There is Such a Thing as a Just Price

Tim Worstall, over at Forbes, is one of my favorite writers.  I generally find myself in agreement with him, and when I don’t it causes me to reevaluate my thoughts.  However, there is one item I wish to disagree with him on.  The other day, he wrote:

Also perhaps, to wonder at how various left liberals are still making the mistake that a medieval saint was making near a millennium ago, that a Greek philosopher was making near three millennia ago. For the truth is that there just isn’t any such thing as a “just price.” There’s only one that clears that market and any number that don’t.

I agree that there is no one just price, but I disagree that there is no such thing as a just price.  The just price is whatever price is agreed upon by the parties involved.  If a man agrees to sell his labor for $7/hr, and another decides to buy it for that price, then $7/hr is just.  Neither’s rights were violated, no injustice has been visited upon them, so the price is just.  But, if one man held a gun (either literal or proverbial) to another’s and said “you will work for $7/hr,” then that price now becomes unjust, since the laborer’s rights were violated; an injustice has been visited upon him.

13 thoughts on “There is Such a Thing as a Just Price

  1. You’ve got no problem with the universal basic income that he advocates at the end? I was rather stunned myself, but I’m not familiar with his work. Though I know he’s not alone. I really can’t believe that some (ostensibly) free marketers support such a thing.

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        • Haha!

          It’s not an ideal system, and I see it more as a stepping stone away from welfare. My biggest question is how to handle those who might fall through the cracks of a market system: the invalids, the mentally ill, etc

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          • What about good old-fashioned charity? You know, that thing that has been largely crowded out by the State. Scale the State back severely and we’ll have so much wealth that it won’t be that big a problem (including, of course, central banking whose inflationary bent has stolen so much of the productivity gains of the last century from society and funneled them to the crony class). Business will flourish and entrepreneurism will make a real come back. Mutual aid societies, etc.

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            • While the state has crowded out much of charity, I don’t know if charity alone could immediately solve the issue. Charities tend to suffer from the free-rider problem, where too few end up supplying funds because everyone else wants someone to foot the bill.

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            • Although…I suppose an alternative would be to have charitable giving included in a person’s income. That way, the cost to the state would be lower, the person still gets their benefits, and charitable giving would still be encouraged.

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      • Jon

        While the state has crowded out much of charity, I don’t know if charity alone could immediately solve the issue.

        Ironically, in my experience, it seems to be those who are most adamant about the need for government redistribution to ensure the welfare of the needy, who are the most giving of their time and money to charitable organizations. It’s never clear why they believe they are unique in some way, and tht others.

        My biggest question is how to handle those who might fall through the cracks of a market system: the invalids, the mentally ill, etc

        How were they handled before the state was involved? Relatives, mutual aid societies and other charitable organizations, neighbors, friends, concerned members of the community, etc. THAT wasn’t an ideal system either, but it functioned fairly well.

        It’s true that those depending on charity may not have been very comfortable in their lives, but in earlier times very few people lived their lives in what we would now consider comfort.

        Why don’t you think the amount of voluntary help from compassionate individuals and groups wouldn’t be the correct amount? How is the correct amount determined? Does someone with the ability to take from others by force know the correct amount?

        Obviously there is no compassion or charity involved in helping those in need with resources not given willingly.

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        • You and Troy are asking good questions. I hope, once this weekend is over, I’ll have some time to answer them in depth.

          I do want to address one thing: I’m not talking about a “correct” amount. I’m talking about “enough.” (in my opinion, there is no such thing as too much charity). The issue here is the free-rider problem. People may not give enough in a town to help the homeless because they assume others will give. Minimize one’s costs for the maximum benefit

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  2. Jon, you’re absolutely right. A just price can only be determined by the parties to an exchange, and I think Worstall is referring to some imaginary, objective just price that third parties would consider is just, but there ‘s no such thing.

    Let me reword one of your statements slightly and tell me if you still agree.

    But, if one man held a gun (either literal or proverbial) to another’s and said “you will work for $7/hr,” “you will hand me some of your earnings so I can provide someone else with a basic income.” then that taking now becomes unjust, since the laborer’s rights were violated; an injustice has been visited upon him.

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