Shakespeare's The Merchant of Venice highlights some key economic concepts -- and trade-offs -- in a gruesome and instructive manner. The story runs thus. Antonio, the ‘Merchant of Venice’, is seeking 3,000 ducats, to help his friend Bassanio who desperately needs money to court Portia, a wealthy heiress . Although Antonio is a merchant, all his own money has been invested in ships still at sea, and so he borrows the 3,000 ducats from Shylock, the moneylender. Seas being hazardous, Antonio’s productivity (hence repayment capacity) is stochastic. Shylock, having been mocked and scorned by Venetian society (including Antonio), wants a default penalty that is personal and punitive. The contract thus states that if Antonio should default, Shylock is entitled to a pound of his flesh. Both parties know the terms and agree to them. It is a bond contract WRITTEN IN BLOOD.
Antonio’s ships are duly caught up in a storm, and the debt is not repaid on time. The ‘death clause’ is therefore triggered. Shylock intends to enforce it, come hell or high water, and at this point things get interesting. What is the Court of Venice to do? Pronouncing the death clause as void seems like the common-sense answer, but if the Court of Venice will not enforce Shylock’s contract, other moneylenders may expect the same treatment and take their business elsewhere. Entrepreneurs like Antonio would be left unable to pursue risky projects and economic progress would flag. The Court -- understanding that INSTITUTIONS MATTER – has a dilemma on its hands.
And the dilemma is not just economic. Shylock and Antonio have entered a contract, voluntarily and with a full understanding of the terms. Antonio may have misjudged Shylock’s appetite for revenge (anticipating he would not follow through), but if we annulled all contracts based on wrongful expectations, we should soon have no contracts left to annul: each party would anticipate that the other could escape enforcement ex post, rendering such contracts worthless. Further, from a moral perspective, why is it not just to enforce the contract? A conventional wisdom says we should “bear the consequences of our actions” and this is what Shylock expects. The Court, it seems, is paralyzed by its own laws.
At this point, Portia enters the Court disguised as a male legal expert, and makes the case that the Court and the gallery have been unable to muster:
“The quality of mercy is not strained;
It droppeth as the gentle rain from heaven
Upon the place beneath. It is twice blest;
It blesseth him that gives and him that takes:
'T is mightiest in the mightiest; it becomes
The throned monarch better than his crown:
…And earthly power doth then show likest God's
When mercy seasons justice.
Therefore…Though justice be thy plea, consider this,
That, in the course of justice, none of us
Should see salvation: we do pray for mercy;
And that same prayer doth teach us all to render
The deeds of mercy. I have spoke thus much
To mitigate the justice of thy plea;
Which if thou follow, this strict court of Venice
Must needs give sentence 'gainst the merchant there.”
The essence of the argument is that mercy is distinct from justice but can complement it. But what, exactly, does it mean to say that mercy seasons justice? We are first told that mercy “is twice blest; It blesseth him that gives and him that takes.” This is a nice starting point: mercy may be said to season justice if it leaves both parties better off – a PARETO IMPROVEMENT. But this is not enough since Portia assumes an improvement in Shylock’s welfare, which may be untrue given his preferences. If justice is our goal, Shylock’s preferences must be taken as SOVEREIGN, i.e. we must let him choose. Hence Portia’s argument turns to a statement of the Golden Rule: “Though justice be thy plea, consider this. That, in the course of justice, none of us should see salvation: we do pray for mercy; and that same prayer doth teach us all to render the deeds of mercy.”
By appealing to fairness and the ‘social contract’, Portia is supporting her earlier argument that mercy is beneficial both to those who grant it and the rest of society; she is obviously hoping here to influence Shylock, to remind him that his self-interest (setting aside any desire for revenge) may be aligned with theirs. The stage is now set. Shylock will have the choice to take a pound of Antonio’s flesh – and thus end his life – or to grant mercy. But the MORALITY of the situation is now sharper. Because Shylock has the CHOICE, he has gained some freedom but also RESPONSIBILITY. Previously, it could be argued that Shylock would not bear direct responsibility for Antonio’s death as Antonio signed it away and then fate dealt the killer blow. Shylock can no longer rely on the law to give him moral guidance or take the situation as outside his control. He must DECIDE to be merciful or not.
Bringing all this together, mercy may be said to season justice if (i) those with responsibility for the execution of laws give the wronged party a decision of whether to enforce the penalty or not, and (ii) the choice itself is both merciful and just. A just outcome reached through mercy is superior to the same outcome reached by veto since it gives the wronged party the chance to be merciful, as well as allowing for a possible change in preferences in the 'cooling off' period. This freedom must be granted if we want to promote justice to the fullest extent.
A UTILITARIAN would presumably be happy to grant Shylock his 'pound of flesh' if the expected welfare gain to Shylock and others out for revenge exceed the losses to Antonio and other members of society. According to this view, any act (even murder) can be justified if there is strong enough preference or enough numbers in favour. A RAWLSIAN perspective could lead to a different outcome, but it is unclear in this case which party should be considered least well-off. Given the predicament that Antonio is in – vulnerable to imminent death – it may be said that he is the least well-off. On the other hand, Shylock has been badly treated in Venetian society and so one may argue that the decision should be based on whether he is made better-off by the Court’s ruling. The 'solution' reached by the Court is somewhat unsatisfactory -- a modern deus ex machina -- and legal scholars remain divided on whether justice prevailed in this instance.
Written by Michael Hatcher, July 2022.