Mt. Airy, Philadelphia. Before it became a science of supply and demand and the circulation of commodities, economics was originally understood as the wisdom of household management. The Greek word oikonomia derives from oikos (household) and nomos (the governing ordering of a place). The term originates with Plato and Xenophon (perhaps going back to Socrates), but it was Aristotle who gave it the precise meaning it maintained intact for nearly two millennia.
To understand the original meaning of economic philosophy, we must resist our impulse to think of the household as the “private sphere,” as if it were part of a system of artificial demarcations drawn between public and private domains. That way of thinking is a result of already having lost any understanding of classical oikonomia. Oikos has the more concrete meaning of dwelling-place, estate, household goods – that which makes up the site and the concrete form of the life of a family.
In Aristotle’s terms, there are ordering principles natural to the household, because the household itself is the concrete form of community of a family. The family has its own nature as a distinct form of community of persons ordered toward a good life. Thus oikonomia concerns the principles and practices that order and sustain the well-being of a family and its members in the place where they live out their shared life.
For Aristotle then, oikonomia can only be understood as a distinct and integral part of practical philosophy. Practical philosophy has three parts: Ethics, concerned with the right formation of character and the capacity to choose and act; Politics, concerned with the right formation and conduct of the city or community united by laws; and Œconomy, concerned with the right formation and conduct of the household as a place in accord with its nature.
These three parts of practical philosophy are distinct, but not separable, since they all take their bearings by the human good and shed slightly different lights on it. They inform one another, but are also sometimes in tension with one another. For example, the good order of the city may impose demands on the household that are somewhat at odds with the good of the household viewed on its own level.
On the whole, however, Aristotle sees each higher level as opening possibilities for fulfillment that are not available to the lower level left to its own confines. To give one example, he argues that the proper relationship between husband and wife is best understood as republican in character, an image of the relationship of fellow-citizens (rather than in terms of the monarchical king-subject model or the despotic master-slave model), and that one of the distinctive features of the Greek city-civilization is that it makes it possible to understand the relationship in these terms.
Oikonomia is necessarily, then, concerned with wealth, and the proper understanding of what constitutes wealth. Aristotle is at pains to distinguish the art of household management from the art of acquisition. Oikonomia looks to obtaining, preserving and using “those goods a store of which is both necessary for life and useful for partnership in a city or a household.” The acquisitive art, on the other hand, seeks to discern “what and how to exchange in order to make the greatest profit.”
Accordingly, oikonomia recognizes limits to acquisition, since it takes its measure by the standard of self-sufficiency with a view to a good life, which means a life embodying virtue and friendship. Those intent on profit, on the other hand, encounter no natural limit to their pursuit, since
they are serious about living, but not about living well; and since that desire of theirs is without limit, they also desire what is productive of unlimited things.
One of the principal functions of classical œconomics, then, is to warn us of the dangers of conceiving wealth in terms of money. First we must understand what constitutes the good life of a household, and construe as wealth only what contributes to that good life. A primary aim of the household will be productive self-sufficiency, and “self-sufficiency in possessions of this sort with a view to a good life is not limitless.” Barter exists “in order to support natural self-sufficiency.” The introduction of money as the medium of barter leads eventually to fixation on “what and how to exchange in order to make the greatest profit,” and “the wealth deriving from this sort of business expertise is indeed without limit.”
Thus, it is in accord with the nature of human life that we recognize limits to wealth, limits deriving from the shape of a life that is good and whole, that is shared in a healthy family and its well-ordered household. By changing the focus to mere life and its wish for limitless self-preservation, we lose any sense of natural limit on acquisition. Aristotle concludes from this discussion that “expertise in business relative to crops and animals is thus natural for all,” whereas making money from money through the charging of interest is “the most contrary to nature.”
This use of the word oikonomia that I’ve sketched out, which is explicitly restated by thinkers like Avicenna, Maimonides, Aquinas and Bonaventure, persists essentially unchanged for approximately 2000 years, until about 1650. The first occurrence in English of the word “economy” in reference to the regulation of the larger system of wealth of a nation is found in that classic of modern political philosophy, Hobbes’ Leviathan, published in 1651.
In chapter 23, on public ministers, Hobbes notes that some offices are concerned with the “economy of a commonwealth,” such as those that administer the public revenues. A word formerly used to denote the judicious management of the goods proper to a household here gets metaphorically extended to the management of the more abstract goods, especially monies, upon which the more abstract political association of the state nourishes itself. This metaphorical use eventually usurps the place of the original sense of the term, so that for us today economics concerns the market, and is emptied of the normative character that it can only derive from being concerned with what is good for a household. (In Hobbes’ nominalistic philosophy, only the individual has reality. Forms of community are entirely artificial, or “constructs” as we would say. Thus the family has no significant role in his political philosophy.)
In Hobbes the “economy” of the commonwealth does not yet refer to exchange in what we would call “civil society,” but specifically to the accumulation of money by the state itself. It is tempting to say, however, that the deformation of the domestic economy results from a kind of trickle-down dys-oikonomia. This results in part from what Adam Smith points out as a distinctive feature of the modern dynamics of history. Whereas formerly wealth and luxury led to national softness, and so vulnerability to hardier barbarians, after the invention of firearms and artillery the generation of wealth leads to strength rather than to weakness in relation to less luxurious nations. Smith thus provides the strongest case for Locke’s argument that the
Prince who shall be so wise and godlike as by established laws of liberty to secure protection and incouragement to the honest industry of Mankind against the oppression of power and the narrownesse of Party will quickly be too hard for his neighbours.
The modern acquisitive individual, considered in abstraction from the household and family and viewed as an interchangeable part in the vast division of labor, has proven to be a convenient and efficient motor of public industry and revenue for the military-industrial state. Is the unfettered, freely contracting, self-interested individual who serves as the libertarian’s archetype of the free human being really just the creature and instrument of the self-aggrandizing state? So suggest Locke and Smith.
Of course I don’t mean to suggest that this conceptual and linguistic change is the primary causal engine of our social ills, but rather something like the following. What for a while was distinguished by the name political oeconomy, but has now entirely usurped the name of economics, is by no means a neutral player in human moral life and in how we understand ourselves as human beings. On the contrary, “economics” is complicit from the start in the state’s reconceptualization of the person, because it neutralizes the distinctive claims that the life of the household makes on the moral shape of our lives.
In fact, its very semblance of methodological neutrality makes it complicit, because it recasts our imagination of the life of production and consumption in the image of the unlimited acquisition of money rather than in the image of choices about goods that contribute to a good life. It swears off any judgments about relative goodness, and so by default has to measure and compare in terms of value, which ultimately means by the medium of money. And by linguistically usurping the place of the original moral science of oeconomics, it cuts off one means of access to that alternative vision.
(The above has been excerpted and adapted from my contribution to The Humane Vision of Wendell Berry, due out in 2010 from ISI Books.)