The Moral Economy: Poverty, Credit, and Trust in Early Modern Europe
Review by Anne EC McCants
Laurence Fontaine begins her (newly translated into English) book, The Moral Economy: Poverty, Credit, and Trust in Early Modern Europe—a magisterial overview of the social context of money-lending and poverty before the industrial age—squarely in the present. Her opening question is to wonder if there is “an alternative to this new form of savagery that economic liberalism has become” (p. 1)? And in partial answer she invokes the ’new’ enthusiasm for micro-credit schemes to address the failure of capital markets in the developing world. In particular, she argues that: “Microcredit today is endowed with the virtues of a moral economy, for it creates solidarity” (p. 2). The persistence of poverty around the globe despite the dramatic increase in both production and productivity in the 19th and 20th centuries—that is in the period after her object of study—coupled with the specific brutality of the sub-prime and home mortgage crash of 2008 and the painfully slow global recovery from it, make this an ideal time to revisit the morality of an economic system that preceded our own. Does history have something to teach us about a more ethical way of structuring our economic life, or are we simply misled by nostalgia when we look backwards and see what appears to have been greater social solidarity? These questions are critical, both for our understanding of the past as well as our prospects for the present. Fortunately, Fontaine is equipped with an impressive breadth of historical compass and the sharp clarity of thought necessary to sift the wheat from the chaff, leaving us with answers that are as intellectually compelling as they are humane.
Before she can tackle her framing questions however, Fontaine provides her reader with the best of what history has to offer: A geographically and thematically comprehensive survey of what has been learned over the last half century of social historical research about credit (with “belief, faith, and authority” as its semantic origins, p. 11), gift-giving, indebtedness, poverty, and trust. She examines these socially complex and interrelated phenomena from a diverse range of relevant perspectives: That of peasants, the landed aristocracy, urban financiers, the emerging bourgeoisie, the royal court, and women generally given their peculiar financial and legal disabilities. She also surveys the life of these concepts as played out in the early modern theatre and as employed by the pawnshop movement, the changing meanings of the words themselves as they appear in dictionaries, encyclopedias, and personal correspondence, and the clerical and legal prohibitions against usury. Her sources range from Central Europe to the Iberian Peninsula, to the North Sea Littoral, with not surprisingly her most extensive material drawn from England, France and Italy. The book is deeply informed by her own pioneering work on peddlers and household survival strategies, but it also broadly researched in the large secondary literature over which Fontaine holds an impressive command. Indeed, this would be a book well worth reading for its distillation of the vast bibliography alone.
Her most important historical claim is that in the early modern period creditor / debtor obligations lay at the heart of all social relationships, and were essential to their maintenance. Paying off loans completely actually had negative social repercussions, at least before the later 18th century. with the emergence of a bourgeois preference for arms-length, fixed-term credit arrangements that were strictly contractual in nature. Older aristocratic notions of friendship and honor had demanded that credit be extended to any claimant in one’s circle even if at their peril. The pawnshop offered one solution to a world whose values were in transition by providing those suffering from weak social links to the market credit that would otherwise be unavailable to them. Nonetheless, the intractable problem with the pawnshop then, and now for that matter, is whether it should be understood as an institution of credit or charity.
The marketplace, an ancient space to be sure, was also dependent on personal knowledge informed by correspondence or proximity in which both the quality and quantity of goods might be uncertain. It was not yet the market of neo-liberal economics with ‘perfect information’ based on price clearing fundamentals. Given the power of bargaining in the early modern context then, Fontaine warns us then to be clear-eyed about the social solidarities of the past. For those richly endowed with friends and information, the social network could indeed overcome temporary hardship or a foolish decision. For those not so endowed—that is those who failed to nurture friendships or cultivate a credit-worthy persona or even just the appearance of one—they were forced into all variety of informal finance. But then, as now, informal finance was expensive, indeed, usurious (p. 302).
The moral voice she turns to finally is that of Amartya Sen, placing her hopes on equal access for all to a full participation in public discourse, the “circulation and sharing of information as a common good,” and the nurturance of institutions that assure everyone of the basic necessities of life. If our political economy could yield these things we would not need to pine for a utopian vision of a ‘world lost’ of the kind that Karl Polanyi offered up in 1944. We could instead pursue the “more ambitious goal” of helping everyone to “live the life he or she wants” (p. 320). After a long career spent uncovering the hardships of early modern poverty and the development of social institutions tasked with their remedy, this ambitious goal for our own society is one that Fontaine can speak to with authority and persuasiveness. Her book should be on the reading list of everyone who wants to move beyond nostalgia for a seemingly simpler past, or to address the complex issues of poverty in our own day.
