Aristotle Economic Thought

Scope and Classification of Aristotle's Economic Thought

The nearest approach made by Greek philosophy to developing a distinct theory of economics came in discussing the elements of household management. Here a distinction was drawn between economics (oikonomik) and chrematistics (chrematistik); the former embraces chiefly wealth consumption in the satisfaction of wants, and the provision of such necessary and useful com­modities as can be stored to meet those wants; the latter deals with wealth-getting, including money-making and exchange. Concerning the latter, Aristotle says, "And there is another element of a household, the so-called art of money-making (or finance) which, according to some, is identical with household management, according to others, a principal part of it."

There are two kinds of chrematistics: the natural and the unnatural. Thus the first simple barter by which things are given in exchange for what one wants "is not contrary to nature, but is needed for the satisfaction of men's natural wants"; but "retail trade is not a natural part of the art of money-making." Or, again, husbandry and stock-raising make the "true or proper art of money-making," while the other consists in exchange. It is the "natural" or "proper" branch of chrematistics alone which should be included in economics or household management Thus Aristotle's classi­fication might be represented by the accompanying diagram. Closely connected with the preceding analysis is the distinc­tion between the natural or proper and the unnatural or improper uses of a thing. "Of everything which we possess there are two uses: both belong to the thing as such, but not in the same manner, for one is the proper, the other the improper or secondary use of it. For example, a shoe is used for wear, and is used for exchange; both are uses of the shoe." This distinction rests upon Aristotle's notion of exchange, which, in its turn, is founded on the idea that there is a certain consumption which is sufficient for a proper life; for, when he says that retail trade is not a "natural" part of money-making, he adds that "had it been so, men would have ceased to exchange when they had enough." In other words, natural chrematistics concerns the satisfaction of natural or proper wants by "natural" or "proper " or "primary" uses.

This idea clearly suggests later distinctions between value in use and value in exchange. Its consciously ethical content, how­ever, is absent from much of the later usage. In the same idea, a trace of the notion held by some later economists (the Physio­crats) may be distinguished, namely, the notion that extractive industries are the only ones which are productive. One could easily get the idea from Aristotle that the growing, or digging up, or catching of things which satisfy the more elemental wants in the simplest way, is more productive than the elaboration of these things by artisans or their exchange by merchants, — that the latter occupations do not add to the real wealth of the state.