The Myth of the Just Price
By Laurence M. Vance
(His dates: ?-?, http://www.mises.org/story/2918, Posted on 3/31/2008)
(No notation) = Direct Quote, [P] = Paraphrase, and [Magee] = Magee Observations
[Magee] Introduction
Recommended by Phillip Bresson
An enjoyable read, if you can maintain your cool, and keep a heavenly perspective… :-)
Contents
1. The Biblical Concept of Justness
2. The Just Price
3. Interventionism
4. The Biblical Case for Laissez-faire
5. Conclusion
Teaching Notes
Introduction
The concept of the just price is the basis of a great deal of erroneous economic thought that permeates our supposedly free market, capitalistic society.
Disguised with a euphemism – Medicare is not called socialized medicine…
Not only is any price agreed upon between a willing buyer and a willing seller the just price, that alone is what makes it the just price.
The Bible is our final authority in all matters.
1. The Biblical Concept of Justness
The expression just price is nowhere to be found in the Scriptures.
There is generally no mention of what the items were sold for.
The absence of fraud would be essential for the price of any commodity to be said to be just. But one will search the Scriptures in vain for any other concept of what constitutes a just price.
2. The Just Price
Thomas Aquinas. Born about 1225.
Discusses the concept of the just price in the section in his "Treatise on Prudence and Justice" called "Of Cheating, Which Is Committed in Buying and Selling."
Equated the just price, … with the common market price established by the "common estimation" of buyers and sellers.
Rothbard: "Unfortunately, in discussing the just price,
Aristotle… equal value in a commercial exchange… revived and employed "as a philosophical justification for the medieval doctrine of the just price." (
Two minority viewpoints
1. Just price was only that beyond labor and expenses that enabled the seller to maintain his social status
2. Just price was the cost of production plus compensation for labor and risk incurred. àMarx
Aquinas:… a number of principles:
* The merchant performs a valuable service
* The merchant can conduct business without sinning
* Buying and selling are to the advantage of both parties
* Misrepresenting the condition of goods in a sale is fraud
* Price is influenced by changes in supply and demand
* Price can vary according to location
* Price can vary according to time
* Price is a function of utility
* The just price is an estimate, and cannot be fixed with mathematical precision
* The just price is the current market price
* Price should represent the true value of goods
It is this last concept that sends Aquinas off course.
3. Interventionism
Mises: "a method for the transformation of capitalism into socialism by a series of successive steps." Here are some examples.
THE MINIMUM WAGE
Minimum-wage laws violate freedom of contract.
SUGAR PRICE SUPPORTS
Since 1894…
The gang of thieves in Congress who accept $2 to $3 million in bribes each congressional election from their sugar daddies in the sugar industry are costing American consumers hundreds of millions of dollars a year through higher prices on not just sugar, but anything made with sugar.
PRICE GOUGING
[Magee] – The kind of rhetoric we are regularly exposed to on oil prices makes me ill. If we would just let gas prices be what they should be and stop manipulating them, that would create proper incentives for the development of energy alternatives, and would help us enormously in terms of our foreign policy.
DUMPING
Antidumping laws are not designed to protect the public, they are designed to product domestic producers from foreign competition.
USURY
All of the fifty states regulate interest rates in the twenty-first century.
[Magee] some verses here…
ESV Exodus 22:25 "If you lend money to any of my people with you who is poor, you shall not be like a moneylender to him, and you shall not exact interest from him.
ESV Deuteronomy 23:19 "You shall not charge interest on loans to your brother, interest on money, interest on food, interest on anything that is lent for interest.
ESV Nehemiah 5:7 I took counsel with myself, and I brought charges against the nobles and the officials. I said to them, "You are exacting interest, each from his brother." And I held a great assembly against them
ESV Psalm 15:1-5 Who shall dwell on your holy hill?... who does not put out his money at interest
ESV Proverbs 28:8 Whoever multiplies his wealth by interest and profit gathers it for him who is generous to the poor.
ESV Matthew 25:27 Then you ought to have invested my money with the bankers, and at my coming I should have received what was my own with interest.
ESV Luke 19:23 Why then did you not put my money in the bank, and at my coming I might have collected it with interest?']
[Magee] This is not easy to sort out. The last two citations are positive. The others are negative. There may be a difference between profiting from personal loans to someone in trouble, vs. business loans for capital. In any case, I don’t precisely know why this is condemned. It clearly has nothing to do with the specific rate. The condemnation, such as it exists, is for any lending at interest.
THE STATE
I have maintained that, in the absence of fraud — not in the absence of ignorance, laziness, greed, or stupidity — not only is any price agreed upon between a willing buyer and a willing seller the just price, that alone is what makes it the just price. A just price for an item does not exist independently of a transaction between buyer and seller. It is both impossible and immoral for any governmental body to institute, regulate, control, or recommend what is a just price. It is impossible because the state is not omniscient; it is immoral because the state has no authority to intervene in the market.
I will even grant that it might be immoral under certain circumstances to charge a particular price. But that doesn't mean that it should be illegal. Vices are not crimes. Saying that the just price is a moral imperative is one thing, but making it a legal device is something else that opens up the deadly can of worms of government intervention that can never be closed. The separation of market and state is just as important as separation of church and state.
4. The Biblical Case for Laissez-faire
[P] Same economic philosophy for Marx, Keynes, and many Christians!
Christian statists … can neither establish nor confirm their position from the New Testament without reading their conception of social justice back into the Bible, applying to the government admonitions given to individuals, and opaquely misreading the Scriptures through interventionist glasses.
WEALTH
But it is not riches per se that are disparaged in the Bible. Rather, it is trusting in riches, boasting in riches, coveting riches, or obtaining riches unlawfully.
The New Testament admonishes the rich, not to become poor, but to "be not highminded, nor trust in uncertain riches, but in the living God, who giveth us richly all things to enjoy; that they do good, that they be rich in good works, ready to distribute, willing to communicate."
[Magee] communicate=share with others in need
There is no imperative or implication in the New Testament for the state or any individual to seek the redistribution of wealth.
POVERTY
The idea that individuals, let alone the state, should seek to eradicate poverty is never advanced in the Old or New Testaments.
THE MERCHANT
The Bible nowhere condemns mercantile activity as an action or a profession.
ESV Matthew 20:13 But he replied to one of them, 'Friend, I am doing you no wrong. Did you not agree with me for a denarius? 14 Take what belongs to you and go. I choose to give to this last worker as I give to you. 15 Am I not allowed to do what I choose with what belongs to me? Or do you begrudge my generosity?'
EMPLOYMENT
ESV Ephesians 4:28 Let the thief no longer steal, but rather let him labor, doing honest work with his own hands, so that he may have something to share with anyone in need.
UNEMPLOYMENT
(Acts 2) This is charity, not communism, and as such was purely voluntary.
ESV Acts 5:4 While it remained unsold, did it not remain your own? And after it was sold, was it not at your disposal? Why is it that you have contrived this deed in your heart? You have not lied to men but to God."
5. Conclusion
Laissez-faire is natural, moral, and biblical.
Both parties are better off after an exchange than they were before the exchange.
There is no such thing as market failure.
The only problem with the free market in the
[Magee] Closing Thoughts:
1. I agree entirely both economically and morally.
2. This kind of stuff (foolish government intervention) is infuriating.
3. We have to be careful not to let such things distract us with anger – Part of living in a particular place and time is facing the economic/moral idiocy of that place and time.
4. Nonetheless, in our role as teachers, we do not want give in to any of this for a minute. To do so would be dishonest.
5. I don’t have a good answer to the biblical prohibitions of lending at interest. It does not appear to have anything to do with the specific rate charged. I think that it had something to do with the oppression of the poor by the powerful, and particularly something to do with duties of charity within the covenant community. A proper application in the New Testament era might be that within the church we should be giving to the poor rather than lending to them at interest.
6. This temptation to unhealthy anger on these topics is serious. Nothing we think about the foolishness of the state role in the economy can be allowed to overturn Romans 13. We cannot get caught up in nasty dialogue that encourages everyone to be enemies of the state. That would be against God’s Word. I don’t agree with what they are doing, and I will use my freedom and my vote accordingly, but I will show respect to governing authorities, even if things get much worse than they are today.
7. We are looking forward to a life beyond scarcity. In the new heavens and the new earth things will be quite different.
No comments:
Post a Comment