Front Page Titles (by Subject) Just Price and Balancing Rights - Literature of Liberty, April/June 1978, vol. 1, No. 2
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Just Price and Balancing Rights - Leonard P. Liggio, Literature of Liberty, April/June 1978, vol. 1, No. 2 
Literature of Liberty: A Review of Contemporary Liberal Thought was published first by the Cato Institute (1978-1979) and later by the Institute for Humane Studies (1980-1982) under the editorial direction of Leonard P. Liggio.
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Just Price and Balancing Rights
“Justum pretium: one more round in an ‘endless series.’” History of Political Economy 9 (1977): 504–521.
St. Thomas Aquinas's subtle doctrine of the just price mirrors the tensions between a society of status and a society of contract and exchange. Reconciling its divergent interpretations we can explicate how Aquinas's just price theory both reflects and perpetuates the inequalities of a hierarchical and status society. Medieval “social welfare” dictated a “fair” allocation of property by respecting each person's unequal social function.
The just price insured that goods and services would be exchanged at prices to guarantee each member of society an income proportionate to his “worth,” that is, with an income that would enable him to fulfill his “naturally” ordained social function. As a reflection of the sociology of knowledge, Aquinas's formulation of the just price was intended to forestall a breakdown of the traditional social structure.
Aquinas achieved a remarkable synthesis of the Christian tradition and Aristotelian teleology in articulating the just price doctrine. Aristotle's perception of the universe as structured and purposeful led Aquinas to explain the value of economic goods in terms of their utility to man. But if goods are valued or priced by their human utility (i.e., by the want-satisfying quality of things and not by the relative social “worth” of the producer), how can exchange at such market prices be reconciled with the income distribution demanded by the social estimate of different individuals' worth and hierarchical status?
A recent but inaccurate neoclassical interpretation would read social or “common estimate” for determining the just price as a reference to the competitive market price or society's valuation of the marginal productivity of the goods in question. A sounder interpretation of Aquinas's just price sees social “worth” or status as determined independently of economic value. Aquinas believed that the just price must be set so as to maintain one's natural social status. Civil society is more than a business venture whose purpose is acquiring wealth; the worth of a person and his share of goods, therefore, should not depend on his contribution to the production of wealth. In a society organized around the purpose of the morally good life of all its members, the worth of each person would be judged not in terms of his contribution to production, but in terms of his social contribution to the life of virtue.
If this is so, what is the procedure that guarantees that while “goods exchange at their just prices, income will be distributed in proportion to the relative dignitas [worth] of society's members?” The answer requires us to understand Aquinas's distinction between commutative and distributive justice. Commutative justice refers to justice in market exchanges and requires that the two parties in an exchange receive equal value. Here the just price depends on utility, labor, costs, and supply and demand, not on the social standing of the exchangers. Distributive justice, however, does require that each member of society receive an income commensurate with his social status. We achieve this not through manipulating the just price of the products which each person produces but through an earlier property distribution. An anterior distribution of resources based on hierarchical social rank provides Aquinas with a means of guaranteeing each person an income according to his status and dignitas and is the first step in devising a just economy and allocation of property.
STUDIES INECONOMIC THEORY