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The just price is a theory of ethics in economics which attempted to set standards of fairness in financial transactions. Although its roots lie in ancient Greek philosophy, it was advanced by Thomas Aquinas as an argument against usury, which in his time referred to the making of any rate of interest on loans. The theory was based on the belief that the lender was receiving income for nothing, since nothing was actually traded. Ethics is the branch of axiology – one of the four major branches of philosophy, alongside metaphysics, epistemology, and logic – which attempts to understand the nature of morality; to define that which is right from that which is wrong. ...
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Ancient Greece is the term used to describe the Greek-speaking world in ancient times. ...
The term philosophy derives from a combination of the Greek words philos meaning love and sophia meaning wisdom. ...
St Thomas Aquinas Saint Thomas Aquinas (1225 – March 7, 1274) was an Italian , Catholic philosopher and theologian in the scholastic tradition. ...
Usury (from the Latin usus meaning used) was defined originally as charging a fee for the use of money. ...
In finance, interest has three general definitions. ...
A loan is a type of debt. ...
He later expanded his argument to oppose any unfair earnings made in trade, basing the argument on the Golden Rule. He held that it was immoral to gain financially without actually creating something. The Christian should "do under others as you would have them do unto you", meaning he should trade value for value. Aquinas believed that it was specifically immoral to raise prices because a particular buyer had an urgent need for what was being sold and could be persuaded to pay a higher price because of local conditions: The term Golden Rule may refer to any of the following Wikipedia articles: The Golden Rule - in ethics, religion and philosophy. ...
- If someone would be greatly helped by something belonging to someone else, and the seller not similarly harmed by losing it, the seller must not sell for a higher price: because the usefulness that goes to the buyer comes not from the seller, but from the buyer's needy condition: no one ought to sell something that doesn't belong to him.
- — Theologia Moralis 2-2, q. 77, art. 1
Aquinas would therefore condemn practices such as raising the price of building supplies in the wake of a natural disaster. Increased demand caused by the destruction of existing buildings does not add to a seller's costs, so to take advantage of buyers' increased willingness to pay constituted a species of theft in Aquinas's view. A natural disaster is the consequence or effect of a hazardous event, occurring when human activities and natural phenomenon (a physical event, such as a volcanic eruption, earthquake, landslide etc. ...
Theft (also known as stealing) is, in general, the wrongful taking of someone elses property without that persons willful consent. ...
Although Aquinas believed all gains made in trade were wrong, he was willing to accept them as a necessary evil, provided the gains were regulated and kept within certain bounds, and provided they were directed toward a public good:
- ...there is no reason why gain [from trading] may not be directed to some necessary or even honourable end; and so trading will be rendered lawful; as when a man uses moderate gains acquired in trade for the support of his household, or even to help the needy...
In Aquinas' time, banking was still in its infancy. The later School of Salamanca argued that the just price is identical to the market price. With the rise of banking and Capitalism, the just price theory began to be seen as discredited. In modern economics, interest is seen as payment for a valuable service, which is the use of the money. The School of Salamanca is the renaissance of thought in diverse intellectual areas by Spanish theologians, rooted in the intellectual and pedagogical work of Francisco de Vitoria. ...
For other uses, see Bank (disambiguation). ...
Capitalism has been defined in various ways (see Capitalism in Wikiquote). ...
Most banking systems still forbid excessive interest rates. An interest rate is the rental price of money. ...
See also
In economics and business, the price is the assigned numerical monetary value of a good, service or asset. ...
Pricing is one of the four aspects of marketing. ...
The supply and demand model describes how prices vary as a result of a balance between product availability at each price (supply) and the desires of those with purchasing power at each price (demand). ...
The term economics was coined around 1870 and popularized by Alfred Marshall, as a substitute for the earlier term political economy which has been used through the 18-19th centuries, with Adam Smith, David Ricardo and Karl Marx as its main thinkers and which today is frequently referred to as...
External link - An article discusses the Salamanca school and just price
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