The history of economic thought did not develop in a straight line from superstition to the Enlightenment. Rather, there have been many back and forths, zigs and zags to arrive at the current state. This is why I want to talk about Juan de Marianaon currency,” an essay by a 16th-century Spanish scholastic, in which he explains some of the fundamentals of payment. Mariana’s views on financial theory can also be found in “A treatise on the change of meaning,” which includes a summary of his political views. I recommend the article first for anyone who wants to visit the Marianas. Many of the arguments explained here have parallels with modern theory, and in one particular case he makes a statement By Milton Friedman.

Mariana was born in 1536 to a poor family near Toledo, and in 1553 she entered the prestigious University of Alcalá. After completing his studies, he went on to teach theology and philosophy in Rome, Sicily and Paris until the age of 37. He then retired due to health problems, but this did not stop him from becoming a prominent writer. Among many books he wrote a famous history of Spain, History of the subjects of SpainAnd King and King’s institution (on kings and royal institutions); The latter will be of more interest to us because that text includes his political and economic theory.

Juan de Mariana is considered a pioneer of marginalization and Austrian School of Economics. Murray Rothbard called him “Scholars are extremists“And rightly so. Mariana believed that government was based on the consent of the people, and any action against it, such as imposing new taxes and confiscating private property, was a justification for killing the king. She called it tyrannical murder. She supported free trade and argued against currency debasement, which he condemned as interfering with the efficient operation of the economy. He was often harshly judged by his classmates, and his books were banned in France for undermining the foundations of absolutism. However, he lived a life of relative security and died in 1624 at the age of 88. To know more about his life you can read Jesus Huerta de Soto Biography of Juan de Mariana: The Influence of the Spanish Scholastics (1536-1624).

Mariana’s financial theory has many interesting aspects. Regarding the debasement of coins by mixing gold and silver coins with copper, he says:

I’ve generally thought of people who promise to transmute metals by some magical method – bronze to silver and silver to gold – as traveling snake oil salesmen of the most implausible sort.

Mariana uses harsh words against those who try to change the currency value to solve economic problems. Yet such policies are widespread among governments around the world today. Some amount of currency depreciation is often used for various reasons, such as increasing exports or increasing employment in the short term. Mariana will be very disappointed.

Mariana makes another interesting observation based on her theory of natural rights. As the king has no justification for disturbing the property of his subjects or imposing taxes without their consent, the same applies Inflation: “This, too, is a kind of tax by which a sum is taken out of the property of the subjects.” This is very similar Milton Friedman Later will say: “Inflation without law is tax”.

Mariana explains that money has two values, intrinsic and extrinsic. The former is established by the quality and quantity of the metal and the latter is determined by law. In simple words, internal comes from the market, external comes from the state. Here again, Mariana has some harsh words to say about those who separate the two.

He is a fool who separates these two values ​​in such a way that the latter’s legal value does not adhere to its natural value. Injustice is he who decrees that a thing ordinarily worth five is usually sold for ten rupees. One should not try to make it happen through effort or rigor.

The only reason for which a devaluation of currency is reasonable is as a last resort in case of war, when all other means of paying the army have been exhausted and the independence of the state is uncertain. Even so, once the crisis is over, the currency should be left to stabilize again at previous levels.

There is one point in Juan de Mariana’s argument that I have to agree with. He argued that if a fiat currency were used, no one would be willing to exchange goods and services for the new currency because it was inherently worthless, a mere piece of paper. I can acknowledge all the problems caused by incompetent monetary policy, but I doubt that such chaos in commercial activity would result from its adoption. After all these years off the gold standard it’s fair to say that Di Mariana overstated its consequences.

I will end with the same words that de Mariana used to end his essay:

I would like to give one last piece of advice to the princes: if you want your kingdom to be a healthy one, do not touch the basic foundations of trade – units of weight, measure and currency. A multi-layered deception hides behind the appearance of a quick fix.

[Editor’s note: See also this Essay by Maryann Keating at AdamSmithWorks, Adam Smith, Classical Liberalism, and the Legacy of Hispanic Scholasticism.]


Chris Lucas was born in Greece and is an economic journalist and bronze medalist at the 2022 International Economics Olympiad. His articles have been featured by the Foundation for Economic Education, Ms. Institute, and Adam Smith Works.

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