Gothenburg Research Institute GRI-rapport 2017:1 Bank Management Scholasticism, Fair Value and Ursury, According to Odd Langholm Sten Jönsson and Thomas Polesie © Gothenburg Research Institute All rights reserved. No part of this report may be repro- duced without the written permission from the publisher. Gothenburg Research Institute School of Business, Economics and Law at University of Gothenburg P.O. Box 600 SE-405 30 Göteborg Tel: +46 (0)31 - 786 54 13 Fax: +46 (0)31 - 786 56 19 e-mail:
[email protected] gri.gu.se / gri-bloggen.se ISSN 1400-4801 Scholasticism, Fair Value and Ursury, According to Odd Langholm Sten Jönsson Gothenburg Research Institute, School of Business, Economics and Law, University of Gothenburg Thomas Polesie School of Business, Economics and Law, University of Gothenburg GRI-rapport 2017:1 Abstract Odd Langholm, a prominent Scandinavian scholar of early economic thought, provides us with cues on how to re-consider the fundamental assumptions that go into economic valuation and modelling. “Fair value” was not controversial among the scholastics. A thing is obviously worth what it can be sold for! Problems arise when the parties to a contract disagree – when the market is too thin to produce a fair price. Use a model, and/or give an account of how you calculated, is today’s solution. The scholastics, not yet accustomed to econometric models, assumed that contracts are entered into by competent individuals with free will, and given that money, the counting medium, has no intrinsic value (it is worth what is stamped on the coin), it follows that a contract including interest is not valid.