LIVING A CHRISTIAN LIFE

Question G: What Are One’s Responsibilities in Transactions?

Transactions are cooperative acts bearing on the transfer of the ownership and/or use of property and money: giving and receiving gifts, gratuitous lending and borrowing, bartering, buying and selling, leasing and renting, and borrowing and lending money at interest. Insofar as any transaction involves acts already treated—acquiring and disposing of property, more or less fairly dealing with others’ property, and so on—it should be carried out in accord with the norms relevant to those acts. Here it remains only to treat the responsibilities proper to transactions insofar as they are cooperative acts.

1. Giving and Receiving Gifts Should Promote Interpersonal Communion

The concept of gift giving is analogous; the central case is that of a transaction in which the transfer of the possession and use of material goods is solely a means to the good of interpersonal communion between the parties. This central case will be treated first; it clarifies by analogy secondary cases in which gift giving is used to acknowledge or strengthen other relationships.

a) The giving of a gift should express sincere love. To understand the moral ground of gift giving, it helps to recall what interpersonal communion is: a union of persons by mutual volitional love—the willing of one another’s good for the sake of a common good which is or includes their interpersonal relationship itself. The initiation and continuation of this requires expression, and among its appropriate expressions are actions by at least one person intended to benefit another or others in a way to which they have no right. Transferring without compensation the ownership of mutually desirable material goods—that is, giving a gift—is one such action. (A gratuitous loan or an uncompensated service can be called “gift giving” in a wider sense.) Thus, while there never is a duty to give a gift,⁹⁸ using money and things for this purpose is morally right just insofar as the gift sincerely expresses love with the intention of initiating or building up interpersonal communion and does not violate other responsibilities.

b) This moral ground of gift giving implies several specific norms. In the absence of the relevant sort of love, a person should not give anything as a gift (using gift in the central sense). Similarly, to express that love, nothing should be given as a gift which would be given even in love’s absence, nor should anything be given which will not both truly benefit the recipient and be experienced as beneficial. Therefore, it is wrong to give anything as a gift (i) that is known to be unwanted by the recipient, (ii) that the giver owes the recipient as compensation or on some other ground, (iii) instead of fulfilling some duty or in place of reparation for failing to fulfill a duty, (iv) in order to motivate the recipient otherwise than through the relevant sort of mutual love, or (v) on any merely emotional motive.

These norms often are violated. (i) Trying to cheer up his depressed friend, Jill, who lives alone, Jack gives her a puppy, although he knows Jill hates dogs (“Surely,” Jack thinks, “Jill will become attached to this dog, and caring for it will do her a lot of good”). (ii) Sweatshop Garments Company does not pay its employees a just wage, but gives each a turkey at Thanksgiving and a ham at Christmas. (iii) Pete, who is engaging in an adulterous affair, salves his conscience by showering his wife with presents. Sally seldom visits her aged parents who live nearby in a retirement community, but on Mothers’ Day and Fathers’ Day she makes it up to them by sending them fashionable clothing and accessories from the very best stores. (iv) Kate, who owns a specialty store, seeks to improve business relationships and so increase profits by using surplus items as “gifts” for her employees and suppliers; while legitimately charging these items off as an expense of doing business, she often misrepresents them as personal gifts by insincerely pretending that her largess is motivated by affection. (v) Phil gives people expensive presents because doing so makes him feel superior to them. Martha gives presents mainly because she enjoys the recipients’ appreciative reaction.

Such violations vitiate gift giving by falling short of sincerity, adequacy to express love, or both. Moreover, as in all other cases in which material goods are abused, violating these norms is unjust, insofar as what is thus abused should be put to some other just use.

People often violate several of these norms at once. The Jacksons agreed on their agenda before getting married, and they have been very successful in carrying it out. Both have good jobs, and they have a fine house, enjoy their vacations, and so forth. They also have two children, who have been brought up mainly by others, since neither parent ever has had much time for them. However, the Jacksons lavish presents on the children at Christmas, on birthdays, and on every other suitable occasion. Not only is this their way of being “good” parents, but it is also intended to motivate the children to be “good” children and make it clear to relatives, friends, and neighbors that the Jackson family is enjoying the “good” life.

c) Analogous sorts of gift giving are subject to other norms. Sometimes, of course, as in (iv), behavior which abuses material goods insofar as it is insincere gift giving could be a right use if intended as a sincere expression of the good will appropriate to the business relationship (such expressions of good will also are called “gifts” in an analogous sense).

Similarly, disposing of surplus items by giving them to people who can put them to good use is a just use of property, which, however, is vitiated if misrepresented as an instance of gift giving in the central sense.

d) In accepting a gift, a person assumes obligations to the giver. Gifts in the central sense call for gratitude, acknowledgment, reciprocal love. Believing that a proffered gift expresses the relevant sort of good will, therefore, one should not accept it unless prepared to respond suitably. For example, if John is not open to a romantic relationship with Mary, he should not accept her costly Valentine’s day gift. If Mary prefers not to develop friendships with co-workers, she should not accept the friendly invitation of a co-worker, Sarah, to go to a concert.

Again, sometimes a gift is offered subject to some condition, such as that it be used in a specific way. The gift should not be accepted unless the condition may rightly be met and one intends to meet it. However, if a gift offered subject to a legitimate condition has been accepted with the intention of meeting the condition, the obligation to do so is defeasible in the same ways as other promises (see 7.C.1.d). Of course, the obligation may not be set aside if just and applicable law requires that the condition be met.

2. One Should Be Generous in Lending and Honest in Borrowing

Borrowing often is a good and even better way of acquiring the things one needs (see E.3.e, above). People’s frequent failures to fulfill the specific responsibilities which borrowing involves have the bad result of making most owners more resistant to lending their property than they otherwise would be.

a) Owners should allow others to use their goods temporarily. Owners and their dependents very often can realize only part of the potential usefulness of nonconsumable goods—real property, furniture, tools, and so on—from whose use others could benefit. Many owners who rightly retain possession of such goods mistakenly take it for granted that they may allow such things’ potential utility to remain unrealized.

To realize that utility, owners should be ready to lend out things. They not only should deal fairly with any request to borrow but should offer the use of things to those who need them. Many owners are understandably anxious that their property will not be returned or will be damaged if they lend it. But in some cases they can afford to accept these risks and should do so; in other cases, they should require security, such as a damage deposit, to motivate renters or borrowers to fulfill their responsibilities.

b) In seeking to borrow, one should be entirely forthright. Owners must judge their responsibility to lend their property, and that cannot be done correctly unless they know all the relevant circumstances. Potential borrowers therefore should be not only truthful in answering questions but forthcoming in supplying the necessary information: what need they hope to meet by borrowing the property, and how great the need is; any unusual risks that the property will be harmed; any special provisions they will make to care for it; when and how they plan to return it; and so on.

Sometimes, someone who wishes to borrow something seeks to motivate the owner to lend it by resorting to emotional pressure and concealing or even lying about relevant circumstances. That is unjust because it impedes owners in fulfilling their responsibility to judge the request by the standard of fairness.

c) One should carefully abide by agreements made in borrowing. All the explicit and implicit conditions of agreements made in borrowing things should be fulfilled faithfully. These include limits of use, for instance, not to put what is borrowed at risk in certain ways, not to lend it to a third party, and so on.

In keeping and using borrowed items, the responsibility to care for them is at least as great as if one owned them. Often it is greater, for example, if the owner has taken especially good care of the item, if it is of sentimental value to the owner, or if the owner is due special gratitude for having lent it. Moreover, one should avoid unnecessarily lessening the potential future utility of that which is borrowed, for example, by marking up a borrowed book.

The explicit or implicit understanding about a borrowed item’s return is especially important. Borrowers should return borrowed items as soon as is mutually convenient and, unless they seek and obtain an extension, not later than promised.

3. Exchanges Should Be Just, Not Merely Mutually Accepted

By exchange here is meant a transaction mutually transferring ownership and/or use of money, goods, and/or services: bartering, buying and selling, renting and leasing, hiring and providing services.

Even though an exchange is accepted by both parties, it may not be just. No exchange is just if someone thereby acquires something he or she should not or which he or she intends to use wrongly. Similarly, an exchange is unjust if it is intended (rather than merely accepted as a side effect) that others obtain something they should not have or mean to put to bad use.

The prospect of serving genuine human needs must motivate every just exchange. Moreover, a just exchange must be fair. That requires mutual informed consent, and such consent presupposes honesty. Many people imagine that only an even exchange is fair—equal things must be exchanged, resulting in a precise balance of the advantages gained. However, while fairness often requires equality, uneven exchanges also can be fair.

The norms articulated here apply to all exchanges, from those among neighbors to those among huge corporations in international trade. Employer-employee relations involve additional responsibilities, treated in question A.

a) Both parties should seek a genuine understanding and fulfill it. The parties to any exchange should seek an agreement based on mutual understanding, so that neither will enter into it with false expectations. Sellers, for example, should not set terms and limits in language which buyers cannot understand, nor should contracts be presented in fine print to discourage people from reading them.

Someone who makes an agreement to exchange anything should abide by it, just as by any other promise. Although many contracts provide remedies if the agreement is not kept, a provision of this kind is not a justification for choosing arbitrarily between keeping the agreement and allowing the remedy to take effect. If a person cannot keep an agreement or judges it fair not to keep it, he or she should inform the other party promptly and arrange for fair compensation. For example, buyers who cannot pay the agreed price at the agreed time act unfairly if they delay by giving false assurances that payment will soon be made, evade attempts to repossess goods, and so on.

b) One should never seek profit as if it were good in itself. Profit is the gain or advantageous return resulting from an exchange. Since exchanges can be mutually advantageious, both parties can profit. The prospect of profit can rightly be taken into account in deciding whether to cooperate in an exchange.

Nevertheless, in any exchange one should seek to increase one’s own and/or others’ capacities to act for basic human goods, which truly fulfill persons (see GS 64). Acquiring wealth and property by no means guarantees that one will use them rightly to serve persons, since avarice—that is, unreasonable emotional desire for gain—can motivate people to seek profit endlessly without benefiting anyone. Thus, in every exchange the end sought should be not only profit but the fulfillment of genuine human needs. Moreover, one should hope to fulfill those needs, not by any and every means, but only by means morally acceptable in every way.

Hence, while the profit motive of itself is neither morally good nor evil, it does tempt to avarice and in isolation is never a morally adequate motive, since it needs to be subordinated to an upright intention. Consequently, in exchanges, people should intend not only profit but also justice in the relationship and some morally good use to which any profit will be put (see S.t., 2–2, q. 77, a. 4).

c) Sellers should be honest, not manipulative. Persuasion, including advertising, often is manipulative, in that it attempts to arouse emotional motivation irrelevant to any possible sound reason for acting as the persuasion would have others do.⁹⁹ Those attempting to sell anything should abstain entirely from manipulative persuasion, and instead should provide sound reasons for consideration by potential buyers. Plainly they should not lie or otherwise attempt to deceive (see S.t., 2–2, q. 77, a. 2). For example, accurate weights and measures should be used; goods should not be adulterated and their quality should not be misrepresented.

Nevertheless, sellers may focus attention on a thing’s better features and advantages, and, unless there is a contrary law or custom, need not point out its shortcomings, provided these are not concealed and the asking price takes them fairly into account (see S.t., 2–2, q. 77, a. 3).¹⁰⁰

Where it is the custom for sellers to allow for bargaining by initially asking a higher price than they expect to receive, that is not dishonest. But if a potential purchaser offers more than the seller judges, all things considered, to be the maximum fair price, the latter should not accept the excess.

d) Market or legally fixed prices often can be regarded as fair. At the start, the fairness of a market price or a price fixed by law can tentatively be assumed, but this assumption is rebuttable. Sometimes one knows a market has been manipulated or is biased in one’s favor due to underlying structural injustices, while a price set by law can be so ruinous to one party that it is manifestly unfair; and it is wrong to take advantage of a price known to be unfair. Instead, one must be willing to pay more or take less, and should proceed as one would if there were no relevant market or law.

To determine the fair price in such a case, the Golden Rule must be applied to the facts. The parties cooperate in doing so by honestly bargaining to a price which both freely accept, provided they are nearly equally well informed and motivated to do business. If one knows the other to be less informed, however, or under special pressure to come to terms, he or she should set a price more favorable to the other than that which bargaining biased by ignorance or special need would produce.

e) Sometimes one should moderate an otherwise fair price. Using one’s money and things to meet others’ needs can be an obligation in strict justice, while mercy can call for subordinating one’s own needs to those of others (see E.5.b–f, above). In view of these responsibilities, someone dealing with the less wealthy, the unemployed, and so on sometimes should moderate the price that otherwise would be fair, and give a discount or pay a premium. The transaction then will be a compound of two elements: in part, a fair exchange; in part, a just use of money or property to meet the other’s needs.

Arranging such a compound transaction should be considered whenever someone judges that his or her wealth should be used to meet others’ needs. Such a transaction, involving the element of exchange, is more likely to protect the self-esteem and encourage the self-reliance of the less wealthy party, and so to promote stronger bonds of human community and charity.

4. Seeking and Accepting Interest on a Loan Can Be Just

Lending money at interest raises a special question due to the historical controversy over usury. Church teaching condemned usury, and a superficial reading of economic history suggests that usury referred in earlier times to what today is called “interest.”¹⁰¹ However, money itself no longer is what it once was. Thus, while the Church’s teaching of earlier times remains true, today it can be just to charge interest on a loan.¹⁰²

a) The Church’s teaching on usury must be understood correctly. The Church never taught that all charging of interest is wrong, but only that it is wrong to charge interest on a loan in virtue of the very making of the loan, rather than in virtue of some factor related to the loan which provides a basis for fair compensation (see DS 1442/—, 2546–47/1475–76).

Charging interest on a loan simply in virtue of making it takes advantage of the difference in need between lender and borrower. The assumption was that during the period of the loan, lenders can do without their money, for otherwise they would not lend it; but borrowers need the money, for otherwise they would not borrow it. Applying the general norm that surplus wealth should be used to satisfy others’ needs, people with extra money should lend it without charge to those who need it. However, those who deposit or lend money can fairly charge for various other factors: costs incurred in making and administering the loan, the risk of nonpayment, probable inflation, taxes, the forgoing of other legitimate uses to which the money otherwise would be put, and so on.

b) The possibility of investing money may be taken into account. “Other legitimate uses” refers to the possibility of productive investment. This is not the same thing as lending, since one who invests becomes a sharer in the productive enterprise and so is entitled to share in its profit. St. Thomas already realized this (see S.t., 2–2, q. 78, a. 2, ad 5). Still, viewing the prospect of profit on an investment as too uncertain to deserve consideration (see ad 1), he held that the existence of this alternative did not justify charging interest by those who instead chose to lend their money. If that argument was sound in the thirteenth century, however, it no longer is today, for anyone can invest in productive enterprises (for example, by buying high-grade corporate bonds) with moral certainty of preserving the principal and making a profit.

c) It can be assumed that market rates of interest are usually fair. Due to the change in the nature of money, every modern economy includes extensive money markets. Here most borrowers and lenders differ little in their information and their need, and it is reasonable to assume that market rates of interest reflect legitimate grounds for seeking and accepting the payment of interest. This is so even though structural injustices probably affect interest rates, since the effects of such injustices are impossible to assess, and might well offset one another.

In making personal loans to less wealthy people, however, one sometimes should lend at lower than market rates, just as one should moderate other prices, so that one’s surplus wealth will be put to use satisfying genuine needs.

5. Transactions Often Offer Opportunities for Christian Witness

The Christian conception of property differs widely from the modern individualistic conception. Thus, since many people pay close attention to others’ behavior in transactions, it often is possible to bear witness to the moral truth which faith affirms and clarifies by behaving in transactions according to Christian standards and indicating why one is doing so, instead of acting in the usual, expected way.

98. On certain occasions, gift giving is obligatory to express gratitude, congratulations, and so on. Nevertheless, even on such occasions, it is not a duty in the strict sense, for the ground of the obligation is the good of communion, which demands that one manifest good will that transcends justice.

 99. A critique of advertising: Pontifical Commission for the Instruments of Social Communication, Communio et progressio, 59–62, AAS 63 (1971) 615–17, Flannery, 1:313–14.

100. However, having completed the transaction, a seller might have an obligation to point out a previously unmentioned defect, for example, if ignorance of it might lead to some significant harm.

101. For a more careful reading of the history: John T. Noonan, Jr., The Scholastic Analysis of Usury (Cambridge, Mass.: Harvard University Press, 1957); Thomas F. Divine, S.J., Interest: An Historical and Analytical Study in Economics and Modern Ethics (Milwaukee: Marquette University Press, 1959), 3–116; Odd Langholm, The Aristotelian Analysis of Usury (New York: Columbia University Press, 1984).

102. Some argue that since the Church’s teaching on usury developed, her teaching on contraception and other matters could change. For a reply, see CMP, 36.G.10; Matthew Habiger, O.S.B., “Is the Magisterium a Reliable Moral Guide? The Case of Usury,” Social Justice Review, May-June 1989, 73–79.