The School of Salamanca was a school of economic thought in various areas that took place in the Renaissance of the 16th century, through a group of theologians and jurists concentrated mainly at the University of Salamanca.
They are well known for their liberal economic thought and for their studies on the economic problems generated in Spain after the discovery of America. As part of the scholastics they are considered the founders of scientific economy. Among many other things, they laid the foundations for the quantity theory of money.
The Salamanca school had the following main exponents:
- Francisco de Vitoria
- Tomás de Mercado
- Domingo de Soto
- Luis de Molina
- Juan de Mariana
- Martín de Azpilcueta.
This School was the continuation of the scholastic approaches of Renaissance Europe - in which the Church lost much of its cultural influence - where what prevailed was to increase the wealth of the states. There is no unanimity among historians as to whether the grouping of all Spanish scholastic thinkers under the aegis of the School of Salamanca is correct, although it is true, they were influenced by this school and its thinkers, which is not an erroneous qualification.
Economic Thought of the School of Salamanca
The first concept that was defended in the School of Salamanca was that of private property; The group of theologians - following the path that Thomas Aquinas already marked centuries ago - considered that private property was very necessary for the development of commerce and, therefore, had a completely legitimate function. Thus, Domingo de Soto affirmed that this private property was fundamental to promote peace but insufficient to eradicate all the evils of society given the sinful and innate capacity of man. In addition to private property, they defended issues that are still valid today, such as competition, economic freedom, and the dynamic nature of markets.
On the other hand, the encounter with the New World was the trigger for inflation and famine in Spain. In other words, the arrival of abundant quantities of gold and silver caused the country to plunge into serious conditions of poverty. In this sense, it was Martín de Azpilcueta who analyzed - for the first time in history - the amount of money that exists in a given economy in relation to its price level. The religious expressed some very common terms for the current economy but in which, at that date, no one had noticed yet: the abundance of money generates inflation in prices, a fact that has a very negative impact on society.
Influence of the Salamanca school
With the passage of time, the influence of the School of Salamanca was transferred to Italy, Portugal and the Netherlands; However, its members grew increasingly distant by credibly supporting the prohibition of interest-bearing loans - a trend that Thomas Aquinas had already started - believing that it was an immoral practice. In addition, they refused to accept the new economic margins imposed by mercantilism -such as the trade balance-, their approaches fell into complete disuse to end up disappearing at the beginning of the seventeenth century.
Centuries later, although there is no direct connection between them, the Austrian School has rescued and highlighted its liberal principles.
Many economists have come to affirm that the authors of the School of Salamanca would be worthy of the qualification of founders of scientific economy.
Some advanced in economics
Azpilcueta and Tomás de Mercado were the forerunners of the quantity theory of money, in which the monetary mass multiplied by the speed of circulation is equal to the national product multiplied by the price level:
M * V = P * Y
An angular equation in the modern economy. Likewise, the theologian affirmed that, in circumstances of equality, present goods are always valued more than future goods. Or, what is the same, he exposed for the first time the concept of the timeless preference of money; a basic idea for the Austrian School of the 20th century being, therefore, Azpilcueta one of its pioneers.
Another of the great exponents of the Salamanca school was Juan de Mariana, who had principles of economic freedom that are still very current. At that time, Felipe III himself destroyed most of his books for thinking that they were attacking his figure. He was described as a pro-poor agitator.