Plato & true economy

By Roland Onyimo

 “Greed is good,”says Gordon Gekko: the suave corporate raider represented in Wallstreet. Greed seems to represent good market behaviour. According to Adam Smith; self- interest is a market fundamental essential to the efficient workings of capitalism.

In the major work ‘The Politics’, Aristotle defined two types of distributive activities. Firstly, Aristotle defined Oeconomia , the root of the word economics-as household management. The latter, involving: growing crops plus tending animals, craftwork to produce the necessities of life and the system of creating domestic order.  In such a system debt is publicly issued by either The Palace or The Temple. Given agriculture, merchant shipping and sharecropping were seasonal activities, debt bridged seasonal subsistence gaps. Interest for debt was nil ,and purchasing parity was fixed was fixed by law. The laws of Hammurabi fixed a weighting of silver to a specific amount of grain. When debt became unsustainable it was easy to cancel, given it was issued by the Central authority of either Palace or Temple. Zero interest minimised losses which were the result of famine, flood or war causing debt default.

On the other hand, chrematistics, concerns the making and lending of money to generate profit. It also involves the accumulation of wealth, currency and earnings through speculation. Chrematistics basically defines economics as we know it today. The word bank, comes from the word bench-a bench on which the wealthy sat and lent money for profit to those in need. When the powers of the wealthy increased and Palace Temples lost their clout, the vacuum was usurped by profiteers. The economics studied today should be defined as pure chrematistics. Earlier civilisations, in The Neolithic and Babylonyian era, had Oeconomia or pure economic activity.  Plato is credited with defining this historical distinction of two separate bi-polar activities.

Oeconomia, as sustainable production, was considered by Plato to be good and necessary for human existence. Chrematistics was considered dangerous and destructive to society. The danger in chrematistics lay in its “notion that wealth and power have no limit,” according to Aristotle.  Aristotle felt “the art of acquisition which is commonly and rightly called money making” is downright unsustainable. As such, Oeconomia is a natural activity whereas chrematistics is not.

Exchange is only helpful when it helps a household cover its needs. The natural purpose of exchange as Aristotle surmises is not to make money. Resultantly, it is no surprise Aristotle detested the charging of interest, speculation, hoarding and profiteering. Within this analysis, in The Politics, the exchange of goods and services has not only a material dimension but a moral one as well. Money, as a means of exchange, therefore has a moral value, as it facilitates the exchange of goods and services,or true product value itself.

When people are driven by greed, they act immorally. Speculation, hoarding and trading for non-productive purposes all create industries which do not benefit society.  Oversized hedge-funds, speculators like Gordon Gekko and greedy citizens (both corporate and members of the public) all work to destroy the productive sector of the economy or oeconomia. They do this in two ways, as they diminish the moral value of money and its true productive value.

Using Aristotle’s taxonomy, modern economics should be called chrematistics. Its legalization and general acceptance after the 16^th Century, when Europe finally became privately monetized, has brought about immense social destruction in the form of imperial wars, industrial slavery, environmental damage and the destruction of societies.

The so called progress brought about by private industrialisation has dehumanised the world population and created a new mass of humanity living in poverty. These billions cannot survive in a system which enriches the few, who acquire the majority of resources, through the system of money making. Gekko was right-“Greed is good,” if you are rich, a political insider, living on elite fraud and actually have the resources(free credit) to engage in chrematistics.

Aristotle however was wiser. Only through Oeconomia , plus the resultant sustainable development, can human economic value and moral worth  be preserved.