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Hythloday now comes to a point in his description of his dinner with Cardinal Morton that he terms "ridiculous." He says he is unsure whether this story is worth the telling, but decides to tell it anyway.
After Hythloday finishes speaking, someone comments that Hythloday has managed to create a policy dealing with criminals and vagabonds, and asks how to deal with the old and the sick, who are often reduced to begging. A man Hythloday describes as a fool who was always trying to draw laughter takes a stab at the problem. This man decrees that all male beggars would be made "lay brothers" of Benedictine monasteries, and all women be made nuns. According to Hythloday, Cardinal Morton takes this as a good joke, though others take the idea seriously. A friar responds that begging will remain as long as there are friars, referring to the fact that friars collect money for their religious order through begging. The fool wittily responds that the friars would already have been arrested as vagabonds. At this, the friar becomes incensed. He curses the fool with biblical references, and threatens him with excommunication. Cardinal Morton defuses the situation by dismissing the fool, and, soon after, the Cardinal himself goes off to bed, dismissing everyone.
Hythloday now apologizes to More and Giles for telling such a long story, but insists it was necessary to make his point. He wanted to show how the Cardinal's associates had only disdain for his views until the Cardinal himself showed interest, at which point they all became uncritical. They, in fact, became so uncritical, that they then almost accepted the advice of the fool as a serious proposal. This example, Hythloday claims, will demonstrate the lack of acceptance he will receive at the hands of courtiers.
The meaning of the story about the fool and the friar is not obvious. Hythloday himself claims not to know why he tells the story. Eventually, he claims the story shows how men form judgments not on the merit of the proposal put before them but wholly in response to the judgments formed by the men in power. Judgments, then, are not a process of rational thought, but rather a means of currying favor. The story can be seen as an example of such judgment making, but Hythloday's previous description of the reaction to his proposals before and after Cardinal Morton displayed his approval of them was a far superior example and needed little further support.
A second interpretation, offered by David Wootton, argues that the fool provides a third alternative between the worldly More and the philosophical Hythloday. The fool, Wootton claims, represents Christian Folly, a distinct notion of Humanist thought first conceived by Erasmus in Praise of Folly. Christian Folly is the understanding that a man who acts according to the laws of Christianity, independent of his wisdom or intelligence, will be seen as acting in folly. Christian Folly claimed that Christianity did not mesh with European culture at large, no matter what those in power claimed. The fool, in this conception, is a jester, a man who pokes fun at the inconsistencies of society and yet is treated with condescension. This evocation of Christian Folly in the form of the fool is meant, according to Wootton, to remind the reader of Utopia that while the real world can never be perfect and Utopia is a figment of the imagination, the Kingdom of Heaven is real and imminent. Utopia is a book advocating social reform, but its deepest hope remains religious. Wootton's argument, though convincing in its textual analysis, can prove difficult to grasp for the simple reason that it hinges on an understanding of a Humanist body of knowledge to which most modern readers have had no exposure. To better understand the idea of Christian Folly, the best work is probably the source, Erasmus's Praise of Folly.
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