Article III. Supplements to the Doctrine

I. COROLLARIES.

347. The mean of the thing in contracts. Therefore, even in contracts an objective comparison of things is made, and, without any formal fault, it happens that the parties depart from the equality which commutative justice will command to be restored. And thus it again appears that justice has the mean of the thing. Cf. no. 36.

Therefore, although, with the Scholastics, we concede this to Rev. Dr. Funk—that formal injury is not committed unless someone abuses fraud or force—we nevertheless cannot weigh the justice of agreements in this balance. Indeed, sins do not even have their specification from these artifices, but from the object. Hence, unless fear inflicted upon a person contains a personal injury, the sin will be the same in species whether you have abused cunning or a prevailing position to obtain an excessive price.

348. Exchange conduces per se to the utility of both parties. The rationales given show in what manner each party makes a gain per se from a just exchange. For while, at a just price, one party cedes to the other a thing which is less useful to himself for its proper use, he preserves the same value and procures a thing of greater proper utility.

349. In what manner the seller’s utility is to be reckoned. If we speak strictly, since the just price of a thing is that which equals its value, he who in an exchange wishes his own utility to be made good and the price which is called the price of affection to be paid to him in fact asks for something beyond the just price; rightly, however, because he compensates for his own inconvenience. “Thus,” St. Thomas accurately says, II-II, q. 77, art. 1, corpus, “something can licitly be sold for more than it is worth according to itself, although it is not sold for more than it is worth to its possessor.” And Cardinal de Lugo, disp. 26, no. 43: “Beyond the just price he asks for something, not for the thing itself, but for that affection or loss.”

From this it also follows that this extraordinary price is owed under a title different from that under which the common price is owed,¹ that it is not to be offered spontaneously, and that it can be exacted only from one who is aware of the cause. “It is necessary,” says Molina, disp. 348, no. 6, “that the agreement be made upon this point, so that the buyer, knowingly and prudently, may buy the things.”

¹ It is as though there were a second purchase and sale added to the sale of the thing, namely, that of the seller’s utility and advantage, which the buyer is free to refuse.

350. Where there is no common estimation, there will be no value of the thing properly so called. Therefore, the seller’s loss from his own use of the thing, and from its hoped-for value if it perhaps appears that the thing will soon become subject to common estimation, will then merely have to be compensated. These matters, therefore, will have to be weighed by prudent men, to whom the Scholastics judge that the case should then be referred. Cf. Molina, disp. 348, no. 9; Cardinal de Lugo, disp. 26, nos. 46-47. At the same time, these same authors concede that there are certain things which can be estimated at the discretion of the seller. Lessius, chap. 14, no. 53; Cardinal de Lugo, place cited.

So that we may speak a little more explicitly about this matter, the following points seem to us worthy of careful note.

1. Although, if common estimation is entirely lacking, there is then no place for a strictly objective price, nevertheless, from the preceding rule of justice, it remains true that no one is to be deprived of his own thing while reasonably unwilling. Therefore, according to a reasonable estimation of the utility or advantage which he himself receives from the thing possessed, the seller will be able to define the sum of money to be paid to him.

The buyer may safely conform himself to that determination while keeping silent the utility peculiar to himself on account of which he wishes to procure the thing for himself.

2. Rarely, however, will consideration of common estimation be wholly absent. For if it should perhaps appear that, after a short time, the thing will enter into common estimation, and this is known in itself, this very hope has a just price, which must be compensated in the exchange of the thing.

Furthermore, common estimation is already present inchoatively from the moment that there are some who desire to have the thing. For just as the utility of a thing to be acquired, if it is commonly perceived, through the mediation of common estimation engenders a universal aptitude for exchange which is called value, so also the estimation of a few engenders a restricted aptitude for exchange, which is a certain inchoative value possessed by the seller and to be compensated to the seller. The measure of this inchoative value will be the importance of the estimation itself, not indeed the whole of it, but diminished by the difficulty of finding others who are interested in this thing.

3. Briefly, therefore, we shall speak as follows. In the exchange of things which lack value properly so called, the seller must be compensated for the objective hope of a value soon to come, or for the importance of an inchoative value, and, in addition, for that which the seller, on account of his own estimation of the thing, judges ought to be exacted for himself. If the first two are absent, the thing will be estimated at the discretion of the seller.

N.B. Take care also that you do not think that things desired only by a certain class of persons, perhaps not a very numerous one, lack a just price. Of this kind are, for example, paintings and various works made by art. For although most people disregard the proper utility of these things, they can nevertheless readily be exchanged. For the interest with which persons of a certain class are drawn toward them is commonly known. This suffices so that the common estimation of those things is not lacking, although perhaps few can define the price corresponding to it. Therefore, the Scholastics cited above concluded, not without reason, that there are things whose case must be estimated by prudent men, and others which are left to the discretion of the seller.

350bis. The office of common estimation is not only to declare the value of things authoritatively, but proximately to effect that value. And we judge that this is perceived sufficiently from the manner in which our conclusion was stated and proved. We also readily confirm it, because if common estimation merely declared value, it would no longer be necessary in any way. For why could not a private declaration, in this matter, supply for the lack of an authoritative declaration?

This, however, is admitted: if you know of a thing which, for example, is fitted to bring the greatest utility to a barbarous people, as long as your knowledge has not pervaded that society itself, the value of that thing will remain null, or it will be present only inchoatively, on account of the diffusion of that knowledge which has begun.

Therefore, the goodness of a thing does not engender value unless there is added a common estimation of that goodness, in which estimation, moreover, some part is left to men’s opinions, prejudices, and even free will; and in this manner it comes about that, through common estimation, things are not only declared but are proximately made apt for exchange.

A certain difficulty, however, must be met. For, as we saw in no. 339, 5, falsehood can underlie common estimation, and we then said that it must be corrected. If it is the cause of value, how can it be a cause which does not operate necessarily and always as soon as it is in act?

But it is not so remarkable that the efficacy of a proximate cause should sometimes be frustrated in its force, if it should happen to depart from its remote rule. Thus, human law is the proximate cause of obligation; nevertheless, it has no force to command against the divine law. Thus also a sentence by which a judge, in pronouncing the law, awards a thing to one party is vitiated by an error of the judge or by deception, and it grants no true title to the party prevailing in the case. Thus finally, in a more universal manner, error and deception remove consent and its efficacy. Therefore, the common estimation of men, insofar as it has been altered by fraud or force, is to be judged involuntary. And just as he who has deceived a magistrate, in order to repair the losses caused by the fraud, ought rather to conform himself to the sentence such as it is presumed it would have been if the fraud had not occurred, so too, in the present case, common estimation—which you would better call a false appearance of estimation—is to be reformed according to the truth. Therefore, those who have publicly lied about the qualities of some medicine, those who by false reports have changed the public reputation and estimation of some business undertaken or to be undertaken, and those who by various devices have produced an artificial scarcity of certain wares—all these are the cause of a price which can by no means be regarded as objectively just.

351. Social value. Value properly so called, since it arises in society and from common estimation, and promotes commerce among men to no small degree, contains a certain social function of things, on account of which it seems to us elegantly called social value by Cauwès.² It can be lacking in a thing either because the thing is such that it does not possess a utility capable of being commonly esteemed, or because this utility is hidden per accidens. In that case, a condition rather than the cause of value is lacking.

² The Philosopher had already said, Ethics, bk. 5, place cited: “If there is exchange, there will also be society.”

352. What if a thing is sold more dearly to outsiders? If the value of things increases from an abundance of buyers, it is evident that merchants are free to ask a just price from outsiders and to remit something from it in favor of the inhabitants. Nor are they prohibited from exacting the highest price even from outsiders. Nevertheless, to raise the price of things for them beyond measure because, for example, the things are held at a higher price in their own region savors of fraud—a fraud which, though sufficiently customary, is perhaps committed in a kind of good faith, but which sound doctrine cannot approve. Cf. Cardinal de Lugo, disp. 16, no. 51.

Therefore, the market to which the thing comes is to be considered. This is sometimes not free of all doubt where there is question of large transactions which are contained within “international” commerce. For those who operate immense factories are accustomed to appoint agents who sell the products of the factory in foreign regions; and merchants are also accustomed to visit foreign markets. Sometimes, as when a transaction is conducted by telegram, the buyer will say with equal right, “I bought in Belgium,” and the seller, “I sold in England.” When these things occur, we judge that the parties can consider either price which they prefer to choose and can obtain without force or fraud. In any case, these prices are not accustomed to differ greatly from one another.

353. Concerning the law of supply and demand. There is some truth in this celebrated formula insofar as a comparison of the supply of things with the number of those who desire them inadequately governs variations in price. For we know that the common estimation of a thing and its value itself depend chiefly upon the perceived utility of the thing and the difficulty of obtaining it. But the formula is false if you take it as a norm of price, whether proximate or remote.

It is not a proximate norm. Rather, the supply of those offering or seeking a thing is a certain circumstance which men are accustomed to consider in estimating the thing, so that it partly grounds the common estimation according to which the true price is proximately exacted. Further, for it to be a proximate rule, it would be necessary that, by some constant ratio, the more demand increased, the more the price would increase, and conversely. But no such ratio exists. If the supply of wheat offered is made smaller by half, the price will increase more than twofold.³

³ Thus C. Gide, Principes d’économie politique, pp. 74-76, where he very well refutes that false saying.

Nor is it a remote rule. For, on account of the price of things itself, things will be more or less sought and offered, so that this relation is partly subsequent to price. For when wine becomes cheaper, will there not be more buyers? Will merchants not endeavor to bring wares to the place where they are valued more highly?

354. Concerning monopolies. a) Properly speaking, a monopoly designates a privilege granted by public authority to a private man or to the treasury, by which the faculty of selling certain wares or of transporting them is reserved to them alone. Often the price is then also fixed by law. Such a legal monopoly, introduced for a just cause, is not to be disapproved.

Related to this is the monopoly which an inventor enjoys for some period of time by virtue of the instrument called a brevet d’invention. Nor is this illicit, provided that the price is not increased excessively. Nevertheless, the just limits are not so readily determined.

b) A monopoly is private when one or more persons bring it about, by purchasing all the things of a certain kind, that they alone in fact sell them. Provided that they do not exact a price beyond the highest price which the thing would otherwise have, or induce that price by fraud or force, it is not unjust. But if the poor thereby suffer notable detriment, charity will be violated.⁴ This will more readily be lawful in things of pleasure.

⁴ Those who doubt the very justice of an agreement of this kind, freely made, do not seem to deserve a hearing. For they could by no means prove any right of buyers to impede these associations.

N.B. That trading practice (spéculation) by which some persons buy up certain wares in great quantity at a low price, in order to keep them and sell them later when the price, as they hope, has increased,⁵ is not illicit per se, provided that the price corresponds to the supply of the things. Cf. Molina, disp. 345, no. 10; Cardinal de Lugo, disp. 26, nos. 176-179.

⁵ Aristotle already gives examples of practices of this kind, Politics, bk. 1, chap. 11.

c) To a certain kind of private monopoly must be referred many agreements and associations of merchants and artisans, which were not entirely unknown to the ancients, but which have become frequent from present-day practices of trading and, assuming various forms, have received different names in different regions. All of them, however, have this purpose: to break the force of free competition (effets de la libre concurrence). Indeed, businessmen today, with this purpose, not only agree among themselves that they will not sell wares or undertake work below a certain price, but also form associations so that they may hold the markets in their power and may wear down the other merchants or at least subject them to the necessity of obeying their laws. These forms of associations (syndicats) are called consortium, kartell (in Germany), corner, combination, pool, and especially trust, which American form is the most powerful of all.⁶

⁶ Concerning these, cf., for example, Cl. Jannet, Le Capital, la Spéculation et la Finance au XIXe siècle, chap. 8; and Conrad, Handwörterbuch, etc., s.v. Kartelle.

In order to judge agreements of this kind rightly, it is necessary to attend both to present circumstances—in which, because of the hostile contest of rivals, it comes about that by various devices, by depressing wages, and so forth, and especially by artificial prices which are ruinous to those who conduct business honestly, some are accustomed to overcome and oppress others—and to the end intended by the associates and to the things with which the agreement is concerned.

α) For if agreements of this kind are made among men of small means, by which they can both establish a suitable wage for workers and themselves receive an honest profit for the labor expended, there is no reason why we should disapprove these practices. Indeed, public administrations are already accustomed to define a certain minimum wage to be paid to workers by contractors, lest the contractors profit from the withholding of a just wage. Furthermore, if agreements of this kind do not concern things of necessary use, but things of pleasure—for example, music books—the price cannot be increased at the discretion of the sellers, since the buyers are free to decline harsher conditions.

β) But associations among great manufacturers and wealthy merchants are far more suspect. For then:

It can indeed happen that even these alliances, if they have this purpose—that an honest profit be obtained and the losses of excessive competition be warded off—are not without either cause or utility. Hence the Kartelle of Germany, in which there is rather the character of a certain defense, are not held in such ill repute.

But often it is not so much one’s own defense as the oppression of others that is intended; or there is question merely of increasing profits and fortunes. Indeed, in certain parts of America some trusts have gone so far that they have even obtained political dominion in the state. Who does not see that these things greatly harm the commonwealth?

What of the fact that any agreements whatever concerning things necessary for subsistence are already accustomed to produce common inconvenience and detriment?

Therefore, formerly the laws most justly dealt severely with those who bought up all the goods. But if, perhaps, there was then a fault of excessive severity, today rulers rather abstain too much from checking ruinous practices. Already of themselves, however, these monopolies are opposed to charity, which, where there is question of common detriment, binds even with grave inconvenience.

As regards commutative justice, the solution already given concerning private monopoly returns. Without injury, a price cannot be exacted beyond the highest price which would otherwise be customary.

This norm, however, is not easy to use: both because those agreements of sellers often answer contrary agreements by which buyers attempt to buy wares at too low a price; and because that highest price seems capable of being defined apart from unbridled competition which depresses prices below that which can justly be exacted in the market where the things are sold. Nor is it always sufficiently clear which market is to be considered. Therefore, it will be useful to indicate more precisely the manner in which this norm seems to us to be applied.

That price is to be judged just which gives skilled businessmen only a moderate profit, or a recompense for their labor or industry. For in this manner the natural value which we shall see to inhere in human labor is merely sanctioned. The ancients already considered it lawful per se to ask a price from which, after expenses had been recovered, some suitable recompense would remain;⁷ and economists likewise judge this to be the natural price.

⁷ Cf. the documents collected by D. Brants in the work Les théories économiques aux XIIIe et XIVe siècles, chap. 6, § 4.

That price is to be presumed just which businessmen agree to exact when, after considering the supply of things which they jointly possess and the extent of the market, they do not enjoy a monopoly. For they would seem to wish in vain to introduce a price which was excessive.

In doubt, one should incline toward the justice of an agreement which has the character of some defense, as was said.

On the other hand, honest merchants must beware of alliances by which they do less to protect themselves than to attack (syndicats d’aggression) others, whether rivals or buyers. Then it will be especially useful to consider the price at which the things would otherwise have been estimated. To illustrate the matter by an example, suppose that certain wares, on account of special circumstances, have reached a very high price; and while, after the circumstances have changed, they are on the point of recovering their customary value, the merchants make an agreement with the purpose of retaining the unusual dearness. An alliance of this kind will scarcely be free from the stain of injustice.

This response, that the price which would prevail without a monopoly is to be considered, has for several centuries been held by theologians as most certain and must be retained entirely; nevertheless, its rationale does not appear so easy.

For they permit one who enjoys an inventor’s privilege (brevet d’invention), or one to whom it happens by itself that he alone possesses an art or a useful thing, to increase the price on account of the natural or legal monopoly itself. And we have also taught above, universally, that things are to be estimated according to scarcity. By what right is a different response given if, when a private monopoly has been introduced, art imitates nature and brings about a true scarcity of things? Can adapting the price to this scarcity be opposed to justice? These and similar arguments do not seem to us capable of being solved unless we reason from a higher principle.

Therefore, we argue as follows. The primary intention of nature, as we saw in no. 208, was and is that external things should yield to the common good of the human race. Nature therefore sanctions private ownership of things because it is a suitable means—indeed, in the present condition of things, the most suitable means—of procuring the common use of goods (no. 199). We have also seen that limits are placed upon the right of property by the primary intention of nature (no. 232).

Indeed, here also this intention of nature, this highest end of riches and property, must be invoked. While a natural monopoly does not concern necessary things, and while a legal monopoly is not without the social function of stimulating talents and the sciences, a monopoly artificially introduced has merely this purpose: that, without any common utility, a certain class of things be made rarer and thus be partly withdrawn from the uses of the human race. This manner of acting, which is directly contrary to the end of external things and of property, cannot be sanctioned by nature as a title to a higher price. Nature does not recognize monopoly as such, but property as it would be without monopoly. Therefore, the price of the thing must be established as though it were subject to no monopoly.

N.B. 1. There is another manner of violating justice if others are prohibited by threats or fraud from selling at a lower price.

2. By their agreement the contracting parties themselves are bound per se, so that, if they violate their promise to the detriment of others, they will be guilty of an injury to be repaired by restitution.

3. We shall treat below of agreements among workers, where we discuss the contract of hiring.

355. A moderation of the doctrine. Although the buyer’s special utility cannot enter into the price properly so called, nevertheless, one to whom the acquisition of the thing is very beneficial can grant something beyond the price, whether from a grateful mind or from some other intention of beneficence. Indeed, St. Thomas, here, reply to obj. 3, judges that this is fitting. And you should observe that a gift of this kind can be alluring, so that the donor is impelled not so much by a benevolent mind as by the hope of attaining some intended object. Therefore, if, as sometimes happens, someone, in order to obtain more quickly or easily the money with which he hopes to conduct a profitable transaction, immediately offers, for example, extraordinary interest, this promise of his can be accepted without scruple. And, universally, he who, aware of the matter, willingly assents or spontaneously offers, seems per se, insofar as is necessary, to yield his own right.

356. Concerning the opinion of Bastiat.

This opinion, which denies that the natural utility of a thing can be compensated and judges that in exchanges services (services) rather than things are formally compared with one another,

a) Is repugnant to common sense. For men assign one true price to each thing, while the service furnished is different for one acquirer and another; and they judge that in agreements each contracting party considers less what service he renders to the other than what advantage he himself obtains.

b) Is repugnant to the dignity of human service, which, having proceeded from benevolence, is repaid by a grateful mind, but not by payment of a thing from strict justice. For strict justice preserves for each person his own things and his own goods. Therefore, unless, together with the service, there is the cession of something proper to oneself, no debt properly so called will arise. But if the renunciation of something proper to oneself accompanies the service, and does so by the force of an onerous promise, this renunciation, and not the service, will be, reduplicatively, the title by which something can be exacted from justice.

c) Tacitly posits the value which is expressly denied. For the excellence of the service will depend very greatly upon the utility and value of the thing.

d) Has ruinous consequences. For it not only destroys the objective rationale of justice in contracts, since subjective conditions, and the very mind both of him who furnishes the service and of the other to whom it is furnished, must then be considered above all; but also, contrary to the mind of Bastiat, it favors the conclusion of the socialists. For they will readily show that something is exacted for the thing itself by the owner of the thing—for example, by the possessor of “capital”—and consequently that, by Bastiat’s admission, the present regime of private possession is vicious, and that a part of the price which from justice pertains to the workers is consumed by the wealthy.