May 12, 2003

Notes: Polanyi: Aristotle Discovers the Economy

Karl Polanyi, "Aristotle Discovers the Economy," in Trade and Market in the Early Empires...

A whole bunch of this article is simply wrong: the claims that "in the fourth century... Greeks initiated the gainful business practices that in much later days developed into the dynamo of market comnpetition" are false. This means that Polanyi is wrong when he says that Aristotle is examining a new phenomenon when he looks at the economy. Aristotle is examining an old phenomenon from the point of view of an Athenian aristocrat.

But there is much of value in Polanyi's exposition of what Aristotle says...

p. 79: Trade is "natural" when it serves the survival of the community by maintaining its self-sufficiency... the operation of giving a share... from on's surplus. The rate... follows from the requirement of philia, i.e., that the goodwill among the members persist.... The just price, then, derives from the demands of philia as expressed in the reciprocity which is of the essence of all human community...

p. 80: Trade... is "natural" as long as it is a requirement of self-sufficiency. Prices are justly set if they conform to the standing of the participants in the community, thereby strenghening the goodwill on which community rests.... In such exchange no gain is involved, goods have their known prices, fixed beforehand. If exceptionally gainful retailing there must be for the sake of a convenient distribution of goods in the marketplace, let it be done by noncitizens. Aristotle's theory of trade and price was nothing else than a simple elaboration of his general theorem of the human community. Community, self-sufficiency, and justice: these pivots of his sociology were the frame of reference of his thought on all economic matters, whether the nature of the economy or policy issues were at stake.

p. 80: The desire for wealth, Solon's verse had proclaimed, was unlimited with man. No so, said Aristotle.... Wealth is, in truth,, th ethings necessary to sustain life when safely stored in the keeping of the community.... Human needs... are not boundless; nor is there a scarcity of subsistence in nature...

p. 80: ...scarcity... "from the demand side"... Aristotle attributes to a misconceived notion of the good life as a desire for a greater abundance of physical goods and enjoyments. The elixir of the good life--the elation of day-long theater, the mass jury service, the holding in turn of offices, canvassing, electioneering, great festivals, even the thrill of battle and naval combat--can neither be hoarded nor physically possessed. True, the good life requires... that the citizen have leisure... to devote himself to the service of the polis... slavery... the payment of all citizens for the performance of public duties... not admitting artisans to citizenship...

p. 83: Commercial trade... money... earned by respectable citizens through... buying and selling. Such a thing had been... restricted to... hucksters...metics, who eked out a living by retailing food in the marketplace.... Now this practice had apparently spread to the citizenry of good standing... How should the phenomenon be classified? How should profit... be operationally explained? And what judgment should be passed on such an activity? Aristotle's analysis... calling commercial trade kapelike--no name had yet been given to it--he intimated it was nothing new... hucksterism writ large...

p. 87: This should dispose of the notion that Aristotle was offering in his Ethics a theory of prices.... When... numbers increased and they were compelled to settle apart, they found themselves short of some of the things they formerly used in common... mutual sharing.... Hence exchange. The rate of exchange must be such as to maintain the community.... The skills of persons of different status had to be exchanged at a rate proportionate to the status of each: the builder's performance exchanged against many times the cobbler's performance: unless this was so, reciprocity was infringed and the community would not hold.

p. 89: The set price... justness... setting natural trade apart from unnatural trade. Since the aim of natural trade is exclusively to restore self-sufficiency, the set price ensures this through its exclusion of gain...

Posted by DeLong at May 12, 2003 04:14 PM | TrackBack

Comments

Michael is often considered even more interesting than he rather better known brother.

Posted by: Edward Hugh on May 14, 2003 02:12 AM

My planned second article in my "On Fox at 11: When Good Theologians Go Bad" is an defence of charging interest to capitalists based on Aquinas.

The basic thesis is that the defence is based around the intent of the borrower ; as the borrower intends to turn money into more money, the act is valid, as it would not be valid if the intent of the borrower was to eat.

But I have to finish Part One, "Sport Fucking : A theological defense" first.

Posted by: Ian Whitchurch on May 14, 2003 03:20 AM
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