Aristotle's Critique of Political Economy

With a Contemporary Application

Robert L. Gallagher

• Publisher: Routledge
• Year: 2018
• eBook ISBN: 9781317241676
• Edition: 1
• Topic: Business
• Subtopic: Business General
• Index: Business

This book presents a positive account of Aristotle's theory of political economy, arguing that it contains elements that may help us better understand and resolve contemporary social and economic problems.

The book considers how Aristotle's work has been utilized by scholars including Marx, Polanyi, Rawls, Nussbaum and Sen to develop solutions to the problem of injustice. It then goes on to present a new Social Welfare Function (SWF) as an application of Aristotle's theory. In exploring how Aristotle's theories can be applied to contemporary social welfare analysis, the book offers a study that will be of relevance to scholars of the history of economic thought, political theory and the philosophy of economics.

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Part I

Post-Enlightenment Aristotelian theorists of political economy

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1 Karl Marx

“The Aristotle of the nineteenth century”¹

Readers should note that the purpose of this chapter is not to praise the indefatigable Dr Marx, but rather to show how much Aristotle influenced him, by showing that Marx incorporated much of Aristotle’s theory of political economy into his own.

Marx, more than other political economists, takes Aristotle’s critique of political economy seriously, for he calls Aristotle “the great thinker who was the first to analyze . . . the form of value.”² Marx openly acknowledges his debt to Aristotle in several places in Capital and in other works, such as in A Contribution to the Critique of Political Economy.³ One such place is the chapters of Capital in which Marx develops his thesis that there are contradictions in the capitalist mode of production and distribution, a rather fundamental portion of his theory of political economy. He develops his argument out of Aristotle’s analysis in the Politics that there exist two types of property acquisition (ktētikē), one in accord with nature, the other contrary to it.⁴ Marx made that thesis of contradiction the core of his theory of political economy. Though Marx was influenced in his study of philosophy by Hegel, in his development of his theory of political economy it was Aristotle he rather turned to.

Much of the first two parts of Capital (Chapters 1 to 4⁵) can be understood as a commentary on Aristotle, Politics, Book i, Chapters 8, 9 and 10. Chapter 1 of Capital, “The Commodity,” starts with a discussion of the distinction between use-value and exchange-value for which Marx credits Aristotle, even quoting in Greek from Politics i.9.⁶ Later in Chapter 1, Marx praises Aristotle for first developing a theory of value and critiques Aristotle’s theory while quoting from Nicomachean Ethics v.5.⁷ In Chapter 2, in discussing exchange, Marx again cites Aristotle as an authority on exchange-value.⁸ Here, however, we are interested in discussing Part II of Volume I, Chapter 4, “The Transformation of Money into Capital.” There Marx presents sections on “The General Formula of Capital” and on “Contradictions in the General Formula” (Widersprüche der allgemeinen Formel).⁹ The first section presents the model for circulation of commodities (which he represents with the schema C—M—C), and the model for the accumulation of capital or “chrematistics”¹⁰ (which he represents with M—C—M'). For several pages with multiple examples he explains over and over again the differences between the two models. He concludes: “The movement of capital is unlimited.”¹¹ In a long footnote Marx credits Aristotle as being, in Politics i.8–10, the first to notice that “the craft of money-making” (chrēmatistikē) has no limit, and the first one to see that capitalists follow the M—C—M' model of circulation, not the C—M—C followed by ordinary citizens who enter into exchange in order to obtain goods for their households.¹² As Natali and Meikle each point out, Aristotle’s Politics i.9 is often analysed using the schema of symbols first advanced by Marx.¹³ Of course, Aristotle did not call those who practised “the craft of money-making” “capitalists,” but rather kapēloi, meaning “merchants,” “retail traders,” or, as Polanyi likes to call them, “hucksters.”¹⁴ Marx summarizes his debt to Aristotle:

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Aristotle contrasts oikonomia with chrematistics . . . So far as <oikonomia> is the art of acquisition, it is limited to procuring the articles necessary to existence and useful either to a household or the state.

Marx continues with his own translation of a relevant text from the Politics:

“True wealth (ho alēthinos ploûtos) consists in such use-values; for the amount of property which is needed for the good life is not unlimited . . . There is, however, a second mode of acquiring things, to which we may by preference and with correctness give the name of chrematistics, and in this case there appear to be no limits to riches or property.”¹⁵

Continuing with his commentary, Marx says:

As he [Aristotle] goes on to show, the original form of trade was barter, but with the extension of the latter there arose the necessity of money. With the discovery of money, barter of necessity developed into kapēlikē, into trading in commodities, and this again, in contradiction (Widerspruch) with its original tendency, into chrematistics, the art of making money (zur Kunst, Geld zu machen).

“Chrematistics” (chrēmatistikē) is in contradiction with the “original tendency” of barter and trading in commodities, for these were initiated for the purpose of completing the self-sufficiency of the household or city-state, while the purpose of chrematistics is to make a money profit. Marx continues his commentary:

Now chrematistics can be distinguished from oikonomia in that [he translates Aristotle again] “for chrematistics, circulation (poiētikē chrēmatōn . . . dia chrēmatōn metabolēs) is the source of riches. And it appears to revolve around money, for money is the beginning and the end of this kind of exchange (to gar nomisma stoikeîon kai peras tês allagês estin). Therefore also riches such as chrematistics strives for are unlimited . . . with chrematistics there are no bounds to its aims, these aims being absolute wealth.”¹⁶

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Marx with Aristotle sees a contradiction between trading goods in order to “procure the articles necessary to existence and useful either to a household or the state” and trading goods to make a money profit. The first is a practice of oikonomia and is represented by the schema for circulation of goods, C—M—C; the second is what Marx calls “chrematistics” and is represented by the schema for the circulation of money, M—C—M'. Marx recognizes that Aristotle regarded there to be two forms of chrēmatistikē: One is part of oikonomia when money must be acquired for use in future exchanges to obtain goods for the household or city-state, and the second is trading in goods solely to make a money profit.¹⁷ Natali calls these chrematistique¹ and chrematistique².¹⁸ The contradiction between oikonomia and chrematistics (chrematistique²) is that in chrematistics the kapēlos draws value out of oikonomia by reselling goods he has purchased at a price higher than that at which he obtained them. The difference in value is extracted from “the commons,” as Aristotle say...

Table of contents

• Cover Page
• Aristotle’s Critique of Political Economy
• Routledge Studies in the History of Economics
• Title
• Copyright
• Dedication
• Contents
• List of Figures
• List of Tables
• Foreword
• Preface
• Acknowledgements
• List of Abbreviations
• General Introduction
• Part I Post-Enlightenment Aristotelian Theorists of Political Economy
• Part II Aristotle’s Critique of Political Economy
• Part III Contemporary Application: Social Welfare Analysis: Theory
• Part IV Contemporary Application: Social Welfare analysis: Results
• Conclusion
• Bibliography
• Index of Passages
• Greek Index
• Name Index
• Subject Index