has to increase as demand increases. Unfortunately, people accept this and end up being manipulated by radical capitalists into buying things at unfairly high prices—all because the radical capitalist wants to maximize profits.
The ABC bakery above is located in a rural area. Due to a family situation, the only other bakery in the area has closed and now there is no competition for ABC. The consumers in the area are within a captive market; they have no other choice but to buy bread from ABC bakery. ABC bakery makes a reasonable profit on the sale of bread. Since it is the only bakery in the area, it could charge significantly higher prices—but does it? Does ABC bakery have to charge higher prices for bread? Is there some economic principle that forces it to raise prices? Does price have to increase in a captive market? The answer to these questions is ‘no’
Of course, it is true that businesses raise prices when demand increases and within captive markets. But they don’t have to. Businesses see opportunities to increase their profit margins in these cases and they ignore what is fair and just. Is it fair to charge a person a higher price because there is high demand? Is it fair to charge a higher price when there is no other place to buy the item? Why are the prices for food so high at theme parks, sports stadiums and vacation towns? Why are rental property prices so high in college towns and vacation towns? Fair and just prices are prices which are fair to both company and consumer. The theory of supply and demand totally ignores what is just and actually helps businesses take advantage of consumers. Businesses hide behind this theory and consumers blindly accept unjust prices because of this theory.
Consumers and even some businesses (primarily small businesses) are powerless when it comes to unjust prices. There are three types of unjust prices: unfairly high prices, unfairly low prices, and extreme changes in prices.
The price of a good or service is unfairly high when it is grossly out of line with prices for comparable goods or services within the same market, and when it is out of line relative to the economy. Unfortunately, there are many markets which are now dominated by a few corporations. In some local markets there may only be one supplier. In these markets prices can be unjustly high because of collusion by these few dominant corporations to set high prices. While price fixing is illegal in the United States, the government virtually ignores the practice even though it is the responsibility of the government to prevent and eliminate unfairly high prices not only because such prices are unjust and harms the consumer or business which is forced to pay the unfair price but also because these unfair prices affect the economy.
It is estimated that there are over 140,000 convenience stores in the United States and the number is growing. Most gasoline stations and most pharmacy store chains such as CVS and Walgreens are also convenient stores. It is a known fact that prices at convenience stores are higher than the prices of comparable items at supermarkets. While it is not unjust to have a slightly higher price at a convenient store, it is unjust to have a significantly higher price. Consider as an example the price of a gallon of milk. If the average price at local supermarkets is $2.00 a gallon, what would a fair price be and what would an unfair price be at a convenience store? If a milk product that is comparable to the milk product that is sold at local supermarkets is sold at a convenient store for $2.20 a gallon, a 10 percent higher price, then that would not be considered unjust. But if that gallon of milk sold for $2.50 a gallon, a 25 percent higher price, then that would be considered unjust.
Besides convenience stores, vending machines are another instrument where businesses engage in unjust pricing. There are tens of millions of vending machines in the United States selling food, beverages, toys, toiletries and even cash (ATM machines). It is common knowledge that the prices for the products sold through these machines are extremely high compared to comparable products sold at local stores. Similar to convenient stores, it is not unjust if the prices for the items sold from vending machines are perhaps 10 percent higher than the average price for the comparable items sold at a local store. But it is unjust when these prices are more than 25 percent higher, and many prices in vending machines are actually 100 to 200 percent higher.
How many convenient stores and vending machines are owned and operated by Christians? With 75 percent of Americans claiming to be Christians, there has to be a significant number. Of course, these Christians are not bothered by the prices that they charge. Objectively, they would have to admit that their prices are significantly higher than the prices for comparable items at local stores. Yet, they don’t want to admit that their prices are unjust and what they are doing is wrong. Why is that? They have allowed themselves to be misled and deceived by the philosophy and principles of amoral capitalist theories. These theories establish the corporation as an amoral intermediary between the business owner and the customer. Based on these theories, owners are immune legally and morally from actions that they engage in through the corporation. Christian business owners have blindly and naively accepted these theories and feel no guilt in what they do in the name of business even though it is objectively wrong.
The price of a good or service is unfairly low when the intent is to drive competition out of business and when it is grossly out of line with prices for comparable goods or services within the same market. Wal-Mart is notorious for pursuing a strategy of unfairly low pricing to eliminate the competition within the local, rural market. In small towns prior to the arrival of Wal-Mart, local businesses were primarily family-owned and operated and relatively small in size. In these towns there were a few pharmacies, clothing stores, furniture stores, hardware stores, and grocery stores. All of these businesses employed a few hundred people. Because these establishments were locally owned and operated, customers dealt with the business owners themselves and the profits from these locally owned businesses were mostly re-invested locally. Upon the arrival of Wal-Mart with their ruthlessly low, subsidized pricing strategy, customers naturally went to Wal-Mart instead of the local businesses. Because Wal-Mart was often selling at a loss which it could handle because of its financial reserves, the small businesses could not compete and eventually had to close. Once the majority of small, local businesses were eliminated, Walmart would increase prices because there was virtually no competition. The local economy and customers actually suffered from all of this. The pay and benefits of the average worker was less than that of the workers of the local, family-owned businesses. Customers coming in could not ask to talk to the owner, and the profits were not re-invested locally.
A similar strategy was used within the trucking industry in the 1980’s after Ronald Reagan deregulated the trucking industry. Large carriers with significant cash reserves lowered prices to a point where they were not making money. Small carriers with little to no cash reserves could not lower their prices to compete with the large carriers. Their revenues suffered to the point where they could not continue operating and the large carriers bought them. After the industry was consolidated into a few large carriers who dominated the market, they raised their prices. There were many independent, small trucking companies that were family run. This strategy that was employed by the large trucking companies enabled by the deregulation of the industry destroyed tens of thousands of these small independent trucking companies and most of them want bankrupt. This was not good for these family-run businesses and it was not good for the economy. Today, forty years later the transportation industry is dominated by a few large carriers who maintain high prices and exploit the drivers who work for them.
It is another common practice by large corporations which want to grow through acquisitions of suppliers to increases their purchases from a supplier until they represent a very significant percentage of the supplier’s business. Once that happens, the large corporation forces the supplier to reduce their prices often to a point where the supplier can no longer operate profitability. When this happens, the supplier is positioned for an easy take-over by the large corporation. Is such a practice fair? Certainly not!
A captive market is a situation in which a consumer is constrained by one or a few suppliers. Captive markets almost always involve unfair, unjust prices. Food and beverage prices within captive markets such as stadiums are unfairly high. While a hotdog at a small restaurant one block from a baseball stadium sells a hotdog for $1.50, the same hotdog costs $4.50 within the stadium. People are so captive within
