The ideas of upstanding citizenship, morality, ethics, and fairness have likely been around since the beginning of time since groups (even groups of two) need to figure out how to interact successfully together. The Ten Commandments, the Code of Ur-Nammu, the Code of Hammurabi and the Greek Citizen’s Code are all ancient examples of standards of conduct guiding group behavior.

The record of the first organization undermined by unethical behavior is lost in history, but one can imagine that Grug the Hunter was out on the Serengeti Plain with his friends trying to bring down a fresh gazelle and one of them decided to take a bit more than his or her fair share. This internal notion of “fair share” started the moment two humans first cooperated toward a common objective.

Business ethics is also rooted in the idea of fairness.  As large empires emerged, such as the Persian Empire; the Greek Conquests under Alexander and the Roman Empire, the relative peace imposed by the conquerors allowed the establishment of trade routes. The most famous, the Silk Road, emerged over history as several trade routes that were joined together. The Royal Persian Road was established and protected by the Persian Empire. The city of Alexandria, named after Alexander the Great, formed a crucial trade branch in north and east Africa and was watched over by the Egyptian empire ruled by Ptolemy and his line of successors ending with Cleopatra. Later, the travels of Marco Polo were made possible by the Mongol Conquest of Asia and the reestablishment of the Silk Road. The Silk Road was in operation for approximately 2,000 years, though not continuously due to war and conquest by unfriendly powers. The importance of trade between the near and far east, Asia, and Europe should not be underestimated and the closing of trade routes had a very large impact on the nobility. It was, of course, the Ottoman conquest of Constantinople that made the Genoese navigator Christopher Columbus’ idea of a trade route to Asia across the Atlantic worth backing by the Queen of Spain. As a merchant class emerged separate and distinct from royalty and the military, customs developed as to appropriate behavior and fair dealings.

For the European merchant class, one of the first influential writers on standards of business conduct was Saint Thomas Aquinas. Thomas Aquinas was born in 1225 in Sicily. As the younger son of a noble family he was expected, at an early age, to be destined for the clergy.  Despite his family’s deep ties to the Benedictine Order, Thomas—quite scandalously—was attracted to the Dominican Order. His family was so distraught that his brothers were sent to capture Thomas on the road and he was held captive by his family for two years. At the strong suggestion of Pope Innocent IV and the Holy Roman Emperor Frederick II, Aquinas was allowed to join the Dominicans.

Saint Thomas Aquinas’ seminal work, Summa Theologica, is a compilation of Catholic teachings at the time. It is structured as a series of questions aggregated in parts relating to overall topics. It is impressive in its scope and uses as its logical base the arguments of very broad selection of great thinkers. Aquinas cites not only Aristotle, but Arabic writers, Islamic theologians, and rabbinic scholars. In the Second Part, Aquinas addresses ethics and, in particular, addresses business ethics, saying that it is unlawful to sell an item for more than it is worth. Further, Aquinas tells us that it is unlawful for a seller to sell defective merchandise and should make restitution if he does so. If there is a defect in the items that is known by the seller, the defect must be told to the buyer. Aquinas says it is lawful to make a profit, but it is unlawful to charge interest for a loan, which he likened to thievery.

Yet Aquinas was not dogmatic and it would be remiss not to give credit to Aquinas for his appreciation for how the market worked. In his discussion about what is a “fault” in the merchandise, St. Thomas acknowledges three very important things about the market in his discussions. First, Aquinas acknowledges that the two of the same items may be of different quality and therefore may command a different price. Second, local market conditions affect the price and states a fair price gives “due consideration for conditions of place and time.”  Finally, each buyer may value something differently because if its “usefulness” to the buyer, so the price may fluctuate from buyer to buyer.

 

In summary, Aquinas felt that gain through the trade of goods was proper, so long as the trade was honest and transparent and that a merchant could set any price, so long as it was fair under the circumstances—not at all bad for a humble thirteenth century friar.