COMMERCE. - By c. is meant the human activity directed toward the exchange of consumer goods and factors of production. The economic basis of individual exchange lies in the differing valuation of the same goods by the two parties to the exchange, a difference that depends on needs and quantities (theory of marginal utility).
I. SOCIAL ECONOMICS. - The economic basis of exchanges between different countries is to be sought in the comparison between the cost of the commodity exported by country A to country B and the cost that the commodity received in exchange would have had for A if it had been produced there (the theory of comparative costs). The justification of commerce lies in the mutual advantage of exchanges; it performs an economic function because it increases the utility of the goods possessed and is therefore productive. The exchange of good A for good B may be effected through money. In this case there are two distinct acts of exchange: good A for money (sale); money for good B (purchase).
The act of exchange, whether direct or effected through money, may be carried out for the purpose of consumption or with a view to a subsequent exchange. In the latter case the increase in utility is transformed into a monetary gain consisting of the difference between the cost price and the selling price: such gain is commercial profit.
Commerce transfers goods through time and space, bringing the means capable of satisfying needs closer to those needs, and performs an intermediary function between producer and consumer, assuming part of the risks of production. Risk is an inseparable element of every act of exchange, and its compensation is an integral part of commercial profit.
Commercial profit was not always justified: certain economic theories (physiocracy, the classical school, the Marxist school), proceeding from an objective basis and from an inadequate notion of good, regarded as productive only those economic activities which quantitatively increase the product (agriculture) or transform its form (industry). Today commercial activity is generally justified, both from the economic and the ethical point of view, insofar as it performs an economic function useful to the community and is, like every form of economic activity, an expression of free initiative and thus of human personality.
This does not exclude the possibility that, in a regulated economy directed toward the attainment of the human ends of society, commerce may be subject to regulatory intervention. Such intervention must aim: a) to prevent pathological manifestations of commercial activity, such as the withholding of goods from the market in order to increase prices (v. INCETTA); b) to ensure that windfall profits arising in particular circumstances in which the supply of goods is necessarily limited (poor harvests, wartime economy, etc.) are absorbed for the benefit of the community, or eliminated by an appropriate price policy. Examples of such regulatory interventions in the commerce of certain goods are found in the fixing of price ceilings, that is, official prices below the equilibrium price. A price ceiling, by fixing a price at which demand exceeds the available supply of goods, must be accompanied by rationing. Money too may be an object of exchange and give rise to a commercial activity, normally carried on by banks. In the modern economy, characterized by a high degree of division of labour, no individual and no nation produces everything it consumes: the close economic interdependence resulting from this makes the activity of exchange ever broader and more complex, and it is now inseparable
from the production of goods. Some economists (Bücher) have characterized the evolution of the economy on the basis of the extent of commerce. They distinguish three economic phases: a domestic or closed economy (up to the 11th century), an urban economy (up to the 16th century), and a national economy (up to the present day), to which respectively correspond itinerant commerce, market commerce, and fixed commerce. It may be objected to this theory that the various forms of exchange coexist and that it is impossible to reduce the multiple and complex commercial phenomena within the limits of a necessary order of development.
Commerce is divided into wholesale and retail commerce, according as exchange takes place with a view to a further exchange or to consumption. Important because of the problems it entails is the distinction between domestic commerce, if exchange takes place between sellers and buyers in the same country, and international commerce, if exchange takes place between producers and consumers in different countries. There is transit commerce when goods enter through one frontier in order to be transported out through another. International commerce is divided into import and export commerce, according as goods are purchased from abroad or sold abroad. The statement of payments which a country must make abroad for imports and of receipts from abroad for exports is called the trade balance. The statement of payments abroad and receipts from abroad on any account is called the balance of payments. Besides import and export items, it includes payments and receipts due to other causes (invisible items), such as tourism, the investment of capital abroad or of foreign capital in the country, freight charges, remittances from emigrants, etc. The development of commerce has led to the formation of a particular discipline which studies its organization from the standpoint of business economics: commercial technique. It analyses the various elements affecting the conduct of domestic and international commerce. Among these may be mentioned: advances in productive technique, means of transport, the legal order, and the spread of commercial culture. The development of commercial technique has made particular cultural training necessary for those who are to engage in commercial activities. Acts of commerce have given rise to one of the broadest autonomous bodies formed within the legal order: commercial law. In Italy the first Commercial Code was published in 1865; it was repealed on 10 Jan. 1883 with the entry into force of the new Commercial Code. With the reform of the Codes in 1942, the laws governing commercial activity became part of the unified Civil Code.
II. HISTORY. – The first form of exchange, in what might be called the pre-commercial phase, consists of barter and the capital gift. Herodotus (IV, 12) describes for us a typical form of barter, later observed by explorers and pioneers among numerous primitive tribes: silent barter; this made exchange possible even between hostile or distrustful tribes, avoiding any direct contact between them. Primitive economy nevertheless remains a closed economy; trade does not perform an essential function within it, and the normal means of procuring goods that cannot be produced locally remains robbery.
To find genuine commercial activities, we must go back to the earliest civilizations: the Assyrians and Babylonians, the Egyptians, and the Phoenicians. These peoples introduced the use of money, weights, and measures, and established the first rules governing the peaceful conduct of trade. The Phoenicians, above all, acquired a true and exclusive dominion over international trade, favored in this by their geographical position, which made them the natural intermediaries between East and West. Their commercial predominance lasted
approximately until 500 B.C. The development of Greek trade was likewise stimulated by geographical position, the poverty of the soil, and the natural aptitude of the inhabitants, and was characterized by a particularist and liberal imprint. Great importance was assumed by the colonies spread along all the Mediterranean coasts and economically linked to the mother country by continuous currents of traffic. Carthage was Greece’s rival in Mediterranean trade; it gathered around itself the Phoenician colonies of the western Mediterranean, binding them together with a dense network of commercial treaties. Unlike the Greek policy, Carthaginian commercial policy tended to establish a centralized system with a monopolistic character: it provides us with the first example of an imperialistic commercial policy.
The simultaneous destruction of Carthage and Corinth (146 B.C.) marks the beginning of Roman economic predominance, which represents the period of the broadest and most liberal economy of the ancient world. Through the political and economic unification brought about by its magnificent road network, and through the formation of large population centers and substantial movable capital, Roman rule made possible considerable economic specialization and hence extensive commercial traffic.
With the fall of the Roman Empire, Europe entered a period of decline in trade, which was reduced to the small local market between the city and its suburb. As in the spiritual sphere, so too in the economic sphere, it was the Church that undertook the slow work of reorganization. Around the diocese, in communication with a good number of parish churches, a center of social life was reconstituted. The bishop was the authority who guided the new relationships, safeguarding their regularity and good faith. It was the dioceses and parish churches that obtained from the declining imperial authority the privilege of administering markets and fairs, which restored life to regional and interregional traffic. From the twelfth century onward, all Western cities had shops and merchants who, despite the difficulties, traveled the routes of the Levant and the Mediterranean and made their way to Germany, France, and Flanders.
With the revival of the exchange economy, the foundations were laid for the communal movement, and the golden age of Italian trade began (the twelfth, thirteenth, fourteenth, and fifteenth centuries). The merchant was the central figure of the economy of the late Middle Ages, and the great Italian companies (Medici, Bardi, Peruzzi) directed the commerce in goods and money throughout Europe, amassing enormous fortunes. The closure of the routes of communication with the East, resulting from Turkish expansion, and the geographical discoveries initiated a new phase in the history of trade: the oceanic phase. Commercial primacy passed to the countries of the Atlantic: Portugal and Spain in the sixteenth century, the Netherlands in the seventeenth, and France and England in the eighteenth. The great routes of traffic opened toward the Americas, and Italy would never again succeed in regaining a leading position. A developed industry, a vast colonial empire, and refined commercial techniques gave Great Britain, at the end of the last century, a decisive commercial predominance that would make London the world’s foremost market for goods and capital. In the early years of this century, Germany underwent rapid economic expansion, based on the protectionist system. The period between the two world wars saw an intensification of protectionism and of the struggle to conquer outlets for goods. European states sought increasingly to direct their international trade flows, subordinating them to political directives, while the United States increased its economic potential to such an extent that it became the world’s leading export market. Present-day domestic and international trade is characterized, on the one hand, by a desire for freedom, natural after the constraints of the long wartime period, and, on the other, by the need to assist Europe’s economic reconstruction through a plan of international agreements and to achieve, through national economic-policy plans, greater social justice.
A. Marshall, Industria e c. (Nuova collana di economisti, 7), Turin 1934; P. Bonfante, Storia del c., Turin 1946. Francesca Duchini
III. MORAL OBLIGATIONS
The term c. is understood in a broad sense as referring to all activity based on buying and selling, which forms part of the intricate complex of activities through which the circulation of goods and values is effected.The theology of the High Middle Ages was not favorable to c. practiced for the sole purpose of profit. With Scholasticism (Sum. Theol., 2²-2⁶, q. 77, a. 4), the following criterion began to gain ground and remained in force for many centuries: modest profit may be honest; unlimited profit, although not in itself illicit, requires a motive to justify II.
In the eighteenth century, theologians, prompted by the development attained by c., made a greater effort to understand its legitimacy and found that profit is a kind of stipendium, requiring no other title to justify II. The medieval aversion to c. is justified by the dangers that c. presents, such as the frauds so frequent in this matter, violation of the just price, and the pursuit of profit not for a licit purpose, but solely for the purpose of immense enrichment. In contrast with the rigorism of the Middle Ages, the judgment that the public of our century passes on c. is excessively broad.
From the Catholic point of view, it is impossible to give an overall judgment on all commercial activity, because it consists not of a single act, but of a set of acts that may concern the entire moral field. The first question to be resolved is that of the binding force of commercial laws. The principle of the binding force of civil laws applies, and commercial laws are likewise subsumed under II. Now, as is well known, civil laws, subject to the necessary exceptions and reservations (v. LEGGE), regularly bind in the internal forum, even if the legislator does not say so, especially those that create rights, obligations, and means of proof, as is precisely the case with commercial laws. In modern times, someone has wished to adopt a new division in this regard, which may be accepted as more clarifying, distinguishing also from the moral point of view, in this field, between imperative commercial laws (which concern possible rights of third parties) and suppletive laws (which apply in the silence of the contracting parties): the former bind in conscience «ante sententiam iudicis»; the latter bind in conscience «ante vel post sententiam iudicis» or do not bind at all, according as the parties intended or did not intend to refer to them (cf. G. Bicchierai, Il mondo degli affari e la morale, Brescia 1935, pp. 46-51).
Having established this, since the law cannot eliminate all abuses, it will be useful, alongside the obligations it imposes, to recall all the moral principles governing contracts (v. CONTRATTO), and in particular the contract of purchase and sale (v.), which lies at the basis of c., together with the rules governing the just price (v. PREZZO). With regard more directly to commercial activity, certain specific principles of a moral order apply:
1) the principle formulated in the well-known English aphorism, Business is business (business is business), cannot be accepted; by this principle one would elevate one’s own advantage into the exclusive criterion, abstracting from every other concern. This criterion presupposes that the commercial world is a world unto itself, withdrawn from the moral law; 2) therefore, first of all, commercial activity conducted in connection with dishonest or downright shady dealings is not permissible, e.g. the trafficking of women; 3) it is also morally forbidden to employ illicit means to further one’s own c., as, for example, by resorting to lies, violence, or the ignorance or misery of others (black market). advertising (v.) carries great weight in the use of such means: through it a product is launched in order to make it acceptable to the public and bring about its sale. In this sphere, the tendency to use advertising to stimulate men’s less noble instincts, thereby drawing the passer-by’s attention more forcefully to particular advertising billboards, is certainly condemnable; 4) commercial activity, as is well known, may be conducted under a system of free competition or under a monopoly. Competition under a system of free contracting performs a beneficial and fruitful function in the private economy, but it must be conducted without exceeding the limits set by justice (unfair competition) and charity. The problem of the limits of competition is a very delicate one, since multiple and complex injuries may occur. Civil law often intervenes here as well, and the limits established by it in the interest of individuals and of the national economy must be observed (cf. in this regard art. 2595 of the Italian Civil Code and subsequent articles). Typical examples of unfair or illicit competition include acts of confusion and denigration, and slavish imitation. Regarding a private monopoly, it must be observed that it is not in itself illicit, provided that the price is not raised above what is judged to be the highest price and that other merchants are not prevented from buying and selling. Merchants who conspire to sell only at the highest price, however just it may be, sin against charity, but probably not against justice, unless one of them is fraudulently prevented from selling at a lower price. 5) In the demand for and supply of goods by merchants, it must be observed that, although the economic laws of demand and supply affect economic behavior and are therefore in a certain sense constitutive, they do not do so to the point of removing those engaged in commerce from the higher demands of the ethical order. 6) In economic circumstances, the conscious regulatory action of individual operators, where possible on the part of large merchants, must never lose sight of the common good in favor of individual advantage. 7) Toward their employees, merchants have precise duties, both in promoting insurance and in creating good working conditions, entrepreneur (v.); 8) smuggling, both internal and external, insofar as it violates laws issued by legitimate authority, is undoubtedly also morally illicit, although a distinction is still made in this regard between fiscal laws, which bind sub poena, and other moral laws, which bind sub culpa. In addition to restrictions on c. within the national sphere, there are others in international law as well. 9) It is commonly admitted, for example, that a state of war imposes on States and on the subjects of belligerent States many restrictions on the freedom of c. However, since such restrictions often entail serious economic harm, the prohibition against conducting c. with belligerents must be established solely with regard to the necessities of war, and within these limits it also binds in conscience. 10) Every kind of fraud must be avoided in commercial transactions. Merchants may licitly buy and sell goods that can be used for good or evil, but not goods that by their nature admit only of a bad use. 11) In buying or selling, merchants may licitly employ occult compensation only: a) if they are unjustly compelled to sell, or have through error sold, goods below the just price; b) if they cannot otherwise, without serious inconvenience, obtain payment of a true and certain debt. 12) In addition to the obligations of commutative and legal justice, merchants must not neglect to fulfill the obligations of the precept of charity, to the extent incumbent upon each person and according to the goods possessed and the circumstances. 13) Finally, the pursuit of profit must be subordinated to the supreme purpose of life.
The end of economic man, Nuova York 1939; F. Lantini, Il mondo degli affari e la morale cristiana, in VJ Corso Cristologico, Roma 1942, pp. 225-42; I. Aspiazu, La moral del hombre de negocios, Madrid 1944. Pietro Palazzini
IV. CANON LAW
The CIC takes commerce into consideration, in addition to doing so indirectly in the norms concerning contracts (v.) and, in particular, loans (v. USURY), expressly in can. 142, which prohibits clerics from engaging, even through an intermediary, in negotiationem vel mercaturam for their own or another’s advantage.This norm is understood to prohibit clerics not only from engaging in commerce in the proper sense (thus including exchange and stock-market transactions), but also from engaging in industry whose object is property belonging to others or which makes use of the labor of others. The purchase of bonds issued by commercial companies is not, however, considered prohibited to clerics, nor generally is the purchase of shares (if, however, the purchase is made for the purpose of speculating on resale, its lawfulness may be questioned).
A cleric who violates this prohibition must be punished by the Ordinary according to the gravity of the offense (can. 2380).
Similar, more or less specific, prohibitions are found from the earliest centuries of the Church, especially in many particular synods of the fourth to eighth centuries, whose texts (often imposing severe penalties) are reproduced in part in the Decree of Gratian (cf. c. 26, D. LXXXVI; c. 1. 2. 9. 10, D. LXXXVIII; C. 1. 3. 8, C. XIV, q. 4; C. 1. 3, C. XXI, q. 3) or in collections of decrees.
The Council of Trent (sess. XXII, c. 1; sess. XXIV, c. 12 de ref.) reaffirmed the prohibition, while mitigating the penalties.
For other subsequent canonical texts, cf. the sources cited in the notes to cann. 142 and 2380 of the CIC. Pio Ciprotti