Juan de Mariana: Forefather of Austrian Economics

Through the last weeks, the Austrian Economics Center organized an Austrian Economics Championship on Twitter to let people determine which economist in the Austrian tradition is most popular. One could have easily argued that someone like Friedrich Hayek, Ludwig von Mises, or Carl Menger were the clear favorites as some of the most brilliant free-market economists in history. And yet, it was none of them that eventually ran away with the title. Instead, a little-known Jesuit Priest and scholastic from 16th century Spain won the contest: Father Juan de Mariana.

De Mariana can be considered one of the most prominent members of a Catholic Spanish tradition which endured from the 15th to 17th century – a group of thinkers under the banner of the School of Salamanca, comprising primarily Dominicans and Jesuits in the Thomistic and scholastic tradition. Increasingly in the last decades, the School of Salamanca has become more well known as the first instance of systematic endeavors into the economic discipline. Not only that, however: the Spaniards held deeply liberal principles, foreshadowing many important lessons of the Austrian School of Economics.

While it may be a stretch to argue that these scholastics are the primary influence on the thought of the Austrians – the Scottish Enlightenment figures would have to be in the discussion for that, too – there is little doubt that before there was the Mengerian Austrian School, there was a very similar Salamanca School. Hayek himself had due respect for these forerunners, writing that “the basic principles of the theory of the competitive market were worked out by the Spanish scholastics of the 16th century.”

De Mariana was surely the most radical member of this tradition – which would also get him into trouble multiple times. Joining the still newly founded Society of Jesus at the age of sixteen, he spent time in Rome, Sicily, and Paris, but eventually returned to Spain, where he had a long life, dying in 1624 in Toledo at the proud age of 87.

His first major yet controversial work, On Kingship, was published in 1599, in which de Mariana analyzed the nature of the state and the monarchy. His fellow thinkers in the Salamanca tradition had already established both a concept of sovereign people as well as further expanded on the natural law tradition of St. Thomas Aquinas. Similar to fellow Dominican St. Bartolomé de las Casas, Francisco de Vitoria heavily attacked the atrocities committed by the Spaniards in Latin America, arguing that every individual – without exception – had definitive, God-given rights that no ruler (even supposedly Divine) could violate, including the right of self-government by a community.

In a similar vein, the Jesuit Luis de Molina defended the concept of free will against the ascending Calvinist claim of predestination as well as the Jansenist heresy. As James Hitchcock chronicles it, Molina and Francisco Suárez “taught that God foresaw free human choice and gave graces to individuals to aid their salvation but they could freely reject those graces.” That is, while goodness in life as well as salvation after death could only occur through the grace of God, who would attain this grace was not predetermined by God. Individuals could reject – or accept – it through their free will. And since the free acceptance of God’s grace was necessary, an individual had to make this decision freely. This has been a strong argument for human freedom throughout Catholic history.

Precisely due to these natural rights, a king was not absolute. Only the Pope had Divine authority. Secular rulers, meanwhile, would exist to order the Earthly City, and since the City of God could not be attained on this planet, the state existed for the people and its earthly matters. And thus, the royal authority would need to have the consent of the governed.

For de Mariana, this meant that clear limits for the king would have to be set. When he abused his power, the people could revolt. If the king wanted to levy new taxes, this would have to first be agreed upon by the people (foreshadowing the concept of no taxation without representation). If the king turned into a tyrant, a people would be in the right to remove him from the position – if necessary, through assassination as a last resort. De Mariana’s theory of tyrannicide eventually influenced several such (successful) attempts, including King Henry III as well as Henry IV of France, and was possibly even linked to the (in)famous Gunpowder Plot in Britain. While the Jesuit order eventually told their members to stop teaching to kill tyrants, Mariana’s important insight, as described by Eduardo Fernández, remained: that “the king has to keep in mind: the king is for the kingdom, not the kingdom for the king.”

Subsequently, in his second major treatise, this time on monetary policy, Fr. Mariana heavily argued against monetary debasement by the government and against monetary expansion by the ruling elite. Those that would try to debase a money would be like an “itinerant snake oil salesman,” having to be deemed untrustworthy. De Mariana recognized that this act of devaluing money so that the king can use the newly created money would be little else than a tax – but a hidden one – as citizens are deprived of their wealth. Those particularly affected by inflation would be “craftsmen for the most part and people whose hopes for a meal lie in their hands and in working every day – which is most people.” Here Mariana realizes something that Richard Cantillon would continue arguing one century later: that particularly the poor are hurt by loose monetary policy.

Once again, the king would first have to receive the consent of the people if he wants more money instead of simply “cheating them.” In an advice to the authorities, the priest wrote that “if you want your state to be a healthy hone, do not touch the primary foundations of commerce – units of weight, measurement, and the coinage. A many-layered swindle lies hidden behind the appearance of a quick fix.” This time around, de Mariana was personally affected by his publication, being thrown into prison by the Spanish monarch and the book being censored.

Much more could be said about this fascinating figure and his allies. For instance, Jesús Huerta de Soto spotted a preliminary version of Menger’s subjective theory of value in Mariana’s thought (and one which was notably absent in Adam Smith’s), when the Father argued that “the value of an article does not depend on its essential nature but on the subjective estimation of men, even if that estimation is foolish.” In his posthumously published critique of the Jesuit order – which was too hierarchical for him – he made a deeply Hayekian argument for decentralization: “power and command is mad. … Rome is far away, the general does not know the people or the facts, at least, with all the circumstances that surround them, on which success depends. … It is unavoidable that many serious errors will be committed and the people are displeased thereby and despise such a blind government. … It is a great mistake for the blind to wish to guide the sighted.”

With his defense of popular sovereignty, natural law, sound money, and decentralism, de Mariana can be considered not only a forefather of the Austrian School of Economics but also a true champion of freedom – and most certainly one we should consider more closely looking forward.