finley, m. i. aristotle and economic analysis

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  • The Past and Present Society

    Aristotle and Economic AnalysisAuthor(s): M. I. FinleyReviewed work(s):Source: Past & Present, No. 47 (May, 1970), pp. 3-25Published by: Oxford University Press on behalf of The Past and Present SocietyStable URL: .Accessed: 04/11/2011 11:54

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  • ARISTOTLE AND ECONOMIC ANALYSIS * FOR THE ARGUMENT OF THIS PAPER IT IS ESSENTIAL TO DISTINGUISH, no matter how crudely, between economic analysis and the observa- tion or description of specific economic activities, and between both and a concept of "the economy" (with which only the final section will be concerned). By "economic analysiss', wrote Joseph Schumpeter, "I mean . . . the intellectual efforts that men have made in order to understand economic phenomena or, which comes to the same thing, . . . the analytic or scientific aspects of economic thought". And later, drawing on a suggestion of Gerhard Colm's, he added: "economic analysis deals with the questions how people behave at any time and what the economic effects are they produce by so behaving; economic sociology deals with the question how they came to behave as they do''.1

    Whether one is wholly satisfied with Schumpeter's definitions or not,2 they will serve our present purposes. To illustrate the difference between analysis and observation, I quote the most familiar ancient text on the division of labour, written by Xenophon before the middle of the fourth century B.C. The context - and this should 1lot be ignored is the superiority of the meals provided in the Persian palace with its staff of kitchen specialists.

    That this should be the case [Xenophon explains] is not remarkable. For just as the various trades are most highly developed in the large cities, in the same way the food at the palace is prepared in a far superior manner. In small towns the same man makes couches, doors, ploughs and tables, and often he even builds houses, and still he is thankful if only he can find enough work to support himself. And it is impossible for a man of many trades to do all of them well. In large cities, however, because many make demands on each trade, one alone is enough to support a man, and often less than one for instance, one man makes shoes for men, another for women, there are places even where one man earns a living just by mending shoes, another by cutting them out, another just by sewing the uppers together, while there is another who performs none of these operations but assembles the parts. Of necessity he who pursues a very specialized task will do it best. 3

    * This essay was prepared for the Festschrift for Professor E. Ch. Welskopf on her seventieth birthday, and will appear in German translation in the yahrbuch fur Wirtschaftsgeschichte. An earlier draft was presented to the Social History Group in Oxford on 3 December I969. I have benefited from the advice of a number of friends, A. Andrewes, F. H. Hahn, R. M. Hartwell, G. E. R. Lloyd G. E. M. de Ste. Croix.

    ' J. Schumpeter, History of Economic Analysis, ed. E. B. Schumpeter (New York, I954), pp. I, 2I.

    2 See the review by I. M. D. Little in Econ. Hist. Rev., 2nd ser., viii (I955-6), pp. 9I-8.

    3 Cyropaedia, 8.2.5.


    This text contains important evidence for the economic historian- but not on division of labour for which it is so often cited. In the first place, Xenophon is interested in specialization of crafts rather than in division of labour. In the second place, the virtues of both are, in his mind, improvement of quality, not increase in productivity. He says this explicitly and it is anyway implicit in the context, the meals served at the Persian court. Nor is Xenophon untypical: division of labour is not often discussed by ancient writers, but when it is, the interest is regularly in craftsmanship, in quality.4 One need only glance at the model of the pin factory at the beginning of Adam Smith's Wealth of Nations to appreciate the leap taken by the latter, from observation to genuine economic analysis.

    Even as observation, furthermore, Xenophon's remarks do not merit the accolades they have received. As Schumpeter pointed out, economics "constitutes a particularly difficult case" in any study of the origins of a "science" because

    common-sense knowledge goes in this field much farther relatively to such scientific knowledge as we have been able to achieve, than does common-sense knowledge in almost any other field. The layman's knowledge that rich harvests are associated with low prices of foodstuffs or that division of labour increases the efficiency of the productive process are obviously prescientific and it is absurd to point to such statements in old writings as if they embodied discoveries. 5

    The key for antiquity rests not with Xenophon or Plato but with Aristotle. It is agreed on all sides that only Aristotle offered the rudiments of analysis; hence histories of economic doctrine regularly feature him at the beginning. "The essential difference" between Plato and Aristotle in this respect, writes Schumpeter, "is that an analycic intention, which may be said (in a sense) to have been absent from Plato's mind, was the prime mover of Aristotle's. This is clear from the logical structure of his arguments".6

    Aristotle then becomes doubly troublesome. In the first place, his supposed efforts at economic analysis were fragmentary, wholly out of scale with his monumental contributions to physics, metaphysics,

    4 See Eric Roll, A History of Economic Thought, 3rd edn. (London, I954), pp. 27-8.

    5 Op. cit., p. 9. Even if one grants Xenophon the insight that division of labour is a consequence of greater demand, the observation led to no analysis. To quote Schumpeter again: "Classical scholars as well as economists . . . are prone to fall into the error of hailing as a discovery everything that suggests later developments, and of forgetting that, in economics as elsewhere, most statements of fundamental facts acquire importance only by the superstructures they are made to bear and are commonplace in the absence of such superstructures" (Pe 54)*

    6 Ibid.) p. 57. Cf. e.g. Roll, op. cit., pp. 3I-5.


    logic, meteorology, biology, political science, rhetoric, aesthetics and ethics. Second, and still more puzzling, his efforts produced nothing better than "decorous, pedestrian, slightly mediocre, and more than slightly pompous common sense". 7 This judgement of Schumpeter's, shared by many, is so wide of the universal judgement of Aristotle's other work, that it demands a serious explanation.

    There are only two sections in the whole Aristotelian corpus that permit systematic consideration, one in Book v of the Nicomachean Ethics, the other in Book I of the Politics.8 In both, the "economic analysis" is only a sub-section within an inquiry into other, more essential subject-matters. Insufficient attention to the contexts has been responsible for much misconception of what Aristotle is talkirlg about.

    The subject of the fifth book of the Ethics is justice. Aristotle first differexltiates universal from particular justice, and then proceeds to a systematic analysis of the latter. It, too, is of two kinds: distribu-

    . . . t1ve and correct1ve. Distributive (dianemetikos) justice is a concern when honours,

    goods, or other "possessions" of the community are to be distributed. Here justice is the same as "equality", but equality understood as a geometrical proportion (we say "progression"), not as an arithmetical one.9 The distribution of equal shares among unequal persons, or of unequal shares among equal persons, would be unjust. The principle of distributive justice is therefore to balance the share with the worth of the person. All are agreed on this, Aristotle adds, although all do not agree on the standard of value (axia) to be employed where the polis itself is concerned. "For democrats it is the status of freedom, for some oligarchs wealth, for others good birth, for aristocrats it is excellence (arete) ''. l ? That Aristotle

    70p. cit.,P 57- 8 The first part of Book II of the pseudo-Aristotelian Oeconomica is without

    value on any issue relevant to the present discussion, as I have indicated briefly in a review of the Bude edition to be published in the Classical Review. (See also note SI.)

    9 This difficult idea of a mathematical formulation of equality and justice was Pythagorean, probably first introduced by Archytas of Tarentum at the beginning of the fourth century B.C., and then popularized by Plato (first in Gorgias, so8A). See F. D. Harvey, "Two Kinds of Equality", Classica et Mediaevalia, xxvi (I965), pp. IOI-46, with corrigenda in vol. xxvii (I966), pp. 99-IOO, who rightly stresses the point that the mathematical formulation is employed solely to argue against democracy. (My translations from the Ethics are based on H. Rackham's in the Loeb Classical Library, I926.)

    l o Ethics, I I 3 I a24-29 *


    himself favoured the last-named is not important for us, and indeed he does n