Price and individual behaviour: alternatives to Thomistic issues
In spite of its importance, Thomas Aquinas’s teaching did not remain unchallenged. From the beginning of the fourteenth century, such challenges seem to have jeopardized the elegant construction he had achieved, giving more room to individual behaviour.
This was clearly linked to the growing distance between the analysis of price and the organicist understanding of society, which followed Thomas Aquinas’s death in 1274. An outstanding symptom of this period of intellectual upheaval was the condemnation of the so-called “Averroist theses” by the Bishop of the University of Paris in 1277: Thomas Aquinas’s influence within these theses was clear to everyone concerned. From a philosophical, religious, and political point of view, this period is now well known (see Gilson 1944 [1955]: chs 8 and 9). The ensuring development of alternatives to Aristotle’s authority, at least in its Thomistic version, made possible the birth of individualistic approaches, mainly among the Franciscan order, with John Duns Scotus or the nominalist authors, for instance. Now, however, the puzzling observation can be made that the resulting theory of price was not so remote from its Thomistic predecessor.It seems clear today that most authors fell into the same logical trap, generated by the lack of a demand function relating a list of prices and a list of quantities, which results from the demands formulated by all those who are interested in the good. Such a representation would be consistent with the idea that people usually have different needs, since this difference does not lead to a difference in prices, but to a difference in the quantities demanded. Within the nominalist tradition, this is evident, for instance, from John Buridan’s comments on Aristotle’s claim in the Ethics that need is a measure of price. If individual (and, therefore, different) needs do constitute a measure of price, “the poor should buy corn at higher price than the rich, since he needs corn more than the rich” (Buridan 1637, V, q.16, doubt 1).
The famous Rector of the University of Paris at the beginning of the fourteenth century tried to bypass his own objection by arguing that each one gives what he has in excess - money for the rich, and labour for the poor. Nonetheless, this might explain how the poor should get money to buy grain, but not why both the poor and the rich should pay the same amount for the same quantity of corn. The same could be said, for instance, about Henry of Langenstein (Henry of Hesse), at the end of the fourteenth century. In his Tractatus de Contractibus, he is also faced with the idea that if individual needs are related to prices, this would mean that no one would pay the same price, and that the poor would be charged more than the rich.The difficulty was the same and, to some extent, Buridan’s and Langenstein’s solutions were convergent. Whereas Buridan argued that the kind of need which measures the price of corn is the “common need” (indigentia communis) of those who are able to perform such exchanges, Langenstein also favoured the “common need”, now understood as the part of individual need which is similar for each of us, since it rests on moral grounds and not on fancy or passions (voluptas or cupiditas). The resulting device was quite close to the main features of Thomas’s theory of price, in spite of the attempt to give it a more individualistic foundation (on Buridan and Langenstein’s analysis and, for other examples, see Lapidus 1992: 37-42). A referential norm is introduced as a just price: this fulfils the requirements of commutative and distributive justice as in Thomas Aquinas, and departures from this norm might be explained from a moral or informational point of view.
Interestingly, such a logical trap - making it difficult to conceive a unique price as a result from unequal individual needs - constituted an obstacle to the development of what is known as a subjective theory of value, at least until the concept of a demand function was unambiguously accepted among the predecessors of the marginalist revolution.