mind your business

Sunday, December 27, 2009

Aquinas on Economics and Commerce

It is a project of mine and a couple of the other contributors here at THL to justify libertarian conclusions about government and civil society from classical premises (as opposed to the framework of modernity where classical liberalism "was born").

Editor's note: Content related to this project will be forthcoming in future articles here at THL.

That's why the following article "The Philosopher-Theologian: St Thomas Aquinas" by Murray Rothbard really caught my eye when an abridgment thereof was recently published at Campaign for Liberty.

Here's an excerpt I really enjoyed:

"Finally, and most charmingly and crucially, Aquinas, in his great Summa, raised a question that had been discussed by Cicero. A merchant is carrying grain to a famine-stricken area. He knows that soon other merchants are following him with many more supplies of grain. Is the merchant obliged to tell the starving citizenry of the supplies coming soon and thereby suffer a lower price, or is it all right for him to keep silent and reap the rewards of a high price? To Cicero, the merchant was duty-bound to disclose his information and sell at a lower price. But St. Thomas argued differently. Since the arrival of the later merchants was a future event and therefore uncertain, Aquinas declared justice did not require him to tell his customers about the impending arrival of his competitors. He could sell his own grain at the prevailing market price for that area, even though it was extremely high. Of course, Aquinas went on amiably, if the merchant wished to tell his customers anyway, that would be especially virtuous, but justice did not require him to do so. There is no starker example of Aquinas's opting for the just price as the current price, determined by demand and supply, rather than the cost of production (which of course did not change much from the area of abundance to the famine area).

A piece of indirect evidence is that Giles of Lessines (d. c.1304), a student of Albert and Aquinas and a Dominican professor of theology at Paris, analyzed the just price similarly, and flatly declared that it was the common market price. Giles stressed, furthermore, that a good is properly worth as much as it can be sold for without coercion or fraud.

It should come as no surprise that Aquinas, in contrast to Aristotle, was highly favorable towards the activities of the merchant. Mercantile profit, he declared, was a stipend for the merchant's labor, and a reward for shouldering the risks of transportation. In a commentary to Aristotle's Politics (1272), Aquinas noted shrewdly that greater risks in sea transportation resulted in greater profits for merchants. In his Commentary to the Sentences of Peter Lombard, written in the 1250s, Thomas followed preceding theologians in arguing that merchants could ply their trade without committing sin. But in his later work, he was far more positive, pointing out that merchants perform the important function of bringing goods from where they are abundant to where they are scarce.

Particularly important was Aquinas's brief outline of the mutual benefit each person derives from exchange. As he put it in the Summa: 'buying and selling seems to have been instituted for the mutual advantage of both parties, since one needs something that belongs to the other, and conversely.'"

Read the whole article here.