http://www.jstor.orgAristotle and Economic AnalysisAuthor(s): M. I. FinleySource: Past and Present, No. 47, (May, 1970), pp. 3-25Published by: Oxford University Press on behalf of The Past and Present SocietyStable URL: http://www.jstor.org/stable/650446Accessed: 18/05/2008 21:15Your use of the JSTOR archive indicates your acceptance of JSTOR's Terms and Conditions of Use, available athttp://www.jstor.org/page/info/about/policies/terms.jsp. JSTOR's Terms and Conditions of Use provides, in part, that unlessyou have obtained prior permission, you may not download an entire issue of a journal or multiple copies of articles, and youmay use content in the JSTOR archive only for your personal, non-commercial use.Please contact the publisher regarding any further use of this work. Publisher contact information may be obtained athttp://www.jstor.org/action/showPublisher?publisherCode=oup.Each copy of any part of a JSTOR transmission must contain the same copyright notice that appears on the screen or printedpage of such transmission.JSTOR is a not-for-profit organization founded in 1995 to build trusted digital archives for scholarship. We enable thescholarly community to preserve their work and the materials they rely upon, and to build a common research platform thatpromotes the discovery and use of these resources. For more information about JSTOR, please contact support@jstor.org.ARISTOTLEAND ECONOMICANALYSIS* FOR THEARGUMENTOFTHISPAPER ITISESSENTIALTODISTINGUISH, no matter how crudely, between economic analysis and theobserva- tionor description of specific economic activities, and between both and aconcept of"the economy" (with which onlythefinal section willbeconcerned).By"economicanalysiss',wroteJoseph Schumpeter, "I mean . . . the intellectual efforts that men have made inorder tounderstandeconomic phenomena or, which comes tothe same thing, . . . the analytic or scientific aspects of economic thought". Andlater, drawing onasuggestion ofGerhard Colm's,headded: "economic analysis deals withthequestions howpeoplebehave at anytimeandwhattheeconomiceffectsaretheyproducebyso behaving; economic sociology deals with the question how they came tobehave astheydo''.1 Whether oneiswhollysatisfied withSchumpeter's definitions or not,2 they will serve our present purposes.To illustratethe difference between analysis and observation, Iquote themost familiar ancient text on the division of labour, written by Xenophon before the middle ofthefourth century B.C.Thecontext -and thisshould 1lot be ignoredisthesuperiority ofthemeals provided inthePersian palace with its staff of kitchen specialists. That thisshould be the case [Xenophon explains] isnotremarkable.For just as the various trades are most highly developed in the large cities, in the same way the food at the palace ispreparedina far superior manner.In small towns thesame man makes couches, doors, ploughs and tables, and often he even builds houses, and still he is thankfulif only he can find enough work to support himself.And it is impossible for a man of many trades to do all of them well.In large cities, however, because many make demands on each trade, one alone is enough to supporta man, and often less than one for instance, one man makes shoes for men,another for women, there are places even where one man earns a living just by mending shoes, anotherby cutting them out, another just by sewing the uppers together, while there is anotherwho performsnone of these operationsbut assemblesthe parts.Of necessity he who pursuesa very specializedtask will do it best. 3 * This essaywas preparedfor the Festschriftfor ProfessorE. Ch. Welskopf on her seventieth birthday, and will appearin Germantranslationin the yahrbuch furWirtschaftsgeschichte.An earlierdraft was presentedto the Social History Group in Oxford on 3 December I969.I have benefited from the advice of a number of friends, A. Andrewes, F. H. Hahn, R. M. Hartwell, G. E.R.Lloyd G. E. M. de Ste. Croix. ' J.Schumpeter, History of EconomicAnalysis, ed. E.B.Schumpeter (New York, I954),pp.I,2I. 2See the review by I. M. D.Little in Econ.Hist. Rev., 2nd ser., viii (I955-6), pp.9I-8. 3Cyropaedia,8.2.5. 4 PAST ANDPRESENT NUMBER 47 This text containsimportantevidencefor the economichistorian- but not on divisionof labourfor which it is so often cited.In the first place, Xenophonis interestedin specializationof craftsrather than in divisionof labour.In the secondplace,the virtuesof both are,in his mind,improvementof quality,not increasein productivity. He says this explicitlyand it is anywayimplicitin the context,the meals served atthePersian court.NorisXenophon untypical: divisionof labouris not often discussedby ancientwriters,but when it is, the interestis regularlyin craftsmanship,in quality.4Oneneed only glanceat the modelof the pin factoryat the beginningof Adam Smith's Wealthof Nationsto appreciatethe leap takenby the latter, from observationto genuineeconomicanalysis. Even asobservation,furthermore,Xenophon'sremarksdonot meritthe accoladesthey havereceived.As Schumpeterpointedout, economics"constitutesa particularlydifficultcase"in any study of the originsof a "science"because common-sense knowledge goes inthis field much farther relatively tosuch scientificknowledgeas we have been able to achieve,than does common-sense knowledge inalmost any other field.Thelayman's knowledge that rich harvestsare associatedwith low prices of foodstuffsor that division of labour increases the efficiency of the productive process are obviously prescientific and it is absurdto point to such statementsin old writingsas if they embodied discoveries.5 The key for antiquityrests not with Xenophonor Plato but with Aristotle.Itisagreedon all sides that only Aristotleofferedthe rudimentsof analysis;hencehistoriesof economicdoctrineregularly featurehim at the beginning."The essentialdifference"between Plato and Aristotlein this respect, writes Schumpeter,"is that an analycicintention,whichmaybe said (in a sense)to havebeen absent fromPlato'smind,was the primemoverof Aristotle's. This is clear fromthe logicalstructureof his arguments".6 Aristotlethen becomesdoublytroublesome. In the firstplace,his supposedeffortsat economicanalysiswere fragmentary,wholly out of scale with his monumentalcontributionsto physics,metaphysics, 4See Eric Roll,AHistory of EconomicThought,3rd edn.(London, I954), pp. 27-8. 5Op.cit., p.9.Even ifone grants Xenophon the insight that division of labour is a consequence of greater demand, the observationled to no analysis. Toquote Schumpeter again: "Classicalscholars as well as economists . . . are prone to fall into the errorof hailing as a discoveryeverythingthat suggestslater developments,and of forgettingthat, in economicsas elsewhere,most statements offundamentalfacts acquire importanceonly by the superstructuresthey are made tobear and are commonplace intheabsence ofsuch superstructures" (Pe 54)* 6Ibid.) p. 57.Cf. e.g. Roll, op. cit., pp.3I-5. ARISTOTLEANDECONOMIC ANALYSIS 5 logic,meteorology, biology, political science, rhetoric, aesthetics and ethics.Second, and still more puzzling, his efforts produced nothing better than "decorous, pedestrian, slightly mediocre, and more than slightly pompous common sense". 7This judgement of Schumpeter's, shared by many, is so wide of the universal judgement of Aristotle's other work, that it demands a serious explanation. Thereare only twosections inthewhole Aristotelian corpus that permit systematic consideration, oneinBook voftheNicomachean Ethics,theother inBook Iof thePolitics.8Inboth,the"economic analysis" isonlyasub-sectionwithinaninquiry intoother,more essential subject-matters.Insufficient attention tothecontexts has been responsible for much misconception of what Aristotle is talkirlg about. The subject of the fifth book of the Ethicsis justice.Aristotle first differexltiatesuniversal from particular justice, and thenproceeds to a systematic analysis of the latter.It,too, is of two kinds: distribu- ... t1ve and correct1ve. Distributive(dianemetikos)justiceisaconcernwhenhonours, goods, or other "possessions" of the community are to be distributed. Herejustice isthesame as"equality", butequality understood as a geometricalproportion (we say "progression"),not as an arithmetical one.9Thedistribution ofequal shares among unequal persons, or ofunequalsharesamongequalpersons,wouldbeunjust.The principle of distributive justice is therefore to balance the share with theworthoftheperson.Allareagreedonthis,Aristotleadds, althoughalldonotagreeonthestandard ofvalue(axia)tobe employed where the polisitself isconcerned."Fordemocrats itis thestatusoffreedom,forsomeoligarchs wealth,forothersgood birth,foraristocrats itisexcellence(arete)''.l ?ThatAristotle 70p.cit.,P57- 8Thefirst part of Book IIofthe pseudo-AristotelianOeconomicais without value on any issue relevant to the present discussion, as I have indicatedbriefly in a review of the Bude edition to be published in the ClassicalReview.(See also note SI.) 9 This difficultidea of a mathematicalformulationof equalityand justice was Pythagorean, probably firstintroducedbyArchytasofTarentumatthe beginning ofthe fourth century B.C.,and then popularized byPlato (first in Gorgias, so8A).SeeF.D.Harvey, "TwoKindsofEquality", Classica et Mediaevalia, xxvi (I965),pp.IOI-46,withcorrigendain vol. xxvii (I966),pp. 99-IOO,whorightly stresses thepointthat themathematical formulation is employed solely to argue against democracy.(My translationsfrom the Ethics are based on H. Rackham'sin the Loeb ClassicalLibrary, I926.) l oEthics, II 3 I a24-29* 6 PAST ANDPRESENT NUMBER 47 himself favoured thelast-named isnot important for us,and indeed hedoes not himself make the point in this particularcontext, which isconcerned only toexplain anddefend theprinciple ofgeometric proportion.11 Incorrective justice(diorthotikos,literally "straightening out"), however, the issue is not one of distributionfrom a pool, but of direct, private relations between individuals in which it may be necessary to "straighten out" a situation, torectify an injustice by removing the (unjust) gain andrestoring theloss.Heretherelative nature and worth of the persons is irrelevant, "for it makes no differencewhether a good man has defrauded a bad man or a bad one a good one,nor whether it is a good or bad man that has committed adultery; the law looksonlyatthenatureofthedamage,treatingthepartiesas equa1....xs12 Corrective justice also has two subdivisions, depending on whether the"transactions"(synallagmata)arevoluntaryorinvoluntary. Among theformer Aristotle listssales, loans, pledges,deposits and leases; among the latter, theft, adultery, poisoning, procuring, assault, robbery, murder.l3There is a fundamental difiiculty for us here in trying tocomprehend Aristotle's categoriesand no translation of synallagmataby a single English word eases itbut I need not enter into the controversy except to make one point relevant to some of the discussionthatwillfollow.UnderwhatconditionsdidAristotle envisageaninjustice,anunjustgain,inavoluntary transaction, especially ina sale?Theanswer is,Ithink, beyond dispute that he had inmind fraud or breach of contract, but not an "unjust" price. Anagreement over theprice waspart oftheagreement or"trans- action" itself, and there could beno subsequent claim by thebuyer ofunjust gain merely because oftheprice.AsJoachim says, "the law gives the better bargaineradeia(security)".l4Itis necessary to insistonthis(leaving aside theunfortunate injection ofbargaining) because efforts have been made to drag this section of the Ethicsinto 11Itisprobable that for Aristotle distributive justice isalso operative ina variety ofprivate associations,permanent or temporary: see H.H.Joachim's commentary (Oxford, I9SI),pp.I38-40,though Iseeneither necessity nor warrant for hisattempt tolink distributive justice withtheprivate lawsuit known as diadikczsia. 2 Ethics, I I 3 I b32-32a6. 1 3 Ethics, II 3 I a3-9 * 140p.Cit.,p.I37,withspecific reference toII32bII-I6.Iagree with A. R. W. Harrison, "Aristotle'sNicomacheanEthics, Book V, and the Law of Athens", 1.Hell. Stud., 1xxvii (I957),pp.42-7,against Joachim (see also note II),that "Aristotle'streatmentof justice in the Ethicsshows only a very general one might perhaps say an academic, interest in the actual legal institutions of the Athens of his day". ARISTOTLEANDECONOMIC ANALYSIS 7 the argument about economic analysis, for example bySoudek, who offers as an illustration ofcorrective justice thehypothetical case of ahouse-buyer whobrought suitonaclaim that hehad beenover- charged and whowas awarded a refund equal tohalf thedifference betweentheseller'spriceandhisownproposed"justprice''.l5 Nothingin this or any other text of Aristotle warrantsthis, nor does anything we know about Greek legal practice.Both argue decisively theotherway.Commenting onthefamouspassage intheIliad, "But then Zeus son ofCronus took from Glaucus his wits, in that he exchanged golden armour withDiomedessonofTydeusfor oneof bronze, theworth ofahundred oxenfor theworth ofnineoxen") Aristotle says tersely, "one who gives away what is his own cannot be said tosuffer injustice''.lfiWeshall meet"what ishisown"again ... na surprlslng context. Having completed his analysis of the two kinds of particularjustice, Aristotleabruptlylaunchesintoadigression,l7introducingit polemically: "Theviewisheldbysomethatjustice isreciprocity (antipeponthos)withoutanyqualification, bythePythagoreans for example".Antipeponthosis a term that has a technical mathematical sense, but it also has a general sense which, in this context, amounts to the lex talionis,an eye for an eye. 18On the contrary,replies Aristotle, "in many cases reciprocity isat variance with justice", since it"does notcoincideeitherwithdistributiveorwithcorrectivejustice". However, in the "interchange of services" the Pythagorean definition of justice isappropriate, provided the reciprocity "is on the basisof proportion, noton thebasisof equality". "Interchange ofservices" isRackham's inadequate translation of Aristotle'sevzabsKotvcovlalsratsa>aKTlKabS,losingtheforceof the wordkoinonia,andIamcompelledtodigress.Koinoniaisa centralconceptinAristotle'sEthics andPolitics.Itsrangeof meanings extends from the polis itself, thehighest form ofkoinonia, totemporary associations suchas sailors onavoyage,soldiers ina campaign, or theparties inan exchange of goods.Itis a "natural" form ofassociation-manisby nature a zoon koinonikonas well as azoon oEkonomikon(household-being)andazoon politikon(polis- 15J. Soudek, "Aristotle'sTheory of Exchange: an Inquiry into the Origin of Economic Analysis", Proc. Amer. Philos. Soc., xcvi(I952),pp.45-75,atpp. 5I-2. 16Iliad, 6.234-6;Ethics, I I 36bg-I 3, 17Ethics, II32b2I-33b29. 18Cf.Magna Mor.,II94a29ff.;seeJoachim, op. cit.,pp.I47-8,and the commentaryby R. A. Gauthierand J. Y. Jolif (the best commentaryin so far as close reading ofthe text isconcerned), vol.ii(Louvain and Paris, IgSg), pp. 372-3- 8PAST ANDPRESENT NUMBER 47 being).Several conditions are requisite ifthere istobeagenuine koinonia:(I)themembers mustbefreemen;(2)theymusthave a common purpose, major or minor, temporary or of long duration; (3) theymust have something in common, share something, such as place, goods,cult,meals, desire foragoodlife,burdens, suffering; (4)there must be philia (conventionally butinadequately translated "friendship"), mutuality inother words, andto dikaion,whichfor simplicitywemay reduceto"fairness" intheirmutualrelations. Obviously no single word will render the spectrum of koinoniai. At thehigherlevels,"community"isusuallysuitable,atthelower perhaps"association"provided the elements of fairness,mutualityand common purpose are kept in mind. Thepoint tomydigression istounderscore theovertones ofthe section in the Ethicson exchange: koinoniais as integral to the analysis astheactofexchanging.Edouard Willcaughttherightnuance when hereplaced such translations of theopening phrase as "inter- change ofservices" bya paraphrase, "exchange relations within the framework ofthecommunity"(les relationsd'echangequi ont poar cadrele communaute).19Lest there be any doubt, Aristotle himself promptly dispels it.Immediately following thesentences Iquoted before digressing, hegoesontosay that the polis itselfdepends on proportional reciprocity.Ifmen cannot requite evil with evil, good with good, there can be no sharing."That is why we set up a shrine totheCharites [Graces] inapublic place, toremind men tomake a return.For that is integral to grace, since it is a duty not only to return a service done one,butanother time totake theinitiative in doing a service oneself".20 Andatlonglastwecometoourproblem.Theexampleof proportional requital whichfollowsistheexchange ofahousefor shoes.2lHow is that to be accomplished?Thereisno koinoniain this context between two doctors, but only between, say, a doctor and a farmer, who are notequals butwhomust somehow beequalized. "As a builder is to a shoemaker,so must so many pairs of shoes be to ahouse".Thelattermustbe"equalizedsomehow'',bysome commonmeasure,andthatisneed(chreia),22nowcommonly 19E. Will, "De l'aspect ethique des origines grecques de la monnaie", Rev. Hist., CCXii(I954),pp.209-3I,at p. 2I5note I. 20Ethics, II33a35- 21Aristotle shifts from example to example and I have followed him, despite the superficialinconsistencythat entails. 22Ihave refrained from thecommon rendition, "demand", toavoid the subconscious injection ofthe modern economic concept- soalso Soudek, op cit.,p.60.Thesemantic cluster around chreia inGreek writers, including Aristotle, includes "use", "advantage","service", taking us even further from "demand". ARISTOTLEANDECONOMIC ANALYSIS 9 expressed in money."There will therefore be reciprocity when (the products) have been equalized, so that as farmer is to shoemaker,so is theshoemaker's product to that of the farmer".In that way, tilere will be no excess but "each will have his own".If one party has no needtherewillbenoexchange,andagainmoneycomestothe rescue: it permits a delayed exchange.23 There follows a short repetitive section and the digression on "this outwork ofparticular justice" ends.24Aristotle hasbeenthinking aloud, so to speak, as he often does in his writings as they have come down to us, about a particularnuance or a tangential question that is troublesome; he isindulging in ahighly abstract exercise, analogous tothepassagesinthePolitics ontheapplicationofgeometric proportiontopublicaffairs;here,asoften,hisreflectionsare introduced by a polemical statement, and soon dropped as he returns tohismain theme, his systematic analysis.Exchange of goods does not again appear in the Ethicsexcept in two or three casual remarks. Thatthis isnotoneof Aristotle's more transparent discussions is painfully apparent, andwemustlookatwhatthemostimportant moderncommentators havemadeofit.Joachim, exceptionally, accepted that Aristotle really meant it when he wrote "as a builder is to a shoemaker", and he promptly added, "How exactly the values of the producers are to be determined, and what the ratio between them canmean,is,Imustconfess,intheendunintelligible tome".25 Gauthier and Jolif make an ingenious effort to get round the difficulty by assertingthat the builder and shoemakerare meant to be considered equal "as persons" but different (only) in their products.However, IcannotbelievethatAristotlewentoutofhiswaytoinsiston proportionalreciprocity as necessary for justice in this one field, only to conclude that one pair of ratios does not in fact exist, and to make thatpointillthemostambiguous waypossible.26MaxSalomon 23EthiCS,II33b6-I2.InthePolitics,I257a3Iff.,Aristotle explains that delayed exchange became necessarywhen needs were satisfiedby imports from foreign sources,and "all the naturallynecessarythings were not easily portable". (My translationsfrom the Politics are based on Ernest Barker's,Oxford, I946.) 24 The phrase quoted is that of Harrison,Op. Cit.,p.45. 95 0p.Cit.,pI50- 26 Op,Cit.,p.377.They cite in support MznaMor.,II94a7-25,but those lines are only a simplifiedand more confusing statementof the argumentin the Ethics.For future reference,it should be noted that MagnaMor. says explicitly that"Plato also seems toemploy proportionaljustice inhisRepublic".St. George Stock, in the Oxfordtranslation(I9I5),cites Rep., 36gD, but it requires clairvoyanceto see the Magna Mor. referencethere, since Plato is not discussing at all howthe exchange between builder and shoemakeris to be equated, and soon goes on to introducethe traderas a middleman(significantlyabsent in the Aristotelian account).Ingeneral, however, thissectionofBook IIofthe (cont.onp.10) IOPAST ANDPRESENT NUMBER 47 achieves the same result by more ruthless methods: the mathematics, he says, is a mere "interpolation", a "marginalnote, so tospeak, for listenersinterestedinmathematics",andthewholeconceptof reciprocalproportion must be omitted, leaving Aristotle to say simply that goods are exchanged accordingto their values, and nothing more. That then leads Salomon to a series of grotesque translationsin order to get out of the text what is not there.27 Salomon's drasticsurgerywas not mere wilful caprice.Economics, hewrites,cannotbeturnedinto"akindofwergeld systemona mercantile base".28Thefirst principle ofamarket economy is,of course, indifferenceto the personsof the buyer and seller: that is what troubles most commentatorson Aristotle.Soudek therefore suggests that "as a builder is to a shoemaker"must be read "as the skill of the builder is to the skill of the shoemaker".29From there it is no great step toSchumpeter's interpretation.Thekey passage in the Ethics, he writes, "I interpret like this: 'As the farmer'slabour compareswith theshoemaker's labour, so the product of the farmer compares with theproductoftheshoemaker'.Atleast,Icannotgetanyother sense out of this passage.IfIam right, then Aristotle was groping forsomelabour-cost theoryofprice whichhewas unable tostate explicitly".30AfewpageslaterSchumpeterreferstothe"just price"oftheartisan's "labour", andstilllater heasserts thatthe "relevant part" ofAquinas's "argument onjustprice . . . isstrictly Aristotelian and should be interpreted exactly as we have interpreted Aristotle's''.31However,Aristotledoesnotoncerefertolabour costs or costs of production.The medieval theologians were the first to introduce this consideration into the discussion, as the foundation (nore26cont.) Republicwas obviouslyinfluentialon Aristotle (includingthe stress on need and the explanationof money).For what it is worth, in reply to the commentary by Gauthierand Jolif cited above noteI85I note that Plato says (370A-B), to justifyspecializationof crafts,that "no two people are born exactlyalike.There are innate differerlceswhich fitthemfordifferent occupations" (Cornford's translation,Oxford, I94I). 27Max Salomon, Der Begriff der Gerechtigheitbei Aristoteles(Leiden, I937), in a lengthy appendix,"Der Begriffdes Tauschgeschaftesbei Aristoteles".My quotation appears on p.I6I.Salomon isnot alone indismissing the mathe- matics asirrelevant: seemostrecently W.F.R.Hardie, Aristotle'sEthical Theory(Oxford, I968),pp.I98-20I. 28Op.cit., p.I46. 39Soudek,op.cit.,pp.45-6,60.Thesamesuggestionismadeby J.J.Spengler, "Aristotle onEconomic Imputation andRelated Matters", SouthernEcon.1.,xxi (I955),pp.37I-89. 300pcit.,p.60noteI 31Ibid., pp.64,93.Hardie, op. cit., p.I96, simply asserts without serious discussion that "the comparativevalues of producers must in Aristotle's view here mean thecomparativevalues oftheir work done inthe same time" (my italics). ARISTOTLEANDECONOMIC ANALYSISII for theirdoctrineof justprice,andtheirallegedAristotelianismin this respectrestedon the ambiguityof the Latintranslationsof Aristotle madeavailableto them in the middleof the thirteenthcentury.32 Anyway,none ofthese interpretationsofwhat Aristotle"really meant" answersthequestion, How are prices, just or otherwise, establishedinthemarket? More specifically,how are needs, on whichAristotleinsistsas basic,equatedwith the partiesor theirskills ortheirlabour ortheirlabour costs,whichever oneprefers? ObviouslyAristotledoes not say, or at least does not say clearly, otherwisethe moderneffortsto discoverhis concealedmeaningwould allbeunnecessary. ForKarl Marx theanswer isthat, though Aristotlewas the first to identify the centralproblemof exchange value,he then admitsdefeat"andgives up the furtheranalysisof the formof value"whenhe concedes33that 'Citis impossiblefor thingsso differentto becomecommensurableinrealitys.34Soudekrepeatshis erroron correctivejustice,alreadydiscussed,then graspsat the word "bargain"whichW. D. Rossfalselyinjectsinto his translationin one passage(and Rackhaminseveral),and concludesthat the price is determined,and justicesatisfied,by mutualbargaininguntil agree- ment is reached.35 That isnot a very good way to describewhat 32 See Soudek, op. cit., pp. 64-5- J. W. Baldwin, TheMedieval Theoriesof the 3rustPrice (Trans. Amer. Philos. Soc.,new ser., xlix,part 4[I959]),pp.62 74-5;E.Genzmer, "Die antiken Grundlagen der Lehre vom gerechten Preis und der laesio enormis", Z. f.auslandischesu. internat.Privatrecht,Sonderheft Xi(I937),pp.25-64,at pp27-8@ 3 3Ethics, I I 33bI 8-20. 34Marx, Capital, transl. S. Moore and E. Aveling, i (Chicago, I906),p.68. Cf. Roll, Op.Cit.vp.35;"Whatbegins with the promise of being a theory of value ends up with a mere statementof the accountingfunction of money". 30Op.Cit.,pp.6I-4.Both Ross (Oxford, I925)and Rackhamhave "bargain" inII33aI2,Rackham also inII64a2o;II64a3o.(Itis worth noting another mistranslationbyRackham, atII33bI:"Hence theproper thingisforall commodities tohavetheirpricesfixed".WhatAristotleactually saysis "Thereforeit is necessaryfor everythingto be expressedin money, tetimesthai".) Furthermore,Icannot accept Soudek's use of passages from the beginning of Book IX,continuing the analysis offriendship, as relevant.There Aristotle's examplesare drawnfrom promisesto pay for services by musicians, doctorsand teachers of philosophy, "exchanges"in a sense perhaps, but in a sense that is differentin qualityfrom those Book v is concernedwith.That should be clear from a number of passages.In the opening statement (II63b32-3s), Aristotle distinguishes "dissimilar friendships" (whichheisabouttodiscuss)from exchange relations among craftsmen,and he soon says explicitly that the value ofaphilosopher'sservices"isnotmeasurableinmoney"(II64b3-4). Protagoras, hewrites,acceptedwhateverfeehispupilsthoughtproper (II64a24-26),and Aristotle thinks that isonthewhole theright procedure (II64b6-8), though he cannot refrainfrom the sneer (II64a3o-32) that Sophists had better take their paymentin advance.All this seems to me to belong to the spirit of gift and counter-gift, of the Charites.There must be reciprocityand proportionhere, too, as in all human relations, but Isee no other link tothe digression on the exchange between builder and shoemaker. I2 PAST ANDPRESENT NUMBER 47 happensin a realmarketsituation,andSoudeksuggeststhatAristotle's trouble was that "he was preoccupiedwith the isolated exchange betweenindividualsand not with the exchangeof goods by many sellersandbuyerscompetingwith eachother"36-astrangecriticism of a discussionthatexplicitlysets out to lookat exchanges"withinthe firameworkof the community". Schumpetertakesthe oppositeline.Startingfrom the erroneous idea that Aristotle"condemned[monopoly]as 'unjust'" he went on to reasonin this way: It is not farfetchedto equate, for Aristotle's purpose, monopoly prices with prices that some individual or group ofindividuals have settotheir own advantage.Prices that are given to the individualand with which he cannot tamper, that is to say, the competitiveprices that emerge in free marketunder normalconditions,do not come within the ban.And there is nothing strange in the conjecturethat Aristotle may harretaken normal competitiveprices as standardsof commutativejustice or, more precisely, that he was preparedto accept as 'sjust"any transactionbetween individualsthat was carried out at suchprices-whichisinfactwhatthescholastic doctors weretodo explicitly.37 We need not discusswhetheror not it is ';farfetched"to conjecture that all this was in Aristotle'smind,thoughnot expressedin his text; it surelytakesus awaycompletelyfromthe starting-pointstatedin the introduction,with its referencetoPythagoreanreciprocityand its consequentmathematics. Schumpeterfurtherobservedthatthe analysiswas restrictedto the artisan,while the "chieflyagrarianincome of the gentleman"was ignored,the free labourer,