A Short History of Ethics and Economics

A Short History of Ethics and Economics

The Greeks

James E. Alvey

Arising from a disenchantment with mainstream economics – a dissatisfaction that is widespread today – A Short History of Ethics and Economics sketches the emergence and decline of the ethical tradition of economics and the crisis of modern economics. In doing so, James Alvey focuses on four of the leading ancient Greek thinkers: Socrates, Xenophon, Plato and Aristotle.

Chapter 8: Aristotle Part III: Economics

James E. Alvey

Subjects: economics and finance, economic psychology, history of economic thought


This chapter completes the study of Aristotle and the ancient Greeks. Aristotle extends the study of the household in Xenophon and Plato (in the late dialogues). Similarly, he further develops Plato’s work on the city and the individual. Of course, Aristotle incorporates new arguments on old themes and introduces new topics of his own. Aristotle’s analysis of economics is the best known of the three thinkers studied in this book.1 Two preliminary points are required before commencing the substance of the chapter. First, for many historians of economics, the most important aspect of Aristotle’s work is his theory of justice in exchange (or the just price). Some regard it as important in its own right because it was the product of an intellectual giant and because it was path breaking at the time. Others stress it because of its great influence on later writers, especially the Scholastics. By contrast, we have relegated it to a brief discussion at the end of the chapter, after the main argument has been completed. This is appropriate for at least two reasons. First, Aristotle’s discussion of price in Book V Chapter 5 of the Nicomachean Ethics is restricted to exchange (metabletike) between specialist ¯ ¯ artisans. He does not regard this as central to his work as a whole: it is an ‘inferior form of justice’ (Lewis 1978, p. 87). Aristotle’s focus is on citizen-households, which are largely self-sufficient. Exchange between these households is based on good will, mutual obligation, and future reciprocity. By contrast, exchange...

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