth what is stamped on the coin), it follows that a contract including interest is not valid. The free will of either party must have been infringed upon. Be it by fraud, force, or ignorance. Odd Langholm informs us about how the idea of the depersonalized market as a system that produces prices, “fair values”, emerged. The problem is not so much how scholastics contributed to current ideas on valuation but what was lost on the way.