Friday, February 24, 2012

On Wealth

I thought there were a number of interesting passages from Plato and Aristotle on various aspects of wealth. First from Plato:
the makers of fortunes have a second love of money as a creation of their own, resembling the affection of authors for their own poems, or of the parents for their children, besides that natural love of it for the sake of use and profit which is common to them and all men. And hence they are very bad company, for they can talk about nothing but the praises of wealth.
It seems to me that the comparison of authors and their poems is wholly different than that of parents and their children. Whereas a child is mostly loved unconditionally, a poem (or other creative output) is loved more on its perceived merits. Every author (songwriter, director, etc.) that I've ever read read of has favorites and not so favorites. They believe that item A is better than item B and act accordingly. Even if the rest of the world disagrees, they have a scale of value.
Not so with children. We really only hear of parents disowning their children in the most extreme situations and even then not reliably. Even the most horrible criminal has family members that will stand by them. But even outside of that, parents are not able to be all that rational when it comes to their children. I know of no modern play-write who will compare themselves with Shakespeare. I also know of no parent who doesn't believe their children are less than special.
I suspect that the comparison to a poet is the better one. A man who has made his fortune making life saving medicine will be more proud of that fortune than one who has made it counterfeiting drugs.

And then to Aristotle in 'Politics':
Now money-making, as we say, being twofold, it may be applied to two purposes, the service of the house or retail trade; of which the first is necessary and commendable, the other justly censurable; for it has not its origin in nature but by it men gain from each other; for usury is most reasonably detested, as it is increasing our fortune by money itself, and not employing it for the purpose it was originally intended, namely exchange.
And this is the explanation of the name (TOKOS), which means the breeding of money. For as offspring resemble their parents, so usury is money bred of money. Whence of all forms of money-making it is most against nature.
So simple exchange is fine but any kind of more complicated finance is unnatural? For centuries then, people have been questioning what money 'breeders' are really adding to society. The answers are out there in particular but probably easier to see in general. Cultures that adopt practices like charging interest (usury) and other aspects of finance have much more wealth than cultures that don't. That's true from the top to the bottom.
I wonder if Aristotle would have understood this better had he lived at a later time?


  1. Dante, based on Aristotelian thinking, placed usurers under murders in Hell. They were in the "crimes against nature" circle with the sodomites. Marx utilized Aristotle in his M-C-M formula from Das Kapital. C-M-C is earlier and represents money used as a medium of exchange for commodities. The other formula represents commodities traded for money. Anyways, Aristotle's descendants for you.

  2. Would Aristotle have been a Renaissance Christian humanist poet or a Marxist? That seems to be the new question. :-)

    1. Ayn Rand would be horrified by this question!

  3. If you have the patience and are really interested in the usury question, I recommend Volume I of Eugen von Boehm-Bawerk's "Capital and Interest," which exhaustively considers interest theories from antiquity through the 19th century. B-B is sometimes condescending but always accurate in pointing out the flaws of each theory. His own theory (in Volume 2) connects the fact of interest to the universal preference of human beings for present goods to future goods (ceteris paribus). It is an extremely important work; I'd put it in Tier 2 of the Great Books. It demolishes Marx, by the way.

    1. I've been following your summaries of the Austrian economic books with interest. If I have the time I would like to tackle some of them. Thanks!