Economy, History, Microeconomy

Aristotle and his double vision of economy

Looking back in time, there’s a point where “economy” begins as a way of managing the wealth of the house, for that’s the meaning of “oikos” (house) and “nemein” (administration). What is not clear at all is what was being administered was “wealth” in its meaning nowadays or just a restricted concept of it.


Aristotle was born in 322BC. In an era of isolated greek cities, many of them in war. Economy was based on the production of slaves and women. The first as “properties that could talk”, the latter as beings that only had power by delegation, restricted to the care of the house and children.

In those greek cities, common good was an important concept, much more important than individual rights. The pursuing of wealth was still something not accepted by society for the real wealth was measured by the size of owned land, not by any other means. Those societies needed resources for protection and needed a way to make decisions: politics.

Politics were managed by middle class. Middle class were those with enough resources to participate in political life for free. There still was a clear separation between politics and money, and corruption was still a few decades away of being born in Athens.

But most interesting, Aristotle already described four main objectives in life:

  • Pursuing honour and public recognition
  • Pure contemplation of truth
  • Hedonism: accumulating and tasting different pleasures
  • Accumulating wealth

The fourth was the despised one. It was perceived as a threat for the city and a nonsense because it meant accumulating resources with no use for them. That meant depriving the community of those resources.

Aristotle ended up differenciating two kinds of economy:

  • oikonomikos, as I first described, related to the administration of the house, the acceptable one
  • chrematisike, or commerce for profit, the art of money making

The difference between the two, moral difference between what’s right and what’s wrong, has labeled Aristotle as “enemy of business”. In fact he was.  He labeled the participants of this trading activity as “parasites of society” and thought of them as outsiders not rightful citizens.

Many of the christian traditions followed Aristotle’s path, specially protestantism. Normative economy was born, studying interchanges and economy from the ethics point of view. Difference between the concepts of price and value was grasped -but later forgoten for a long time-, and theories where accumulation of resources had no sense apart from a future use were created.

It’s not that Aristotle abhorred wealth. He recognised the necessity of a sensible amount of it. That’s the way for the middle class to participate in politics for free -being at the same time able to work less hours-. He understood that it was not possible to make good deeds without resources.

It wasn’t until Adam Smith that chrematisike was considered again as a useful resource for the whole of society. But that’s another story.


4 thoughts on “Aristotle and his double vision of economy

  1. Ferran says:

    Great post Gabi!!
    just a question… what christian traditions do you think that follows Aristotle’s path?

    thanks for this post, Ferran.

  2. I think it’s worth pointing out that ‘Oikos’ referred to all domestic or private life and was contrasted with ‘Polis’, the realm of political and public activity. ‘Oikonomikus’ was basically domestic management, and doesn’t really cohere to the modern idea of economics (which, as you say, has its roots in political economy). Aristotle certainly thought that some people would make large sums of money – he thought that the noblest and best people would naturally rise to the top through a combination of good upbringing and the development of good judgment. Thus, they would ‘flourish’ (‘eudaimonia’). In no way, though, did he advocate the kind of super-rich individualism we see today: the man of excellent character would be engrained and enriched by public life.

    Ferran – Aristotle was hugely influential on scholastic thought and most intellectual endeavour in Europe and the Middle East until the Renaissance was inspired by his work. All science more or less takes its lead from Aristotle, who responded to Plato’s metaphysical idealism by becoming the first naturalist. Thus, it’s often said of philosophers that they are either Platonists or Aristotleans, though this distinction does not of course hold true.

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