Aristotle's Economic Thought

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Aristotle and economic thought:

Aristotle’s Politics forms a synthesis of his research findings and lecture notes on the political regimes of the Aegean. The first chapters of Book One open with a discussion of the basic hierarchical and other differences between the superior art of politics and oikonomike, the more instrumental art of household management. Chapters 8–11 offer a penetrating discourse on the stages of transition from the natural and familial practice of the household economy, governed by traditional social motivations, toward a market economy in which unrelated individuals seek profit through commercial exchange. The driving force of this monetarized mode of wealth acquisition (chrematistike ktetike) is the evolving dominance of the profit motive. Mis-development consists in the ruling of a misguided desire by which commercial exchange looses its function of natural wealth-getting and degenerates into commercial and speculative money-making (chrematistike kapelike). These passages are a striking reminder of Plato’s juxtaposition between the frugal community, and the luxuriant state, with the expansion of commercial exchange inducing people to profit, and money-making as a corrupter of the polis and its citizens. Aristotle analyzes with remarkable subtlety the operational and motivational changes of economic agents in the course of the transformation from barter exchanges, to satisfy natural needs, to the exchanges of a society in commerce for profit. In the analysis the Stagirite is guided by an interpretative scheme frequently used in his studies on physics and biology, namely the unfolding of all forms of life from their potentiality (dynamis) to their actuality (energeia). In the transition to a chrematistic stage of development, money plays a key role. Originally, money was a mere conventional intermediary or instrument of commercial exchange (ploutos organou), but in the chrematistic stage, it changes nature and becomes the proper end of...
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