HAVE YOU BEEN CHARGED A JUST PRICE?

HAVE YOU BEEN CHARGED A JUST PRICE?

After yet another Christmas and New Year mad rush largely driven by a culture of consumerism more than need, it is time now to reflect on the value of your purchases. There will be many going through depression and buyer’s remorse as January brings about real needs – school fees, uniform, books and many more. Perhaps it no longer matters what you bought – what’s done is done, but the question becomes ‘did you buy whatever you bought at a just price?’. Like the great American poet Propaganda once proclaimed, “I point at elephants in the room…!”, this writer also hides behind that tangible bravery and calls out “family discounts”. The most characteristic feature of this particular elephant is that it is merely a conscience crying to break from cages of guilt. One has to ponder thoroughly and deeply about the price they would have paid had they not complained. Our family, friends and foes have run flourishing businesses by just getting their pricing right. This writer borrows largely from The Economics Book by Kishtainy et al (2012) to do justice on the concept of a just price. We often define a just price as that thin line between greed and ambition. However, the concepts of greed or rip-offs are non-existent in prevailing economic theory both overseas and on our very shores. Morals aside, the price of anything is simply the market price – the price people are prepared to pay. Thus, pricing is simply an automatic function of demand and supply. Your complaining is an indication that demand is low and the “family discount” is the price dropping to increase demand. When prices are low, demand is high ceteris paribus. And there is that economic theory! Business people or entrepreneurs, if you will, who appear to be overcharging are simply pushing the price to its limits. If they push their price further than people are prepared to pay, people stop buying, so the entrepreneurs are compelled to bring down their prices. Market economists consider the marketplace to be the only way to establish price, as nothing – not even gold – has an intrinsic value. Nothing has value for its own sake as value is relative and it
changes according to perception. It is imperative to note that the marketplace is not one tiny establishment, but it may be an entire country, with demarcations determined by accessibility (transport, communication and technology). The idea that the marketplace should set prices seems to contrast sharply with the view expressed by Sicilian scholar Thomas Aquinas in his Summa Theologica, one of the first studies of the marketplace. For Aquinas, a scholar monk, price was deeply a moral issue. He recognised avarice as a deadly sin, but at the same time he saw that if an entrepreneur is deprived of the profit incentive he would cease to trade, and the community would be deprived of goods it needed. Aquinas concluded that an entrepreneur may charge a ‘just price’, which includes a decent profit, but excludes excessive profiteering, which is sinful. This just price is simply the price the buyer freely agrees to pay, given honest information. The vendor is not obliged to make the buyer aware of facts that might lower the price in the future, such as the shiploads of cheap spice due to dock shortly. The issues of price and morality are very much alive today, as both economists and the public discuss ‘the just price’ of a banker’s
bonus or the minimum wage. Free-market economists, who reject interference in the market, and those who advocate government intervention – whether for narrow economic or moral reasons – continue to argue about the rights and wrongs of imposing restrictions on prices. And there you have it, we perhaps should still be charmed and honoured at the hint of a “family discount”.

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