The Past and Present Society

Aristotle and Economic Analysis

Author(s): M. I. Finley
Reviewed work(s):
Source: Past & Present, No. 47 (May, 1970), pp. 3-25
Published by: Oxford University Press on behalf of The Past and Present Society
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 ARISTOTLE AND ECONOMIC ANALYSIS *
FOR THE ARGUMENT OF THIS PAPER IT IS ESSENTIAL TO DISTINGUISH,
no matterhow crudely,betweeneconomicanalysisand the observa-
of specificeconomicactivities,
tionor description and betweenboth
and a conceptof "the economy"(withwhichonlythe finalsection
will be concerned). By "economic analysis", wrote Joseph
Schumpeter, "I mean.., .the intellectual
efforts
thatmenhave made
in orderto understandeconomicphenomenaor, whichcomesto the
same thing,. . . the analyticor scientificaspects of economic thought".
And later,drawingon a suggestionof GerhardColm's, he added:
"economicanalysisdeals withthe questionshow people behave at
any time and what the economiceffectsare they produce by so
behaving;economicsociologydealswiththequestionhowtheycame
to behave as theydo".'
Whetherone is whollysatisfiedwithSchumpeter'sdefinitions or
not,2theywillserve our presentpurposes. To illustrate
thedifference
betweenanalysisand observation, I quote the mostfamiliarancient
texton thedivisionoflabour,written byXenophonbeforethemiddle
of the fourthcenturyB.C. The context- and thisshouldnot be
ignored- is the superiority of the meals providedin the Persian
palace withits staffofkitchenspecialists.
That this should be the case [Xenophon explains] is not remarkable. For
just as the various trades are most highlydeveloped in the large cities,in the
same way the food at the palace is prepared in a far superior manner. In
small towns the same man makes couches, doors, ploughs and tables, and
oftenhe even builds houses, and stillhe is thankfulif onlyhe can findenough
work to support himself. And it is impossible for a man of many trades to
do all of them well. In large cities, however,because many make demands
on each trade,one alone is enough to supporta man, and oftenless than one:
for instance, one man makes shoes for men, another for women, there are
places even where one man earns a living just by mending shoes, anotherby
cuttingthem out, anotherjust by sewing the uppers together,while thereis
anotherwho performsnone of these operationsbut assembles the parts. Of
necessityhe who pursues a veryspecialized task will do it best.3
* This forProfessorE. Ch. Welskopf on
essay was preparedforthe Festschrift
her seventiethbirthday,and will appear in German translationin the Jahrbuch
fur Wirtschaftsgeschichte. An earlier draftwas presentedto the Social History
Group in Oxfordon 3 December I969. I have benefitedfromthe advice of a
number of friends,A. Andrewes,F. H. Hahn, R. M. Hartwell,G. E. R. Lloyd,
G. E. M. de Ste. Croix.
1 J. Schumpeter,Historyof EconomicAnalysis,ed. E. B. Schumpeter (New
York, 1954), PP. I, 21.
2 See the reviewby I. M. D. Little in Econ. Hist. Rev., 2nd ser., viii (1955-6),
pp. 91-8.
3 Cyropaedia,8.2.5.
4 PAST AND PRESENT NUMBER 47

This textcontainsimportant evidencefortheeconomichistorian -

but not on divisionof labourforwhichit is so oftencited. In the
firstplace, Xenophonis interestedin specializationof craftsrather
thanin divisionof labour. In the secondplace,the virtuesof both
are,in his mind,improvement ofquality,notincreasein productivity.
He says this explicitlyand it is anywayimplicitin the context,the
meals served at the Persian court. Nor is Xenophonuntypical:
divisionoflabouris notoftendiscussedby ancientwriters, but when
it is,theinterestis regularly
in craftsmanship,
in quality.4 One need
onlyglanceat themodelofthepin factory at thebeginningof Adam
Smith'sWealthofNationsto appreciatethe leap takenby the latter,
fromobservation to genuineeconomicanalysis.
Even as observation,furthermore, Xenophon'sremarksdo not
merittheaccoladestheyhavereceived. As Schumpeter pointedout,
economics"constitutesa particularly case" in any studyof
difficult
the originsof a "science" because
knowledgegoes in thisfieldmuchfarther
common-sense to such
relatively
scientificknowledgeas we have been able to achieve,than does common-sense
knowledgein almostany otherfield. The layman'sknowledgethatrich
harvests orthatdivisionoflabour
areassociatedwithlowpricesoffoodstuffs
increasesthe efficiency
of theproductiveprocessare obviouslyprescientific
inold writings
anditis absurdtopointto suchstatements as iftheyembodied
discoveries.5
The keyforantiquityrestsnot withXenophonor Plato but with
Aristotle. It is agreed on all sides that onlyAristotleofferedthe
rudiments ofanalysis;hencehistoriesofeconomicdoctrineregularly
featurehim at the beginning. "The essentialdifference" between
Plato and Aristotlein this respect,writesSchumpeter,"is thatan
analyticintention,whichmaybe said (in a sense)to havebeen absent
fromPlato'smind,was theprimemoverofAristotle's. This is clear
fromthelogicalstructure ofhis arguments".6
Aristotlethenbecomesdoublytroublesome. In thefirstplace,his
supposedefforts at economicanalysiswerefragmentary, whollyout
of scale withhis monumental contributions to physics,metaphysics,

4 See Eric Roll, A History of Economic Thought,3rd edn. (London, 1954),

pp. 27-8.
5 Op. cit., p. 9. Even if one grants Xenophon the insight that division
of
labour is a consequence of greaterdemand, the observationled to no analysis.
To quote Schumpeter again: "Classical scholars as well as economists. .. are
prone to fallinto the errorof hailingas a discoveryeverythingthatsuggestslater
developments,and offorgetting that,in economicsas elsewhere,most statements
of fundamentalfacts acquire importanceonly by the superstructuresthey are
made to bear and are commonplace in the absence of such superstructures"
(P. 54).
6 Ibid.,
p. 57. Cf. e.g. Roll, op. cit., pp. 31-5.
 ARISTOTLE AND ECONOMIC ANALYSIS 5
aestheticsand
biology,politicalscience,rhetoric,
logic,meteorology,
ethics. Second,and stillmorepuzzling,hisefforts
producednothing
betterthan"decorous,pedestrian,slightlymediocre,and morethan
pompouscommonsense".' This judgement
slightly ofSchumpeter's,
sharedby many,is so wide of the universaljudgementof Aristotle's
otherwork,thatit demandsa seriousexplanation.

I
There are onlytwo sectionsin the wholeAristotelian corpusthat
permitsystematic consideration,one in Book v of the Nicomachean
Ethics,the otherin Book I of the Politics.8 In both,the "economic
analysis"is onlya sub-sectionwithinan inquiryinto other,more
essentialsubject-matters.Insufficient attentionto the contextshas
been responsibleformuchmisconception ofwhatAristotle is talking
about.
The subjectofthefifth bookoftheEthicsis justice. Aristotle first
universalfromparticularjustice,and thenproceedsto
differentiates
a systematicanalysisofthelatter. It, too,is oftwokinds:distribu-
tiveand corrective.
Distributive(dianemetikos) justice is a concernwhen honours,
goods, or other"possessions" thecommunity
of areto be distributed.
Here justiceis the same as "equality",but equalityunderstoodas
a geometricalproportion(we say"progression"), notas an arithmetical
one.9 The distribution of equal sharesamongunequal persons,or
of unequal shares among equal persons,would be unjust. The
principleof distributive
justiceis thereforeto balancethe sharewith
the worthof the person. All are agreed on this, Aristotleadds,
althoughall do not agree on the standardof value (axia) to be
employedwherethepolis itselfis concerned. "For democratsit is
the statusof freedom,for some oligarchswealth,for othersgood
birth,for aristocratsit is excellence (arete)".1o That Aristotle
7 Op. cit., p. 57.
8 The firstpart of Book II of the pseudo-AristotelianOeconomicais without
value on any issue relevantto the presentdiscussion,as I have indicated briefly
in a review of the Bud6 edition to be published in the Classical Review. (See
also note 51.)
9 This difficultidea of a mathematicalformulationof equalityand justice was
Pythagorean, probably first introduced by Archytas of Tarentum at the
beginning of the fourthcenturyB.c., and then popularized by Plato (firstin
Gorgias, 5o8A). See F. D. Harvey, "Two Kinds of Equality", Classica et
Mediaevalia, xxvi (1965), pp. Io101-46,with corrigendain vol. xxvii (1966), pp.
99-Ioo, who rightlystresses the point that the mathematical formulationis
employed solely to argue against democracy. (My translationsfromthe Ethics
are based on H. Rackham's in the Loeb Classical Library, 1926.)
10Ethics, II3Ia24-29.
6 PAST AND PRESENT NUMBER 47

himselffavouredthe last-namedis notimportant forus, and indeed

he does not himselfmakethe pointin thisparticularcontext,which
is concernedonlyto explainand defendthe principleof geometric
proportion."
In correctivejustice (diorthotikos,literally"straightening out"),
however, theissueis notone ofdistribution froma pool,butofdirect,
privaterelationsbetweenindividualsin whichit maybe necessaryto
"straighten out" a situation,to rectifyan injusticeby removingthe
(unjust) gain and restoringthe loss. Here the relativenatureand
worthofthepersonsis irrelevant, "forit makesno difference whether
a good man has defraudeda bad man or a bad one a good one, nor
whetherit is a good or bad manthathas committed adultery;thelaw
looks only at the nature of the damage, treatingthe parties as
equal ... ."12
Correctivejusticealso has twosubdivisions, dependingon whether
the "transactions"(synallagmata)are voluntaryor involuntary.
Amongthe formerAristotlelistssales, loans,pledges,depositsand
leases; amongthelatter,theft, adultery,poisoning,procuring, assault,
robbery,murder.13 There is a fundamental forus herein
difficulty
tryingto comprehendAristotle'scategories- and no translation of
synallagmata bya singleEnglishwordeasesit - butI neednotenter
intothecontroversy exceptto makeone pointrelevantto someofthe
discussionthat will follow. Under what conditionsdid Aristotle
envisagean injustice,an unjust gain, in a voluntarytransaction,
especiallyin a sale? The answeris, I think,beyonddisputethathe
had in mindfraudor breachof contract,but not an "unjust" price.
An agreementover the pricewas part of the agreementor "trans-
action"itself,and therecould be no subsequentclaimby the buyer
of unjustgain merelybecause of the price. As Joachimsays,"the
law givesthebetterbargaineradeia (security)".14It is necessaryto
insiston this (leavingaside the unfortunate injectionof bargaining)
becauseefforts havebeen madeto dragthissectionoftheEthicsinto
11 It is probable that for Aristotledistributivejustice is also operative in a
varietyof private associations, permanentor temporary:see H. H. Joachim's
commentary(Oxford, 1951), PP. 138-40, though I see neither necessity nor
warrant for his attemptto link distributivejustice with the private law suit
known as diadikasia.
12
Ethics,II3Ib32-32a6.
13
Ethics,II13a3-9.
cit., p. 137, with specific referenceto II32bii-I6. I agree with
A. 140p.
R. W. Harrison, "Aristotle'sNicomachean Ethics, Book V, and the Law of
Athens", Ji. Hell. Stud., lxxvii (I957), PP. 42-7, against Joachim(see also note
II), that "Aristotle'streatmentof justice in the Ethicsshows onlya verygeneral,
one might perhaps say an academic, interestin the actual legal institutionsof
the Athens of his day".
 ARISTOTLE AND ECONOMIC ANALYSIS 7

the argumentabout economicanalysis,forexampleby Soudek,who

offersas an illustrationof corrective justicethe hypotheticalcase of
a house-buyerwho broughtsuit on a claimthathe had been over-
chargedand who was awardeda refundequal to halfthe difference
betweenthe seller's price and his own proposed "just price".15
Nothingin thisor anyothertextof Aristotle warrants this,nordoes
anything we knowaboutGreeklegalpractice. Botharguedecisively
the otherway. Commentingon the famouspassage in the Iliad,
"But thenZeus son of CronustookfromGlaucushis wits,in thathe
exchangedgoldenarmourwithDiomedes son of Tydeus forone of
bronze,the worthof a hundredoxen forthe worthof nine oxen",
Aristotlesaystersely,"one whogivesawaywhatis his owncannotbe
said to sufferinjustice".16 We shall meet"what is his own" again
in a surprising context.
Havingcompletedhisanalysisofthetwokindsofparticular justice,
Aristotleabruptly launches into a digression,'7introducingit
polemically:"The view is held by some that justiceis reciprocity
(antipeponthos) withoutany qualification, by the Pythagoreans for
example". Antipeponthos is a termthathas a technicalmathematical
sense,butitalso has a generalsensewhich,in thiscontext, amountsto
thelextalionis,an eyeforan eye.18 On thecontrary, repliesAristotle,
"in manycases reciprocity is at variancewithjustice",sinceit "does
notcoincideeitherwithdistributive orwithcorrectivejustice". However,
in the "interchange of services"thePythagorean definitionof justice
is appropriate,providedthe reciprocity "is on thebasisofproportion,
notonthebasisofequality".
"Interchangeof services"is Rackham'sinadequatetranslation of
Aristotle's 'v 7-a^ 7a~t
KOLVWoVtagL JAAaKTtKag,losing the force of
the word koinonia,and I am compelledto digress. Koinoniais a
central concept in Aristotle'sEthics and Politics. Its range of
meaningsextendsfromthepolisitself,the highestformof koinonia,
to temporaryassociationssuch as sailorson a voyage,soldiersin a
campaign,or the partiesin an exchangeof goods. It is a "natural"
formof association- man is by naturea zoin koinonikon as well as
a zo6n oikonomikon (household-being) and a zoin politikon(polis-
15 J. Soudek, "Aristotle's
Theory of Exchange: an Inquiry into the Origin of
Economic Analysis", Proc. Amer. Philos. Soc., xcvi (1952), pp. 45-75, at pp.
51-2.
1" Iliad, 6.234-6; Ethics, II36b9-13.
17 Ethics, II32b21-33b29.
18 Cf. Magna Mor., II94a29 ff.; see Joachim, op. cit., pp. 147-8, and the
commentaryby R. A. Gauthier and J. Y. Jolif(the best commentaryin so faras
close reading of the text is concerned), vol. ii (Louvain and Paris, 1959), pp.
372-3.
8 PAST AND PRESENT NUMBER 47

being). Severalconditionsare requisiteif thereis to be a genuine

koinonia:(I) the membersmustbe freemen; (2) theymust have
a commonpurpose,majoror minor,temporary or of long duration;
(3) theymust have somethingin common, share something, such as
place, goods,cult,meals,desirefora good life,burdens,suffering;
(4) theremustbe philia (conventionally but inadequatelytranslated
"friendship"),mutualityin otherwords,and to dikaion,whichfor
simplicitywe may reduce to "fairness"in theirmutualrelations.
Obviouslyno singlewordwillrenderthe spectrumof koinoniai. At
the higherlevels, "community"is usually suitable,at the lower
perhaps"association"providedtheelementsoffairness, and
mutuality
commonpurposeare keptin mind.
The pointto my digressionis to underscorethe overtonesof the
sectionin theEthicson exchange:koinonia is as integraltotheanalysis
as the act of exchanging. Edouard Will caughtthe rightnuance
whenhe replacedsuch translations of the openingphraseas "inter-
changeof services"by a paraphrase,"exchangerelationswithinthe
framework of the community"(les relationsd'dchangequi ontpour
cadrele communautd).10 Lest therebe any doubt,Aristotlehimself
promptlydispelsit. Immediately followingthe sentencesI quoted
beforedigressing, he goes on to say thatthepolisitselfdependson
proportionalreciprocity.If men cannotrequiteevil withevil,good
withgood,therecan be no sharing. "That is whywe setup a shrine
to the Charites[Graces]in a public place, to remindmen to make
a return. For thatis integralto grace,sinceit is a dutynot onlyto
returna servicedone one, but anothertimeto takethe initiativein
doinga serviceoneself".20
And at long last we come to our problem. The example of
proportional requitalwhichfollowsis the exchangeof a house for
shoes.21 How is thatto be accomplished? There is no koinonia in
thiscontextbetweentwodoctors,butonlybetween,say,a doctorand
a farmer,who are not equals but who mustsomehowbe equalized.
"As a builderis to a shoemaker,so mustso manypairsofshoesbe to
a house". The lattermust be "equalized somehow", by some
common measure,and that is need (chreia),22now commonly
19
E. Will, "De l'aspect 6thique des originesgrecques de la monnaie", Rev.
Hist., ccxii (1954), PP. 209-31, at p. 215 note I.
20 Ethics,
II33a3-5.
21 Aristotleshiftsfromexample to example and I have followedhim, despite
the superficialinconsistencythat entails.
22 I have refrainedfrom the common rendition, "demand", to avoid the
subconscious injection of the modern economic concept; so also Soudek, op.
cit., p. 6o. The semantic cluster around chreia in Greek writers,including
Aristotle,includes "use", "advantage", "service", takingus even furtherfrom
"demand".
 ARISTOTLE AND ECONOMIC ANALYSIS 9

expressedin money. "There willtherefore be reciprocitywhen(the

products)havebeenequalized,so thatas farmer is to shoemaker, so is
the shoemaker'sproductto thatof the farmer". In thatway,there
willbe no excessbut "each willhavehis own". If one partyhas no
need there will be no exchange,and again moneycomes to the
rescue:it permitsa delayedexchange.23
Therefollowsa shortrepetitive sectionand thedigression on "this
outworkof particularjustice" ends.24 Aristotlehas been thinking
aloud,so to speak,as he oftendoes in his writings as theyhave come
downto us, abouta particularnuanceor a tangential questionthatis
troublesome;he is indulgingin a highlyabstractexercise,analogous
to the passages in the Politics on the applicationof geometric
proportionto public affairs;here, as often,his reflectionsare
introducedbya polemicalstatement, and soon droppedas he returns
to his maintheme,his systematic analysis. Exchangeofgoodsdoes
notagainappearin theEthicsexceptin twoor threecasual remarks.
That thisis not one of Aristotle'smoretransparent discussionsis
painfullyapparent, and we must look at what the most important
modern commentators have made of it. Joachim,exceptionally,
acceptedthatAristotle reallymeantit whenhe wrote"as a builderis
to a shoemaker", and he promptly added,"How exactlythevaluesof
theproducersare to be determined, and whattheratiobetweenthem
can mean, is, I must confess,in the end unintelligible to me".25
Gauthierand Jolifmakean ingeniouseffort to getroundthedifficulty
byasserting thatthebuilderand shoemaker aremeanttobe considered
equal "as persons" but different
(only)in their products. However,
I cannot believe that Aristotlewent out of his way to insist on
proportional reciprocityas necessaryforjusticein thisone field,only
to concludethatone pairofratiosdoes notin factexist,and to make
that point in the most ambiguousway possible.26 Max Salomon
23 Ethics, II33b6-I2. In the Politics, I257a3I ff., Aristotle explains that
delayed exchange became necessarywhen needs were satisfiedby importsfrom
foreignsources,and "all the naturallynecessarythingswere not easilyportable".
(My translationsfromthe Politicsare based on Ernest Barker's,Oxford, 1946.)
24 The phrase quoted is that of Harrison, op. cit., p. 45.
25 Op. cit., p. ISo.
26 Op. cit.,p. 377. They cite in support Magna'Mor., II94a7-25, but those
lines are only a simplifiedand more confusingstatementof the argumentin the
Ethics. For futurereference,it should be noted thatMagna Mor. says explicitly
that "Plato also seems to employ proportionaljustice in his Republic". St.
George Stock, in the Oxfordtranslation(1915), cites Rep., 369D, but it requires
clairvoyanceto see the Magna Mor. referencethere,since Plato is not discussing
at all how the exchange between builder and shoemakeris to be equated, and
soon goes on to introducethe traderas a middleman (significantly absent in the
Aristotelian account). In general, however, this section of Book II of the
(cont. on p. 10)
IO PAST AND PRESENT NUMBER 47

achievesthesameresultby moreruthlessmethods:themathematics,
he says,is a mere"interpolation", a "marginalnote,so to speak,for
listenersinterestedin mathematics",and the whole concept of
reciprocalproportion mustbe omitted, leavingAristotleto saysimply
thatgoodsareexchangedaccordingto theirvalues,and nothingmore.
That thenleads Salomonto a seriesofgrotesquetranslations in order
to getout ofthetextwhatis notthere.27
Salomon'sdrasticsurgery wasnotmerewilfulcaprice. Economics,
he writes,cannotbe turnedinto "a kind of wergeldsystemon a
mercantilebase".28 The firstprincipleof a marketeconomyis, of
course,indifferenceto thepersons ofthebuyerand seller:thatis what
troublesmostcommentators on Aristotle. Soudektherefore suggests
that"as a builderis to a shoemaker"mustbe read "as theskillofthe
builderis to theskilloftheshoemaker".29Fromthereit is no great
stepto Schumpeter's interpretation.The keypassagein the Ethics,
he writes,"I interpretlikethis:'As thefarmer'slabourcompareswith
the shoemaker'slabour,so the productof the farmercompareswith
the productof the shoemaker'. At least, I cannotget any other
sense out of thispassage. If I am right,thenAristotlewas groping
for some labour-costtheoryof price whichhe was unable to state
explicitly".30 A few pages later Schumpeterrefersto the "just
price" of the artisan's"labour", and still laterhe assertsthatthe
"relevantpart" of Aquinas's"argumenton just price.. . is strictly
Aristotelian and shouldbe interpreted exactlyas we haveinterpreted
Aristotle's".31However,Aristotledoes not once referto labour
costsor costsofproduction. The medievaltheologians werethefirst
to introducethisconsideration intothe discussion,as thefoundation
(note 26 cont.)
Republicwas obviouslyinfluentialon Aristotle(includingthe stresson need and
the explanationof money). For what it is worth,in reply to the commentary
by Gauthier and Jolifcited above note 18, I note that Plato says (37oA-B), to
justifyspecializationof crafts,that"no two people are born exactlyalike. There
are innate differenceswhich fit them for differentoccupations" (Cornford's
translation,Oxford, 1941).
27 Max Salomon, Der Begriff der Gerechtigkeit bei Aristoteles(Leiden, 1937),
in a lengthyappendix,"Der Begriffdes Tauschgeschiiftesbei Aristoteles". My
quotation appears on p. 16I. Salomon is not alone in dismissingthe mathe-
matics as irrelevant: see most recentlyW. F. R. Hardie, Aristotle'sEthical
Theory(Oxford, 1968), pp. 198-201.
28 Op. cit., p. 146.
29
Soudek, op. cit., pp. 45-6, 6o. The same suggestion is made by
J. J. Spengler, "Aristotle on Economic Imputation and Related Matters",
SouthernEcon. Jl., xxi (1955), PP. 371-89.
30 Op. cit., p. 60onoteI.
31 Ibid., pp. 64, 93. Hardie, op. cit., p. 196, simply asserts withoutserious
discussion that "the comparativevalues of producers must in Aristotle'sview
here mean the comparative values of their work done in the same time" (my
italics).
 ARISTOTLE AND ECONOMIC ANALYSIS II

fortheirdoctrineofjustprice,and theirallegedAristotelianism in this

respectrestedon theambiguity of the Latin translationsof Aristotle
madeavailableto themin themiddleofthethirteenth century.32
Anyway,none of these interpretations of what Aristotle"really
meant" answersthe question,How are prices,just or otherwise,
establishedin the market? More specifically, how are needs, on
whichAristotle insistsas basic,equatedwiththepartiesor theirskills
or their labour or their labour costs, whicheverone prefers?
ObviouslyAristotledoes not say, or at least does not say clearly,
otherwise themodernefforts to discoverhisconcealedmeaningwould
all be unnecessary. For Karl Marx the answer is that, though
Aristotlewas the firstto identifythe centralproblemof exchange
value,he thenadmitsdefeat"and givesup thefurther analysisofthe
formofvalue" whenhe concedes33 that"it is impossibleforthingsso
differentto becomecommensurable inreality".34 Soudekrepeatshis
erroron corrective justice,alreadydiscussed,thengraspsat theword
"bargain"whichW. D. Ross falselyinjectsintohistranslation in one
passage (and Rackhamin several),and concludesthatthe price is
determined, and justicesatisfied, by mutualbargaininguntilagree-
mentis reached.35 That is not a verygood way to describewhat
32 See Soudek, op. cit., pp. 64-5; J. W. Baldwin, The Medieval Theoriesof the

Just Price (Trans. Amer. Philos. Soc., new ser., xlix, part 4 [1959]), pp. 62,
74-5; E. Genzmer, "Die antiken Grundlagen der Lehre vom gerechtenPreis
und der laesio enormis", Z. f. ausldndischesu. internat.Privatrecht,Sonderheft
xi (1937), Pp. 25-64, at pp. 27-8.
S3Ethics, I133b18-20.
34 Marx, Capital, transl. S. Moore and E. Aveling, i (Chicago, 19o6), p. 68.
Cf. Roll, op. cit.,p. 35; "What beginswiththe promiseof being a theoryofvalue
ends up with a mere statementof the accountingfunctionof money".
50 p. cit.,pp. 61-4. Both Ross (Oxford, 1925) and Rackham have "bargain"
in I I33ai2, Rackham also in I I64a2o; II64a3o. (It is worthnotinganother
mistranslationby Rackham, at II33bi5: "Hence the proper thing is for all
commodities to have their prices fixed". What Aristotle actually says is
"Thereforeit is necessaryforeverythingto be expressedin money,tetimesthai".)
Furthermore,I cannot accept Soudek's use of passages fromthe beginningof
Book Ix, continuingthe analysis of friendship,as relevant. There Aristotle's
examples are drawnfrompromisesto pay forservicesby musicians,doctorsand
teachers of philosophy,"exchanges" in a sense perhaps, but in a sense that is
different in qualityfromthose Book v is concernedwith. That should be clear
froma number of passages. In the opening statement(II63b32-35), Aristotle
distinguishes "dissimilar friendships" (which he is about to discuss) from
exchange relationsamong craftsmen,and he soon says explicitlythat the value
of a philosopher's services "is not measurable in money" (II64b3-4).
Protagoras, he writes, accepted whatever fee his pupils thought proper
(II64a24-26), and Aristotle thinks that is on the whole the right procedure
(I I64b6-8), thoughhe cannot refrainfromthe sneer (II64a3o-32) that Sophists
had bettertake theirpaymentin advance. All thisseems to me to belong to the
spiritof giftand counter-gift, of the Charites. There must be reciprocityand
proportionhere, too, as in all human relations,but I see no other link to the
digressionon the exchange between builder and shoemaker.
12 PAST AND PRESENT NUMBER 47

happensina realmarket and SoudeksuggeststhatAristotle's

situation,
troublewas that "he was preoccupiedwith the isolatedexchange
betweenindividualsand not withthe exchangeof goods by many
sellersand buyerscompeting witheachother"36 - a strangecriticism
ofa discussionthatexplicitly
setsoutto lookat exchanges"withinthe
framework of the community".
Schumpetertakesthe oppositeline. Startingfromthe erroneous
idea thatAristotle"condemned[monopoly]as 'unjust'" he wenton
to reasonin thisway:
It is not farfetchedto equate, for Aristotle'spurpose, monopoly prices with
prices that some individual or group of individuals have set to their own
advantage. Prices thatare given to the individualand withwhich he cannot
tamper,that is to say, the competitive
prices thatemergein freemarketunder
normalconditions,do not come withinthe ban. And thereis nothingstrange
in the conjecturethat Aristotlemay have taken normal competitiveprices as
standardsof commutativejustice or, more precisely,that he was prepared to
accept as "just" any transactionbetween individuals that was carried out at
such prices - which is in fact what the scholastic doctors were to do
explicitly.37
We need not discusswhetheror notit is "farfetched" to conjecture
thatall thiswas in Aristotle's
mind,thoughnotexpressedin histext;
it surelytakesus awaycompletely fromthestarting-point statedin the
introduction, withits referenceto Pythagoreanreciprocity and its
consequentmathematics.
Schumpeter furtherobservedthattheanalysiswas restricted to the
artisan,whilethe "chieflyagrarianincomeof the gentleman"was
ignored,the freelabourer,"an anomalyin his slave economy",was
"disposed of perfunctorily", the trader,shipowner,shopkeeperand
moneylender judgedonly in ethicaland politicalterms,their"gains"
notsubmittedto "explanatory analysis".38 No wonderSchumpeter
dismissedthe whole performance as "decorous,pedestrian,slightly
mediocre, and more than slightlypompouscommonsense".39 An
analysisthatfocusesso exclusively on a minorsectoroftheeconomy
86Soudek, op. cit., p. 46.
37 Op. cit., p. 61. Both referencesto monopoly which he adduces are
incorrect. Pol., I259a5-36 has no condemnationbut ratheran implied defence
of public monopoly, whereas the Ethics, II32b21-34ai6, makes no mention of
monopoly at all (nor does the Ethics anywhereelse). Schumpeteris here also
repeating his errorabout the scholastic theologians,fromwhom he takes the
unfortunateword "commutative". Soudek, op. cit., p. 64, also drags in a
condemnationof monopoly,on the untenable (and irrelevant)ground that "if
the seller holds a monopolisticposition, then what appears on the surface as
a 'voluntarytransaction'is distortedin spirit". For a correctanalysis of the
Politicspassage on monopoly,see M. Defourny,Aristote,Etudessurla "Politique"
(Paris, 1932), pp. 21-7.
38 Op. cit., pp. 64-5.
39 Ibid., p. 57.
 ARISTOTLE AND ECONOMIC ANALYSIS 13

deservesno morecomplimentary evaluation. Indeed,the timehas

cometo ask whetherit is, or was intendedto be, economic analysisat
all.
BeforeI proceedto givea negativeanswer,I mustconfessthat,like
Joachim,I do notunderstandwhattheratiosbetweentheproducers
can mean,but I do notruleout that"as a builderis to a shoemaker"
is somehowto be takenliterally. Marx believedthattherewas "an
important factwhichprevented fromseeingthat,to attribute
Aristotle
value to commodities, is merelya mode of expressingall labouras
equal humanlabour,and consequentlyas labour of equal quality.
Greeksocietywas foundedupon slavery,and had, therefore, forits
naturalbasis, the inequalityof men and of theirlabour power".'4
That naturalinequalityis fundamentalto Aristotle'sthinkingis
beyond argument:it permeateshis analysisof friendshipin the
Ethicsand ofslaveryin thePolitics. True,hisbuilderand shoemaker
in the exchangeparadigmare freemen, notslaves,41but the con-
current existenceofslavelabourwouldstillbarhiswayto a conception
of "equal humanlabour".42
Schumpeternoticed,but brushedaside, whatseemsto me to be
centralin any judgement,namely,that Aristotleby his silence
separatesthe artisanfromthetrader,thathe is talkingexclusively of
an exchangebetweentwo producerswithoutthe intervention of
a middleman. Aristotleknewperfectly well thatthis was not the
waya largevolumeof goods circulatedin his world. He also knew
perfectlywellthatpricessometimes respondedto variations in supply
and demand- thatis the pointunderlying his page in the Politics
on monopoly. In the discussionof moneyin the Ethicshe remarks
thatmoney"is also subjectto changeand is not alwaysworththe
same, but tends to be relativelyconstant".43 This observationis
repeatedin the Politicsin a concreteapplication:in the sectionon
revolutions,Aristotlewarnsagainstrigidlyfixedassessments in states
thathavea property for
qualification office,since one should allow for
theimpacton theassessment "whenthereis an abundanceofcoin".44
In short,price variationsaccordingto supplyand demandwere
40 Op. cit., p. 69. On Marx's views on Aristotle,see E. C. Welskopf,Die
Produktionsverhdiltnisse im alten Orient und in der griechisch-rdmischen Antike
(Berlin, 1957), PP. 336-46.
41 That seems certainfromEthics, I I63b32-35.
42 See J.-P. Vernant,Mythe et
pensdechez les Grecs (Paris, 1965), ch. 4.
43 Politics, I259a5-36. Ethics,I333bI3-I4.
44Politics, I3o8a36-38. Nowhere does Aristotle explain why money is
"relativelyconstant" compared withothercommodities. The generalobserva-
tion, it should be noted, had already been made by so shallow a thinkeras
Xenophon, Ways and Means, 4.6.
14 PAST AND PRESENT NUMBER 47

a commonplace in Greeklifeinthefourthcentury B.C.45 Yetinthe

EthicsAristotledoesnotuseanyofthenormal Greekwordsfortrade
and trader(as he doesruthlesslyin thePolitics),
butclingsto the
neutralword"exchange".Thatthisis deliberate I cannotdoubt:
in thepassagein theRepublic on whichmuchofthissectionofthe
Ethicsis a kindofcommentary, Platoconcedesthatthepolisrequires
pettytraders(kapeloi)whowillgivemoneyforgoodsand goods
for moneybecauseneitherfarmersnor artisanscan counton
findingsomeone withwhomto exchange whenever theybringgoods
to the market.Aristotle, however, cannotintroduce the kapelos,
sincejusticeintheexchange (whichisnotPlato'squestion)isachieved
when"eachhashisown",when,inotherwords, thereis nogainfrom
someoneelse'sloss.46 As partofa theory ofpricethisis nonsense,
andAristotle knewitto be nonsense.Therefore hewasnotseeking
a theoryofmarketprices.47
The digressionon exchange,I repeat,was placed at the start
"withinthe framework of the community". When the digression
ends, furthermore, Aristotleresumesthe main threadas follows:48
"We must not forgetthat the subjectof our investigation is both
justice in the absolute sense and politicaljustice". The phrase
"politicaljustice"is an excessivelyliteralrenderingofthe Greek,for
Aristotlegoes on to defineit as "justiceamongfreeand (actuallyor
proportionately) equal men,livinga community lifein orderto be
self-sufficient
[or for the purpose of self-sufficiency]". Monetary
gain has no place in such an investigation: "The money-maker is
someonewho livesunderconstraint"." It is in the contextof self-
46 I should perhaps not have botheredwith these seeming platitudes,were it
not thatKarl Polanyi, "AristotleDiscovers the Economy", in Trade and Market
in the Early Empires,ed. K. Polanyi, C. M. Arensberg and H. W. Pearson
(Glencoe, Ill., 1957), pp. 64-94, makes the strangeremark (p. 87) that "the
supply-demand-pricemechanism escaped Aristotle. The distributionof food
in the marketallowed as yet but scant room to the play of thatmechanism....
Not before the third centuryB.C. was the workingof a supply-demand-price
mechanism in internationaltrade noticeable". How wrong that is will be
evident from Lysias' 22nd oration,Against the Corndealers,to be dated about
387 B.C., on which see R. Seager in Historia, xv (1966), pp. 172-84, or from
Demosthenes 32.24-25 and Pseudo-Demosthenes 56.9-Io, half a centurylater.
(Polanyi's chapterhas been reprintedin the volume cited in note 68, but my
referencesare to the originalpublication.)
46 Republic,371B-C. Ethics, II33a31-b6.
47 This is also the conclusion of Polanyi, op. cit. Although our analyses
diverge, often sharply (see note 45), I must warmlyacknowledge his having
introducedme to the problemnearlytwentyyearsago.
48Ethics, I I34a24-26.
49Ethics,Io96a5-6. For thistranslation of 6 86 XppLnactorT1s
Piat6SriSio-rtv,
see Gauthierand Jolif,op. cit.,pp. 33-4, whose commentarycuts throughall the
unnecessaryemendationand elaborateinterpretation the texthas been subjected
to.
 ARISTOTLE AND ECONOMIC ANALYSIS I5

notmoney-making,
sufficiency, thatneedprovidesthemeasuring-rod
of just exchange(and that the properuse of moneyalso became
necessaryand thereforeethicallyacceptable). In theEthics,in sum,
thereis strictlyspeakingno economicanalysisratherthan poor or
inadequateeconomicanalysis.
II
It will have been noticedthatin the EthicsAristotledoes not ask
how farmersor shoemakerscome to behaveas theydo in exchange.
In Schumpeter'sterms,then,in the Ethicsthereis no economic
sociologyeither. For thatwe mustturnto Book I of the Politics,
and againbeginby carefully fixingthe contextin whichexchangeis
discussed. Aristotle firstestablishesthatboththehouseholdand the
polisare naturalformsofhumanassociation,and proceedsto examine
variousimplications, such as the relationsof dominanceand subjec-
tion (includingbetweenmastersand slaves). Then he turnsto
property and "theartofacquiringit" (chrematistike) and askswhether
the latter is identical with the art of household management
(oikonomike).5?0 His choice of words is importantand has led to
much confusionand error. Oikonomike (or oikonomia)in Greek
usage normallyretainsthe primarymeaning,"the art of household
management". Though that may involve"economic" activity,it
is misleading, and oftenflatlywrong,to translate it as "economics".51
But chrematistike is ambiguous. (Its root is the noun chrema,"a
thingone needsor uses", in thepluralchremata, "goods,property".)
We havealreadymetchrematistike (and we shallsoonmeetit again)in
the sense of "the art of money-making", but here it has the more
genericsense of acquisition,less commonin ordinaryGreekusage
but essentialto Aristotle'sargument. For he soon concludesthat
oikonomia and chrematistike(in themoney-making sense)are different
thoughoverlapping speciesof the genus chrematistike.52
50 Politics,
I256ai-5.
51Occasionally the word oikonomiawas extended to the public sphere, and
even then it usually refersto administrationin general, as when Dinarchus
(1.97) calls Demosthenes "useless in the affairs(oikonomiai) of the city" (note
the plural). The furthestextension is to be found in a brief section at the
beginningof Book II of the pseudo-AristotelianOeconomica(I345b7-46a25), in
which four types of "economy" are said to exist: royal,satrapic,city-stateand
private. There follow six short paragraphs of excruciatingbanalityabout the
sources of revenuein each of the types,and thatis the end of the discussion.
52 Beginningwith the Sophists, philosopherswere faced with the problem of

creating the vocabulary for systematicanalysis out of everydaywords. One

increasinglycommon device was to employ the suffix-ikos. There are some
seven hundred such words in Aristotle,many firstemployed by him. See
P. Chantraine, La formationdes noms en grec ancien (Paris, 1933), ch. 36.
(cont.onp. 16)
16 PAST AND PRESENT NUMBER 47

Exchange again enters the discussion polemically. What is

wealth,Aristotleasks? Is it,as Solon had said, limitless? Or is it
a meansto an end and therefore limitedby thatend?53 The answer
is categorical. Wealthis a means,necessaryforthe maintenance of
the householdand thepolis (withself-sufficiency a principlein the
background), and,likeall means,it is limitedby itsend. Of course,
he continues, thereis thesecond,money-making senseofchrematistike,
and thatis whathas led to thefalseopinionthatthereis no limitto
wealthandproperty.This attitude to wealthindeedseesitas limitless,
but it is againstnatureand therefore nota propersubjectofethicalor
political discourse,on his fundamental principlethat ethicshas a
naturalbasis. ("The money-maker", we remember fromtheEthics,
"is someonewholivesunderconstraint".)54
AlthoughAristotle singlesouttheobolostates,
thepettyusurerliving
on smallconsumerloans,as themostunnaturalofall practitioners of
theartofmoney-making55 - money"cameintoexistenceforthesake
of exchange,interestmakesit increase"-, thetypehe selectsas the
exemplaris the kapelos,just the man we notedas missingfromthe
analysisof exchangein the Ethics. Again the choice of wordsis
significant.Greek usage was not whollyconsistentin selecting
amongthevariouswordsfor"trader",butkapelosusuallydenotedthe
pettytrader,the huckster,in the market-place.In the present
context,however,theaccentis noton thescale ofhis operationsbut
on theaim,so thatkapelike, theartofthekapelos,mustbe translated
"tradeforthe sake of gain" or simply"commercialtrade".56 Like
Plato beforehim,Aristotlenow asksthehistoricalquestion,how did
exchangecome to takeplace altogether. His answeris thatas the
koinoniagrewbeyondtheindividualhousehold,therewereshortages
and surplusesand these were correctedby mutualexchange,"as
manybarbariantribesdo to thisday... Whenused in thisway,the
(note 52 cont.)
Polanyi, op. cit., pp. 92-3, was rightto insistthatfailureto distinguishbetween
the two meaningsof chrematistike is fatalto an understandingof this section of
the Politics; cf. Defourny, op. cit., pp. 5-7; brieflyBarker, Notes E and F of
his translation(pp. 22 and 27), though he adds new confusionby suggesting
"domestic economy" and "political economy" as English equivalents.
63 Politics, 1256b30-34.
64 Ethics, Io96a5-6.

55Politics,I258b2-8.
56 Polanyi,op. cit.,pp. 91-2, was almost alone in seeing the point. However,
I cannot accept his explanations, that "no name had yet been given to
'commercialtrade' " (p. 83) and thatAristotle,with a kind of Shavian wit, was
exposing the fact that "commercial trade was no mystery..,.but huckstering
writtenlarge" (p. 92). Polanyi did not take sufficientnotice of the Platonic
background.
 ARISTOTLE AND ECONOMIC ANALYSIS 17

artof exchangeis notcontrary to nature,norin anywaya speciesof

the art of money-making.It simplyservedto satisfythe natural
requirementsof self-sufficiency".67 But then, because of the
difficultiescreatedby foreignsourcesof supply(a passage I have
alreadyquoted in note 23), moneywas introduced,and out of that
theredevelopedkapelike. Its end is not"thenaturalrequirements of
self-sufficiency" but the of
acquisition money without limit. Such
acquisition- we shouldsay "profit"- is made "not accordingto
naturebut at theexpenseofothers",58 a phrasethatechoesin reverse
the "each has his own" of the Ethicsand givesthe finalproofthat
commercialexchangewas notthesubjectin theEthics.
Aristotle was so rigorousin theethicalargument thathe refusedto
make even Plato's concession. The kapelosis not onlyunnatural,
he is also "unnecessary".59That thiswas notmeantas a "practical"
proposalis certain,but thatis irrelevant in the presentanalysis.60
Whatis relevantis thatAristotleextendedhis ethicaljudgementsto
embracethehighestformofkoinonia, thepolisitself. The state,like
the householder,must sometimesconcernitselfwithacquisition.61
Hence,in the discussionoftheideal state,in BookvII ofthePolitics,
he recommends thatthepolisbe sitedso as to haveeasyaccessto food
supplies,timberand the like. That immediately plungeshiminto
anothercurrentdebate,whetherconnectionwiththesea is a good or
bad thing, and he decides that the advantagesoutweigh the
disadvantages.
It should be able to importthose thingswhich it does not itselfproduce, and
to exportthesurplusofitsownnecessities. It shouldpractisecommerce
for
itself[Aristotlenow switchesfromkapeliketo the commonestword for
foreigntrade, emporikeor emporia],but not for others. States which make
themselves market-placesfortheworldonlydo it forthe sake of revenue;
and sinceit is notproperfora polisto sharein suchgain,it oughtnothave
such an emporium.,2
57 Politics, 1257a24-30. It is worth notingthe contrastwith the "simplest"
model for "an economic theoryof the city state" put forwardby John Hicks,
A Theoryof EconomicHistory (Oxford and London, 1969), pp. 42-6. That
startswiththe exchange by merchantsof oil forcorn, "and the trade is unlikely
to get startedunless, to begin with,it is a handsome profit".
6" Politics, I258bi-2.
"9Politics, I258ai4-I8.
60
Soudek, op. cit., pp. 7I-2, sees a programmaticdifferencebetween Plato
and Aristotle. Basing himselfon Laws, 918A-920C, and forgetting both Repub.,
371B-C (which I quoted earlier) and Pol., 1327a25-3I (quoted later in this
paragraph), Soudek writesthat "the author of the Laws ... had made his peace
with moneymakingand plutocracy,while Aristotlenever gave up his opposition
to this class". Beneath this fundamental misunderstandinglies an equally
fantasticpictureof a sharp class strugglein Greece betweenwealthylandowners
and merchants.
" Politics,
I258ai9-34, 59a34-36.
'2Politics,I327a25-3I.
I8 PAST AND PRESENT NUMBER 47

There will have to be merchants, of course,but "any disadvantage

whichmaythreatencan easilybe metby laws defining the persons
who may,or maynot,have dealingswithone another".63
Nowherein the Politicsdoes Aristotleever considerthe rules or
mechanicsof commercialexchange. On the contrary, his insistence
on the unnaturalnessof commercialgain rulesout the possibility of
sucha discussion,and also helpsexplaintheheavilyrestrictedanalysis
in theEthics. Of economicanalysisthereis nota trace.

III
One could restthe argumentthere,perhapsaddingthe familiar
pointthatAristotle, and even morePlato beforehim,werein many
respectsresisting social,economic,politicaland moraldevelop-
the
mentsoffourth-century Greece. Thereis thefamousanalogyofthe
wayAristotleappearsto ignorecompletely the careersof Philipand
Alexander,and theirconsequencesforthepolis,thenaturalformof
politicalassociation. He was therefore equally freeto ignorethe
unnaturaldevelopmentsin commercialtrade and money-making,
despitetheirgrowth inthesameperiodandthetensionstheygenerated.
Schumpeter was rightto commentthat "preoccupationwith the
ethicsof pricing. .. is preciselyone of the strongest motivesa man
can possiblyhave for analyzingactual marketmechanisms".64 It
doesnotfollow,however, thatethicalpreoccupationsmustleadto such
an analysis,and I havetriedto showthat"pricing"was actuallynot
Aristotle'sconcern.
In theend, Schumpeteroptedfora strictly "intellectual"explana-
tion. Althoughhe wrotein his introduction that"to a largeextent,
theeconomicsofdifferent epochsdeal withdifferent setsof factsand
problems",65 he ignoredthat point when he excused Aristotlefor
being mediocreand commonsensical.
There is nothingsurprisingor blameworthyin this. It is by slow degrees
that the physical and social factsof the empiricaluniverseenterthe range of
the analyticsearchlight. In the beginningsof scientificanalysis,the mass of
the phenomena is leftundisturbedin the compound of common-senseknow-
ledge, and only chips of this mass arouse scientificcuriosityand thereupon
become "problems"."6
Yet Aristotle'sscientific has rarelybeen paralleled,and the
curiosity
time has come to ask; the mass of what phenomena? Would an
economicanalysishavebeenpossiblehad his(or anyoneelse's) interest
63 Plato of course draftedthe legislation,Laws, 919D-920D.
84 Op. cit., p. 60.
65
Ibid., p. 5.
66
Ibid., p. 65. See the general criticismby Little, op. cit. in note 2.
 ARISTOTLE AND ECONOMIC ANALYSIS 19

not been deflected? Indeed, would even a descriptionof "the

economy"have been possible?
Today we writebookswithsuchtitlesas TheEconomics ofAncient
Greece,and thechaptersareheadedagriculture, miningand minerals,
labour,industry, commerce,moneyand banking,public finance-
Schumpeter's"chips" of the "mass of the phenomena".67 This
learnedactivitypresupposesthe existenceof "the economy"as a
concept,difficult as it has become to find a generallyacceptable
definition.The currentdebate about "economic anthropology",
largelystimulatedby Karl Polanyi'sinsistenceon a sharpdistinction
betweenwhathe calledthe"substantive"andthe"formal"definitions
oftheeconomy,68 is a debateaboutdefinitions and theirimplications
for(historical)analysis,not about the existenceof "the economy".
As Polanyihimselfsaid, even in earlysocieties"onlythe conceptof
the economy,not the economyitself,is in abeyance".69 No one
could disagreewithhis substantivedefinition; in one of his varied
formulations it is "an instituted processof interactionbetweenman
and his environment, whichresultsin a continuoussupplyof want-
satisfyingmaterialmeans";70 his opponentsmerelydenythatthisis
a sufficientoperationaldefinition."Modern economistsmakeeven
RobinsonCrusoespeculateupontheimplications ofchoicewhichthey
regardas theessenceofeconomy".71
Nor werethe Greeksthemselvesunawarethatmen procuretheir
want-satisfactions by social (Polanyi's"instituted")arrangements,or
thattherewerethingsto be said aboutagriculture, mining,moneyor
commerce. Aristotlerefersreaders who may be interestedto
existingbooks on the practicalside. He mentionsby name the
authorsoftwoagronomictreatises,'"and muchpracticalinformation
is scattered
in thesurviving botanicalwritings ofhispupilTheophras-
tus. Greekswhothoughtaboutthematterwerealso awarethattheir

"6The titleand chapter

headingsare thoseof H. Michell'sbook,2nd edn.
(Cambridge, 1957).
68
Polanyi'stheoretical essayshave been convenientlyassembledunderthe
title,Primitive, Archaic,and ModernEconomies, ed. G. Dalton (GardenCity,
N.Y., 1968). For a commentary on the debate,withextensivebibliography,
see M. Godelier,"Objetetmethodede l'anthropologie &conomique", L'Homme,
v, no. 2 (1965),pp. 32-91,reprintedin hisRationaliti
etirrationalitd
en&conomie
(Paris, 1966), pp. 232-93; S. C. Humphreys,"History,Economicsand
Anthropology: theWorkofKarlPolanyi",Hist.and Theory, viii(1969),pp. 165-
212.
69Polanyi,op. cit.,p. 86.
70Ibid.,p. 145.
7 Roll,op. cit.,p. 2I.
I258b39ff.
7" Politics,
20 PAST AND PRESENT NUMBER 47

want-satisfying arrangements weretechnologically and sociallymore

complexthanhad beenthecasein thepast. The Homericpoemsand
thewitnessofcontemporary "barbarians"wereproofenough. Greek
"historical"accounts of the developmentfromearly times were
largelyspeculative. One should not attributeto them too much
accurateknowledgeof the past on such subjects; they were,for
example,ignorantof the complexpalace-centred organization of the
lateBronzeAge. The significance ofthespeculationliesratherin its
testimonyto the values of the classical era, the fifthand fourth
centuriesB.C. On thistwo pointsare significant forus.
The firstis thatgrowthofpopulation,increasing and
specialization
technologicaladvances,the increasein materialresourceswere all
judged positively. They werethe necessaryconditionsforciviliza-
tion,forthe"natural",thatis,thehighest, formofsocialorganization,
the polis. This was no discoveryof Plato and Aristotle;it was
implicitin the Prometheusmyth,it became more explicitin the
"prehistory"with which Thucydides opens his History and
in otherfifth-century writersknownto us only fromfragments."3
"The ancient Greek world", writesThucydides,"lived like the
barbariansof today".74 However,progresswas not an unmixed
blessing. It led to bitterclass struggles,imperialconquest,and the
ethicaldangerswe have alreadynoticed. Furthermore, thereis an
implicationthattechnological and materialprogresshas come to an
end. AtleastI am unawareofanytextwhichsuggeststhatcontinued
growthin this sphereof human behaviourwas eitherpossible or
desirable,and the wholetenorof the literature arguesagainstsuch
a notion.75 There can and will be progressin certaincultural
spheres,suchas mathematics or astronomy; therecan,somethought,
be improvements in ethical,socialand politicalbehaviour(moreoften
thannotputin termsofa returnto oldervirtues);therecan be better
(truer)understanding of lifeand society. But noneof thatadds up
to theidea ofprogresswhich,in myjudgement, has beenin theback-

73 Thucydides, History,1.2-19. On the fragments,see T. Cole, Democritus

and the Sources of Greek Anthropology
(Amer. Philological Assn., Monograph
25, 1967).
74 History, I.6.6.
75 I have examined some aspects of this theme in "Technical Innovation and
Economic Progress in the Ancient World", Econ. Hist. Rev., 2nd ser., xviii
(1965), pp. 29-45; cf. H. W. Pleket, "Technology and Society in the Graeco-
Roman World", Acta Historiae Neerlandica, ii (1967), pp. 1-25, originally
published in Dutch in Tijd. v. Geschiedenis,lxxviii(1965), pp. 1-22.
 ARISTOTLE AND ECONOMIC ANALYSIS 21

ground of all modern economic analyses at least since the late

eighteenth century."7
For Thucydidesone ofthedrivingforcesin "prehistoric" progress
was the rise and growthof maritimecommerce- and thatis the
secondpoint. Givenhis grandtheme,theAthenianempireand the
PeloponnesianWar, he was moreconcernedwiththe corollary, the
navy and the maritime a
empire, polemicalsubject both in his dayand
later. Butinterwoven withthisaspectwasalwaystheother,on which
I quotedAristotleearlier,overseastradeas an indispensablesupple-
mentto homeproduction, forfoodstuffs,timber,metalsand slaves."
And "in Athensfactshad a way of becomingspiritualproblems"."8
That is preciselyhow the discussionturned. I have in mind not
maritime powerbutthe"problem"oftradeand markets. Herodotus
revealsits existencea centurybeforeAristotle. When a Spartan
embassycameto warnthe Persiankingnotto harmany Greekcity,
he tellsus, Cyrusreplied:"I haveneveryetfearedmenofthiskind,
whosetup a place in thecentreoftheircitywheretheyassembleand
cheat each otherwithoaths". This was addressedto all Greeks,
Herodotusexplains,"because they have establishedmarket-places
forbuyingand selling",whereasthePersianshaveneitherthepractice
nor the market-place.Xenophon offerspartial support in his
statement thatthe Persiansexcludeall huckstersand peddlersfrom
the"freeagora"(hereto be translatedin itsoriginalsense,"assembly-
place").79 Whateverthe truthmay be about Persia, the Greek
attitudereflectedby Herodotusand Xenophonis evident. Aristotle
used the same terminology as Xenophon when he proposedthat
"provisionshould be made foran agora of the sortcalled 'free'in
Thessaly[a districtin north-central
Greece]. This shouldbe clear
of all merchandise,and neithera workingman nor a farmernor any
76 The faithof some Hippocratic writers,notably the author of On Ancient
Medicine (sect. 2), that "the rest [of medical knowledge] will be discovered
eventually", is no exception, though admittedlysuch progress would bring
"practical" benefits to mankind. Neglect of the fundamental distinction
between material and cultural progress in my view vitiatesthe much praised
polemic by L. Edelstein, The Idea of Progressin Classical Antiquity(Baltimore,
1967), against the "orthodox" view, summed up by J. B. Bury, The Idea of
Progress(New York, 1932 edn.), p. 7: "... the Greeks, who were so fertilein
theirspeculationson human life,did not hit upon an idea whichseems so simple
and obvious to us as the idea of Progress". On Thucydides, see J. de Romilly,
"Thucydide et l'id'e de progres",Ann. Scuola norm.Pisa, xxxv (1966), pp. 143-
91.
17 On all this see A. Momigliano, "Sea-Power in Greek Thought", Class.
Rev., Iviii (1944), PP. 1-7, reprintedin his Secondo contributoalla storia degli
studiclassici(Rome, I960), pp. 57-67.
78Ibid., p. 58.
79 Herodotus, 1.152-3. Xenophon, Cyropaedia, 1.2.3.
22 PAST AND PRESENT NUMBER 47

othersuchpersonshouldbe permitted to enterunlesssummonedby

the magistrates".80 As a final example, there was Aristotle's
contemporary, Aristoxenus, who thoughtit reasonableto claimthat
thehalf-legendary Pythagoras had "extolledand promotedthestudy
of numbersmore than anyone,divertingit fromthe business of
merchants".81
However,neitherspeculationabouttheoriginsoftradenordoubts
about marketethicsled to the elevationof "the economy"(which
cannotbe translated intoGreek)to independent statusas a subjectof
discussionor study;at leastnotbeyondAristotle's divisionoftheart
ofacquisitionintooikonomia and money-making, and thatwas a dead
end. The modelthat survivedand was imitatedwas Xenophon's
Oikonomikos, a manualcoveringall thehumanrelationsand activities
in the household(oikos), the relationsbetweenhusbandand wife,
betweenmasterand slaves,betweenhouseholderand his land and
goods. It was not fromHausvaterliteratur that moderneconomic
thinking and writing arosein thelateeighteenthcentury, butfromthe
radical discoverythat therewere "laws" of circulation,of market
exchange,ofvalueand prices(to whichthetheoryofgroundrentwas
linked).82 It is at leastofsymbolicinterest thatin preciselythatera
David Hume made the brilliant(and still too often neglected)
observation:"I do not remembera passage in any ancientauthor,
wherethegrowthofa cityis ascribedto theestablishment ofa manu-
facture. The commerce,which is said to flourish,is chieflythe
exchangeofthosecommodities, forwhichdifferent soilsand climates
weresuited".83
I wouldbe preparedto arguethatwithoutthe conceptof relevant
"laws" (or "statisticaluniformities"ifone prefers)itis notpossibleto
havea conceptof "the economy". However,I shallbe contenthere
merelyto insistthattheancientsdid not(ratherthancouldnot)have
the concept, and to suggest where the explanationlies. One
consequenceoftheidea ofthekoinoniawas a heavyencroachment by
politicaland statusdemandson thebehaviourof ordinary Greeks,not
just in writingsof a few doctrinaireintellectuals. If we consider
investment, forexample,we immediately comeup againsta political

soPolitics, 133Ia30-35.
s8 Frag. 58B2 Diels-Kranz.
82 See O. Brunner, "Das 'ganze Haus' und die alteuropiiischeOkonomik",
in his Neue Wege der Sozialgeschichte(G6ttingen, 1956), ch. 2, originally
published in Z. f. National6k.,xiii (1950), pp. 114-39.
83 "Of the
Populousness of Ancient Nations", Essays (London, World's
Classics edn., 1903), p. 415. How widelyand carefullyHume had read ancient
authorsis demonstratednot only in this essay but also in his notebooks.
 ARISTOTLE AND ECONOMIC ANALYSIS 23

divisionof the populationthatwas unbridgeable. All Greekstates,

so far as we know,restrictedthe rightof land ownershipto their
citizens(save forexceptionalindividualswho receivedthe rightas a
personalprivilege). They thereby, in effect,
erecteda wall between
the land, fromwhichthe greatmajorityof the populationreceived
theirlivelihood,and thatverysubstantialproportionof the money
availableforinvestment whichwas in the hands of non-citizens.84
Amongthe mostobviouspracticalconsequenceswas a narrowing of
choiceofinvestment (whetherbypurchaseorbyloan)forthepotential
investorson the one hand, and a tendencyon the partof money-
holdingcitizenstoturntothelandfromconsiderations ofstatus,notof
maximizationof profits.85The absence in our sources of any
evidenceof investment (includingloans) forimprovements on land
or in manufacture is noteworthy,especiallyagainstthe considerable
evidence of relativelylarge-scaleborrowingfor conspicuouscon-
sumptionand for expensivepoliticalobligations.86 No doubt a
moderneconomistcould construct a sophisticatedinvestment model
to account for these Greek conditionsof choice. But firstthe
usefulness, ofsucha modelhastobe envisaged,
indeedthepossibility,
as it was notin antiquity."8
Keptofftheland,thenon-citizens ofnecessitylivedbymanufacture,
tradeand moneylending.That wouldbe oflittleinterest wereit not
forthe capitalfactthatthismeticactivitywas not a matterof their
being toleratedby the koinoniabut of theirbeing indispensable.
They weresoughtafter,preciselybecausethecitizenscould notcarry
on all the activitiesnecessaryforthe survivalof the community."8
8"The important economicr61leof the metic(the freeresident"alien"),
whichunderlies thispoint,willbe consideredimmediately below.
85 I have discussedthe evidencebriefly in Studiesin Land and Creditin
Ancient Athens(New Brunswick, N.J.,1952),pp. 74-8; againin "Land, Debt,
and the Man of Property in ClassicalAthens",Pol. Sci. Quart.,lxviii(1953),
pp. 249-68. Detailed researchintothe whole questionof "investments" is
urgentlyneeded.
8" C. Moss6,La finde la dimocratie (Paris,1962), pt. I, ch. I, has
athenienne
argued in greatdetailthatthefourthcenturyB.C.witnessedmorefluidity
thanmy
sketch(citedin thepreviousnote)allowed. Evenso, sheagreeswiththepoint
at issue here, e.g. pp. 66-67: "Certainlysuch profits[fromaccumulationof land
in production
holdings]wererarelyreinvested .... That is why,iftherewas
a concentrationof landholding, it did not bring about any profound trans-
in the mode of agricultural
formation production".
s7 Political and status "interference"was equally significant
in otheraspects,
forexample,on prices and wages wheneverthe statewas a party,whichwas often
the case. To enter into details would protractthis discussion unnecessarily,
I believe.
88 This was openly acknowledged by an anonymous fifth-century
oligarchic
pamphleteer, Constitution
Pseudo-Xenophon, ofAthens,1.11-12;Plato,Laws,
919D-920C, made a virtueof the fact; Aristotlewas troubled in the Politics by
(cont. on p. 24)
24 PAST AND PRESENT NUMBER 47

(Whetheror not they could not "only" because they would not
is a historically
meaningless"psychological"questionthatseemsto
me to divertattention fromthe centralissue.) Slaves werethe sole
labour force in all manufacturing establishmentsexceedingthe
immediatefamilycircle,rightto the manageriallevel. Withoutthe
manythousandsoffreenon-citizens, mostlyGreeksthemselves, some
transient,otherspermanently resident(metics),maritimecommerce
in themorecomplexurbanizedcommunities wouldhavefallenbelow
the essentialminimumfor vital supplies,not to mentionluxury
goods. Hence fourth-century Athensomittedone piece fromits
networkof laws designedto guaranteea sufficient annualimportof
corn- it madeno effort to restrict
or specifythepersonnelengaged
in thetrade.89
The positionis neatlysymbolizedby a singlepamphlet,the Ways
and Means (or Revenues)writtenby Xenophonin the periodwhen
Aristotlewas worryingabout oikonomike and chrematistike. His
proposalsfor raisingthe revenuesof Athens are concentrated on
two groupsof people. First he suggestsmeasuresto increasethe
numberof metics,"one of the best sourcesof revenue":theypay
taxes,theyare self-supporting, and theyreceiveno pay fromthe
statefortheirservices. The stepshe proposesare (I) releasemetics
fromthe burdensomeobligationof servicein theinfantry; (2) admit
themto the cavalry(an honorific service);(3) permitthemto buy
land in the cityon whichto build residences;(4) offerprizesto the
marketofficials forjust and speedysettlement of disputes;(5) give
reservedseatsin thetheatreand otherformsof hospitality to worthy
foreignmerchants;(6) build morelodging-houses and hotelsin the
harbourand increasethe numberof market-places.Hesitantlyhe
adds thepossibilitythatthestateshouldbuilditsownmerchant fleet
and lease thevesselsout,and immediately turnsto his secondgroup,
slaves. Startingfromthe observationthat large privatefortunes
have been made by men who investedin slaves and let them to
(note 88 cont.)
his inabilityto get round this obtrusiveelement in the koinonia,as J. Pe'irka
showed in a shortbut importantarticle,"A Note on Aristotle'sConception of
Citizenship and the Role of Foreignersin Fourth CenturyAthens", Eirene,vi
(1967), PP. 23-6. On metics generallyin fourth-century Athens, see Moss&,
op. cit.,pp. 167-79. Hicks, op. cit.,p. 48, seems to me to have placed the accent
exactlyin the wrongplace when he writesof the metics,"what is remarkableis
that there should have been a phase in which theircompetition is tolerated,or
even welcomed, by those already established" (my italics).
s1 To avoid misunderstanding, I will say explicitlythata countof heads would
probably show that even in Athens the citizens who did work of some kind,
including agriculture,outnumbered the others. The point at issue is the
location withinthe economyof the vital minority.
 ARISTOTLE AND ECONOMIC ANALYSIS 25

holders of concessionsin the Atheniansilver mines, Xenophon

proposesthatthe stateembarkon thisactivity itself,ploughingback
the profitsintothe purchaseof moreand moreslaves. Aftersome
rough calculationsand variouscounter-arguments againstpossible
objections,he writes,"I have now explainedwhatmeasuresshould
be takenby the statein orderthateveryAthenianmaybe maintained
at publicexpense".90
We neednotwastetimeexamining thepracticality
oftheseschemes.
Manyharshthingshavebeen said aboutthemby modernscholars-
all fromthewrongpointofview,thatofmoderneconomicinstitutions
and ideas. What mattersis the mentality revealedin this unique
document,a mentality whichpushedto the extremethe notionthat
what we call the economywas properlythe exclusivebusinessof
outsiders.
JesusCollege,Cambridge M. I. Finley

90Xenophon, Ways and Means, 4.33.