10th December 2011

Since austerity is now the order of the day, Greeks are doing the sensible thing and beginning to barter. Aristotle thought it was the only system that kept the world honest.

At the centre of Aristotle’s thinking lay a concept dear to him — the purpose for which something was designed (its telos). So, the purpose of a shoe was to wear it. That was its ‘use-value’. Bartering it for something else did not change that: the shoe was still a shoe, with a specific use. If you did not wear it, someone else would. In return for the shoe, you would be receiving a commensurate item — a cloak, a pot, a mattock — which you would also put to the use for which it was made. Aristotle agreed there was a problem about the commensurability of any barter — how would you equalise the use-value of a shoe/bed/house? — but that did not affect the principle.

Now bring money into the equation. Aristotle’s point here was that it added a further dimension to the idea of use. Take medicine. Doctors used it to provide health. But if the doctor also used it to make money, health, a good per se, was no longer the sole aim: it was also a means to a further end — making a profit. So what were the priorities?

Further, the fact that anything from health to education could be turned into money suggested that the stock of wealth was infinite; believe that, and making money became life’s goal. But how ‘good’ was the activity of generating profit by compromising the use of something good in itself?

Aristotle knew about furthering trade by credit and loans. But his was an ethical, not economic, analysis. Barter keeps one honest because it puts equality, not profit, at the heart of all exchange. It does not judge the worth of any activity by its profit/loss potential, nor make financial accumulation the sole arbiter of life’s value.

But money in Aristotle’s time did at least derive directly from use-value. He would be aghast at today’s myriad instruments for producing fantasy money on the back of other fantasy money, and not a bit surprised by the consequences.