Economic Thought of Aristotle and Plato - PowerPoint Presentation

Slide1

Economic Thought of Aristotle and Plato

By Ahmad

QaziSlide2
AristotleSlide3

Allocation of scarce resources was a moral issue to

Aristotle

 in book I of his 

Politics

, Aristotle expresses that consumption was the objective of

production

surplus should be allocated to the rearing of childrenSlide4

 personal satiation ought to be the natural limit of

consumption

Child mortality was high

Aristotle used the labels of "natural" and "unnatural"Slide5
N

atural

Natural transactions were related to the satisfaction of needs and yielded wealth that was limited in quantity by the purpose it servedSlide6
Un Natural

 Un-natural transactions aimed at monetary gain and the wealth they yielded was potentially without limits. He explained the un-natural wealth had no limits because it became an end in itself rather than a means to another end—satisfaction of

needs

This distinction is the basis for Aristotle's moral rejection of

usurySlide7

Later, in book VII Chapter 1 of Politics

, Aristotle asserts

“external

goods have a limit, like any other instrument, and all things useful are of such a nature that where there is too much of them they must either do harm, or at any rate be of no use, to their

possessors”Slide8

some interpret this as capturing a concept of diminishing marginal

utility

However a general mass also refuses of the conceptSlide9

Aristotle's Nicomachean

Ethics

, particularly book

V.V,

has been called the most economically

challenging

analytic writing in ancient

Greece

Aristotle talks of justice, exchange and equality of distribution

He discussed isolated exchanges rather than marketsSlide10

Aristotle laid stress on just distribution of prices among individuals of different interests

 Aristotle suggested three different proportions to analyze distributive, corrective, and reciprocal or exchange transactions: the arithmetic, the geometric, and the harmonic.Slide11
Arithmetic

Simply calculating the demand price level on basis of demand and need of a good in a society or by an individualSlide12
Geometric

It is for corrective measures

Here the point of both satisfaction is met geometrically Slide13
Harmonic

 The harmonic proportion is interesting, as it implies a strong commitment to the subjective values of the traders.

Here the harmonic mean of the two suggested prices is taken and then the price thus obtained is the just priceSlide14

PlatoSlide15

Theory of division of labor

First observed in a

copy of the 

Republic

(

Politeia

), written more than 2,400 years

ago by none other than Plato

The book purports to deal with the nature and conditions of a just republic, as well as with the perversions of justice in man and societySlide16

Plato is the godfather of all western philosophers, good and bad. Libertarians heartily despise him as the arch-champion of totalitarian political schemes and the mentor of no less than nine Greek tyrants. Yet the fact is that he did pioneer the theory of the division of labor, and it is instructive to see precisely where he went wrong.Slide17

Theory of Labor

cooperation among any number of persons is more productive than the individual efforts of the same persons in isolation from one another

.

A must even though hatreds upon other factors in order to effectively produce

The economic incentives springing from the division of labor explain the origin and nature of human societiesSlide18

Plato starts off by identifying the better satisfaction of 

human needs

 as the root cause of association

.

In book II of the 

Republic

, Plato follows a macro approach to the analysis of justice. 

 He deals with social organization because he expects to see here a larger image of the very same problems of justice that also exist on the micro level of individuals.Slide19

Three reasons for division of labor

there are natural productive differences between the individuals, which make one person a better tailor, while another one might be a better farmer, and so on;

the daily exercise resulting from specialization improves the workmanship;

many jobs need to be done at the right moment in time and therefore require permanent availability of some person charged with this task.Slide20

The overall result of the division of labor is therefore to increase the physical productivity of individual human effort, to facilitate this effort, and to make it more beautiful

.

 Plato argues that the citizens need to cooperate not only among themselves, but also with people from other cities. This is because of the natural imperfections of the place where the city is built.Slide21

In order to get merchandise from strangers, one needs to pay them with merchandise that is in short supply in 

their

 place. Therefore it is necessary for our citizens to produce in excess of their own needs

.

Exchange a driving force of consumptionSlide22

Opulent Cities

To move towards luxury

To move towards expansion

When a limit is reached, then a need to go on other land

arrises

and thus wages war

For war making men are chosen very carefully

Having a dog nature ( they not attacking own people but strangers)

Thus conversion into opulent forces warSlide23

Government Role

Only limited to have a check on the exchanges and maintaining property rightsSlide24

Thank You