Saturday, October 08, 2005

Antonino of Florence and Just Price

St. Antonino of Florence lived in the Florence -- i.e., the Florence of the Medicis. A moral theologian (who wrote a work called Summa Moralis), he had to deal with the rise of Florentine banking and trade, and with finding an adequate moral-economic analysis of it. He was strongly opposed to usury; to counteract the effects of usury on the poor, he advocated what were called montes pietatis, which were (in essence) municipal pawnshops where, for a small security or occasionally even no security, the poor could get small, short-term no-interest loans to help tide them over in a tight spot, with just a small flat fee to help support the operating costs.

He also battled against exorbitant prices, but in an interesting way. Antonino was focused on the importance of finding a just price for items; the just price was always a factor of the utility, cost of production, and desirability of an item. Now, this could be very complicated, but if I understand him correctly, Antonino held that the socially recognized market price would, as a rule, approximate the just price in any given case, if three conditions were met:

(1) The socially recognized market price only approximates the just price if we are not considering an emergency situation (I think we can give a support for this as follows: socially recognized market prices are neither morally adequate nor justly accurate when a true emergency case has arisen, because the socially recognized market price only gives the just price ceteris paribus, so doesn't take into account special circumstances; likewise, in major emergencies, the market doesn't adjust quickly enough to give an accurate idea of the just price.)

(2) The socially recognized market price only approximates the just price if we are in a healthy economy. (In times of general want, for instance, prices for necessities like basic staples can spiral out of control.)

(3) The people involved in market negotiations (i.e., buyers and sellers) are not acting out of greed. (E.g., the market price doesn't approximate just price unless we assume that people are not deliberately price-gouging, engaging in fraud, etc.)

Since the socially recognized market price approximates just price under the right conditions, it becomes much easier to regulate the cases where it doesn't (e.g., by setting price ceilings on basic staples in emergency situations, or by making fraud illegal).

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