Value in Moral Theology and Political Economy

The price of a thing is the expression in money of its value. But what is value? What is it that makes a pair of boots sell for sixteen shillings in a certain place on a fixed day? The question is one of primary importance in the science of Political Economy. Jevons¹ quotes with approval the following words of Mill: —

¹ Theory of Political Economy, p. 80.

Almost every speculation respecting the economical interests of a society thus constituted, implies some theory of value; the smallest error on that subject infects with corresponding error all our other conclusions; and anything vague or misty in our conception of it, creates confusion and uncertainty in everything else.

The theory of value is picturesquely said by a foreign writer to be the dragon which guards the entrance to economic science; while another declares that he who understands value, understands half of the difficulties of the science of Economics.² If the notion of value is fundamental in Economics, it is of great importance, to say the least, in Moral Theology, and particularly in questions concerning justice and contracts. It may be of interest to inquire what economists have to say on a subject which specially belongs to their province, and to compare it with the received doctrines of Moral Theology. According to a recent writer, economists have shown the teaching of theologians on the point to be chimerical and absurd: and as I propose to make the words of this writer the basis of my remarks, I will quote him at length : —

² C. Antoine, S.J., Economie Sociale, p. 258.

In modern times the form of economic doctrine has been affected by the fact that it has been so much discussed by men who were accustomed to deal with physical and mathematical problems, and who brought their habitual methods of reasoning to bear on the phenomena of supply and demand. In a similar fashion the economic doctrine of the thirteenth century in Christendom was affected, as far as its form was concerned, by the engrossing studies of the time; economic problems were discussed by men who were habituated to the methods of metaphysics. In accordance with current modes of thought, they tried to determine an ideal standard which should be realized in particular transactions, and sought for a definite conception of a ‘‘just price’’; the practical inquiries then resolved themselves into means for discovering the just price of each particular thing. From the modern point of view this whole quest was chimerical: prices are always fluctuating, and must, from their very nature, fluctuate. According to the ‘‘plenty or scarcity of the time’’ there will be great differences in the quantities available, and, therefore, in the relative values of wheat, cloth, coal, and commodities of every sort. We know, too, that the commodity used for money must vary in value from time to time, and that, therefore, there must be continual fluctuations not only in values but in prices as well. The attempt to determine an ideal price implies that there can and ought to be stability in relative values, and stability in the measure of values, which is absurd.

The medieval doctrine and its application rested upon another assumption, which we have outlined. Value is not a quality which inheres in an object, so that it shall have the same worth for everybody; it arises from the personal preferences and needs of different people, some of whom desire a given thing more and some less, some of whom want to use it in one way and some in another. Value is not objective—intrinsic in the object—but subjective, varying, with the desires and intentions of the possessors or would-be possessors; and because it is thus subjective, there cannot be a definite ideal value, which every article ought to possess, and still less a just price as the measure of that ideal value.³

³ Dr. Cunningham, Western Civilization in its Economic Aspects, 1900, p. 78.

According to Dr. Cunningham, therefore, the medieval theory of a just price for everything, and the medieval concept of value have been shown to be absurd and untenable by modern economic science. The schoolmen of the Middle Ages, habituated to the study of metaphysics, looked upon value as a quality intrinsic to the thing itself. To them it was something objective, definite, stable, and fixed; and so the measure of value, or price, was something stable and fixed also.

On the contrary, the doctrines of modern economic science have been formulated by men accustomed to deal with the physical and mathematical sciences. These men have brought their strictly scientific methods to bear on the economic problems of supply and demand. They have taught us that the medieval quest after a just price for commodities was as chimerical as the quest after the San Grail. Taught by them we now know that prices are not stable and fixed, but are always fluctuating, and must of their very nature fluctuate. The plenty or scarcity of the time will affect the quantities of the available commodities, and so will affect the relative values. We now know that. money itself, the measure of value, is subject to the same economic laws as other commodities, and that it fluctuates in value as they do. So that the attempt of the schoolmen to arrive at a just price for each particular thing involved the two absurdities of supposing that there can be stability in relative values, and stability in the value of money.

Let us see what the schoolmen really did teach about the just price of commodities. It is easy to state some absurd theory, ascribe it to the metaphysical scholastics of the Middle Ages, and then proceed to demonstrate its absurdity. It is a more scientific method of procedure first, as the scholastics were fond of doing, to make sure of the fact — Primo, queritur utrum sit.

Molina, one of the great doctors on justice, will tell us what the common teaching of the schoolmen concerning the just price of commodities really was. Almost any other of a score of scholastic theologians would serve our purpose equally well, and I shall refer to one or two others in the course of my remarks, but in the main I propose to follow Molina. The difference between the date at which he lived and the thirteenth century, which Dr. Cunningham has specially in view, need not trouble us, for there was no change of doctrine in the meantime; Molina’s teaching is merely that of St. Thomas somewhat amplified.

This scholastic doctor then is careful in the first place to say what the just price is not derived from. It is not, he says, to be measured by the excellence of things according to their own nature and intrinsic qualities, but according as they serve man’s use and benefit. A mouse considered in its own nature is a more excellent thing than corn, but mice are worthless, while corn, which serves man’s necessities, has its price.

However, he proceeds, the price of a thing does not depend merely upon its usefulness for supplying man’s necessities, but it depends a very great deal upon the estimation which men commonly choose to have of it with reference to its use. Thus the just price of a gem, which is for ornament only, is greater than that of a large quantity of corn, wine, meat, cloth, and horses. And among the Japanese a piece of rusty iron or cracked pottery is of immense value on account of its antiquity; while among us it is worth nothing at all. And mere ornaments of colored glass have a far higher price among the Ethiopians than gold, which they exchange for them. Now all this is brought about solely by the common estimation in which things are held in the place where they are exchanged, so that such trafficking is not to be condemned, though the want of culture and the manners of such peoples are sometimes laughable.

So that the just price of a thing depends a great deal upon the common estimation of men in any place; and when without fraud or any unfair dealing, a commodity is commonly sold at a certain price in any place, that may be considered the just price, as long as the circumstances which cause prices to vary remain unchanged. The Roman Civil Law⁴ and the common opinion of doctors agree on this point.

⁴ L. Pretia rerum, Dig. ad legem Falcidiam.

But it must be observed, adds Molina, that a great many circumstances alter the prices of commodities. Thus scarcity makes the just price rise, while plenty makes it fall; the greater number of competing buyers at one time than at another, or their eagerness to buy, makes prices rise, on the other hand the fewness of buyers makes them fall; the greater demand at one time than at another, while the supply remains constant, as of horses in time of war, makes prices rise. The scarcity of money in any place makes the price of other things fall, while abundance of money makes the price of other commodities rise. For the less the supply of money in any place the greater its value, and thus many more other goods are bought with the same sum. The manner of sale, too, alters the price, as we see in sale by auction, or when a man is anxious to find buyers and seeks them, or in sale by retail.⁵

⁵ Molina, De Justitia, tract. ii., disp. 348.

The just price which we have been considering was called by some theologians, following Aristotle, the natural price; not, as Molina is careful to explain, because it did not depend largely on men’s estimation, nor because it was not very inconstant and changeable, but to distinguish it from the legal price, which was settled for some commodities by law. Inasmuch as the natural, or vulgar price as it was also called, depended upon men’s estimation, wants, and desires, which are very various, it could not be a quantity exactly determinate and precisely defined, it necessarily admitted of a certain latitude; and so theologians distinguished the highest, the lowest, and the middle price, and taught that justice would be done if the seller kept within those limits.⁶

⁶ Ibid. disp. 347.

All this, even in the light of modern economic doctrines, seems eminently practical and thoroughly in keeping with common sense; I fail to detect in it anything that savors of the “ metaphysical,” if that term is intended by Dr. Cunningham to mean unreal and unpractical. The whole point of the teaching of the theologians lies in this, that there is such a thing as a fair and reasonable price for commodities, in which English law and English juries agree with them, and that it is matter of justice to keep to it in contracts. The scholastics certainly knew as well as the modern economist that prices are always fluctuating; they knew that the plenty or scarcity of the time has great influence on the relative values of commodities of every kind; they knew of what is now called the law of supply and demand; they even knew that money is exposed to constant variations in value, and that it would be absurd to look for stability either in relative values, or in the measure of values. In fact they knew all that Dr. Cunningham has taken for granted that they did not know.

From what has already been said, it is quite clear also, in spite of what Dr. Cunningham seems to imply, that the scholastics knew that “value is not a quality which inheres in an object, so that it shall have the same worth for everybody.” Molina expressly states that it arises from the preferences and needs of different people, with their different desires and wants. As we shall presently see they unanimously denied that the seller can charge for any special individual advantage which may accrue to the buyer from the bargain; thus clearly supposing that social and individual value were two very different things. However, a difference between the scholastic doctrine on value and modern theories is touched upon, when Dr. Cunningham proceeds to say : —

Value is not objective—intrinsic in the object—but subjective, varying with the desires and intentions of the possessors or would-be possessors; and because it is thus subjective, there cannot be a definite ideal value, which every article ought to possess, and still less a just price as the measure of that ideal value.

According to modern theories then, value — exchange value is meant — is merely subjective, varying with the desires and intentions of the possessors or would-be possessors of a commodity; and so there is no definite value which a thing possesses, and no just price, for a just price is merely the just measure, the proper equivalent of value. A man may sell a horse for what he can get, he may exact whatever interest the borrower will give him for a loan, he may pay his workmen as little as necessity forces them to take for a day’s wage. There is no just price for commodities, justice is not violated by however unconscionable a bargain. Certainly these are conclusions of great importance, and if they had been proved to be true, we should have to modify some of the rules of Moral Theology. Catholic theologians of the Middle Ages, as well as their successors of to-day, are unanimous in teaching that there is such a thing as a just price for commodities, that justice can be violated by charging too much for what is sold, and that individual wants and tastes do not finally settle the just price. “The estimation of one or two,” says Lugo,⁷ “does not suffice to raise the price, but the common estimation is required.” This doctrine is common to all theologians, and most are content to quote in proof of it the Roman Civil Law: “The prices of things are not settled by the tastes or utility of individuals, but by those of the generality of people.”⁸ The great authority of the Roman Law, that ever-living monument of written reason, was of itself considered sufficient to settle the question; but some went further in their inquiries as to the method of arriving at the just price. Scotus taught that to estimate the just price of his merchandise the merchant should reckon up all the expenses which he has incurred in buying, transporting, housing his goods, then add to them something for his labor and trouble, and something else to compensate for the risks he has run: what corresponds more or less to all these items, will be the just price, he says.⁹

⁷ De Justitia, xxvi., n. 42.

⁸ L. Pretia rerum,

⁹ Molina, disp. 348.

In modern phrase the costs of production were the measure of value, according to Scotus. This opinion was commonly rejected by other theologians, who pointed out that if this were so, the merchant who had lost a portion of his goods might raise the price of the rest to compensate himself; which could not be admitted, for the price of goods is not measured by the profit or loss of the seller, but by the common estimation concerning their value in the place where they are sold, consideration being given to all the circumstances; besides Res perit domino, and it was not fair that the public should bear the private losses of the merchant.

63 Dig. ad legem Falcidiam.

The common estimation then is the cause of value and the measure of value, according to the scholastics; and if the formula be understood as they understood it, there seems no objection why “the common estimation ” should not still be used as a correct term for the cause and the measure of what economists call market prices. For certainly the market price of an article, whatever it may ultimately depend upon, is settled proximately by the common estimation of the value of the article in the particular market, at the time in question. Some of the most recent writers on Economics state this doctrine in terms as precise as those used by the scholastics. Thus Mr. J. A. Hobson¹⁰ says: —

¹⁰ The Social Problem, 1901, p. 144.

Now, just in proportion as exchange or market-value enters and displaces use-value, so does social determination of value displace individual determination. While value in use is strictly personal, value in exchange is distinctively social. A market, however crudely formed, is a social institution ; the value of our farmer’s produce is partly determined by the personal labor he has put into them, but partly by the needs and capacities of others, and not even by the needs and capacities of any definite individual, but by a great variety of needs and capacities expressed socially through the instrument of a market price, which is a highly elaborate result of bargaining, and does not represent the needs or the capacity of any single purchaser.

It would seem, then, that the difference of view between theologians and economists appears prominently and practically only with regard to non-market prices. The theologian teaches that justice requires that there should be an equivalence of social value between the price and the thing bought; (I say “social value,” because, of course, each party to a contract hopes to gain in individual value in use, otherwise there would be no exchange;) that the just price is settled by the common estimation of the value of an article; that value is partly objective, inasmuch as it supposes usefulness, capacity to be esteemed and desired, in the object, partly subjective, not, indeed, with reference merely to the wants and desires of the buyer and seller, but with reference to the common estimate of people at the particular time and place. However, theologians commonly allow the seller to charge for any special private loss of any sort which he may suffer from parting with his property, the pretium affectionis as it is called; and so to this extent they concede that subjective and private wants and desires may be allowed to influence the terms of the contract. What they agree in rejecting is the view that the seller may exact a higher price on account of some private necessity of the buyer, for then he might sell dearer to the poor than to the rich, or on account of some special advantage accruing to the buyer from his purchase, for then he would sell what did not belong to him, and sin against justice.¹¹

¹¹ St. Thomas II. II. q. 77, a. 1.

On the other hand the economist considers that the value of an article and its price are settled by the consent of the parties to a bargain; no man would give 100 per cent. interest for money unless it were worth his while; the loan, therefore, is worth that price to him, and the lender does him no injustice in taking it.

This, of course, would be true if both parties to the contract were equally intelligent, free, and independent; a man, if he chooses, may give what he likes of his own for any commodity ; if he gives a sovereign for a cup of tea at a bazaar, held for a charitable purpose, nobody will have anything but praise for his generosity. But usually when an unconscionable bargain is struck the parties are not on equal terms.

If a man promises 100 per cent. for a loan, when the current rate of interest on money is 3 per cent., or if a laborer undertakes to work for sixpence a day, when the common rate of wages is sixpence an hour, hard necessity alone, or perhaps ignorance, will have been the cause of his consent to such unfair terms. In such cases theology teaches that he who exacts such hard terms commits a sin against justice, and is bound to restitution; but the theory of value, on which this theological doctrine rests, is, according to Dr. Cunningham, an “ assumption which we have outlived.”

The difference between theological and economic doctrines on this point may partially perhaps be explained by the difference of standpoint assumed by theologians and economists respectively. Theologians consider the question from an ethical point of view, they condemn whatever the Christian code of morals condemns; on the other hand many economists at least treat the phenomena of political economy as they treat the phenomena of the physical sciences. The law of supply and demand is, for the purposes of the science, studied and reasoned upon with the help of mathematics as if it were as necessary and determinate as a law of astronomy; most economists abstract from questions of morality. Thus Jevons wrote: —

I conceive that such a transaction must be settled upon other than economical grounds. The disposition and force of character of the parties, their comparative persistency, their adroitness and experience in business, or it may be a feeling of justice or of kindliness really influences the decision. These are motives altogether extraneous to a theory of economy.¹²

¹² The Theory of Political Economy, p. 124.

Perhaps Dr. Cunningham belongs to this class of economists, and perhaps he would not disagree with the theologians if he treated the matter from their point of view, for he writes: —

We feel that it is unfair for the economically strong to wring all he can out of the economically weak, or to trade on terms in which ‘‘common estimation’’ is notoriously set aside. We have given up as impracticable many of the old attempts to put down hard bargains with a high hand: but modern moral feeling does not sensibly differ from that of medieval times in the desire, if it were possible, to interfere with the action of any dealers who are able to enrich themselves through the necessities or the ignorance: of others, and to gain at their expense. If we tried to find a test by which to discriminate hard bargains we could scarcely do better than adopt the medieval phrase and say that hardship arises when a bargain is made without reference to ‘‘common estimation.’’¹³

¹³ Western Civilization, p. 80.

This is admirable, but we hardly see how it can be reconciled with other passages of the same author. In other passages he seems to condemn the theological doctrine not only as out of place in economics, but as false in itself. He thus seems to agree with many other writers, the earliest of whom is said to be Hobbes, who rejected the hitherto received doctrine on commutative justice, and substituted an invention of his own. “The value of all things contracted for,” he says, “is measured by the appetite of the contractors: and therefore the just value is that which they be contented to give.”¹⁴

¹⁴ Hobbes, Of Man, p. 187.

This assertion Hobbes did not attempt to prove, nor has it been proved by any of his followers. The argument drawn from marginal values is no proof that the subjective and individual theory of value is in accordance with truth and justice; it merely formulates the fact that as a rule people will exchange commodities as long as it is worth their while to do so.

Economists are by no means agreed as to the nature of value, although all confess that it is a question of the greatest difficulty; some hold that it is purely subjective, depending upon the desires of each individual; others, that it is the same thing as private utility; others, that it is social utility; others, that it is the relation between two services exchanged ; others, that the value of a commodity is the labor bestowed on it, and so forth. None of these theories is commonly accepted, and none of them is an improvement on the old doctrine that common estimation is the cause and measure of value.¹⁵ The merely subjective theory, which seems to be most in vogue, fails to furnish any reasonable ground for condemning transactions which all, economists included, admit to be wrong. It even furnishes some sort of justification for the iniquities of the swindler, the usurer, and the sweater. I cannot do better than conclude this article with the concise argument by which, in his Encyclical on the Condition of Labor, Leo XIII proves its falseness as applied to the price of labor.

¹⁵ Professor Smart in his little book on The Theory of Value

We now approach a subject [says the Holy Father] of very great importance, and one on which, if extremes are to be avoided, right ideas are absolutely necessary. Wages, we are told, are fixed by free consent, and, therefore, the employer, when he pays what was agreed upon, has done his part, and is not called upon for anything further. The only way, it is said, in which injustice could happen would be if the master refused to pay the whole of the

(1914) says: “The history of economic science is strewn with the wrecks of theories of value,” p. 1.

wages, or the workman would not complete the work undertaken. ...

This mode of reasoning is by no means convincing to a fair-minded man, for there are important considerations which it leaves out of view altogether. To labor is to exert oneself for the sake of procuring what is necessary for the purposes of life, and most of all for self-preservation. In the sweat of thy brow thou shalt eat bread. Therefore a man’s labor has two notes or characters. First of all, it is personal; for the exertion of individual power belongs to the individual who puts it forth, employing this power for that personal profit for which it was given. Secondly, man’s labor is necessary; for without the results of labor a man cannot live, and self-conservation is a law of Nature which it is wrong to disobey. Now, if we were to consider labor merely so far as it is personal, doubtless it would be within the workman’s right to accept any rate of wages whatever; for in the same way as he is free to work or not, so he is free to accept a small remuneration or even none at all. But this is a mere abstract supposition; the labor of the working man is not only his personal attribute, but it is necessary, and this makes all the difference. The preservation of life is the bounden duty of each and all, and to fail therein is a crime. It follows that each one has the right to procure what is required in order to live, and the poor can procure it in no other way than by work and wages.

Let it be granted, then, that, as a rule, workman and employer should make free agreements, and in particular should freely agree as to wages, nevertheless there is a dictate of Nature more imperious and more ancient than any bargain between man and man, that the remuneration must be enough to support the wage-earner in reasonable and frugal comfort. If through necessity, or fear of a worse evil, the workman accepts harder conditions because an employer or a contractor will give him no better, he is the victim of force and injustice.

In the Irish Theological Quarterly for October, 1914, Fr. Kelleher subjected the doctrine of the just price which I have been defending, to some adverse criticism. He writes:

The difficulty against this, which we may call the general desirability, convenience, or utility theory, is that it is only a variety of the fascinating game of sending the fool farther. In substance it means that we can get over the objection against a subjective, individualistic standard by applying it to 100 or 1000 cases instead of to one.

Surely there is some confusion here. A standard which applies to 100 or 1000 cases is not a purely subjective and individualistic standard. To show that just prices are settled by the common estimation is not an attempt to get over the objection against a subjective, individualistic standard by the fascinating game of sending the fool farther. This is a matter of importance and touches the very foundation of the commonly received theological doctrine on the point at issue. Let us see if we can clear it up.

A society of men is not a mere collection of individuals. There is the same difference between a society and the individuals who compose it as there is between a cathedral and a heap of stones which go to the building of it. Society is an organism, as the sociologists say. However small or however large a society may be, it is an organized, human entity. The family, the town, the province, and the nation, are so many human entities, with rights, obligations, and a spirit of their own, quite distinct from the rights, obligations, and spirit of the individual members who compose those different societies. It is a fact, well known and admitted on all hands, that the spirit of a school lives and succeeds in giving a peculiar impress on the successive generations of boys who pass through it. We need not here describe the organism of society on its physical side. It has an intellectual and an ethical side which specially interest us at present. Society seems to know where its interests lie by instinct. It is very quick to see when they are threatened and how they may be furthered. Liverpool, for example, shows its good sense by making its tramway system converge on the landing stage. From North, East, and South, the tram lines show on what the prosperity and very existence of Liverpool depend. It is essentially a seaport town, and depends for its prosperity on its sea borne commerce from the West. At the outbreak of the German War, she at once began to take means to protect her approaches by sea. She is interested in religion and architecture, witness her new cathedral; her art gallery and libraries show that she is interested in art and literature; she has attempted the solution of many social problems; she has a young and ambitious university, but she is most interested in her docks. Anything that threatens them, whether a strike, or the danger of a bombardment, or a fire, or a new dock, awakens her keenest interest. Long study and experience have taught her how best to defend and to further her interests as a great seaport town. She does not waste money by cutting useless channels to the sea, like some of her neighbors. But she has an efficient fleet of dredgers which keep the river channel open for the largest liners that cross the Atlantic.

She has a mind and a will of her own. Her mind and her will are quite different from the mind and the will of Manchester or of Preston, though all three towns are in the same English county. A new oratorio might draw a good audience at Manchester, a lecture on new openings for cotton goods might awake interest in Preston, I doubt if Liverpool would listen to either. She does not despise liberal culture, but she is mainly devoted to the practical application of science and her school of medicine has distinguished itself in work on tropical diseases. She has a tender heart and has welcomed hundreds of Belgian refugees and subscribed large sums for their maintenance. To come closer to our subject. Liverpool, as becomes a great center of commerce, has a very good idea of what all things in heaven and earth will exchange for. She knows the commercial value of things. This estimate does not depend on the individual preferences and tastes of her citizens. It does not depend even on her corporate tastes and characteristics. She knows well that many things which have an exchange value come into her docks, but which she herself has no use for either socially or individually. She values them only because they will sell. Her merchants know quite well what they can get for them. There is a common estimate of what all sorts of merchandise will fetch if it is exposed for sale. That estimate is constantly changing because it depends on a great variety of ever changing circumstances, and it is expressed by the prices which rule on the exchanges and markets of the city. If a Manchester spinner asks for a supply of raw cotton, the Liverpool broker can tell him at what price he can have it. The broker knows whether this year’s crop is good, bad, or average. He knows whether it has cost more or less than usual to harvest and bring to market. He knows the costs of production. He knows the price at which cotton is sold in New York. He knows the cost of freightage, how much it is increased by war and other risks. He can form a shrewd judgment as to whether the price is likely to rise or fall within the next month or two, and so he sends his quotation to the Manchester merchant. The estimate which one Liverpool merchant forms is practically the same as that formed by another of equal competence. The price at which the bargain is struck is based on an estimate made by experts on what is the exchange value of cotton. It is based on a great multitude of external facts. It depends mainly on objective facts, not on subjective opinions or fancies. In no sense does it depend on the subjective and individualistic views and wants of the buyer or seller. It is a common estimate of the leading members of the exchange. It is a fair and reasonable estimate because it rests on facts. The price, then, at which the Liverpool broker supplies the Manchester spinner with raw cotton is a fair and reasonable price, it is a just price.

The expert community of Liverpool, whose ideas and judgments are not those of the individuals who compose it, nor a common denominator of them, but those of a distinct, intelligent, and moral entity, estimates that in certain circumstances, at a certain time, raw: cotton should exchange at the rate of six pence per pound. There is an equivalence of social value between a pound of raw cotton and six pence. In exchanges the virtue of justice requires that equality of value be given and received. That, then, is the just standard of price which must be observed by buyer and seller alike. It is a standard which is objective and social, not subjective and individualistic, nor is it a variety of the fascinating game of sending the fool farther.