Aristotle to Aquinas

History of Economic ThoughtBoise State University

Spring 2007Prof. D. Allen Dalton

Background

• 750 BCE: Homer’s The Iliad and The Odyssey

• 700 BCE: Hesiod’s Works and Days

• Homer’s and Heisod’s Greece– extensive colonization of Mediterranean– primacy of agriculture and culture of

hospitality and reciprocity

– secondary position of merchant traders

Background

Greek and Phoenician colonies circa 700 BCE

The Golden Age of Greece• From mid-5th century BCE• Flowering of Drama and Comedy

– Aeschylus, Sophocles, Euripides, Aristophanes

• Beginning of Historical study– Herodotus’ Histories and Thucydides’ History of the

Peloponnesian War

• Architectural wonders– Temple of Zeus, the Parthenon, Temple of Artemis,

Mausoleum at Helicarnassus

• Advances in “Natural” Philosophy and Medicine– Anaxagoras (matter in motion); Democritus and Leucippus

(atoms) advance Materialism– Hippocrates develops empirical study of disease

Golden Age Philosophy• Social Philosophy

– Sophists (Pre-Socratic)– Socrates and the Socratic Method

– Socratic schools• Cynicism - Antisthenes• Platonism - Plato

• Aristotelianism - Aristotle

• Skepticism - Eucliedes• Epicureanism - Aristippus and Epicurus• Stoicism - Zeno

The Sophists• Protagoras (481 - 411 BCE) and

Democritus (460? - 362? BCE)– Sophist = teacher of wisdom

– Sensation as source of knowledge.– “Man is the measure of all things.”– Various versions of “Justice,” but none

center on religion, the gods, or the state.

– Emphasis on grammar, logic, dialectics, forms of arguments and detection of fallacy.

Socrates• Socrates (469 - 399 BCE)• The Socratic Method

– definition and questioning

• Concentration upon Ethics and Politics– Purpose of philosophy is to guide one to the

good life; “Goodness” not general and abstract but specific and practical; the highest good is happiness, the highest means is knowledge.

• Government by ability; rejects tradition and subjects every rule to reason.

The Early Epicureans• Aristippus (435? - 356? BCE) founder

– “I possess; but am not possessed.”– Source of action is pain and pleasure.

– Virtue and philosophy judged according to pleasure.

– Uncertainty of knowledge makes physical pleasure the highest good.

The Late Epicureans• Epicurus (341 - 270 BCE)

– Source of action is pain and pleasure.– Uncertainty of knowledge makes physical

pleasure the highest good.– Since physical pleasure may have evil

effects, man must discriminate between actions.

– Understanding is the highest virtue.

– The wise man seeks to control appetite, put aside fear, and seek peace.

The Cynics• Antisthenes (444 - 365 BCE) founder

– Reduce things of the flesh to bare necessities so the soul may be free.

– “I do not possess, in order not to be possessed.”

– Only real philosophy is ethics; virtue is possessing little, desiring little (except sex); injuring no one.

– Religion is superstition.– After Diogenes (412? - 323 BCE), becomes

a “monastic”order (rule of poverty).

The Skeptics• Eucleides of Megara (450 - 374 BCE)

– Denies possibility of any real knowledge.

• Pyrrho of Elis (365 - 275 BCE) founder– Certainty is unattainable; wise man will

suspend judgment and seek tranquility rather than truth.

– Since all theories are probably false, one might as well accept social myths and conventions .

The Stoics• Zeno (336 - 264 BCE) founder• How can epicurean pleasure be reconciled

with self-control necessary for societal survival?– Knowledge arises from senses; between

sensation and reason lies passion (source of epicurean drive for pleasure).

– Reason must be used to overcome passion.– Determinism and realignment with religion - God

(supreme intelligence) is beginning, the middle, and the end - human science is working out of that determined by The Supreme Intelligence.

Plato (427? - 347 BCE)• Student of Socrates; influenced by

Aristippus, Cynics and Eucleides• Founds the Academy in Athens

386 BCE - “Let no one without geometry enter here.”

• Writings found in the Thirty-Six Dialogues (conversations of Socrates).

• Poetic structure of works.• Plato has no system; thoughts on

different topics presented in Dialogues.

Plato (427? - 347 BCE)• Rejects sensations as ultimate

source of knowledge; knowledge possible through Ideas - not objective to senses but real to thought.

• God, the Prime Mover Unmoved, moves and orders all things according to eternal laws and perfect, changeless Ideas.

• Highest Idea is the Good - to perceive the Good is the loftiest goal of knowledge.

Plato (427? - 347 BCE)• Problem of ethics lies in apparent

conflict between individual pleasure and social good.

• Justice defined as co-operation of the parts in a whole.

• Appalled at the existence of faction in Athenian politics.

• The Republic, and later, The Laws is Plato’s utopian response to the corruption of Athenian democracy.– focuses on justice as making men

good

Aristotle (384 - 322 BCE)• Student of Plato• Tutor of Alexander, 343-334 BCE• Founds the Lyceum in Athens 334

BCE, starting rivalry between his school and the Academy.

• Wrote 27 Dialogues, for which he was renowned in antiquity, and were considered the equal of Plato.– Lost in “barbarian conquest” of Rome

• Known to modern world through his lecture notes (likely organized by pupils).

Aristotle (384 - 322 BCE)• Aristotle’s Organon is his

contribution to logic and reasoning - consisting of six books.

• Senses are source of knowledge.• Man forms universals, or

categories, from many perceptions of like objects.

• Universals are conceptions, not things (rejects Plato’s Idealism).

• Presents deductive reasoning based on experience as method of science and philosophy.

Aristotle (384 - 322 BCE)• In science, Aristotle produces

books in natural science, biology, (his History of Animals is his greatest scientific achievement) and psychology (On the Soul).

• Aristotle’s Metaphysics produces his view of God as the First Cause Uncaused, pure thought, internal to nature.

• Ethics is concerned with individual happiness; Politics is concerned with collective happiness.

Economic Contributions• Plato

– first recognizable economic theory • explanation of the division of labor in The

Republic

– Nature of the ideal Republic• exclusion of traders and workers from

citizenship; slavery taken for granted• limitation of markets, private property and

money

Economic Contributions• Aristotle

– Origin of state does not arise from Plato’s patriarchal family, nor the Sophist “social contract,” but exchange (self-sufficiency) ties men together.

– Defense of private property against Plato’s communism focuses on incentives, peaceful coexistence, and the opportunity to act benevolently.

– Slavery defended on basis of natural inequality.

• (contra Cynics and Epicureans)

Economic Contributions• Aristotle on Wealth-Getting

– Differentiates between natural and unnatural (agricultural and barter v. trade)

– Differentiates between wealth and money

– Theoretical explanation origin of money• money arises as medium of exchange to solve the

problems of barter• money arises as a commodity with preexisting

(intrinsic) value

– Condemnation of usury (“unnatural” use of money)

Economic Contributions• Aristotle on Justice and Exchange

– Types of Justice• distributive (spoils of war)• rectificatory (compensation for loss)• commutative or reciprocal (exchange)

– What is Aristotle’s theory of exchange? Of justice in exchange?

• Is exchange an exchange of equals?• Is justice in exchange an exchange of equals?• Is money the medium by which unequals become

“equalized”?

Economic Contributions• Epicureanism

– Emphasis on happiness, pain and pleasure (foreshadows later utilitarianism).

• Stoicism– View that human science is working out of

that which is determined by the supreme intelligence leads to natural law view of nature and human action.

Further Reading

• General History– Will Durant, The Life of Greece, 1939.– Michael Grant, The Founders of the Western

World, 1991.

– David Tandy, Warriors into Traders: The Power of the Market in Early Greece, 2000.

• Economics/Philosophy– Plato, Waterfield, trans., The Republic, 1993.– McKeon, Introduction to Aristotle, 1947.– Meikle, Aristotle’s Economic Thought, 1995.

Islamic Scholasticism

Aristotle and Plato influenced the West by the transmission of their ideas as seen through

the lens of Islamic Scholasticism of the 9th – 12th centuries of the Common Era.

The Islamic Scholastics

• Al-Kindi (801-873)

• Al-Razi (865-925)

• Al-Farabi (870-950)• Ibn Sina (Avicenna) (980-1037)

• Al-Ghazali (Algazel) (1058-1111)

• Ibn Rushd (Averroes) (1126-1198)

• Ibn Khaldun (1332-1406)

Al-Ghazali (Algazel)(1058-1111)

• born at Tus in Khorasan (mod. Iran)• reared by Sufi friend of deceased

father• primary field was law, but as result

of teaching law, lost belief in reason to sanction Islam

• In his two great works, Tahafat and Ihya, greatly influenced Aquinas and Christian theologians in putting reason to employ in defense of orthodoxy, but also...

• nearly ended pursuit of philosophy and science in Islam, while making Sufism acceptable to orthodoxy

Ibn Rushd (Averroes)(1126-1198)

• born in Cordova• grandfather and father chief

justices of Cordova• 1169, chief justice of Seville• 1172, chief justice of Cordova• 1182, physician to Emir of

Marraqesh• Kitab al-Kulliyat fil-Tibb (Colliget),

a medical encyclopedia, widely used in Christian universities

• The ultimate Aristotelian rationalist and primary heretic of medieval Islam and medieval Christianity

Further Reading• General History

– Will Durant, The Age of Faith, 1950.– Karen Armstrong, Islam: A Short History, 2002.– Richard Rubenstein, Aristotle’s Children, 2003.

• Economics/Philosophy– S. M. Ghazanfar, ed., Medieval Islamic Economic

Thought: Filling the “Great Gap” in European economics, 2003.

– Oliver Leaman, Averroes and His Philosophy, 1997.– L.E. Goodman, Avicenna, 1994.– Al-Ghazali, (Marmura, trans.), The Incoherence of

the Philosophers, 2000.

Latin Scholasticism

Latin Scholasticism, built upon Greek philosophy and

Christian theology, is the foundation of modern

philosophical and scientific thought.

The Scholastic Ages

• Fall of Rome (5th century)

• Rise of Feudalism and Manorialism (8th and 9th centuries)

• Peasant status becomes increasingly servile until the 12th century

• The First Logistic (9th – 11th centuries)– Agricultural Innovation and Population Growth

• The Crusades (1095-1291)

The Scholastic Ages

• Commercial Revolution (11th – 13th centuries)

• The 14th Century– The century of Famine, Plague, War, and

Statism• Breakdown of Serfdom (14th – 15th

centuries)• Europe’s Second Logistic (15th – 17th

centuries)

Economics – Law Tradition• Roman Law dominates…

– Mercantile activity served important social ends (health and maintenance of family).

– Profits justified by labor and expense, ends served, risk, and uncertainty.

– “Just price” is established by the “common estimate” of the market; isolated exchange subject to laesio enormis constraints.

• Canon Law dominates– Usury prohibition lessened at fringes, but dominant position

is usury as a mortal sin.

– “Two forums” doctrine effectively allows interest (esp. from mid-13th century)

Pre-Scholastic Christianity• How to reconcile reason with revelation,

science with faith, philosophy with theology?– Question addressed and answer found in St.

Basil, Origen, St. Augustine and others– ALL wisdom of philosophy (Plato, etc.) is due

to inspiration of the Logos; therefore, all wisdom of philosophy is God’s truth and can not be in contradiction to revelation

– St. Augustine• faith aids reason and reason aids faith• But How???

Scholasticism• the method and manner of dialectical

philosophizing (question and answers) taught in the schools

• the period from 9th century CE, when new schools arose in Europe to spread Patristic faith disciplined by dialectic methods of thinking

• Christian Rationalism, as distinct from Augustinian Intuitionism– reason applied to nature, human nature

and supernatural truth

Scholastic Process

“Through doubting we come to inquiry, and through inquiry we perceive the truth.”

- Peter Abelard

Major Scholastic Thinkers

• St. Anselm (1033-1109)

• Peter Abelard (1079-1142)• Peter Lombard (c.1100 - c.1160)

• St. Albertus Magnus (1193/1206 - 1280)

• Roger Bacon (1212-1294)

• St. Bonaventure (1221-1274)• John Duns Scotus (1266-1308)

• William of Occam (1285-1349)

St. Thomas Aquinas• St. Thomas Aquinas (1225-1274)

– Italian, born near Naples– Dominican, student of Albertus Magnus, professor

of theology at Paris, papal advisor

• Century of Dispute– 13th Century is torn between Augustinians who

make truth a matter of faith and Averroists, led by Siger de Brabant ( ? - 1277), who separate truth from faith.

• Aquinas advances a middle ground– reason and faith constitute two harmonious

realms; faith complements reason; but, reason has autonomy of its own.

St. Thomas Aquinas• Thomist Philosophy

– systematic application of Aristotelian methods and distinctions

• Aquinas’ Works– Commentary of the Sentences (public lectures

1254-56)

– seven quaestiones disputatae (public debates 1256-72)

– commentaries on several of Aristotle’s works– Summa contra Gentiles (1258-60)– Summa theologica (1267-73)

St. Thomas Aquinas• Aquinas on Property Rights

– All law, including natural law and human law, if derived from “right reason,” is derived from God’s eternal law; reason can add or subtract to natural law.

– Private property is justified by right reason because it

• leads to a society of less conflict.

• is better cared for than common property.

• allows people to exercise liberality.

• is founded in labor and occupation.

• … but this right is limited by just demands of the social order (state) and just demands of the needy.

St. Thomas Aquinas• Aquinas on Just Price and Price Determination

– Exchange is for mutual advantage and driven by utility. (But, reintroduces Aristotelian confusion of “equality for equality” without the interpretation of Albertus Magnus).

– Seller may charge higher price than he paid (labor and expenses, risk, uncertainty).

– Supply affects price (common estimate is just price).– A seller need not tell buyers of future supplies that would

affect price willingly paid by buyers.

– Price of a good depends on its usefulness to man, not on the nature of the good.

St. Thomas Aquinas• Aquinas on Usury

– (1) Certain things are extinguished upon use, and thus their use can’t be separated from the thing itself.

(2) To lend such a thing is to transfer ownership.

(3) One can not sell the use of such things separate from the ownership of such things.

(4) Money is such a thing (“invented chiefly for exchange”).

(5) Therefore, interest is unnatural and usury is a sin.

– But other things can be granted the use of while retaining ownership, and therefore can both be rented and sold.

– Profits from partnerships (societas) is not usury.

Economics of Aquinas and Olivi• Aquinas’ economics

– Shows some progress beyond Aristotle but continues Aristotelian confusions, especially regarding interest; inferior to immediate predecessors (esp. Albertus Magnus).

– Substantial contribution to the idea of natural law as discovered by “right reason.”

• Olivi’s economics– Discoverer of subjective utility theory and initiator of

concept of capital.– Defender of current market price as just price and

partial use of lucrum cessans in loans.

Middle Scholastic Economics • Contributions of the Middle Scholastics

– Buridan and Oresme advance the theory of money significantly, laying the groundwork for the Late Scholastics’ quantity theory of money.

– San Bernardino’s defense of commerce, description of the entrepreneurial function, and defense of foreign trade and foreign exchange contribute greatly to the collapse of anti-commercialism.

– San Bernardino’s revival of Olivi’s contributions to subjective utility theory and the concept of capital are vital to development of future economic theory.

– Usury question remains topic of dispute though increasingly liberalized position and markets were making arguments increasingly irrelevant.

Late Scholastic Economics • Contributions of Late Scholastics

– Catejan argues for freedom of foreign exchange and legality of interest; briefly dominant before reaction.

– Navarrus and Molina significantly advance monetary theory; found the quantity theory of money, noting the value of money is its purchasing power determined by demand and supply of that money; that foreign exchange rates are determined by the purchasing-power parity of different currencies as determined by demand and supply of one currency for another.

– Molina and Mariana significantly reform natural law and natural rights theory into an active concept that was to find favor in contemporary and later political economy.

Further Reading• General History

– Will Durant, The Age of Faith, 1950.– Rondo Cameron, A Concise Economic History of the

World, 1997.– Richard Rubenstein, Aristotle’s Children, 2003.

• Philosophy– A.C. Pegis, ed., Introduction to St. Thomas Aquinas,

1948.

– G.K. Chesterton, Saint Thomas Aquinas: “The Dumb Ox,” 1933.

– Brian Tierney, The Idea of Natural Rights, 1997.– A.S. McGrade, ed., The Cambridge Companion to

Medieval Philosophy, 2003.

Further Reading• Economics

– Raymond de Roover, San Bernardino of Siena and Sant’ Antonino of Florence, 1967.

– Odd Langholm, Economics in the Medieval Schools: Wealth, Exchange, Value, Money & Usury, 1992.

– Joel Kaye, Economy and Nature in the Fourteenth Century: Money, Market Exchange, and the Emergence of Scientific Thought, 1998.

– Diana Wood, Medieval Economic Thought, 2002.– Alejandro Chafuen, Faith and Liberty: The

Economic Thought of the Late Scholastics, 2003.