CHAPTER VIARISTOTLE
In the writings of Aristotle, we find a much richer source for a history of Greek economic thought. Though no extant work of his is devoted to economics, he left a multitude of writings on diverse subjects, as a monument to his wonderful versatility and tireless industry.[517]Of these, thePoliticsand theEthicsare especially fruitful in economic ideas, though, as in the case of Plato, such material is incidental to the main discussion. His general attitude toward wealth and some of its problems, we shall find to be often substantially in agreement with that of Plato. His economic vision was prejudiced by the same ethico-aristocratic spirit. Yet his practical, scientific mind caused him to deal with many economic questions more extensively, more directly, and more incisively than is true of any other Greek thinker. Caution must be observed, however, against reading into his statements more meaning than he purposed to convey. He was not the creator of the science of political economy,[518]though his apprehension of many of the chief concepts of economics was probably clearer than has often been admitted by modern economists.[519]
At the very threshold of economic speculation, Aristotle advanced beyond Plato and Xenophon, in that he perceived the fallacy in the confusion of household and public economy. He sawthat they differed, not only in size or numbers, but in essential type.[520]In his later discussion of wealth, however, he overlooked his distinction, and fell into the old Greek confusion.
The extent of Aristotle’s contribution to the theory of value has been very diversely estimated.[521]In a classic passage of thePolitics, he distinguishes between the two uses of an object, the direct use for which it was produced, and the indirect as an article for exchange.[522]This has often been heralded as an anticipation of Adam Smith’s distinctions between value in use and value in exchange.[523]Such an interpretation, however, is hardly warranted.[524]The entire emphasis of Aristotle in the passage is upon use rather than upon value. The exchange use is declared subordinate, and the context shows that the purport of the statement is to teach the uneconomic doctrine that exchange (μεταβλητική) is an artificial use, especially when pursued for gain.
Moreover, the passage fails to develop the definition further by distinguishing between economic utilities that involve a cost of production, and other necessities that are devoid of exchange value because of their universality.[525]Need is recognized as an element in exchange value,[526]but it is not differentiated from economic demand that has the means to purchase. All that can safelybe said of this statement of Aristotle, therefore, is that he accidentally hit upon a basal distinction, which, had it been his purpose, he might have used as starting-point for the development of the modern theory of value.
Certain other passages from his writings reveal a clearer apprehension of the distinction. In theRhetoric, he states the principle that exchange value is measured by rarity, though this may not be a criterion of the actual value of the commodity to life.[527]The latter is measured by its necessity or practical utility.[528]
A paragraph from theNicomachaean Ethics, though it does not treat the problem directly, is also an evidence of Aristotle’s insight into the elements of economic value.[529]It has been strangely slighted by most historians of economic thought, though its significance has been recognized by editors of theEthics.[530]It grows out of his discussion of fair exchange, which is a part of the larger subject of justice. He observes that a proportional equality (κατὰ τὴν ἀναλογίαν ἴσον) between diverse products must exist before exchange can take place,[531]since the labor involved in their production is not equal.[532]This equality he obtains through a proportion, in which the objects of exchange stand in inverse ratio to the producers.[533]The equalization of the commodities is thus based, according to Aristotle, upon an estimate of the labor or cost of production in each case.[534]Again, he points out that thestandard by which all products are measured is need or demand (χρεία) for reciprocal services,[535]thereby making demand a social fact dependent upon organized society. It is, in his thought, the “common denominator of value” which finally determines the actual basis on which all goods are exchanged or services rendered. Elsewhere Aristotle’s conception of value is more individualistic, like that of Xenophon and Plato, but Haney[536]overlooks this passage in asserting that his notion of value is “purely subjective.” It is not merely “equal wants” that are considered, as he states, but equal costs as well.[537]This demand, or common measure of value, is expressed in terms of money (νόμισμα).[538]
It is clear then, from this passage in theEthics, that Aristotle understood that economic value is determined by demand, as measured in money, and by labor invested or cost of production.[539]This latter element, of course, involves the condition that the product be limited in supply, though this is not expressly stated.[540]To be sure, the interest of the moral philosopher is also paramount here,[541]as in thePoliticspassage. The thought is centered on fair exchange, as a phase of justice, rather than upon the problem of value. Nevertheless, his discussion reveals a clear insight into demand and cost of production as the two most important elements in economic value.[542]
WEALTH
Since Aristotle had a better apprehension of the theory of value than other Greek thinkers, we may expect him also to define more clearly the concept of wealth. In thePolitics, he names the following attributes of genuine (ἀληθινός) wealth (πλοῦτος): necessary to life; useful to persons associated in a household or a state; capable of accumulation (θησαυρισμός); limited in extent (οὐκ ἄπειρος).[543]According to Mill,[544]from the “economic” standpoint, wealth is “all useful and agreeable things” of a “material nature” possessing “exchange value”; and, to have exchange value, they must be “capable of accumulation.”
In comparing these two definitions, it should be recognized at the outset that Aristotle’s term “genuine” does not mean “truly economic,” as it might in Mill, but rather “legitimate wealth” as distinguished from that gained from false finance (χρηματιστική);[545]also that his “necessary to life” and “limited in extent” are not used in the economic but in the moral sense, as opposed to luxury and extreme interest in money-making. Mill’s “all useful and agreeable things” presents a marked contrast to this in spirit. Aristotle’s “useful” means “what subserves the final good” (πρὸς ἀγαθὴν ζωήν), while Mill’s means “things that give sensations of comfort or pleasure.” Thus Aristotle’s wealth is necessarily limited, while Mill’s is unlimited, since, as Barker observes, “only an infinity of wealth can satisfy an infinity of need.”[546]It will be seen from the following discussion, however, that Aristotle includes more than “necessary things” in his category of economic wealth. He does not specify “material things,” as does Mill, but it seems probable that this is his meaning.[547]In all the passages where he enumerates the different kinds of wealth, only material things areincluded, except slaves, who are counted as mere tools.[548]One of these passages specifically excludes intellectual wealth by defining property as a “separable instrument.”[549]The use of the term for value (ἀξία) probably implies the same limitation.[550]Though Aristotle does not mention exchange value specifically, it is clearly implied in his definition. “Things useful for the association of a state” and things “capable of accumulation” must have exchange value, thus excluding illimitable utilities such as air and light.[551]His use of κτῆμα, “possession,” and his recognition of cost of production and economic demand as the main factors in determining value,[552]are further evidence of this. Moreover, as seen above, in theEthics, he clearly makes exchange value an attribute of all wealth.[553]
From our comparison of the two definitions, then, it is evident that, though Aristotle is antithetical to Mill in putting the ethical interest first, and though his definition is not so scientifically specific, yet the two agree in recognizing the qualities of materiality, exchange value, and possibility of accumulation as necessary attributes of wealth. We shall see below, also, that the Greek philosopher was the forerunner of the orthodox English economists in criticizing the common confusion of money with wealth.[554]
But, despite his grasp of the leading principles in the economics of wealth, he takes the same negative moral attitude toward wealth as does Plato, though his hostility is also directed primarily against the spirit that commercializes life and makes unlimited wealth thesummum bonum. To his mind, this idea that wealth is the sum ofall goods is almost the necessary accompaniment of the possession of superfluous wealth, but it is especially characteristic of the new-rich (νεωστὶ κεκτημένοις).[555]Yet Aristotle is too practical to be ascetic. He realizes that leisure (σχολή) is necessary for moral development and for good citizenship, and that this cannot be enjoyed except on a basis of sufficient wealth. A fair competency is therefore desirable for the best life,[556]for men should live not only temperately, but liberally.[557]Poverty produces civic strife and crime.[558]Wealth in the absolute sense (ἁπλῶς) is always good, though it may not always be fitted to a certain individual, or be property used by him.[559]Each, therefore, should choose what is good for himself, and use it accordingly.[560]All this sounds saner than the subjective notion of wealth taught by Plato. But right here is the secret of the difficulty as Aristotle sees it. Just because all external wealth is good in the absolute sense, the popular error has arisen that it is the final cause (αἰτία) of all happiness,[561]whereas the actual relation of wealth to happiness is the same as that of the lyre to the tune. There can be no music without the intervention of the musician.[562]External goods are therefore not of primary importance to life. The goods of the soul should be placed first,[563]for the virtues of life are not gained and preserved by material wealth, but vice versa,[564]and the men of high character andintelligence are most happy, even though their wealth is moderate.[565]The common attitude of the money-maker that wealth is unlimited is contrary to nature.[566]Genuine wealth cannot be unlimited,[567]since external goods are strictly defined by their utility for a certain thing. Excessive wealth thus either harms the owner, or is, at least, useless to him.[568]Neither can wealth be rightly made thesummum bonum, for it is really not an end at all, but only a collection of means to an end (ὀργάνων πλῆθος).[569]The inevitable result of making it the end and measure of all is moral degeneration.[570]If the highest interests of life are to be preserved, it must always be kept subservient. First things must be placed first, both by the individual[571]and by the state.[572]
It is often asserted that Aristotle denied the very existence of a problem of production.[573]This statement has been based primarily on certain passages in thePolitics.[574]These passages, however, are not a denial of the importance of production. Their purport is merely to show that the chief aim of life is not to produce or to provide wealth, but to use it for the advancement of life’s highest interest. From this standpoint, both acquisition (κτητική) and production (ποιητική) are subordinate arts.[575]So far is Aristotlefrom giving no place to production, that a later chapter of thePoliticsis devoted to the consideration of the scheme of supply, including production.[576]To be sure, he does not lay much emphasis on genuine production in his enumeration. Industry is barely mentioned, while agriculture is discussed in detail. His “free-holder” is a consumer of the gifts of nature, rather than a real producer.[577]He classifies the truly productive employments that work for themselves (αὐτόφυτον) as those of the nomad, the farmer, the brigand, the fisherman, and the hunter, and makes those that live by barter (ἁλλαγῆς) or trade (καπηλείας) parasitic.[578]
In another passage, finance, strictly defined (οἰκειατάτη), is limited to all forms of agriculture, and even the hired labor (μισθαρνία) of industry is included in unnatural finance.[579]Aristotle has thus often been compared to the physiocrats, who distinguished between creative and parasitic classes of workers, upheld the “natural” order as the ideal, and eulogized agriculture and the “extractive” industries as the only productive ones. As Souchon[580]has observed, however, the resemblance is only superficial. Yet the fact that he fails to see that exchange is productive of a time and place value, and the fact that he includes hired labor, skilled and unskilled, among the unnatural activities, are sufficient evidence that he had only a superficial grasp of the principles of production.[581]But the frequent assertion that he includes brigandageand war among the productive arts is unwarranted, for he classifies them only among the acquisitive means.[582]
Aristotle almost outdoes Plato in his subordination of all production to ethics, though he keeps their respective aims more distinct. According to him, the productive arts are not ends in themselves. They are means to the supreme end of the moral life, whose first interest is not in production, but in right action.[583]As seen in our discussion of Plato, such a doctrine is not fruitful, economically. If interpreted too rigidly, it stifles commerce and industry. Yet, at bottom, it holds a great truth which modern economists are emphasizing—the fact that wealth and production alike must be subordinated to the general individual and social good. Moreover, the philosopher should not be interpreted in too hard-and-fast a manner. Barker is extreme in his statement that the economic theory of Aristotle is a mere treatise on “the ethics of family life” and that “the fundamental characteristic of his idea of production is a reactionary archaism, which abolishes all the machinery of civilization in favor of the self-supporting farm and a modicum of barter.”[584]Bonar’s assertion is also unwarranted, that “Aristotle thinks it beneath the dignity” of his discourse to give the practical details of agriculture and industry “more than a cursory notice.”[585]Such details were not germane to the plan of his work, and would certainly be considered out of place in a modern general text on economics. Aristotle’s economic doctrine, as a whole, is certainly far broader in scope than the family, and, while based upon ethics, is something more than an ethical treatise. As seen above, he recognizes the necessity of a moderate acquisition of wealth, both for the prosperous state and for the virtuous man, and demands only that the human interest be put first.[586]
Agriculture.—Of the factors that enter into production, Aristotle is, like the other Socratics, most interested in natural resources. He emphasizes especially the agricultural life. To his mind, it is the only true foundation of “natural finance,” since the financial means should be provided in nature herself.[587]Natural finance (οἰκειατάτη) is made to include only a proper knowledge of the care of land, cattle, bees, fowl, and other natural resources.[588]It is natural, since it does not earn at the expense of others, as do retail trade and other methods of false finance. Aristotle also reveals his interest in agriculture by giving a bibliography of the subject. He names Charetides of Paros, Apollodorus of Lemnos, “and others on other branches”—a hint that many such works on practical economics may be lost to us.[589]However, his interest, even in this primary industry, is not of a practical nature, like that of Xenophon. He relegates it to the non-citizen classes, along with commerce and the mechanical arts.[590]
Capital.—Aristotle is the only Greek thinker who has given a clear definition of capital. After defining the slave as an instrument (ὅργανον), in order to distinguish still more sharply, he differentiates between the two kinds of wealth—that which is used for consumption, and that which is employed for further production.[591]As an example of the former, he uses the bed and the dress, and of the latter the weaver’s comb (κερκίς).[592]He points out that all wealth is produced for consumption, but that part of it is consumed indirectly in manufacture. Here is an approach to Adam Smith’s[593]definition of capital, as “that part of a man’s stock which he expects to afford him revenue.” Unfortunately, however, the Greek fails to pursue his distinction farther. The theme of his thought is, after all, not capital or production either, but the status of the slave, though, from his standpoint, the slave is capital. He proceeds with the very uneconomic assertion that life consists in action(πρᾶξις), not in production (ποίησις),[594]and concludes with the real goal of his argument, that the slave is an assistant (ὑπερέτης), or an animate instrument in the realm of action, not of production.[595]The slave is therefore an instrument to increase the life or action of his master, who himself is not represented as a producer, but as a consumer of the present stock. Thus what bids fair to be a fruitful distinction ends in a denial of the primary importance of production. The purpose of Aristotle is here similar to that in some passages of Ruskin[596]and Adam Smith,[597]to emphasize consumption rather than production.
In another passage, he repeats his definition of capital in different terms. Goods are classified as for “purposes of production” or for “mere enjoyment,”[598]but here again no theory of capital is developed. Yet these two definitions are sufficient evidence that he advanced beyond his predecessors in his apprehension of the meaning of the term.[599]His division of production and finance, however, into the natural or limited, which deals only with natural resources,[600]and the unnatural, which is unlimited, and includes commerce, usury, and even industry,[601]reveals a mind neither greatly interested in capital, nor clear as to its true economic importance. His assertion in theEthics[602]that the prodigal (ἄσωτος) benefits many by his reckless expenditures, and that parsimoniousness (ἀνελευθερία) is a worse evil than prodigality also shows that he did not sufficiently emphasize the importance to society of economy, themother of stored capital. On this point, Plato has the saner view,[603]and the extreme attitude of Aristotle is certainly not characteristic of the Greeks in general.[604]His failure to grasp the true theory of interest is a further evidence of his superficial apprehension of the function of money capital. He does not see, with Adam Smith, that money represents so much stored capital, potentially productive, and that “since something can everywhere be made by the use of money, something ought everywhere to be paid for the use of it.”[605]In justice to him, however, it should be observed that, though he failed to see the importance of unlimited economic progress through constant increase in the capitalistic stock, there is after all a sense in which he was right. There is a natural limit to just acquisition, and it is especially with the individual in relation to wealth that he is dealing. He is thus, with Plato, a forerunner of the present tendency in economics, which is inclined to set a limit to the amount that one can justly earn in a lifetime by his own work.[606]
Labor and industry.—Aristotle’s attitude to labor, the third factor in production, is similar to that of Plato, though he lays greater emphasis on the evil physical and moral effect of the “banausic” arts. They are defined as those that “render men unfit for the practice of virtue.”[607]They not only cause the body to degenerate,[608]but, being “mercenary” employments, they alsovulgarize the soul.[609]The occupations that require the most physical labor are the most “slavish.”[610]The life of artisans and laborers is mean (φαῦλος) and has no business with virtue.[611]The citizen youth should be taught none of the illiberal pursuits of the tradesmen.[612]No citizen should enter into industrial labor or retail trade, since they are ignoble (ἀγεννής) and hostile to virtue.[613]Even all the agricultural work must be performed by slaves, that the citizens may have leisure for personal development and for service to the state.[614]In addition to his other objections to retail trade and the arts, Aristotle considers them to be naturally unjust, since they take something from him with whom they deal.[615]Indeed, the productive classes have but slight recognition in his ideal state. They seem to be tolerated only as a necessary evil, and are in a state of limited slavery ἀφωρισμένην τινὰ δουλείαν. Virtue is even less possible for them than for slaves, and they lead a less tolerable life.[616]All hired labor belongs to the category of “false finance” which degrades individual and state alike.[617]The state that produces a multitude of mechanics and but few hoplites can never be great.[618]
Here we have the very antithesis of the modern commercial standpoint. However, the truth is not all with the moderns, for a highly developed commerce and industry and the general prosperity of the mass of the people are not always necessarily coincident. Moreover, it is hardly fair to interpret Aristotle too rigidly. He understood well the necessity of craftsmen and all other industrial workers to the state.[619]The burden of his attack was directed against retail trade. Like Plato’s his prejudice had a moral and political root,[620]and was arrayed against the extreme applicationto labor, and against its false purpose, rather than against labor itself. He insisted that even intellectual work, when carried to an extreme, and pursued with the wrong aim, might become equally demoralizing.[621]
Here is a doctrine which our modern age, that would place even education on a bread-and-butter basis, and that tends to kill initiative and vision by extreme specialization, might well consider. Even Latin literature, when taught as it too often is, merely as a syntactical grind to prepare teachers to pursue the same folly is no more one of the humanities than is industrial chemistry.[622]Furthermore, Aristotle and Plato are doubtless right in their belief that a necessary extreme application to physical labor to earn the daily bread inevitably prevents mental and moral development and the proper performance of the duties of citizenship. And our modern democracies with their boasts of universal suffrage are still something of a farce, as long as economic conditions are such that the mass of the population has left no time to think of anything, except how to provide the bare physical necessities. Aristotle’s insistence upon leisure for the life of the citizen is no demand for aristocratic indolence.[623]Neither is it Jowett’s “condition of a gentleman,” or merely the idealized notion of an “internal state” in which “the intellect, free from the cares of practical life, energizes or reposes in the consciousness of truth.” It is rather a demand for release from material cares, so as to insure the highest degree of activity in self-development and political service.[624]
It may well be observed too, that Aristotle, the special champion of slavery, and reputed scorner of physical labor for freemen, exhibits a real interest in industry, in unguarded moments. Oneof his arguments against communism is that it would take from the citizen the desire to work.[625]He repudiates the life of indolence, and finds happiness in action.[626]He considers a practical knowledge of agriculture as essential to the successful economist,[627]and defines the just as those who live upon their own resources or labor, instead of making profit from others, especially the farmers, who live from the land which they cultivate.[628]We have seen above also that he makes labor one of the prime factors that determine value, and thus the most important element in production.[629]Moreover, he shows that he has a practical grasp of the importance of productive employment for the citizens of a democracy. He advises the rich to furnish plots of land (γήδια) to the poor, from the public revenues, or else that they give the poor a start (ἀφορμή) in other business, and thus turn them to industry.[630]
On the division of labor, Aristotle adds little to Plato’s and Xenophon’s theory. He agrees with Xenophon against Plato that it implies a necessary distinction between the work of men and women.[631]He also applies the principle more extensively, so as to include all nature, whereas Plato seems to limit its application to man. Nature (ἡ φύσις) he observes, does not produce things like the Delphian knife, in a poverty-stricken manner (πενιχρῶς) to serve many purposes, but each for a single purpose (ἓν πρὸς ἓν).[632]Like Plato, he makes the principle of reciprocity (τὸ ἴσον ἀντιπεπονθός) out of which the division of labor arises, the saving element in the state.[633]He is also fully as emphatic in his application of the law to politics and citizenship.[634]
SLAVERY
We have seen that the references to slavery in Xenophon and Plato are incidental, and reveal a certain unconscious naïveté as to the actual social problem involved. By Aristotle’s day, however, the criticisms of the Sophists had shaken the foundations of all traditional institutions, and their thesis that slavery is contrary to nature had become through the Cynics a prominent social theory.[635]The thought on the subject had crystallized into two leading doctrines—one including benevolence in justice, and hence denying the right of slavery; and the other identifying justice with the rule of the stronger, and hence upholding slavery as based on mere force.[636]The practical Aristotle, an upholder of slavery, not from tradition, but through conscious belief in its economic necessity, thus takes his stand midway between the two opposing theories. He champions the old view of natural slavery, but rejects the basis of mere force for that of morality and benevolence.[637]His thesis is that slavery is a natural and necessary relation in human society, not accidental or conventional. The slave, being property, which is a multitude of instruments (ὀργάνων πλῆθος), is an animate instrument (ὄργανον ἔμψυχον) conducive to life (πρὸς ζωήν).[638]He is just as necessary to the best life of the citizen as are inanimate instruments, and will be, until all tools work automatically, like the mythical figures of Daedalus or the tripods of Hephaestus.[639]The slave is a servant in the realm of action (πρᾶξις), not of production (ποίησις). He is not a producer of commodities(ποιητικός), but of services (πρακτικός),[640]and just as property is merely a part or member (μόριον) belonging wholly to something else, so the slave, as property, belongs entirely to his master, and has no true existence apart from him.[641]From these facts, the whole nature and power of the slave are evident. One who, though a human being, is merely property is a natural slave, since he is naturally not his own master, but belongs to another, in whom he finds his true being.[642]As Barker has observed, this conclusion of the first part of Aristotle’s argument is inevitable if we admit his premises of the identity of “instruments” and property, but this is an unreal identity.[643]“Natural” (φύσει) is the saving word in his argument, but “human” (ἄνθρωπος) refutes it, as the philosopher practically admits later.
He now proceeds to ask the question whether this “natural” slave of his hypothesis actually exists, for whom such a relation is just, or whether all slavery is contrary to nature, as some allege. He answers in the affirmative. The principle of rule and subjection he declares to be a foundation law of all life.[644]Men are constituted for either condition from birth, and their development follows this natural bent.[645]This law may be observed in inanimate things,[646]in the natural subordinate relation of the body to the soul, of domestic animals to man, of female to male, of child to parent, and of subjects to rulers.[647]Thus all who are capable only of physical service hold the same relation to higher natures as the body holds to the soul, and are slaves by nature.[648]This is the only relation for which the slave is naturally fitted, since he can apprehend reason without himself possessing it, being midway between animals and truly rational men.[649]Usually also nature differentiatesboth the bodies and the souls of freemen and slaves, suiting them to their respective spheres and functions.[650]
This relation of slavery, Aristotle argues, is not only natural and necessary, but also beneficial for those who are so constituted.[651]Just as the body is benefited by the rule of the soul, and domestic animals by the rule of man, so it is distinctly to the advantage of the “natural slave” to be ruled by a rational master. This is universally true, wherever one class of persons is as inferior to another as is the body to the soul.[652]
The philosopher’s frank admissions, in which he opposes the doctrine that slavery is founded on mere force, are fatal to his first argument on the natural slave. He admits that nature does not always consummate her purpose; that the souls of freemen are sometimes found in the bodies of slaves, and vice versa;[653]that it is difficult to distinguish the quality of the soul, in any event;[654]that the claim that slavery is neither natural nor beneficial has in it a modicum of truth, as there are sometimes merely legal slaves, or slaves by convention;[655]that slavery based on mere might without virtue is unjust;[656]that captives of war may be wrongly enslaved;[657]that only those who actually deserve it, should meet this fate;[658]that the accidents of life may bring even the noblest of mankind into slavery;[659]and that only non-Greeks are ignoble and worthy of it.[660]He even insists that the terms “slave-master,” “freeman,” “slave,” when rightly used, imply a certain virtue or the lack of it, and therefore that to be justly a master, one must be morallysuperior.[661]The question of the possession of the higher virtues by slaves is recognized by him to be a difficult problem, for an affirmative answer breaks down his distinction of “natural” slave, yet it seems paradoxical to deny these virtues to him as a human being.[662]Nor can the difficulty be avoided by positing for the slave a mere difference in degree of virtue, for the distinction between ruler and subject must be one of kind.[663]In any event, temperance and justice are necessary even for good slave service.[664]Aristotle therefore evades the difficulty, and begs the question by concluding that both master and slave must share in virtue, but differently, in accord with their respective stations.[665]
With this admission, he places slaves on a higher plane than free artisans, in that he denies virtue to such classes, since it cannot be produced in them, except as they are brought into contact with a master.[666]He thus makes slavery a humanitarian institution, and the slave a real member of the family.[667]But the admission most fatal to his theory is in agreeing that the slavequaman may be a subject of friendship,[668]and in advocating his manumission as a reward for good behavior. With this, the attempted distinction between him,quaslave andquaman, utterly breaks down, and the existence of natural slaves is virtually denied.[669]Thus the great champion of slavery in the ancient world, by his very defense of it, repudiates its right as a natural institution. His actual conception of the relation is, indeed, not far from the ideal of Plato, a union for the best mutual service of rulers and ruled, in whichthe slave receives from his master a moral exchange value for his physical service.[670]
There is a certain economic and moral truth, also, in the attitude of Aristotle toward slavery, that, as Ruskin has observed,[671]higher civilization and culture must have a foundation of menial labor, and that the only justification of such a situation is in the assumption that some are naturally fitted for the higher, and some for the lower, sphere.[672]Such modern laborers are not technically slaves, but Aristotle would insist that they are in a still worse condition, since they are deprived of the humanizing and moralizing influences of a rational master. The plausibility of such a contention would be well illustrated by the wretched condition of multitudes of negroes after the Civil War, as also by the hopeless life of a large portion of the modern industrial army. Moreover, the economic slavery of many of the common toilers today is less justifiable than the domestic slavery advocated by Aristotle, for it too often means a life of indolence and self-indulgence for the masters, instead of that Greek leisure which gave opportunity for higher activity.[673]
To the theory of money Aristotle makes a substantial contribution. He agrees with Plato that money found its origin in the growth of necessary exchange, which in turn resulted from an increased division of labor. Unlike Plato, however, he gives a detailed history of the development of money.[674]Before its invention, all exchange was by barter.[675]But with the growth of commerce, barter became difficult, and a common medium ofexchange was agreed upon.[676]Something was chosen that was a commodity, having intrinsic value (ὁτῶν χρησίμων αὐτὸ ὄν) and that was easy to handle (εὐμεταχείριστον) in the business of life such as iron, silver, or other metal.[677]It was first uncoined, defined merely by size and weight.[678]Finally, to avoid the inconvenience, it was given a stamp (χαρακτήρ) representative of the quantity (σημεῖον τοῦ πόσου).[679]Thus arose the use of money as a convenience in necessary exchange, but once having arisen, it became the foundation of false finance and retail trade, which are pursued as a science of gain.[680]All this accords well with the facts as now accepted, yet how utterly different is Aristotle’s standpoint from that of the modern historian of economic institutions is revealed by his last statement, and indeed by the setting of the entire passage. His history of money is merely incidental to his purpose of showing that money is the parent and the very life of the false finance which he decries.
He is also more explicit than the other Greek theorists on the function of money. He clearly recognizes the two functions noted by Plato,[681]but he deals with them in a much more detailed manner. His discussion grows out of his theory of distributive justice presented in theEthics.[682]Money was introduced as the exchangeable representative of demand (ὑπάλλαγμα τῆς χρείας),[683]since diverse products must be reduced to some common denominator.[684]It is thus a medium of exchange, acting as a measure of all inferior and superior values, by making them all commensurable (συμβλητά).[685]
The other important function of money recognized is as a guaranty (ἐγγυητής) of future exchange. It represents the abiding, rather than the temporary, need, and is thus a standard of deferred payments.[686]The importance of money in the fulfilment of these functions is great, in the opinion of Aristotle. The possibility of fair exchange, or indeed the very existence of organized society depends upon it.[687]
He is also clearer than Plato and Xenophon in his definition of the relation between money and wealth. He severely criticizes the current mercantilistic theory of his day, which identified wealth with a quantity of current coin (νομίσματος πλῆθος).[688]He immediately follows this, however, with a more extended presentation of the opposite error of the Cynics, that money is mere trash (λῆρος), depending for its value entirely upon convention (νόμῳ). This theory, he points out, is based on the fact that, if money ceased to be recognized as legal tender, it would be useless; that it satisfies no direct necessity; and that one might starve like Midas, though possessed of it in superabundance.[689]
Aristotle is here somewhat ambiguous as to his own attitude toward this doctrine. He fails to object that money does not necessarily become valueless when it ceases to be legal tender, and that a similar argument might be used to prove that clothing is not wealth. Instead, he uses the idea as a means of refuting the opposite error, which is more obnoxious to him, and on the basis of it he plunges into his discussion of the true and false finance.[690]This, together with a passage in theEthics, might point to the conclusion that he agreed with the doctrine of the Cynics on money. He states that it was introduced by agreement (κατὰ συνθήκην); that, owing to this, it is called νόμισμα, because its value is not natural but legal; and that it may, at any time, be changed or madeuseless.[691]In the light of other evidence, however, it seems probable that he here meant to emphasize merely the fact that the general agreement of a community is necessary before anything can be used as a symbol of demand. In stating that it may be made useless, he probably referred to money itself, rather than the material of it, which is, of course, true. His determined opposition to the mercantile theory of money, as the basis of false finance, caused him to appear to subscribe to the opposite error. That, in actual fact, he did recognize the necessity of intrinsic value as an attribute of money is clearly evidenced by another passage, where he specifies it. He says that the material chosen as money was a commodity and easy to handle.[692]This can mean only that it is subject to demand and supply, like any other object of exchange. This inference is substantiated by another passage, which declares that the value of money fluctuates, like that of other things, only not in the same degree.[693]Moreover, in his enumeration of the diverse kinds of wealth, money is regularly included.[694]It seems evident, therefore, that he did not fall a victim of either error, but recognized that, though money is only representative wealth, yet it is itself a commodity, whose value changes with supply and demand, like other goods.[695]Since he understood the use of money as a standard of deferred payments, he also saw clearly the necessity of a stable monetary standard.[696]
Though Aristotle defines money as representative wealth, like Plato, he fails to apprehend its meaning as representative, and therefore productive capital.[697]In his eyes, such a use of money isunjust and contrary to nature. He counts usury (τοκισμός) to be a large part of that false finance, which turns money from its true function to be made an object of traffic.[698]Those who lend small sums at a high rate of interest are contemptible,[699]and petty usury (ἡ ὀβολοστατική) is the most unnatural and violent form of chrematistik, since it makes money reproduce money.[700]It is to be observed, however, that his criticism is directed chiefly against petty interest, and that he does not appear to be thinking of “heavy loans on the security of a whole cargo, but of petty lendings to the necessitous poor, at heavy interest.”[701]Though his entire account of false finance exhibits an animus against the precious metals, as its basal cause, and as the source of individual and national degeneration,[702]yet he clearly appreciates their necessary function in the state, and his hostility is actually directed against the spirit of commercialism. Money, the means, has usurped the place of the end, until domestic and public economy alike have come to mean only the vulgar art of acquisition.[703]
The usual explanation of the fact that the Greek theorists failed to grasp the fact of the productive power of money is that loans were almost entirely for consumption, and hence seemed like an oppression of the poor.[704]This explanation, however, does not accord with the facts of Athenian life, at least for Aristotle’s day. It is clear from thePrivate Orationsof Demosthenes that there did exist an extensive banking and credit system for productivepurposes in the Athens of his time.[705]Moreover, the hostility to interest and credit was not the rule, but the exception, for Demosthenes and not the philosophers should be accepted as voicing public opinion on this point. He considered credit to be of as much importance as money itself in the business world,[706]and declared one who ignored this elementary fact to be a mere know-nothing.[707]Indeed, the money-lenders were, to him, the very foundation of the prosperity of the state.[708]The prejudice of Plato and Aristotle represent merely the exceptional attitude of the pure moralist, who because of the questionable tactics of money-lenders, and the injustice and greed in some phases of contemporary business life, became critics of all money-making operations.[709]
Aristotle, in both thePoliticsand theEthics, deals at considerable length with the subject of exchange.[710]He states that it arose out of the natural situation (κατὰ φύσιν) and defines this as “the fact that men had more of some commodities and less of others than they needed.”[711]At first, all exchange was by barter (ἀλλαγή) and there was no trading except for specific need.[712]The development of an international commerce of import and export was made possible by the invention of money. It is this significant fact that furnishes the line of division between the old naturaleconomy and the era of commerce and finance, when exchange and money have become the tools for unlimited individual enrichment.[713]
His theory of exchange and just price grows out of his application to exchange of his definition of corrective justice, as a mean between two extremes of injustice.[714]Trade is just when each party to it has the exact equivalent (ἴσον) in value with which he began. Exchange is a mean between profit and loss, which themselves have no proper relation to its true purpose.[715]This does not mean that the traders must receive the same in return (τὸ ἀντιπεπονθὸς κατ᾽ ἰσότητα), but an equivalent, or proportional requital (τὸ ἀντιπεπονθὸς κατ᾽ ἀναλογίαν).[716]It is this fact of proportional requital that makes exchange, and indeed human society, possible.[717]The meaning is illustrated by a proportion in which the producers bear the same relation to each other as their products.[718]By joining means and extremes, the exchangers are brought to a basis of proportional equality (τὸ κατὰ τὴν ἀναλογίαν ἴσον).[719]Thus is determined how many shoes, the shoemaker’s product, must be given for a house, the builder’s product, and the prices of the two commodities are justly settled, with relation to each other.[720]It is very necessary for just exchange, that such proportional equality be effected before the requital or actual transfer takes place. Otherwise one will gain both superiorities (ἀμφοτέρας τὰς ὑπεροχάς), andequality becomes impossible,[721]since the cost of production of things is very diverse.[722]Indeed, the arts themselves could not exist, unless the advantage to the consumer were similar in quantity and quality to the cost to the producer.[723]
The common element in diverse products that makes them commensurable is need, or demand (ἡ χρεία), for reciprocal services.[724]But on the basis of the need of the moment, or under the régime of barter, just exchange would be practically impossible, since the concrete needs of A and B, at any given moment, are not likely to correspond. In such a case, exchange would be a gross disregard of the cost of production. This has been avoided by the introduction of money as a substitute for demand,[725]a symbol of general, rather than specific need. Thus just exchange becomes possible, for money, as the representative of general need, is always equally in demand by all, and, as the common denominator of value, it alone renders it possible for proportional amounts of each product to be exchanged.[726]
Aristotle’s basal premise in this theory of fair exchange, that unless an equal quantum of value is received by each party, one must lose what the other gains, has been severely criticized by Menger.[727]He objects that the determining consideration in exchange is not the equal value of exchanged goods. On the contrary,men trade only when they expect to better their economic condition.“Um ihres economischen Vortheils willen, nicht um gleiches gegen gleiches hinzugeben; sondern um ihre Bedürfnisse so vollständig als unter den gegebenen Verhältnissen dies zulässig ist zu befriedigen.”Each gives the other only so much of his own goods as is necessary to secure this end, and it is this competition in open market that fixes prices. Barker[728]also criticizes Aristotle on the ground that he takes no account of demand in his theory of just price. He states that if the cost of production were the only element to be considered, the doctrine might be correct, but with the entrance of demand, one may buy at a low price and sell at an advance without injustice.
Of course, the bald theory that, in exchange, one necessarily loses what the other gains, is untenable. Yet there is still something to be said for Aristotle. He recognized, as well as Menger, that exchange, as pursued by the retailers, did not square with his idea of just price. This is the very reason why he objects to retail trade. He is presenting exchange, not as it is, but as he believes it should be pursued. His doctrine, in a nutshell, is that the primary purpose of exchange is profit,defined as economic satisfaction of mutual needs, not profit in dollars and cents. The equality that he seeks, too, is not so much an equality of value in obols and drachmas, but that each shall receive an equal quantum of economic satisfaction. This is the true standpoint at bottom, and when, as is common, the mere purpose of money-making dominates in the pursuit of exchange, the profit is too often at the expense of the other party. Such exchange certainly does not mean economic advance or general prosperity. It merely makes possible an increase in the inequalities of wealth and poverty. There is much of fallacy in the prevalent idea that business necessarily increases the wealth of a state. Ruskin, though like Aristotle extreme and one-sided in his view, struck at the root of this error. He also declared that the result of exchange should be advantage, not profit, and repudiated the idea that the mere fact that goods change hands necessarily means general enrichment.[729]The central truth in their protest needed to be spoken, though both erred in not sufficiently recognizing that the labor involved in exchange creates an added time and place value, and therefore has a right to be called productive. They also failed to observe the fact of the necessary risk involved in the business of exchange, which should be repaid with a fair additional profit. For the cornering of markets and the manipulation of prices, for the sake of individual enrichment, modern economists and statesmen, with Aristotle and Ruskin, are fast coming to have only words of protest.