In Medio Stat Virtus: An Alternative View of Usury in Adam Smith’s ThinkingHistory of Political Economy
AbstractSome specific positions of Adam Smith have been, and still are, sources of problems and debates. Generally, the controversies concern apparent contradictions in the Smithian theory. An example of these puzzling contradictions in Smith is his position on usury laws: In countries where interest is permitted, the law, in order to prevent the extortion of usury, generally fixes the highest rate which can be taken without incurring a penalty. This rate ought always to be somewhat above the lowest market price, or the price which is commonly paid for the use of money by those who can give the most undoubted security. (WN, II.iv.14) How could a believer in the beauty and power of the market favor usury laws?
Citation InformationPaganelli, M. P. (2003). In Medio Stat Virtus: An Alternative View of Usury in Adam Smith’s Thinking. History of Political Economy, 35, 21-48.