Currency and the Common Good

Aristotle defines money as “the substitute for need.” Currency enables us to acquire basic necessities, since it facilitates exchange between suppliers and those who need supplies.

For Aristotle, though, money signifies a more basic social need. The city depends on a division of labor among its citizens. No one has all the skills or time necessary to maintain himself and his household. A cobbler needs a skilled builder to build a house, and the builder needs the cobbler’s skills to put shoes on his children’s feet. Money weds the builder to the cobbler. Currency is more a social institution (“political” in the classic sense) than an economic one. It’s a medium of a social bond, an index of our need for one another.

Barter is also a sign of mutual need. The homeless cobbler might pay the builder in shoes. Money obviously makes the transaction more efficient. After all, what’s a builder to do with a house’s worth of shoes? But money isn’t preferable to barter simply because it’s efficient. Aristotle sees currency as an instrument of social justice, which ensures the transactions are equitable. Money is a middle term to translate shoes into houses: 1000 shoes = X drachmae = 1 house. Currency provides an agreed-upon standard to equalize the unequal.

Currency also directs private production toward the common good. In his shop, the cobbler expends his own energy, skill, and time to shape leather into shoes. He could stop after he makes enough shoes for his own household, but money gives him an incentive to put his skills to use on behalf of other households. As the medium of market exchange, money integrates the productive household (oikos) into the larger community (polis). 

Aristotle sees currency as an essential political institution, but he warns that money can corrode the common good. Money is infinitely flexible. Given enough cash, you can purchase an unlimited number and range of goods. Human desire can also be boundless, especially when catalyzed by money. Desire for money isn’t desire for anything in particular, but endless desire for the limitless potential that money represents. Money breaks out of the cycle of reciprocal need and becomes an object of desire in itself, a free-floating signifier rather than a signifier of property or of the social bond. People who desire the boundless potential of money to satisfy their boundless desires (pleonexia) aren’t truly citizens. They pose a danger to the polis.

Aristotle is right to worry about the social and political consequences of greed, but his analysis of the vice of pleonexia shades over into a suspicion of profit per se, a suspicion most evident in his rejection of interest-bearing loans. Why does Aristotle object to interest? He acknowledges the borrower can make a legitimate profit from a loan. Why can’t the lender?

Superficially, Aristotle objects because interest falsely attributes a generative power to money. Money isn’t a living thing, so it can’t have offspring. The deeper issue is the relation of money and time. As Marcel Henaff observes in The Price of Truth, Aristotle rejects interest and profit because “currency must be impervious to time.” The cobbler sells shoes to accumulate enough money to buy a house; if the builder’s price is too high, the cobbler can wait to purchase, while his money (more or less) retains its purchasing power. Ideally, “currency cancels time.” Interest, on the other hand, profits from time, allowing money to wriggle free from its natural timelessness. It’s unnatural, Aristotle thinks, for money to increase in value over time.

Behind his economic theory, Henaff claims, is a metaphysical picture of the universe as a closed system. Like most other ancient thinkers, Aristotle believes that “the physical world, the order of beings, movement, the prime mover, the hierarchy of causes, and the organization of society all form a rigorously homeostatic system.” Time is confined to this static order. To be sure, “stories and narratives are witnesses to actions that occurred within the community. But time itself is not history.” In the end, “everything returns to the balance of the cosmos; the ephemeral character of the sublunar world is resorbed into the eternal stability of the divine world.” This is what makes profit and interest appear perilously unnatural. Profit threatens “to move away from this stable order, crack its outer wall, move across the boundaries of the city, and give rise to unthinkable unlimitedness.”

For centuries, Christians accepted Aristotle’s analysis of interest and, implicitly, his homeostatic metaphysics. But the seeds of a radically different understanding of profit and interest were planted as soon as the church broke open the ancient closed cosmos by confessing God the Father, Creator of heaven and earth, and Jesus, God of God and Light of Light, who became incarnate by the Holy Spirit of the virgin Mary. In Christianity, profit doesn’t shatter a closed cosmos because the cosmos was never closed to begin with. Within the Christian cosmos, money remains, as Aristotle says, an index of our mutual need and a regulator of just exchange. It is also a means of mutual profit. Within the Christian cosmos, time can be profitable time.

Peter J. Leithart is President of Theopolis Institute.

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