Understanding Just Pricing in Economics: Fairness and Ethics Explored
Just pricing is a concept in economics and business ethics that refers to determining the fair and equitable price for goods or services. This involves considering factors such as production costs, market demand, competition, and the value perceived by customers.
In simple explanation — don’t be an asshole when it comes to putting prices on services, products or transacting in any modern economy (exchanging, storing, measuring, valuing, etc).
The Background
I live in South Africa. South Africa is deeply intertwined with its socio-political and economic developments over the centuries. Entrepreneurship, trading and money in general are nothing new to us, we have been using money for hundreds and hundreds of years. We have also been trading for years — we even pay for women (*lobola), now, who are you to discuss money, economics and trading with me or any other fellow South African?
**Lobola — the payment of cattle and money by a man for his intended betrothed’s hand in marriage.
South Africa is known for innovation and for businesses that go beyond the borders of South Africa and into other African and international markets. South Africa is also known for luxury goods, minerals and ground-breaking technological advancements all over the world.
A lot has happened in South Africa since 1994, below are just a handful of the changes we have since the independence of South Africa:
- Economic Liberalization
- Black Economic Empowerment (BEE)
- Growth and Development
- Income Inequality
- Unemployment
- Corruption
- Infrastructure Development
- Globalization
- Racial Transformation
In a nutshell, some good changes and some terrible changes, some of which are the reason for this article.
The Terrible Changes:
The Modern Problem: Corruption, The Lack of Leadership, Clear Ethical Standards and Good Business Practices
South Africa has grappled with persistent economic challenges, particularly concerning just pricing, lack of innovation, and the tendency towards hiking prices of services and products. Additionally, high unemployment rates, especially among black South Africans and youth, exacerbate social and economic tensions.
Corruption
Corruption has plagued various sectors, hindering economic progress and further widening the gap between rich and poor. The lack of significant innovation in the economy has stifled growth and competitiveness, leaving many sectors stagnant.
The Lack of Good Business Practices
Furthermore, instead of investing in innovation and quality improvement, some businesses resort to hiking prices, exploiting consumers who have limited alternatives. These issues collectively contribute to a challenging economic environment, hampering the country’s ability to achieve sustainable development and prosperity for all citizens.
It’s all easier said than done.
And The Lack of Leadership
Amid all the nonsense that’s currently going on, you have individuals and entities who choose to ride the wave and start hiking prices for services, products or exchanges that are not worth the money. You have airline companies like Kulula (I’m glad they are out of business) charging hefty prices for domestic flights and individuals like Shameel Joosub (the Vodacom CEO) who hike prices of the offerings to a point where they are no longer profitable to look good in front of investors when they fail to remain innovative and competitive in their space. It’s pure arrogance and evilness.
Corruption… yet again
Other entities include the state-owned electricity provider, Eskom, which failed to keep the lights on but has hiked prices over the years to a beyond where electricity is a luxury to most households living below the poverty line. I grew up in such areas and it breaks my heart that most families still rely on collecting wood and cooking on the ground. They cannot afford to pay for electricity.
The concept of just price, once a cornerstone of economic transactions, has seen a gradual erosion in modern economic systems. Rooted in principles of fairness and ethical conduct, the notion of just price historically aimed to ensure equitable exchanges between buyers and sellers.
What Pisses Me Off
What makes matters worse in South Africa, is we practised the concept of Just Price and *Ubuntu not so long ago.
*Ubuntu is a concept deeply rooted in African philosophy, particularly among various Bantu-speaking peoples of Southern Africa, including the Zulu, Xhosa, and Ndebele. It is a Nguni Bantu term that roughly translates to “humanity towards others” or “I am because we are.” Ubuntu embodies the idea of interconnectedness, emphasizing the importance of community, compassion, and mutual respect.
The fathers of big business in South Africa, Christ Wiese, Raymond Ackerman and Eric Ellerine just to name a few showed us that:
Fair Pricing Practices: While there may not be direct examples of just pricing in the experiences of these individuals and companies, the concept of fair pricing is integral to building trust and maintaining customer loyalty. Businesses should adopt transparent pricing practices, avoid price gouging or exploitation, and strive to offer value to customers.
Social Responsibility: Just pricing also involves considering the social impact of pricing decisions. Businesses, like Raymond Ackerman’s Pick n Pay, can demonstrate social responsibility by offering affordable options, supporting local communities, and promoting sustainability.
My firm belief is that if you encounter challenges steering a company towards profitability and opt for unjust pricing tactics as a solution, then you lack the essence of true business acumen. It doesn’t matter if you adorn yourself in bespoke suits and wield political connections; without integrity and a commitment to ethical business practices, you cannot rightfully claim the mantle of a genuine entrepreneur or business leader, especially the likes of Shameel Joosub.
So What Now, Do I Have a Solution?
I guess so. Don’t be a f**ng a***ole!!!
The Solutions in the Spirit of Ubuntu or Just Price in the Quran. The Quran version summarises as follows:
Islam promotes fair and just pricing in economic dealings, rooted in principles of justice, honesty, and ethical conduct. Key principles include avoiding exploitation and usury, promoting transparency and honesty, ensuring mutual agreement between parties, avoiding deception, considering economic circumstances, emphasizing social responsibility, and encouraging charity and compassion. Islamic teachings prioritize ethical business practices that benefit both individuals and society, aiming for a balanced and just economic system.
Conclusion
That’s all there is to it. If want to make more money, innovate. Resorting to unjust pricing is childish and foolish.
South Africa has cultivated a vibrant economy that thrives on innovation, entrepreneurship, and inclusivity. Embracing the concept of just pricing, South Africa has sought to ensure that economic opportunities are accessible to all, regardless of background or circumstance. That is a nation that built the Pick ‘n Pays, Ackermans, Shoprites, Nedbanks, Capuitec, etc of this economy and country. We didn’t achieve all that by being total jerk-offs and pricing our people out of our services and products.
