Aquinas and Business Ethics

A summary of a longer, article on Aquinas and Business Ethics
Saint Thomas Aquinas discusses the ethical aspects of business, in particular the ethical boundaries to profit as the aim of business, in his Summa Theologica.

Thomas talks about business ethics in the course of a discussion of fraud. Thomas is in the course of discussing the various virtues of the good man, and the vices opposed to them and so his remarks on business practice are incidental. His approach, as usual, is twofold.

  • He will cite the ancient philosophers, here represented by Aristotle and Cicero, in order to support his arguments on the basis of reason alone.
  • He will also cite Sacred Scripture, both New and Old Testament, and the Church Fathers, and here we may find some remarks of Saint Augustine, in order to show the same argument from the point of view of the doctrine revealed by God and accepted by faith. When Saint Thomas makes a point in ethical and moral matters, he always provides two approaches, a philosophical approach that is addressed to all reasonable men, and a religious approach, addressed to those who have faith.

Is it morally permissible to sell a thing for more than it is worth? Key principles cited by AquinasIs it allowed in business to sell something for more than it was bought?Can one separate natural exchange and wealth getting?

Is it morally permissible to sell a thing for more than it is worth?

The first word on this question comes from Scripture: Do unto others as you would have them do unto you (Matt 4, 12). No one wishes to pay more for a thing than it is worth, so they should also not sell a thing for more than it is worth. Thomas then cites Cicero, from his book De Officiis, which means On Duties. In this book, Cicero discusses many of the ethical aspects of public life, the ethics of holding office and doing business.

We must, therefore, take away all lying from business dealings; the seller will not engage a bogus bidder to run prices up, nor will the seller engage some other person to bid against himself to keep them down. (Cicero, De Officiis, book III, c 15)

Cicero continues, that buyer and seller should state their price out front when they meet. It is not wrong to pursue riches, but it is wrong to pursue riches merely for their own sake. Cicero writes:

For we do not aim to be rich merely for our own sakes, but for the sake of our children, our neighbours, friends and most of all, for our community. For the private fortunes of individuals are the wealth of the state.

Here Cicero strikes a fine balance. On the one hand, the man who seeks riches for their own sake is morally corrupt, but there is such a thing as a rich man who is primarily seeking the good of his community. The industry of the businessman is a virtue, the fact that he is resourceful and works hard, and his industry (or industriousness) provides benefits to others.

Key principles cited by Aquinas

There are four:

1. His most important point. There are two different kinds of exchange, two different ways of exchanging goods or doing business. Here Thomas cites Aristotle’s book The Politics in which Aristotle also distinguishes two types of exchange:

  • The first is natural exchange. Buying and selling, or the simple barter of goods, for the benefit of both parties. Both parties have a specific need and the transaction meets both of their needs fairly and equally.
  • The second type of exchange is wealth-getting. Selling goods for the purpose of obtaining wealth.

2. Something that has been brought in for the benefit of all should not be more expensive for one than for another, or a greater burden or inconvenience to some than to others. The same thing should be available equally to all, and for this purpose money serves as a common measure, and one thing will have a set price on the market. Aquinas seeks ‘equality of justice’ which can be illustrated as follows:

Let us suppose that if we were bartering, then one pair of shoes would be a fair trade for twenty loaves of bread. In that case, the price in money for a pair of shoes and the price for twenty loaves of bread should be the same, and otherwise one of the parties is charging too much and we have an instance of injustice.

3. To sell the same thing at a higher price to one buyer than to another is unjust and illicit. He gives an example:

Suppose a merchant has an article, and someone enters the store and for personal reasons is very attracted to this article. This article would bring the customer more delight than it would to others, or perhaps he has some very special need for the thing. The merchant would suffer no great loss in the sale, whereas the customer (at least in his own mind) would greatly gain. Can the seller charge a higher price, since at least to the customer the article is very valuable? Aquinas says no. The special value of the article to the buyer does not come from the seller, but from the condition of the buyer. No one should sell to another what is not his own. Thomas adds that the buyer who desires it so greatly may of his own free will offer something extra to the buyer.

4. It is immoral to sell anything for more than it is worth. The first index of what a thing is worth is basic human needs. If the thing meets no human need, it is not worth anything. For example, there should not be a special high price of water for thirsty people. The law tolerates instances where the price differs moderately from the value, but only if this is not excessive. Aquinas here would allow the state to intervene in the economy and we can imagine that he had in mind situations of monopoly and price-fixing.

Is it allowed in business to sell something for more than it was bought?

  • Aquinas would say that it is morally licit to sell a thing for more than it was bought, but with many moral restrictions. The basic idea is that the businessman whose primary work is to make goods available to people by his buying and selling is allowed to charge something extra in return for his service, and this is like any other earning. In charging for his service, he should have in mind meeting his own real needs and the needs of his household. Anything he charges beyond meeting his own needs and a reasonable fee for his labor is immoral.
  • This he bases on Aristotle’s definitions above on ‘natural’ exchange and ‘wealth getting’. When people do business in order to obtain what they need for life, they are doing something good and necessary, and this is in keeping with nature. When, however, people do business merely for the sake of profit, they are acting out of a disordered desire for profit that knows no limit, but tends to infinity.
  • Business considered merely as business has a certain baseness about because when we think of business as such, we do not think of it having any honest or necessary end. At the same time, profit (lucrum), does not imply anything vicious or contrary to virtue. By itself, then, profit is morally neutral, although we tend to look at it suspiciously. Nothing prevents a businessman from ordering his profit to some other honest and necessary good, and so profit is licit. When someone orders the moderate profit he seeks by business to the support of his household or to help the needy, or even when someone is in business for the benefit of the public, so that his country won’t be lacking in the things necessary for life, he is not seeking profit for its own sake, but as the rightful fee for his labor.
  • To apply this, many are morally outraged by what they see as predatory profits, and would like harsh laws to reclaim these profits, which they see as ill-gotten gains (witness the recent outrage at massive profits made by banks and bankers, even banks bailed out by Governments). On the other hand, businessmen will say that they benefit the public, and without their work, the community would not have what it needs.

Can one separate natural exchange and wealth getting?

It is very difficult to distinguish the two ways of doing business, and it is almost impossible to pass laws against predatory profiteering. Perhaps the best test would be an honest question. Suppose we were to ask a man in the shoe business what his purpose was. He could answer in two ways:

  1. to make a profit,
  2. to provide the people with the shoes they need.

The man who is primarily seeking profit also supplies shoes, and the man who is primarily seeking to provide a service makes a profit, but the goals are different. And it is entirely possible that we may distinguish which man is seeking which goal when we are more closely acquainted with the smaller details of their business practice.

The above is a summary based on the full article by Hugh McDonald
Here is a statement by the Catholic Church on the ethics of globalisation.

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