Aristotle’s View on Economics (Oikonomia)

Abstract

According to Aristotle, happiness is achieved in virtue’s activity (energeia). However, contrary to some analyses of his philosophy, he does not deny that wealth may legitimately be considered an external good. Human beings need material things for their subsistence or life, and wealth can contribute the achievement of the eudaimonia. In the Politics Book One, Aristotle refers to the pursuit of wealth as oikonomikē, i.e. economics. However, he said that the oikonomikē must be limited. According to Aristotle there are two kinds of wealth, true wealth and spurious wealth. The former is called natural, chrēmatistikē, while the latter is unnatural, chrēmatistikē. In particular, Aristotle calls trade (kapēlikē) unnatural, chrēmatistikē, and he strongly denies its value, saying that this kind wealth is the unlimited and excessive pursuit of wealth. The reasons that Aristotle assesses kapēlikē in a negative way lie in his Politics Book One. Trade pursues money to an unlimited and excessive amount, while the natural chrēmatistikē provides for men’s natural wants regarding the management of the household or polis. Next, the paper discusses the negative aspect of the excessive pursuit of wealth and how it could provoke a social struggle between the rich and poor, according to Aristotle. In other words, Aristotle believes that excessive riches could disenfranchise citizens from their community, and hence make the multitude stir up revolutions (neōteropoiia). Although Aristotle shows a strong fear of the limitless pursuit of wealth and how it could negatively affect the virtuous act, he does not deny a system of private property. In fact, Aristotle criticizes strongly Plato’s communism and Phaleas’ political proposals. Lastly, through examination of Nicomachean Ethics Book Four, two ethical virtues, liberality (eleutheriotēs) and magnificence (megaloprepeia) are related to the use of wealth by which harmony or solidarity within the polis could be achieved. Aristotle’s strong belief that liberal and magnificent persons are truly virtuous persons is obvious, and he clearly argues that they know the true end of wealth and have genuine concern for the lower or poor classes.