The Ancient Greece & why Aristotle can cause problems for contemporary economists?
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1 The Ancient Greece & why Aristotle can cause problems for contemporary economists? 1
2 1. Introduction Socrates ( ) Xenophon ( ) Oikonomikos (Oikos+nomos) Plato ( ) The Republic (Politeia; Staatsromane; Utopia) Aristotle ( ) Politics and Nichomachean Ethics 2
3 2. Historical Context 594 BCE: Solon s reforms laid the basis of Athenian democracy as the election, by the property-owning classes of a council of 400 member. Rise of commerce in the Eastern Mediterranean, the development of Athenian seapower, emerging Imperial aspirations beyond the city-states (polis). Persian Wars Periclean Age ( BCE) Peloponnesian War with Spartans ( BCE) 3
4 3. Class structure of Athenian Polis a. The concept of household (the real household versus the city as a household) b. The concept of citizenship and slavery 4
5 4. Plato s Perfect State Boğaziçi University Department of Economics Small and constant number of population with a stable wealth. All economic and non-economic activity should be regulated. The society is organized around permanent castes (warriors, farmers, artisans, etc.). Man and woman treated equally. A caste of guardians, who live together without individual property or family ties, will rule the polis. Commercial enterprise lead to inequality of wealth; Inequality of wealth led to oligarchy => Democracy developed as a reaction to oligarchy => Tyranny (rule of a popular leader) grew out of democracy. 5
6 But if we do insist on forcing him into a strait jacket of our own making, the fascist strait jacket seems to fit somewhat better than the communist one: Plato s constitution does not exclude private property except on the highest level of the purest ideal; at the same time it enforces a strict regulation of individual life, including limitation of individual wealth and severe restrictions upon freedom of speech; it is essentially corporative ; and it recognizes the necessity of a classe dirigente features that go far toward defining fascism. Joseph Schumpeter, History of Economic Analysis, 1954,
7 5. Aristotle and his contributions to economics 5.1. What are the differences between Plato and Aristotle? For Plato private property was the contagion that fostered greed and avarice and the root cause of war. Private property for Plato not only bred selfishness, but also motivated the Athenian quest of empire at the aggregate social level (the city state as a household). Aristotle, on the other hand, condoned and championed private property and distinguished between two kinds of trade. (See below) For Plato, the Form or Idea of the polis could never be reached, for reality will always be flawed, imperfect image of the Form or Idea. For Aristotle, the society is capable of moving toward the Ideal. 7
8 5.2. Theory of value a. Use value b. Exchange value 5.3. Theory of money a. Medium of exchange b. Measure of value c. Store of value 8
9 5.4. The concepts of exchange: natural versus unnatural Arête (the art of being a good citizen) vs. Chrematistike (the acquisition of wealth) Master/slave; Husband/wife; Father/children; chrematistike When does chrematistike becomes unnatural? C M C vs. M C M (Simple commodity exchange vs. trade for profit) where C C and M >M Why does trade disrupt social harmony and stability? When is trade acceptable for Aristotle? 9
10 5.5. The concepts of justice (i) Distributive Justice (ii) Restorative Justice (iii) Commutative Justice 10
11 6. Conclusions Implications of Aristotle s ideas for the history of economics and contemporary? What would Aristotle think of the contemporary world? 11
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