Thomas Aquinas and the Subjective Theory of Value

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Thomas Aquinas and the Subjective Theory of Value


Tags: History of the Austrian School of Economics, Subjectivism, Value and Exchange
03/17/2025 • Mises Wire • Federico Silva
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Thomas Aquinas is, without doubt, the greatest Roman Catholic philosopher and theologian when it comes to the depth of his thought and the degree of his influence. Although this is the case, it might seem strange at first to see him mentioned in relation to the history of the subjective theory of value. It was Rothbard nonetheless who first pointed out that the direct ancestor of the Austrian School is the Salamanca School, a Roman Catholic school of Scholastic philosophy and theology, rooted in and deeply indebted to Aquinas.
It is necessary to keep in mind that Aquinas was not doing legal theory, nor economics (which did not even exist as separate disciplines by then), but rather moral theology and theory of justice. Under that light, commerce only appears as a subordinate topic to justice. In spite of this fact, I shall prove that we can extract some valuable insights regarding the history of the theory of value from the Thomistic theory of right.
It is also somewhat useful, for the sake of the following discussion, to remember that the first Austrian. Carl Menger, was a lawyer, not a mathematician. The Austrians never forgot that the normative and positive aspects of our economic reality are deeply intertwined, although it was still necessary to distinguish between them. Normative disciplines, such as ethics or law, presuppose the validity of praxeological claims. Praxeology, as the general theory of human action, is therefore the real missing link between economics and law. This is my personal assessment that underlies everything I have to say about the relationship between Aquinas and praxeology.
The Thomistic Theory of Right and Praxeology
Aquinas definitely understood "right" as involving some kind of human action. Some even argue, like the Thomistic philosopher Massini Correas, that "right" belongs to the metaphysical category of action. Laws are not "right" proper, but are a certain "definition" of right (aliqualis ratio iuris), meaning that they establish certain rights and obligations, commands and prohibitions, to all the subjects involved, and therefore, they are a rule and measure of human acts.
In his theory of right (ius), Aquinas takes "right" as being synonymous to "what is just" (iustum), and defines it as "certain action (opus) adequate to another according to a certain mode of equality." He then differentiates between natural right and positive right. In another place, Aquinas explains that some positive laws are a direct application of natural law principles by way of mere logical deduction (per modum conclusionis), which is beyond the scope of this article. What I do want to focus on instead is his conception of "positive right" as the regulatory domain that natural law leaves human freedom to determine (per modum determinationis), which is by far the biggest area to explore.
Contrary to what some might expect, for Aquinas it is crystal clear that there is a positive right when "somebody considers himself satisfied if he receives a certain amount" (aliquis reputat se contentum, si tantum accipiat). In other words, the primordial criterion to determine the "fairness" of such commercial transactions, besides natural law itself, is the satisfaction of individual subjective preferences. This can be divided into two categories. There can be private right by private agreements (privatum condictum), when a contract is signed between private parties to have something "adequate" and "commensurate" to one another, or by public agreement (ex condicto publico), when all the people consents to having something adequate and commensurate to one another, or what the king (princeps) mandates.
I do not believe it is forcing the interpretation if we assert that there is a praxeological truth implicit in his notion of contracts. He says that there is a private right if A considers himself satisfied with what he receives from B and B considers himself satisfied with what he receives from A. This does not simply point to the subjective theory of value, but also to the ordinality of subjective preferences. Both give up something to receive another thing that is subjectively more valuable according to their individual preferences. They give up a good that they value less for something that they value more. There is a mutual consent in giving up something in order to go from a less satisfactory situation to a more satisfactory one.
Praxeological Aspects of "Fair Price"
When discussing "fair price" (iustum pretium), Aquinas even goes on to say, following Aristotle's Politics, that essentially "buying and selling seem to have been introduced for the common benefit (communi utilitate) of both [parties], namely when one desires [indiget] the thing of the other, and vice versa." Unfortunately, but not unexpectedly, he is completely blind to the law of supply and demand, not only because it was not yet discovered at the time, but because what he strives to prove in the referred section is that selling overpriced goods is a violation of "commutative justice" (i.e., commercial fairness). The praxeological element to "fair price" is mainly that price in general, and fair price in particular, is always established by the common utility of market participants.
Exchanges, Aquinas argues, "should not be more of a burden to one party than to another," because there should always be a "proportion" (aequalitas, lit. "equality") between the quantity of the thing offered and its respective price. This might seem strange for people coming from a common law context, where freedom of contract reigns everywhere (at least in theory), and judges usually do not interfere with the content of contracts, even when one of the parties evidently made a "bad deal."
In the civil law tradition, nevertheless, it is customary for judges to consider "inequality of consideration" in contract law, especially when the initial conditions were unilaterally modified, making the contract disproportionately more burdensome for the party considered "weak." With this fact in mind, we have to distinguish what an exchange is, economically speaking, from what it should be from a moral or legal criterion. In other words, fair price for Aquinas is related not only to subjective preferences but to justice and common good as well. But the fact stands that the "common utility" in the exchange is defined mostly by the subjective preferences of each party, as we have seen above. This is an important praxeological precedent found in proto-market thought.
The Bottom Line
The important takeaway here is that Aquinas says that I have a right to some other good when I agree with someone else to exchange some good of mine for some good of theirs, but only if both of us feel satisfied by the exchange, which matches the Austrian definition of market exchange almost verbatim. It is remarkable to go back to a 13th-century thinker and find insights reminiscent of modern praxeology.
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