According to St. Thomas, ST II-II 77, “the quality of a thing that comes into human use is measured by the price given for it, for which purpose money was invented, as stated in Ethic. v, 5.Therefore if either the price exceed the quantity of the thing’s worth, or, conversely, the thing exceed the price, there is no longer the equality of justice: and consequently, to sell a thing for more than its worth, or to buy it for less than its worth, is in itself unjust and unlawful.”
Oftentimes we are at a sale and we find that an item is priced below what it is worth. According to St. Thomas, to buy this item for less than it is worth is in itself unjust and unlawful. Do you need to confess this sin and make restitution, since you bought it for less than it was worth and did something unjust and unlawful?
Actually, if what Thomas says is correct, then the sale price is actually the just price. This is because businesses typically price their product in the following way: Cost+.
There is a strategy for employing the “+” part. Initially, on first release, the markup is high. This is to take advantage of two kinds of people: 1) wealthy people who are willing to pay more for a given product, and 2) people who are willing to shell out the extra money because they want to have the “latest and greatest” fashion or model.
After a certain amount of time has passed, say six months, the markup is reduced. This is to take advantage of the next set of buyers. This continues until they reach the bargain buyers, who typically buy at, or close to cost. After this point they finally sell below cost (negative markup). This is usually toward the end of the life of a product, and it’s the only way they’ll get money for it, or during the close out of store or business, and they need to liquidate quickly.
There are two questions one can pose about this economic system. First, what moral implication does this have for the average buyer? Second, is this even a just system to begin with?
I would suggest that, because the average buyer doesn’t know what the true cost of any given product is (since the seller doesn’t typically publish that information), then little fault can be assigned to him if he engages in an unjust transaction. The fault is negligible, but not zero, however, as with any transaction one can take the time to investigate the value of the product.
As for the justice of the system itself, if what Thomas says is true, then this system is essentially flawed.
He points out the reason that money was invented: to measure the value of a product. I will add to this and say “to measure the value of a product in order to facilitate a broader exchange of product.” Prior to the use of currencies, human exchange was accomplished by barter. This ensured a fair exchange of goods, but it limited who you could exchange with, and what you could exchange. Currency removed that limitation.
But, what about profit? That’s essentially what this question boils down to. If someone made a profit within the barter system, it’s because he was part of an unfair exchange, he exchanged something of lesser value for something of greater value.
“Markup” appears to be a violation of the principle of fair exchange. Effectively, anything sold at markup is sold at a higher value than its worth. One might argue that the widening income gap is due solely to profit, which, if St. Thomas is right, appears to be the result of immoral business practice.
Interesting.
