EW JOURNAL

The bronze weights sat on the counter of a European grain market some seven hundred years ago, dull with handling, kept honest by a magistrate whose entire job was making sure the scale never lied. That number, the price at which bread could be sold that day, the aldermen posted each morning on a chalked board beside it. A baker who charged more risked his licence. A baker who charged less risked nothing, since the town was rarely troubled by excessive generosity.

Behind that number stood a doctrine, worked out at length by the Dominican friar Thomas Aquinas in the middle of the thirteenth century, in a section of the Summa Theologiae devoted to what he called the just price, or justum pretium, in the Latin he actually wrote. He was not writing about scarcity as an abstraction. He was writing about grain merchants and moneylenders, and about the precise question of what a seller may honestly ask for something a buyer badly needs.

Long before Aquinas wrote a word on the subject, English town councils were already regulating the same instinct with real precision. The Assize of Bread and Ale, a statute dating from 1266, did not fix the price of a loaf directly. It fixed the weight a loaf had to reach at a given price, adjusted against the going cost of a quarter of wheat, so a baker facing dearer grain was permitted a smaller loaf for the same coin. Bailiffs weighed loaves in the street. A baker caught shorting his customers faced fines, or worse, and whichever bakers were caught in whichever town, on whichever cold morning a bailiff happened to be paying attention, were presumably thinking about the fine, not about scarcity as a concept. They were trying to get through a bad winter.

No philosopher had yet been consulted.

His own answer, distilled from several dense articles of theology, held that a price ought to track the labour and the ordinary risk a merchant bore in bringing goods to market. Very little else entered into it.

Take a storm that destroys half the houses in a town, and the price of timber doubling within the week. Aquinas held that raising the price to meet the sudden desperation of buyers was not shrewdness but fraud, since the disaster had added nothing at all to what it cost the seller to produce the wood. The seller’s costs had not moved. Only the buyer’s need had, and need, in Aquinas’s accounting, was no legitimate source of profit.

Aquinas had already read his Aristotle carefully by the time he reached this question. Aristotle had long since noted that abundance in one place lowers price while scarcity raises it, a mechanism the friar accepted readily enough when discussing merchants who bought goods where they were plentiful and carried them where they were dear. What troubled him was narrower, and harder to dismiss: the case in which a seller’s costs had not moved and only the buyer’s need had changed, exactly the shape of the storm and the timber. Two prices, identical in every visible respect, one earned by genuine effort and risk, the other earned merely by standing between a desperate person and the thing he could not do without.

This distinction mattered to him because he had inherited, by way of Aristotle, a sharper opposition still: between ordinary justice and what the Greeks called pleonexia, that plain appetite for more than one’s fair share, no more and no less. A price reflecting labour and risk belonged, in this scheme, to justice. A price reflecting nothing but another person’s desperation belonged to pleonexia, dressed up as commerce.

Later scholars at Salamanca spent a further three centuries refining the doctrine, disputing how much room custom ought to leave for a seller’s own judgement. One must admit they never fully abandoned the underlying suspicion that a fair price and a merely obtainable one were not always the same thing.

That unease has never quite gone away. It reappears today in any argument over pricing during a shortage, whatever name the argument happens to be wearing at the time.

One of its names today belongs to a modern trading floor, and it sits at an angle to nearly everything that floor assumes as self-evident. Contemporary economics begins from the observation that resources are finite while wants are not, and treats price as the mechanism through which that imbalance gets resolved, honestly or otherwise. Capital has competing uses, and liquidity has its own limits besides. Time, worse than either, cannot be borrowed from anyone at all, only spent, and every allocation of scarce capital to one purpose quietly forecloses another.

Under this account, the timber merchant raising his price after the storm commits no fraud at all. He is transmitting, accurately and immediately, the fact that timber has become scarcer than it was the day before, and thereby drawing more of it toward the town that needs it most. Higher prices, on this view, function as a signal, doing in an afternoon what a magistrate’s chalk board could never manage quickly enough.

Medieval towns asked their magistrates, who drew on a communis aestimatio, a common estimation built up through custom and public reputation over time. Nobody today would think to ask a magistrate. Modern finance, far more distrustful of magistrates than of markets, asks the price itself to make the judgement, trusting that thousands of buyers and sellers acting on scattered private information will together arrive at something more honest than any official could set by decree.

Not everyone, of course, can have what he wants at the moment he wants it, and both the medieval magistrate and the modern price exist mainly to make peace with that fact. Whether making peace with a thing is the same as answering it, neither has ever quite decided.

Contrary to what all this machinery might suggest, human beings left to their own instincts have never much cared for either solution. We borrow against income we do not yet have. We treat a comfortable present as evidence that a constraint has been solved, when it has only been postponed, and we are unusually skilled at persuading ourselves that whatever we cannot afford was never particularly desirable in the first place. Credit and leverage, and the whole considerable machinery of modern financial engineering, amount to centuries of accumulated cleverness aimed at making a single unpleasant fact feel, for a while, optional. It rarely stays that way for long.

When one constraint is finally loosened, by a new source of capital or a fresh appetite for risk, another tends to appear in its place before much time has passed, wearing a different name and catching almost everyone by surprise, however often the pattern has repeated itself before.

Nobody budgets for this in advance.

Modern finance has its own vocabulary for the same discomfort, considerably more technical than Aquinas’s and no gentler underneath it. A project is said to carry an opportunity cost equal to whatever return the same capital could have earned elsewhere, and a firm facing capital rationing must rank its possible uses of money and decline the ones that fall below the line, however sound any single proposal might look in isolation. Nobody at that table calls the outcome an injustice.

Fairness, reasonably enough, never entered into this arithmetic at all.

And yet it keeps forcing its way back into the law, if not into the textbooks. More than a dozen American states now carry statutes against what they call unconscionable pricing during a declared emergency, Alabama’s among the more explicit, triggered whenever a seller raises a price by twenty five percent or more over what the same goods fetched in the month before disaster struck. The mechanism is Aquinas’s, translated into legislative English almost without alteration: a benchmark price fixed before the emergency, and a presumption of wrongdoing once the gap between that benchmark and the new price grows too wide to explain by any rise in the seller’s own costs.

What Aquinas actually leaves modern price theory is a live question, one its equations tend to leave out entirely: whether the fairness of a price can be separated from the plain fact of what a buyer, in a given moment of need, happens to be willing to pay. Economists have mostly concluded that it cannot, and there is real force in that conclusion.

Such convenience would not have satisfied the friar. He would have wanted to know what became of the merchant’s conscience in the interval between the storm and the sale, a question modern finance has quietly stopped keeping on its books. The question was never answered. At some point nobody quite marked, it simply stopped being the kind of question a market was thought to owe anyone an answer to.

A pair of bronze weights, or whatever now serves in their place, still sits close to every price anyone pays. The argument about what makes that price fair has simply moved indoors, into rooms nobody thinks to call a market at all.