Excerpt from Aristotle's Politics (c. 350BC) :
When the inhabitants of one country became more dependent on those of another, and they imported what they needed, and exported what they had too much of, money necessarily came into use. For the various necessaries of life are not easily carried about, and hence men agreed to employ in their dealings with each other something which was intrinsically useful and easily applicable to the purposes of life, for example, iron, silver, and the like. Of this the value was at first measured simply by size and weight, but in process of time they put a stamp upon it, to save the trouble of weighing and to mark the value.Aristotle cites the advent of mercantilism as leading to the beginning use of "money" in the form of weight measures of useful metals. Then cites efficiency as the reason for transitioning from weight measures of metals to a pure state currency or nomisma.
7 comments:
Where does mercantilism come in? Isn't he just talking about the development or international trade?
Dan,
Lets look at mercantilism as "un-natural" trade...
This from earlier in the paragraph from which I took the snip:
"For example, a shoe is used for wear, and is used for exchange; both are uses of the shoe. He who gives a shoe in exchange for money or food to him who wants one, does indeed use the shoe as a shoe, but this is not its proper or primary purpose, for a shoe is not made to be an object of barter. The same may be said of all possessions, for the art of exchange extends to all of them, and it arises at first from what is natural, from the circumstance that some have too little, others too much. Hence we may infer that retail trade is not a natural part of the art of getting wealth; had it been so, men would have ceased to exchange when they had enough. "
So Ari looks at trade that goes beyond community need as "not natural", this is the same as what went on to be termed mercantilism centuries later... entities within the exporting jurisdiction somehow gain control of production and export it while said production does not align with the exporting jurisdictions needs (high or low).... he goes on:
"In the first community, indeed, which is the family, this art is obviously of no use, but it begins to be useful when the society increases. For the members of the family originally had all things in common; later, when the family divided into parts, the parts shared in many things, and different parts in different things, which they had to give in exchange for what they wanted, a kind of barter which is still practiced among barbarous nations who exchange with one another the necessaries of life and nothing more; giving and receiving wine, for example, in exchange for coin, and the like. This sort of barter is not part of the wealth-getting art and is not contrary to nature, but is needed for the satisfaction of men's natural wants. The other or more complex form of exchange grew, as might have been inferred, out of the simpler. When the inhabitants of one country became more dependent on those of another,...."
imo his use of the word "dependent" is not complementary... like a substance abuser is "dependent" on the substance.... not a "good" thing... he goes on:
"When the use of coin had once been discovered, out of the barter of necessary articles arose the other art of wealth getting, namely, retail trade; which was at first probably a simple matter, but became more complicated as soon as men learned by experience whence and by what exchanges the greatest profit might be made. Originating in the use of coin, the art of getting wealth is generally thought to be chiefly concerned with it, and to be the art which produces riches and wealth; having to consider how they may be accumulated. Indeed, riches is assumed by many to be only a quantity of coin,..."
Bold the whole paragraph here... the ex/im trade becomes driven by pleonexia or greed or "more having" on the part of the humans who have found themselves in the position to control trade ....
this is textbook Alexander Hamilton from Federalist 12 having his unusual/sexual thoughts about silver and gold: "The prosperity of commerce is now perceived and acknowledged by all enlightened statesmen to be the most useful as well as the most productive source of national wealth, and has accordingly become a primary object of their political cares. By multipying the means of gratification, by promoting the introduction and circulation of the precious metals, those darling objects of human avarice and enterprise, it serves to vivify and invigorate the channels of industry, and to make them flow with greater activity and copiousness...."
Again this is weirdo stuff, pleonexia, policy driven by greed or "more having" of coin. Bad stuff all around...
Think of all of the Asian hell holes over there, yet they export immense amounts of goods and services to the west... this is irrational.
Aristotle makes the case that it is out of this irrationality that "money" sprang from, driven by the greed of the exporters in their zealous and un-natural pleonexia for metal coins ... interesting I'd say!
rsp,
"men agreed to employ in their dealings with each other something which was intrinsically useful and easily applicable to the purposes of life, for example, iron, silver, and the like"
Does this make sense?
If a metal is being used as money, then it's not being used for anything else, i.e. anything "useful". It just gets passed around and never used for anything other than the exchange of other goods. It plays a symbolic role, as a unit of account, rather than any practical, "intrinsically useful" role (?).
y, Aristotle is making the point that I made elsewhere about needs and wants. In a functional community,the object of exchange is to satisfy needs. This, he says, is "natural" exchange. When community becomes sufficiently complex that intimacy is lost and impersonality takes its place in exchange, then satisfaction of wants multiples and due to scarcity, imbalance set into where some peoples accumulating what they want results in other not have what they need. At this point the natural basis of community is lost, and so is the connection between meaning and money. This was a key point that of Marx. The result is individual "alienation" that turns into social malaise when it is widespread.
Analyzing it in terms of the functions of money — unit of account, medium of exchange, store of value and record of credit-debt — we can see that what Aristotle was saying is that when money as a store of value becomes store of wealth, that is money under the mattress rather than simply money in the pocket between normal transactions, then the society is "infected" and become "unnatural" due to hoarding. It's a sick society. (This is a reason that Keynes famously said, "Euthanize the rentiers.")
While Aristotle doesn't mention debt explicitly, he implies it. In a family and extended families (clans and even small tribes) there is reciprocity and social obligation but no formal credit-debt. The addition of credit-debt as an impersonal relationship of creditor and debtor further complicates the issue in that formal debt creates a binding legal relationship that leaves the debtor bound to the creditor.
This condition may result in social imbalance — widespread debt servitude — and it can eventually cause economic disruption when a sufficiently large portion of society is unable to pay its debts, resulting in economic collapse and social dsyfunction. The Sumerians realized this prior to the time of Aristotle and dealt with it by jubilee.
y,
Does this make sense?"
imo yes.
These metals were the only ones they had.
Looking at the history of the metallurgy, they only had copper, silver, gold, iron (perhaps lead but that might have come later during Rome) ... or alloys/derivatives thereof...
So if you had an ingot of bronze (copper derivative), that had metallurgical value that you could use in I guess a form of barter...
Their choices in metals was extremely limited...
rsp,
Tom,
It seems to me that Ari I guess may imply "debt" as in play... but he per se does expose "retail trade" as a factor in the evolution of "money" here...
iow Ari doesnt specifically mention "debt" but he for sure mentions trade:
"When the use of coin had once been discovered, out of the barter of necessary articles arose the other art of wealth getting, namely, retail trade;"
Maybe for the West somebody should write a book: "Trade, the First 5,000 years..." ;)
rsp,
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