Commerce

COMMERCE. - By commerce is meant human activity directed toward the exchange of consumer goods and factors of production. The economic foundation of individual exchange lies in the difference in valuation of the same goods by the two parties to the exchange, a difference that is a function of needs and quantities (theory of marginal utility).

I. SOCIAL ECONOMY

The economic foundation of exchanges between different countries must be sought in the comparison between the cost of the goods exported from country A to country B and the cost that the goods obtained in exchange by A would have had if they had been produced there (theory of comparative costs). The justification of trade lies in the mutual advantage of exchanges; it has an economic function because it increases the utility of the goods possessed and is therefore productive. The exchange of good A for good B can be carried out 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 through money, can be carried out with a view to consumption or with a view to a subsequent exchange. In this second case the increase in utility is transformed into a monetary gain given by the difference between the cost price and the selling price: this gain is commercial profit.

Trade transfers goods through time and space, bringing the means suited to the satisfaction of a need closer to that need, and it performs an intermediary function between the producer and the consumer, assuming a 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), starting from an objective basis and from an insufficient notion of good, considered productive only those economic activities that increase the product quantitatively (agriculture) or transform its form (industry). Today commercial activity is unanimously justified, both from the economic and from the ethical point of view, inasmuch as it performs an economic function useful to the community, and is, like every form of economic activity, an expression of free initiative and therefore of the human personality.

This does not exclude that in a regulated economy, with a view to the attainment of the human ends of society, trade may be the object of disciplinary intervention. The intervention must aim: a) at avoiding the pathological manifestations of commercial activity, such as the withholding of goods from the market with a view to an increase in prices (v. INCETTA); b) at ensuring that the windfall profits created in particular circumstances in which the supply of goods is necessarily limited (poor harvests, war economy, etc.) are absorbed in favor of the community, or canceled by an appropriate price policy. There are examples of such disciplinary interventions on the trade in certain goods in the fixing of calmieri, that is, of administered prices lower than the equilibrium price. The calmieri, by fixing a price to which a demand greater than the available supply of goods corresponds, must be accompanied by rationing. Money too can be the object of exchange and give rise to a commercial activity, normally exercised by banks. In the modern economy, characterized by a high degree of division of labor, no individual and no nation produce everything they consume: the close economic interdependence that results makes the activity of exchange ever broader and more complex, an activity that is by now inseparable from the production of goods. Some economists (Bücher) have characterized the evolution of the economy on the basis of the extent of trade. They distinguish three economic phases: a domestic or closed economy (up to the 11th century), an urban economy (up to the 16th century), a national economy (up to our own day), to which respectively would correspond itinerant trade, market trade and fixed trade. To this theory it may be objected that the various forms of exchange are coexistent and that it is impossible to reduce the many and complex commercial phenomena within the limits of a necessary order of development.

Trade is distinguished into: wholesale trade and retail trade, according to whether the exchange takes place with a view to a further exchange or with a view to consumption. Of relevance for the problems it entails is the distinction between internal trade, if the exchange takes place between sellers and buyers of the same country, and international trade, if the exchange takes place between producers and consumers of different countries. There is transit trade when the goods are brought in through one frontier in order to be transported out through another. International trade is divided into import and export trade, according to whether the goods are purchased from abroad or sold abroad. The statement of the payments that a country must make abroad for imports and of the receipts from abroad for exports takes the name of balance of trade. The statement of payments abroad and of receipts from abroad on any account takes the name of balance of payments. It comprises, besides items of imports and exports, also payments and receipts due to other causes (invisible items) such as tourism, the employment of capital abroad or of foreign capital in the country, freight charges, remittances of emigrants, etc. The development of trade has led to the formation of a particular discipline that studies its organization from the economic-business point of view: commercial technique. It analyzes the various elements that influence the conduct of internal and international trade. Among these may be indicated: the progress of productive technique, the means of transport, the legal order, the diffusion of commercial culture. The development of commercial technique has made necessary a particular cultural preparation for those who must exercise commercial activities. Acts of trade have given rise to one of the broadest autonomous formations that have been constituted within the ambit of the legal order: commercial law. In Italy the first Commercial Code was published in 1865; it was abolished on 10 Jan. 1883 with the entry into force of the new Commercial Code. With the reform of the Codes of 1942 the laws regulating commercial activity once again 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 gift-exchange. Herodotus (IV, 12) describes for us a typical form of barter, which was later encountered by explorers and pioneers among numerous primitive tribes: silent barter; this made exchange possible even between hostile or distrustful tribes, preventing them from coming into contact. Primitive economy, however, remains a closed economy; commerce does not fulfill an essential function within it, and the normal way of procuring goods that cannot be produced remains plunder.

To find truly commercial activities we must go back to the earliest civilizations: the Assyrians and Babylonians, the Egyptians, the Phoenicians. These peoples introduced the use of money, weights and measures, and established the first rules governing the peaceful conduct of trade. Above all the Phoenicians acquired a veritable exclusive dominion over international commerce, favored in this by their geographical position, which made them the natural intermediaries between East and West. Their commercial predominance lasts until about 500 B.C. From their geographical position, the poverty of their soil and the natural aptitude of their inhabitants was likewise fostered the development of the commerce of the Greeks, characterized by a particularist and free-trade stamp. Great importance was assumed by the colonies scattered along all the Mediterranean coasts and economically linked to the mother country by continuous currents of traffic. The antagonist of Greece in Mediterranean commerce is Carthage, which gathers around itself the Phoenician colonies of the western Mediterranean, binding them with a dense network of commercial treaties: unlike the Greek one, Carthaginian commercial policy tends to constitute a centralized system with a monopolistic character: it gives us the first example of an imperialistic commercial policy.

The contemporaneous 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. With the political and economic unification brought about by the magnificent road network, with the formation of great centers of population and of substantial mobile capital, Roman domination made possible a notable economic specialization and therefore a vast commercial traffic.

With the fall of the Roman Empire there came in Europe a period of decline of commerce, which was reduced to the small local market between the city and its suburb. As in the spiritual field, so too in the economic field it was the Church that carried out a 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 is the authority that guides the new relationships, safeguarding their regularity and good faith. It is the dioceses and the parish churches that obtained from the declining imperial authority the privilege of operating markets and fairs, which restored life to regional and interregional traffic. From the 12th century onward all Western cities have shops and merchants, who, despite the difficulties, travel the routes of the Levant and those of the Mediterranean and make their way to Germany, France and Flanders.

With the reborn exchange economy the foundations of the communal movement were laid and the golden age of Italian commerce opened (12th, 13th, 14th and 15th centuries). The merchant is the central figure of the economy of the late Middle Ages, and the great Italian companies (Medici, Bardi, Peruzzi) direct the threads of Europe's commerce in goods and money, creating enormous fortunes for themselves. The closing of the communication routes with the East, an effect of Turkish expansion, and the geographical discoveries begin a new phase in the history of commerce: the oceanic phase. Commercial primacy passes to the Atlantic countries: Portugal and Spain in the 16th century, Holland in the 17th, France and England in the 18th. The great trade routes open toward the Americas, and Italy will no longer succeed in reconquering a leading position. A developed industry, a vast colonial empire and a refined commercial technique gave Great Britain, at the end of the last century, a decided commercial preponderance that would make London the world's foremost market for goods and capital. In the early years of this century Germany experienced a rapid economic expansion, based on the protectionist system. The period between the two world wars saw an accentuation of protectionism and of the struggle for the conquest of outlet markets. The European states sought to direct their own currents of international traffic ever more tightly, subordinating them to political directives; while the United States increased their economic potential to such an extent as to become the world's leading exporting market. Present-day internal and international commerce is characterized on the one hand by a desire for freedom, natural after the constraints of the long period of war, and on the other by the necessity of assisting, through a plan of international agreements, the economic reconstruction of Europe and of achieving, through national plans of economic policy, a better social justice.

Francesca Duchini

III. MORAL OBLIGATIONS

The term commerce is taken here in a broad sense, to mean all that activity based on buying and selling which is inserted into the intricate complex of activities through which the circulation of goods and values is effected.

The theology of the early Middle Ages was not favorable to commerce practiced for the sole purpose of profit. With Scholasticism (Sum. Theol., 2²-2⁶, q. 77, a. 4) this criterion made its way, and it remained for many centuries: a modest profit can be honest; profit without limit, while not being illicit in itself, needs a motive to justify it.

In the 18th century theologians, spurred by the development commerce had taken, made a greater effort to understand its legitimacy and found that profit is a quasi-stipendium without need of any other title to justify it. The aversion of the medievals to commerce is justified by the dangers that commerce presents, such as the frauds so frequent in this matter, the violation of the just price, the pursuit of profit not for a lawful end but solely for the purpose of enrichment in immensum. Compared with the rigorism of the Middle Ages, the judgment that the public of our century passes on commerce is excessively broad.

From the Catholic point of view it is impossible to give an overall judgment on all commercial activity, because it is constituted not by a single act but by a set of acts that can touch the entire field of morality. The first question to be resolved is that of the obligation of commercial laws. The principle of the obligation of civil laws holds, to which commercial laws are also reduced. Now, as is well known, civil laws, with the due exceptions and reservations (v. LEGGE), regularly oblige in the internal forum, even if the legislator does not say so, especially those that create rights, obligations, means of proof, as is precisely the case with commercial laws. Some in modern times have wished to adopt a new subdivision in this regard, which can 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 ones (which apply in the silence of the contracting parties): the former oblige in conscience «ante sententiam iudicis»; the latter oblige in conscience «ante vel post sententiam iudicis» or do not oblige at all, depending on whether or not the parties intended to refer to them (cf. G. Bicchierai, Il mondo degli affari e la morale, Brescia 1935, pp. 46-51).

This premised, since the law cannot remove all abuses, it will be opportune to recall alongside the obligations emanating from it all the moral principles that govern contracts (v. CONTRATTO) and in particular the contract of buying and selling (v.), which lies at the basis of commerce, together with the norms that govern the just price (v. PREZZO GIUSTO). As regards more directly commercial activity, certain specific principles of a moral order hold:

1) The principle that found its formulation in the well-known English aphorism Business is business cannot be accepted, by which one would wish to elevate one's own advantage into an exclusive criterion, disregarding every other concern. This criterion presupposes that the commercial world is a world unto itself, removed from the moral law; 2) and therefore, first of all, commercial activity is not permitted for dirty or indeed shady business, for example the white slave trade; 3) it is moreover morally forbidden to avail oneself of illicit means to favor one's own commerce, as for example would be to make use of lies, violence, the ignorance or misery of others (black market). Today in the use of means, advertising (v.) carries great weight, by which a product is launched in order to make it acceptable to the public and to determine its sale. In this sector that tendency is certainly condemnable which seeks to stimulate by means of advertising the less noble instincts of men, so as to draw with greater force the attention of the passerby to certain advertising posters; 4) commercial activity, as is well known, can be carried on under a regime of free competition or under a regime of monopoly. Competition under a regime of free contracting exercises a beneficial and fruitful function in the private economy, but it must be carried on without overstepping the limits marked by justice (unfair competition) and by charity. The problem of the limits of competition presents itself as quite delicate, since multiple and complex injuries can occur. Civil law often intervenes here too, and the limits set 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 following articles). As typical examples of unfair or illicit competition, one should recall acts of confusion and denigration, and servile imitation. As for the regime of private monopoly, it must be observed that it is not illicit in itself, 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, 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 on the part of merchants, it must be observed that although the economic laws of supply and demand affect economic behavior and are therefore in a certain sense constitutive, they are not so to the point of removing those who engage in commerce from the higher demands of the ethical order. 6) In economic conjunctures the conscious regulatory action of individual operators, if possible on the part of large merchants, must never lose sight of the common good in favor of individual good. 7) Toward their employees, merchants have precise duties both in promoting insurance and in creating good working conditions, like every other employer (v.); 8) Smuggling, whether internal or external, insofar as it is a violation of laws issued by legitimate authority, is without doubt also morally illicit, although a distinction continues to be made in this regard between fiscal laws, which oblige sub poena, and other moral laws, which oblige sub culpa. Besides the restrictions on commerce within the national sphere, there are others also in international law. 9) It is commonly admitted, for example, that a state of war imposes also on States and subjects of belligerent States many restrictions on freedom of commerce. However, since such restrictions often bring grave economic damages, it is necessary that the prohibition of carrying on commerce with belligerents be established taking into account only the necessities of war, and within these limits it obliges also in conscience. 10) In sales operations every kind of fraud must be avoided. It is lawful for merchants to buy and sell goods that can be used for good or for evil, but not those that by their nature admit only a bad use. 11) In buying or selling, merchants may lawfully use hidden compensation only: a) if they are unjustly compelled to sell or have by error sold the goods below the just price; b) if they cannot otherwise obtain, without grave inconvenience, the payment of a true and certain debt. 12) Besides the obligations of commutative and legal justice, merchants cannot neglect to fulfill the obligations of the precept of charity to the measure that belongs to each and according to the goods possessed and the circumstances. 13) Finally, the pursuit of gain must be subordinated to the supreme purpose of life.

Pietro Palazzini

IV. CANON LAW

The CIC takes commerce into consideration, besides indirectly in the norms concerning contracts (v.) and in particular loans (v. USURY), expressly in can. 142, which forbids clerics to engage, even through an intermediary, in negotiationem vel mercaturam for their own benefit or that of others.

By this norm the cleric is forbidden not only the exercise of commerce in the proper sense (thus including exchange and stock-market operations), but also the exercise of industry whose object is goods owned by others or which employs the labor of others. On the other hand, the purchase of bonds of commercial companies is not considered forbidden to the cleric, and generally neither is the purchase of shares (if, however, the purchase is made for the purpose of speculating on resale, its lawfulness may be doubted).

A cleric who transgresses this prohibition must be punished by the Ordinary according to the gravity of the fault (can. 2380).

Similar prohibitions, more or less definite, are found from the earliest centuries of the Church, especially in many particular synods of the 4th-8th centuries, whose texts (often imposing grave penalties) are in part reproduced 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 the collections of decretals.

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