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What Is Money? — Nichomachean Ethics

My husband just finished teaching his Intro to Philosophy students Aristotle’s Nichomachaen Ethics. In that work (Book V, ch. 5), Aristotle launches into a discourse about money and goods. He considers money important not because you need a lot of it, but because it’s integral to just exchanges, or “reciprocity.”

I decided to read the chapter because, hey, I write about money and I’m married to a philosopher.

Aristotle proposes that a farmer and a shoemaker wish to make an exchange. The shoemaker wants food and the farmer wants shoes for his family. They can sell their products and buy from each other with money or they can just barter—either way, money will end up coming into the relationship.

If they barter, they have to figure out how many bushels of grain is equal to one pair of shoes (or vice-versa). This is important, Aristotle points out, because the grain could also be exchanged for wine. Some equation, some single, separate unit to work from, must be established for the deal to be reciprocal.

Money, then, acting as a measure, makes goods commensurate and equates them; for neither would there have been association if there were not exchange, nor exchange if there were not equality, nor equality if there were not commensurability.

Even when money never changes hands, the calculation is still based on a unit. So if the shoemaker’s shoes are worth $30, then the farmer will give $30 of grain in exchange. If the shoemaker needs more than $30 of grain, he can purchase more with money made from selling shoes to others, or he can exchange other services equal to the amount of grain he needs.

In itself, money isn’t anything at all. It’s a unit we have fixed to use for our transactions. Even gold is not inherently useful unless there’s some independent standard that tells us how much gold we can exchange for how many shoes.

For Aristotle, the point of living isn’t and shouldn’t be to acquire more money. But the point of money is to help people live together by enabling a just system of exchange.

Does it work? Aristotle is right that money enables fair exchanges. However it’s no more than a tool, independent of how people use it. And because it is key to exchanges and power, it too often gets misused, hoarded, fought-over, etc. But that’s not money’s fault, that’s ours.

NaNoWriMo is coming along very well. 14,273 words in the first 7 days. I’ll keep updating my progress bar in the top right sidebar on the front page and the bottom left on individual posts. This Thursday I start receiving Filgrastim shots to prepare for the donation. I’m feeling more nervous than I was last week, but still excited and hopeful.

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Nick Humez August 7, 2011 at 3:28 pm

Also attributed to Aristotle, though with considerably less certainty, is a book called the Oikonomikon in Greek, the Oeconomica in Latin, and the Economics in English — this last being somewhat misleading since the Greek term really means something like “How to Run a Household [and Not Lose Your Shirt]”. One source suggests that it is actually a summary, possibly by Theophrastus, of some lecture notes someone took from hearing Aristotle speak on the subject. Be that as it may, it contains a very illuminating quote which sounds to me like the genuine Aristotelian article: he defines money as “a kind of security such that if we do not want a think now, but know we shall want it in the future, will allow us to acquire it when we want it,” or words to that effect. (As a self-employed person with a horror of indebtedness, I have often thought of this whenever I was tempted towards avarice, since a corollary of this is that one therefore can reduce one’s need to be dependent on money by scaling back one’s wants. ) For a fuller discussion of money in the ancient Greek world, see Alexander and Nicholas Humez, Alpha to Omega (Boston: Godine, 1981), pp. 91-99.

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