This is an opinion editorial by Joe Moffett, a producer and writer. He is devoted to philosophical and highly deductive reasoning in the world of hot tech.
Aristotle had a lot to say about money, but what would he have said about bitcoin?
“As I have said, there are two kinds of money-making; One is part of domestic management, the other is retail business: the former is essential and respectable, while what happens in return is justifiably condemned; Because it is unnatural, and one of the ways by which humans benefit from one another. The most hated type, and with the greatest reason, is usury, which profit from money itself and not its natural purpose. It was intended to be used in exchange for money, but not to increase interest. And the word interest, meaning the birth of wealth from wealth, is applied to the reproduction of wealth because the offspring are the same as the parents. Therefore it is the most unnatural of the methods of obtaining money.” (source)
Now it may be unwise of me to criticize Aristotle, but there seems to be some flawed logic in this assessment of commerce. Recognizing the benefits of private property, Aristotle is effectively saying three things here:
- Wealth is best when it is a part of household management.
- Retail property development is unnatural and is rightly criticized.
- Lending money is essentially an immoral act.
The study of economics and praxiology has evolved in such a way that we can look at these three statements and recognize the flaws in their reasoning, but the logic behind their belief is easy to understand. As a student of Plato, Aristotle had great respect for ethics and a harmonious society. Where Plato saw central planning as an alternative – such as a communist or heavily planned socialist system – Aristotle saw private property as rooted in human experience, hence the need for individual responsibility and education.
So how is this logic flawed?
The first statement is not flawed; I think most people today would agree that creating the wealth to manage and provide for a home is a noble act. However, the second statement contradicts the first. If it is necessary to acquire wealth and is good for household management, why would retail commerce and currency trading be considered unnatural? In other parts of his book “Politics”, Aristotle also considers how money serves the noble purpose of being a medium of exchange – to reduce the “double coincidence of wants” – which leads to the next point about money lending. leads to.
Although I disagree with Aristotle’s assessment that lending money is an immoral act, I will admit, given credit card fees, high interest, and predatory loans, it is the most appropriate criticism of commerce in this context. However, Murray Rothbard was disappointed by Aristotle’s opinion on lending money, saying:
“Aristotle would have done better to avoid such hasty moral condemnation and try to find out why interest is in fact universally paid. Maybe there is something “natural” about the rate of interest. “No? And if he had discovered an economic reason for the charge and payment of interest, perhaps Aristotle would have understood why such charges are moral and not unnatural.” (Source)
Rothbard is probably referring to the benefits of lending money and interest. As Frank Shostak put it bluntly, “Interest is the price we pay for liking the goods, not the latter, and a measure of the degree to which we do so.”
The borrower benefits from meeting their needs first, the lender takes the risk and they lose the benefit of investing those “real savings” in goods, so the borrower charges for the opportunity to convert future savings into goods immediately. pays. To use Aristotle’s example on a small scale: A shoemaker lends a house builder $1,000 to make equipment for building a house from the savings that haven’t accrued yet. The shoemaker no longer runs the risk of not being paid back, losing the potential investment to purchase materials for shoe making or other improvised goods, and the housewife benefits from being able to build wealth more quickly. Shoemaker is entitled to a small fee of 5-10% to support the builder.
Back to Rothbard’s article “It All Begins, As Usual, With the Greeks,” he says something I’m not sure I agree with:
“Aristotle, like Plato, was hostile to economic development and favored a stable society, which is all about fits as opposed to making money and accumulating wealth. Economic as the allocation of scarce means to meet alternative needs Old Hesiod’s insight into the problem was almost ignored by both Plato and Aristotle, who instead advised the virtue of reducing one’s desires to fit the means available.”
Rothbard makes a good point at the end of his essay when he claims that Aristotle and Plato believed in a stable harmonious society that did not increase the Earth’s natural output. However, I am not sure whether I completely agree that Aristotle was hostile to economic development in general. After all, Aristotle does not say that lending money or debt is bad because of economic growth, but rather claims that it is immoral to receive interest on loans. My interpretation of Aristotle was that, as Rothbard says, he believed that “it was virtuous to reduce the desire to fit whatever means were available.”
Plato and Aristotle both described versions of eugenics and believed that the world should not more or less make up, so it is possible that Aristotle tied his economic beliefs to his philosophical worldview.
All that said, the Republic of Rome debated its currency over the years and I am not aware of how it was distributed through a central bank, local bankers etc. it was done. I think it would be hard to argue with his opinion if the money lending system was on par with the money printing of our current fiat system. We know that the Roman Empire began to reduce its currency around 70 BCE, but it is possible that a similar system was in place as early as 350 BCE, when Aristotle was writing about this.
If that’s the case, then his comment on government currency makes sense. Aristotle writes, “… but by tradition money has become representative of demand; and that is why it is named ‘money’ (nominal) – because it does not exist by nature but by law (nomos) and is subject to change.” And it is in our power to make it useless.”
So how would Aristotle feel about bitcoin?
If Aristotle had lived in the world today, many of his opinions would have fit reasonably well into our current structure. Where Plato believed in central planning and controlling people for a better society, Aristotle felt that individualism, private property and free will were essential to the human experience. Aristotle criticized the divergence of banking and money. In many ways, you could argue that the way bitcoiners treat bitcoin is kind of deviant, but it’s actually the opposite. I may be wrong in this assessment, but the dollar has become the deity of society and the Federal Reserve is the church that keeps on printing more for your salvation. It weakens you while consolidating the dollar’s power through government enforcement and a monopoly on violence.
People come up with the printing of money in large numbers and believe that never-ending growth can be achieved (Thanks, John Maynard Keynes!) What people don’t realize is that the almighty dollar is smoke and mirrors, of money. Printing, debt burden, future taxes and loss of independence are just around the corner. However, bitcoin is not a god, but a tool for volunteering. Bitcoin empowers you to be more virtuous rather than obligated to consume it. Bitcoin protects freedom, provides an opportunity for collaboration like never before, educates the world on the value of savings, and opens channels for complimentary lending and donations when possible. Above all, it is an awakening to the world; We don’t need banks or governments, we just have our own sovereignty.
If Aristotle wished for a medium of exchange that did not exist by law and instead exists through the natural trading system of work and the people who use it, then bitcoin is the answer. Proof of work is the basis that builds this idea. You could argue that even in Aristotle’s challenge about interest, bitcoin is the right solution. To create a new bitcoin or receive any bitcoin, a proof-of-work of the machine is required; A machine that needs energy to run a certain amount of work. Aristotle’s issue with money being born out of money is resolved with bitcoin, which is instead created through work or effort the way gold is found through mining. In addition to this complete adjustment to government-issued currency, we can also recognize that bitcoin acts as a limited resource and will only allow so much expansion and contraction.
At the limit of 21 million bitcoins, lending bitcoins requires strategic thinking which breeds competition and efficiency. This would naturally create decentralized banking and improve local community development, making lending a “noble” or natural act. Since there will never be more than 21 million, if the world followed the bitcoin standard, every item bought or sold would have a ratio and bitcoin would be the common unit of measurement. The world will have more compatibility than it is today because there is a single standard that is relied upon by the people to manage the household.
With bitcoin and proof-of-work, the rich and powerful will not have as unlimited cash resources as we do in the fiat system, so they cannot print money or receive handouts. As long as human nature exists, some of the flaws in “money” referred to by Aristotle will exist on the bitcoin standard. However, the ways in which “wealth-getting” occurs will result in more competition, a kinder world, and a more just social contract.
Aristotle, the first bitcoiner.
This is a guest post by Joe Moffett. The opinions expressed are solely their own and do not necessarily reflect those of BTC Inc. or Bitcoin Magazine.