Friday, October 19, 2012

Decock on the Corporation in 16th-Century Canon Law

Wim Decock, Katholieke Universiteit Leuven Faculty of Canon Law, has posted In Defense of Commercial Capitalism: Lessius, Partnerships and the Contractus Trinus, which is also slated to appear in a work tenatively entitled History of Companies and Company Law in the Early Modern Period, ed. B. Van Hofstraeten & W. Decock (Brussel: Royal Academy Press, 2013).  Here is the abstract:    
In telling the history of commercial law and capitalism, traditional scholarship has often neglected the abundant literature on commerce and contracts written by Catholic theologians in the sixteenth and seventeenth centuries. To shed light on this ‘hidden story’ in the history of commercial law and capitalism, this paper will explore the attitude of one such theologian, Leonard Lessius (1554-1623) from Antwerp, toward the emerging world of capitalism.The more specific focus of attention will be on Lessius’ analysis of a sophisticated commercial technique used to circumvent the usury prohibition: the so-called ‘triple contract’ (contractus trinus). By means of a triple contract, which could be analyzed as a combination of a partnership, an insurance and a sale contract, capitalists safely invested their money in commercial enterprises at a fixed annual profit rate. While many jurists, theologians and legislators opposed this type of contract, since it resembled an implicit and usurious money-loan, Lessius eagerly defended sophisticated legal constructions such as the triple contract. His remarkable cost-benefit analysis of the triple contract developed into a startling defense of commercial capitalism in the literal sense of the word: the investment of capital in commercial activities for the sake of making profit. On the basis of moral, legal and economic policy arguments, Lessius promoted the investment of private wealth in safe commercial credit contracts rather than prohibit this widespread practice. The conclusion of this paper is that, although capitalism may not have emerged from the mind of any theologian at all – whether Protestant or Catholic – the legitimation of capitalism was assured by Catholic theologians such as Lessius.

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