Price and Just Price
Just price is the most typical example of an economic category which has different interpretations in medieval literature. Baldwin (1959: 8) found the first occurrence of the phrase in Babylon, at the time of the fourth successor of Hammurabi.
However, the medieval theologians and jurists encountered it via Roman law, in the Corpus Juris Civilis, notably in passages related to contracts such as those concerning the problem of the laesio enormis. Further, the just price occurs in the theological literature of the end of the twelfth century, as in Peter Cantor, or at the beginning of the thirteenth century, as in Robert of Courςon or Alexander Hales.Nevertheless, although the rough intuition of a price which might be considered as just from a moral or legal viewpoint does have an ancient origin, the first systematic presentation of the concept, accessible to contemporary economists, appears no earlier than in the writings of Albert the Great and his pupil Thomas Aquinas. As such, it expresses the basic requirements of any moralist broadly speaking (for instance, a priest or a judge): knowing whether such-and-such a price for such-and-such a transaction is morally acceptable or not requires (1) that a norm of acceptability is made explicit - the just price, and (2) that any difference from this norm is explained in moral terms. This basic requirement was evidently not restricted to Thomism, since it was shared by its opponents, and still appears as a major theme in the sixteenth century - within the revival of Thomism which since Marjorie Grice-Hutchinson’s works has been known as the “School of Salamanca” (Grice-Hutchinson 1952, 1978; Tortajada 1992); in the works of the founders of natural law philosophy during the seventeenth century such as Hugo Grotius and Samuel von Pufendorf; and even in the eighteenth century, in Turgot’s works.
However, during this long process of evolution, its initial content vanished.This should be taken seriously: not only had the meaning of the “just price” been transformed since its analytical origin in the thirteenth century, but it is too dependent on concerns different from ours to be easily approached through our current economic categories. However, there remains a persistent tendency to view the just price - that is, the norm of morality within a transaction - as something of a trailblazer for market price theory (see, for instance, De Roover 1958, 1971; Baldwin 1959; Barath 1960).
Intuitively, this point of view is far from unreasonable: the persistent struggle of schoolmen against corporations of merchants, trade associations and many other kinds of collusion, or the development of fairs all over Europe, suggest that the intuition of a market mechanism already existed. In the same way, reference in the works of several schoolmen, including Thomas Aquinas, to such notions as “demand” or “utility” contributes to this impression.
However, a more nuanced investigation shows that such an interpretation makes poor sense. For instance, the schoolmen’s opposition to various kinds of monopoly does not lead to an understanding, similar to ours, of the competitive mechanism which leads to market price. Rather, it is linked to moral judgements, which condemn such contracts where justice is violated because of the asymmetric position of the parties. The existence of fairs, which we rightly consider today as “markets”, only means that markets as institutions already existed; not that, for all those who were involved in that institution, the market was also a theory. Moreover, even though Latin expressions such as indigen- tia or utilitas were often translated respectively as “demand” or “utility”, this does not imply that both of them had the subjective meaning to which we are today accustomed: indigentia denotes a social need, and utilitas refers to an admitted social use which has nothing to do with individual fancy.