The right price. Is the market price always the right price?

Saint Thomas of Aquinas says: “On the other hand, one can read in the Gospel: “All that you want people do to you, do you also onto them”. But nobody wants anything to be sold to him for a price higher than its value. Therefore, it is not allowed to sell a good for a higher price than its value”,[21]

 

The market value of a good is the maximum price at which the seller can sell the good and the minimum price at which the buyer can buy it, and it would not be necessary to advise buyers and sellers to act in such a way to obtain the maximum benefit. It is clear, therefore, that the right price recommended here by Saint Thomas is not the market price. In the market it is possible to obtain a price or to sell at a price that is far removed from what sound reason considers right.

 

For Saint Thomas, a seller is allowed to charge a moderate rate over the cost, especially if he is a merchant, in order that he can earn a living. But experience shows us that, in our daily dealings, abusive prices are charged or, in the case of the working market, work is obtained at miserable wages.

 

Some people argue that, market transactions being free, they are already right and, therefore, the market price is always right. But, as we saw when we spoke about the right wage, if one urgently needs a good, food for instance, he inevitably has to buy it, at any price, even if it is unjustly high: need makes that the apparent freedom in buying and selling be fictitious:

 

Nobody is putting a gun to your head, but if you do not want to die of hunger or suffer other limitations, you have to buy at the price food is sold fairly or not.

 

Theoretically, in a free market, in the long run, prices tend to adapt themselves to the cost price, but that is the theory. In practice, we always find some monopolist particular feature (that of location for example: the shopkeeper of a little village can profit from the fact that it is too onerous to go to town and shop) and, in practice, the seller can fix any price so that it is right for the benefit he obtains or wrong because he is taking advantage of his position.

 

The buyer can also take advantage of his position to fix an unfair price, as it happens for instance with farmers of industrialized countries or with mineral or agricultural goods of the Third World, which are acquired by the big companies at very low prices, and sold later at much higher prices, resulting in big and unfair benefits.

 

To say that everything fixed by the market is always right is a pseudo-economic idolatry supporting injustice.

 

Everyone of us has had his own experience with traders or craftsmen who are considered by us to be honest because they only charge what can be considered as reasonable, and others we blame as charging too much (“this is robbery”): if economic transactions were not made by free men, but were automatically fixed, we would not be able to speak about morality in buying and selling. But, since, inside some limitations, every seller and every buyer can vary the price, it is reasonable to speak about  morally correct behavior, about right or wrong prices.

 

We have the obligation to be honest in selling and buying. In fact, whoever takes advantage by fixing abusive prices is steeling, even if the law of the country does not punish him. We know that to have the sin of theft forgiven, we must give back the stolen goods (if it is not possible for everyone we had damaged, at least in alms to people who need it; in the Gospels we find the example of Zaqueus, a converted rich defaulter who paid for his sin by giving half of his wealth to poor people and paying four times more to people he had defrauded).