Just price

Abstract

The idea of the just price is associated primarily with scholastic economics. The schoolmen suggested two ways of estimating the just price, with reference to cost and with reference to the market. The former originated in reply to some of the Church fathers, who claimed that merchants reaped an unjust profit from the toils of others. Alexander of Hales (d. 1240), Peter Olivi (d. 1298), John Duns Scotus (d. 1308) and other schoolmen together compiled a catalogue of cost elements incurred in trade: transport, storage, risk, costly training, professional expertise and diligence, as well as support of the merchant and his family. The cost estimate was confirmed by the schoolmen’s interpretation of the strange formula of exchange appearing in Aristotle’s Nicomachean Ethics. In Book V, on justice, Aristotle presents a cast of characters – a builder, a shoemaker, a farmer, a doctor. ‘As a builder is to a shoemaker, such and such a number of shoes must be to a house’ (1973, 5: ll33a22–3; author’s translation). What could this mean? Albert the Great (d. 1280), the first Latin commentator, and numerous followers, suggested that it might mean equality in proportion to the labour and expenses incurred in the production of the goods offered in exchange. Albert did not merely indicate that economic exchangers deserve cost coverage but that society requires it. If a carpenter (another of Aristotle’s characters) is not paid for a bed as much as it costs him to make it, he will stop making beds – a medieval hint about the law of cost. Scotus says much the same about merchants in general. If no one will be a merchant, the authorities must appoint functionaries and pay them accordingly.KeywordsAlbert the GreatAlexander of HalesAquinas, St. T.AristotleDuns Scotus, J.Just priceMarket priceOdonis, G.Olivi, P.JEL ClassificationsB0