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Institutional Usury and the Banks

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  • Betsy Jane Clary

Abstract

Although usury is no longer widely discussed in economic discourse, the concept of usury is useful in explaining financial upheavals such as the recent and on-going crisis. The Scholastics began the study of interest with their teachings on usury, and Keynes brought the usury debate back into the discussions during the period around the Great Depression. Bernard Dempsey, a Jesuit economist, wrote a definitive assessment of scholastic theory in the early 1940s under the direction of Schumpeter. Dempsey developed his own theory of financial crises which he attributed to the presence of what he termed “institutional usury.” The recently implemented policy by the Federal Reserve of paying banks interest on reserves is examined in light of Dempsey's concept of institutional usury. The scholastic concept of the just price is used to analyze market power wielded by large financial institutions in the modern economy.

Suggested Citation

  • Betsy Jane Clary, 2011. "Institutional Usury and the Banks," Review of Social Economy, Taylor & Francis Journals, vol. 69(4), pages 419-438, December.
    • Handle: RePEc:taf:rsocec:v:69:y:2011:i:4:p:419-438
    DOI: 10.1080/00346764.2011.622906
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    References listed on IDEAS

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    1. Ronnie Phillips, 1992. "The 'Chicago Plan' and New Deal Banking Reform," Economics Working Paper Archive wp_76, Levy Economics Institute.
    2. John B. Davis & Wilfred Dolfsma (ed.), 2008. "The Elgar Companion to Social Economics," Books, Edward Elgar Publishing, number 3765.
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    Cited by:

    1. Shaikh, Salman, 2012. "Interest Based Financial Intermediation: Analysis and Solutions," MPRA Paper 42500, University Library of Munich, Germany.

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