money

Capital (Part I)

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Aristotle and John Locke on Property

In his treatment “Of Property” in the fifth chapter of his Second Essay Concerning Civil Government, John Locke evinces the various ways in which he has been significant influenced by the thought of Aristotle on the subjects of wealth and property ownership. He also, however, departs from and makes meaningful additions to the theories of Aristotle on key points, thereby forging a theory of his own from the foundation provided by Aristotle.

Both Aristotle and Locke begin their exploration of the origins of property with the notion of an original human family which held all property in common. Aristotle asserts that “the first community . . . which is the family . . . originally had all things in common.” Locke, adding to this the biblical names of Adam and Noah as the forefathers of the collective human family, similarly states that God granted the entire world to “Adam, and to Noah, and his sons,” from which “it is very clear, that God . . . has given the earth to the children of men; given it to mankind in common.”

From this original collective ownership of the earth, both Aristotle and Locke explain, there was a departure in favor of private ownership, from which, in turn, resulted the development of exchange and, later still, the use of money. It is in the reasons they provide for this departure from a primitive collectivism that Aristotle and Locke begin to depart from each other in their respective theories. Aristotle puts forward the notion that the development of private ownership out of the early collective economy of the primeval human family was the result of the growth of the population. “Later, when the family divided into parts,” says Aristotle, “the parts shared in many things, and different parts in different things.” The division of property among private owners, then, is the result of the limitation of one’s purview to those things that are of direct concern to one.

Locke, however, offers a theory that, while not in conflict with Aristotle’s ideas, provides an alternative explanation for the development of private property out of early common ownership. Locke sees this development as a natural extension of the private ownership each person naturally possesses over his or her own body. “Though the earth, and all inferior creatures, be common to all men,” says Locke, “yet every man has a property in his own person: this no body has any right to but himself.” Because of this natural ownership over one’s own body, it is also the case that anything one uses one’s body to produce is also one’s own. “The labour of his body, and the work of his hands, we may say, are properly his,” according to Locke.

While Locke’s theory of the origin of private property does not stand in opposition to the theory of Aristotle on the same subject, and the two are even potentially complementary, there is a clear difference in their perspectives on this point. After this brief departure from another another, however, Locke returns again to an agreement with Aristotle in his theories of the origins of exchange and money, adding to Aristotle while relying upon Aristotle’s earlier assessments.

Commenting on the origins of an exchange economy, Aristotle states that “the art of exchange extends . . . arises at first from what is natural, from the circumstance that some have too little, others too much” of certain goods. As a result, an individual exchanges that which he has too much of for that which he has too little of with another individual who finds himself in the inverse situation. The use of money developed, continues Aristotle, because the “various necessaries of life are not easily carried about, and hence men agreed to employ in their dealings with each other something which was intrinsically useful and easily applicable to the purposes of life, for example, iron, silver, and the like.”

While holding to a nearly identical theory regarding the development of an exchange economy and the use of money, Locke adds to Aristotle’s idea the observation that those goods which are necessary to life are generally perishable goods. “And thus came in the use of money,” writes Locke, “some lasting thing that men might keep without spoiling, and that by mutual consent men would take in exchange for the truly useful, but perishable supports of life.”

While departing slightly in some places and proposing slightly divergent alternative theories in others, Locke largely relies upon Aristotle’s account regarding the origins of private property, the exchange economy, and the use of money. Given the clear reliance of Locke upon Aristotle’s ideas, it is perhaps useful to view Locke’s writing on the subject as a commentary upon the earlier work of Aristotle upon the same.

“Productive and Unproductive Labour” in Smith’s The Wealth of Nations

In Book II, Chapter III of his The Wealth of Nations, Adam Smith states and explains the distinction he makes between the categories of “productive and unproductive labour.” According to Smith, “there is one sort of labour which adds to the value of the subject upon which it is bestowed,” namely productive labor, and “there is another which has no such effect,” namely unproductive labor. In addition, Smith holds that the productive laborer makes a greater contribution to a society than the unproductive laborer due to the former’s role in “the growth of public opulence.”

The former, productive, class of labor he identifies specifically with the manufacturing class which produces “some particular subject or vendible commodity.” These laborers, in other words, produce some tangible item which contributes to an indubitable increase in the total material wealth of a society. Smith envisions a society in which, through the profuse production of commodities by the manufacturing class and the consumption of these commodities “in adorning his house or his country villa, in useful or ornamental buildings, in useful or ornamental furniture, in collecting books, statues, pictures; or in things more frivolous, jewels, baubles, ingenious trinkets of different kinds; or, what is most trifling of all, in amassing a great wardrobe of fine clothes,” on the part of the wealthy, greater material wealth is made available to all. Because of the insatiable appetite of the wealthy for new commodities, they will eventually “grow weary” of the items they have purchased previously. As a result, “the houses, the furniture, the clothing of the rich, in a little time, become useful to the inferior and middling ranks of people.” The greater the number of commodities produced, the more available all commodities become to all people. The profusion of material wealth creates a trickle-down economy which increases the material wealth of all in a society. What is necessary to create such a system, Smith holds, is a great number of productive laborers of the manufacturing class working to produce said commodities.

Smith contrasts those whom he terms the “unproductive hands” with this productive group of laborers. Among the unproductive in a society Smith classes “the sovereign . . . with all the officers both of justice and war who serve under him” as well as “the whole army and navy.” In addition, “in this same class,” says Smith, “must be ranked, some both of the gravest and most important, and some of the most frivolous professions: churchmen, lawyers, physicians, men of letters of all kinds; players, buffoons, musicians, opera-singers, opera-dancers, etc.” While these are certainly not without value to a society, Smith classes all of these together as “unproductive” because they do not produce any lasting tangible items, or commodities. “Like the declamation of the actor, the harangue of the orator, or the tune of the musician,” says Smith, “the work of all of them perishes in the very instant of its production.”

The distinction that Smith draws between productive and unproductive laborers is quite compelling and insightful, yet fraught with danger for a society which takes it too seriously. On the one hand, Smith admirably rescues the manufacturer and the artisan from the belittlement of the nature of their vocations which had been a mainstay of Western thought since antiquity. Aristotle, who exerted a substantial influence on the Western mind during and following the High Middle Ages, for instance, claimed that “all paid employments . . . absorb and degrade the mind.” To this condemnation, Smith offers a corrective in the form of a reminder of the necessity of these “paid employments” to the material wealth of a society.

It is this material wealth, in turn, which creates the environment which allows the “unproductive hands” of artists, musicians, and men of letters to flourish. A society which continues to exist at a mere subsistence level cannot develop a distinguishable class of priests and storytellers because all hands must be employed in the cultivation and production necessary to the maintenance of biological life. Only with a class of productive laborers of some size and which is capable of meeting and even producing superfluity beyond the basic needs of a society, such as the slave class of Aristotle’s ancient Greece or the manufacturing class of Smith’s 18th century Scotland, does a class of the “unproductive” become possible.

It is not be overlooked, however, that it is this class of the “unproductive” which leads a society beyond mere animal existence. While Smith is right to place great value upon the manufacturing class, it would be a mistake for a society to lean too far in this direction and so devalue the creative and intellectual element. A poverty of thought is as detrimental to human existence as a poverty of the goods necessary to material well-being, a fact Smith would have done well to note.

Marx on the origin of money

In the opening chapter of Das Kapital, Karl Marx explains his theory of the origin of money, beginning with the prerequisite discussion of the respective origins of value and exchange. He posits first that the primary source of the value of any given commodity is that a commodity is, by definition, a product of a certain amount of human labor expended to produce an item that others find desirable or useful. It is the combination of the factors of having been produced by human labor and having been produced for others that creates a commodity and lends it values to it. If a thing is useful but not the product of human labor, it possesses a measure of “use-value,” says Marx, but not “exchange value,” the actual value of an object in terms of its exchangeability with other objects. It is not, then, a commodity at all. If, on the other hand, the object is the product of human labor but is not produced “for others” or “if the thing is useless,” says Marx, the labor which produced it is also useless and should not be considered real labor at all as it “creates no value.” When an object is produced for the purpose of exchange, however, it is a commodity in the proper sense of the term and “commodities . . . are something-two-fold,” Marx continues, “both objects of utility and, at the same time, depositories of value.”

The second subject which Marx discusses before approaching his theory of the origin of money is the origin of exchange. The origin of exchange, implicit in Marx’s discussion of the origin of value, Marx locates in human need and the progress of the means by which human need may be satisfied. While, for example,“the human race made clothes for thousands of years, without a single man becoming a tailor,” the production of greater qualities and quantities of clothing entailed the specialization of labor. This specialization of labor, in turn, necessitates exchange as the specialized laborer is incapable of producing everything that he requires to satisfy all of his needs. Marx’s theoretical tailor, for instance, continues to require a home, which he no longer possesses the ability to make for himself due to his dedication of time and knowledge to the production of clothing. As he a result, his needs require the specialization of a carpenter.

Exchange now becomes necessary. The tailor and the carpenter must trade with each other for the needs of each to be met. To facilitate this exchange, however, there must be an agreed-upon value of the commodities being exchanged. “The simplest value relation is evidently that of one commodity to some one other commodity of a different kind,” says Marx. In other words, the exchange relationship between two commodities determines the value of each commodity.

A simple one-for-one exchange of commodities, however, is nonsensical. In an exchange in which a tailor trades a single item of clothing he has produced for an entire house, the carpenter clearly has taken a great loss as the latter has undoubtedly put a great deal more labor into building a house than the former did while producing an item of clothing. As a result, the natural means of equivalence between commodities is “congealed labor.” In other words, says Marx two commodities are of equal value because they “have each cost the same amount of labour or the same quantity of labour time.” The amount of labor put into a commodity, then, is, in fact, the value of the commodity. It is only in this agreement that the tailor and the carpenter are able to proceed with an exchange, the carpenter gaining from the tailor an amount of clothing items in the production of which the tailor has expended an amount of labor equivalent to the labor of the carpenter in the production of the tailor’s new home.

From this system of labor-equivalent trade Marx goes on to extrapolate his theory of the origin of money. A prevalent flaw in the system of commodity trade was the continually fluctuating and difficult to determine equivalencies of value. For each trade, it was necessary to calculate anew the labor expenditure on each commodity to be traded. Improvements in the process of production of certain commodities also caused the relative values of said commodities to shift, sometimes dramatically, in value relations to other commodities as the amount of labor necessary to their production decreased. As a result, a new commodity with “the character of direct and universal exchangeability” became necessary. This tertiary commodity, gold, became, “by social custom,” a commodity whose stable value provided the means by which the relative value of other commodities could be determined. In this agreement upon a commodity of stable value, says Marx, is the origin of the money system of exchange.

Chrysostom on wealth

The thought of St. John Chrysostom, the fourth century archbishop of Constantinople and one of the great Greek fathers of the Church, has been a major influence on my beliefs concerning the nature and proper use of wealth, as his thought a compelling commentary on the biblical treatment of wealth and poverty. Chrysostom, as the leading Church figure in Constantinople, an expansive urban center and the seat of power in the Byzantine Empire, was surrounded by extremes. Around him were the highest degrees of wealth among the aristocracy whom he preached to daily in the cathedral as well as the poorest segments of society which he encountered among the many beggars and poor artisans and merchants of the city. As a result of his daily experience of extremes of wealth and poverty, Chrysostom often turned to these topics in his homilies, exhorting the poor to prayer and away from envy and encouraging the rich to charity rather than ostentation. One of his most succinct treatments of wealth is found in his 27th homily on the Gospel of St. John.

There, Chrysostom defines wealth in a manner that draws upon the biblical notion, found in, for example, the Parable of the Talents (Matthew 25:14-30), that wealth, as the sum total of one’s material possessions, is a loan that God, as the source of all the entire material world, gives to men in the hope that they will use it wisely. Everything on earth, says Chrysostom, is really God’s and God, in his munificence, shares it with the rich. Chrysostom combines this definition of wealth with the identification of Christ with those in need in the discourse on the sheep and the goats (Matthew 25:31-46), which immediately follows the Parable of the Talents in the Gospel of Matthew.

Bringing these two together, Chrysostom imagines the poor as the source of the loaned wealth of the rich. “Gladly doth He hunger that thou mayest be fed; naked doth He go that He may provide for thee the materials for a garment of incorruption,” Chrysostom tells his congregation of wealthy aristocrats. Cautioning them against hoarding their wealth, Chrysostom continues, “some of your garments are moth-eaten, others are a load to your coffers, and a needless trouble to their possessors, while He who gave you these and all else that you possesses goeth naked.” Warning his listeners against ostentatious displays of their wealth, Chrysostom exhorts them to charity, saying, “they will not admire thee who wearest such apparel, but the man who supplies garments to the needy.” Because of Christ’s identification of himself with the needy, Chrysostom explains, to share one’s wealth with the poor is not to “bestow as a favor,” but rather the repayment of a debt.

Because the sharing of wealth is simultaneously the repayment of a debt and the assistance of one in need, says Chrysostom, “he who repays both bestows his gifts on a benefactor, and himself reaps their fruit besides.” Chrysostom does not exhort his congregation to charity only “because I care for the poor,” he says, but “because I care for your souls.” Chrysostom even goes so far as to tell his wealthy congregants that “none can rescue you from hell, if you obtain not the help of the poor.”Chrysostom imagines a relationship of reciprocity between the poor and the rich, in which the two act symbolically as Christ to one another, the rich repaying their debt to God through the poor and the poor, in turn, acting to intercede for the rich in prayer and through an ascetical endurance of their state.

This definition of wealth as a loan from God as a means of salvation for its possessor presents a way of understanding wealth that is worthy of consideration as an alternative to current modes of thought on wealth. Chrysostom’s way of thinking is one in which the poor are not reduced to objects of pity and condescension and in which the understanding of wealth as a social good is not reduced to forced communalization of wealth or bureaucratization of charity. Instead, both wealth and poverty are viewed in the light of the redemptive work of Christ, as mutually compatible and even simultaneously necessary means to salvation for all mankind.

A home without books is no home at all

Nothing is more disconcerting, it seems to me, than to enter a home or an apartment in which there are no books and no place for books, no sign that a book has ever been there. It always seems like a kind of desecration to me, even though I am perfectly aware that bookless people can also be saved, even that they often have much practical wisdom, something Aristotle himself recognized. I know that there are libraries from which we can borrow for a time a book we may not own. We are blessed to live in a time of relatively cheap books. Ultimately, no doubt, the important thing is what is in our head, not what is on a printed page on our shelves, even when they contain our own books. Nor do we have to replicate the New York City Public Library in our own homes. Still, most of us would benefit from having at least a couple hundred books, probably more, surrounding us. I am sure that by judicious use of sales and used-book and online stores, anyone can gather together a very respectable basic library, probably for less than a thousand dollars. With a little enterprise, one can find in a used bookstore or online the Basic Works of Aristotle or the Lives of Plutarch for less than twenty dollars. When stretched out over time and compared, say, to the cumulative price of supplies for a heavy smoker, or a week’s stay in Paris or Tokyo, or a season ticket to one’s favorite NFL team, the cost of books is not too bad. My point is merely that whether or not we have good books around us is not so much a question of cost as it is a question of what we do with our available money, with how we judge the comparative worth of things.

Fr. James V. Schall, The Life of the Mind: On the Joys and Travails of Thinking, pp. 14-15

Who says the "global economy" is something new?

Sometime around the turn of the century, one of his [Abbasid Caliph Harun al-Rashid] merchants paid a gold dinar [Arab coin] into the hands of a Scandinavian trader, who took it north and used it to buy goods from an Anglo-Saxon merchant, who sailed home with the coin and landed at a port in the English kingdom of Mercia. Mercia, which by this point had expanded to cover a good bit of the southeast of England, was under the rule of King Offa, a Christian monarch…

Once in Mercia, the merchant used the coin to buy a night’s lodging from an innkeeper, who later that year used it to pay the king’s tax-collector. And so it came into the hands of Off’s silversmith, who was mulling over the designs for the next year’s English coinage. He liked the pretty patterns on al-Rashid’s gold dinar and decided to copy them. The following year, the coins of the English monarch were minted with “OFFA REX” written on one side and, the Arabic words for “There is no God but Allah, and Muhammad is his prophet” on the other. The silversmith, of course, had no idea what the words said; “OFFA REX” is written right side up, but the Arabic letters are all upside down.

Susan Wise Bauer, The History of the Medieval World, p. 397