Death to the Bankrupts! The moral and political origins of bankruptcy legislation in early modern Europe

The Institute of Economics will hold a seminar meeting as part of its Seminar Series on Tuesday, May 2, 2023: Roberto Ganau from New York University will present the paper "Death to the Bankrupts! The moral and political origins of bankruptcy legislation in early modern Europe".

Abstract:

In the late Middle Ages, merchants were exalted by Christian theologians. Usurers, to be sure, were considered social parasites, but the real merchants were those who circulated merchandise for the good of the community. In the sixteenth century, however, a rupture occurred. In England and France, sovereigns issued laws that targeted and punished merchants for excessive indebtedness: Those merchants were “bankrupts”, who could be subject to torture, the amputation of body parts, and ultimately death. In the Italian states bankruptcy laws had long existed since at least the fourteenth century: Venice was the first city to introduce them to cope with systemic risk in the banking sector. Perhaps for this reason, eminent historians such as Jean Hilaire and Emily Kadens argue that the first English and French bankruptcy laws were informed by an economic logic. In this paper, I will show instead that bankruptcy laws in early modern England and France were passed under predominantly moral, religious, and socio-political grounds. By examining a subset of over 400 sermons, pamphlets, manuals for confessors, merchant textbooks, plays, and legal treatises, I can show that after the first bankruptcy laws of the 1530s and 1540s, for about a century bankruptcy was an ethical problem more than an economic one. Jurists, priests, lawmakers, and pamphleteers argued that commerce was essential to promote economic development, but that engaging in it was also a potential source of perdition. The pursuit of profit, which is materially easier than amassing foodstuff or other objects, encouraged greed, avarice, lust, and lying, all of which could easily “infect” the rest of the body politic. The problem of bankruptcy was felt by commentators belonging to various social milieus. Intellectuals and politicians such Jean Bodin were more interested in the broader civilisational consequences of the loss of morality, fearing that behaviours like those conducive to bankruptcy might endanger the future of a commonwealth, as in his view happened to ancient Rome. For this reason, he supported a major broadening of state power so that it could gather information on and intervene in people’s morality and private lives. Priests and Anglican ministers, instead, expressed their preoccupation as to a divergence they saw between ethics and economics. It was unacceptable to them that economic prosperity could be built on immoral foundations, and some of them argued for bankruptcy laws to realign economic practice to their view of economic morality. The passage of bankruptcy from a problem of moral economy to one of political economy occurred in the 1620s, when a paradigm shift occurred and the main criterion to evaluate economic policy was no longer its effects on social stability, but on economic growth and development. At this point the evaluation of bankruptcy regulation was its effect on the number of bankruptcies, to be minimised to reduce the damage to economic growth. Only in the nineteenth century did bankruptcy come to be recognised as an inevitable feature of capitalism, and imprisonment for debt and the death penalty for bankrupts got abolished.

The Seminar will be held in blended mode. In person partecipation is possible in Aula 6. For online partecipation please use the following link.