The Just Price in Catholic Social Teaching
The conventional wisdom would have us believe the market has the last word when it comes to the value of commodities, and that fluctuations in pricing always correspond to real changes in the value of things based on legitimate demand combined with scarcity or surplus in the supply.
Added to the principle of maximum profit, competition, and self-interest, this means that a seller should always seek the highest price, and the buyer the lowest, and that this will naturally lead to a point of equilibrium, and this price located at this point will be the most just. But it should be clear by now that things are never so simple, and that such a simplistic view is the result of ideological thinking in an attempt to convert economic activity into an amoral process between two selfish individuals.
Referring back to St. Thomas Aquinas, we find a different view:
“It is written (Matthew 7:12): ‘All things . . . whatsoever you would that men should do to you, do you also to them.’ But no man wishes to buy a thing for more than its worth. Therefore no man should sell a thing to another man for more than its worth.”
To take advantage of another’s need in order to extract a higher price for an item (which in the conventional view would amount to simply obeying the laws of supply and demand) is immoral because raising the price based on another’s circumstances is to attempt to “sell what you do not own.” You are claiming the advantages of circumstance as if it were your own labor that brought it about, and on this pretense you are profiting unjustly at your neighbor’s expense. Often the disadvantage of one’s neighbor has nothing to do with the labor of the craftsman, and is an opportunity for charity rather than for profit. To capitalize on such a situation amounts to a species of fraud:
“It is altogether sinful to have recourse to deceit in order to sell a thing for more than its just price, because this is to deceive one’s neighbor so as to injure him.…if the one man derive a great advantage by becoming possessed of the other man’s property, and the seller be not at a loss through being without that thing, the latter ought not to raise the price, because the advantage accruing to the buyer, is not due to the seller, but to a circumstance affecting the buyer. Now no man should sell what is not his, though he may charge for the loss he suffers…On the other hand if a man find that he derives great advantage from something he has bought, he may, of his own accord, pay the seller something over and above: and this pertains to his honesty.”
The Church teaches that there is a “just price” which is objectively determinable and which does not depend solely on market conditions and the circumstances of the buyer and seller. The just price is a central principle in the Christian economic tradition. The forces of the market are always to be taken into account, of course, but they are never the only factors.
We are assured that in some cases the “prices that are freely agreed upon can turn out to be most unfair. It must be avowed openly that, in this case, the fundamental tenet of liberalism (as it is called), as the norm for market dealings, is open to serious question.”
Moreover, we must remember that not all prices are subject to market forces in the same way:
“It would appear that, on the level of individual nations and of international relations, the free market is the most efficient instrument for utilizing resources and effectively responding to needs. But this is true only for those needs which are ‘solvent’, insofar as they are endowed with purchasing power, and for those resources which are ‘marketable’, insofar as they are capable of obtaining a satisfactory price.”
The three fictitious commodities (land, labor, money) are all examples of non-marketable resources.