Oikonomia

Context

Inez Aponte:

"In their book ‘For the Common Good’ economist Herman Daly and theologian John Cobb, Jr explain the difference between the practice of economics (from the Greek word oikonomia ‘the management of the household so as to increase its use value to all members over the long term’) and chrematistics (from khrema, meaning money and referring to ‘the branch of political economy relating to the manipulation of property and wealth so as to maximize short-term monetary exchange value to the owner’):

“Oikonomia differs from Chrematistics in three ways.

First, it takes the long-run rather than the shortrun view.

Second, it considers costs and benefits to the whole community, not just to the parties to the transaction.

Third, it focuses on concrete use value and the limited accumulation thereof, rather than on an abstract exchange value and its impetus towards unlimited accumulation….

For oikonomia, there is such a thing as enough. For chrematistics, more is always better… “

In this definition of economics financial wealth does not trump the wellbeing of the community, as it is distinct from the actions a society must undertake to look after its members. The threat to our livelihoods that a fall in GDP represents is due to a conflation of economics with chrematistics. If for a moment we were to prise them apart we would see a different picture."

(email, April 2020)

Discussion

Oikonomia vs Chrematistics as applied to the evolution of money

Ansel Reed:

"Aristotle, writing more than two thousand years ago, distinguished between two ways of acquiring wealth.

The first he called oikonomia, household management. You produce what you need, trade the surplus, use money as a practical tool. Natural and good.

The second he called chrematistics: making money for its own sake. Not to meet needs, but to have more. Especially: money breeding money through interest. He called that the most unnatural way to get rich.

His reasoning was simple. Money is meant to facilitate exchange. It’s a means, not an end. But once money itself bears fruit, it becomes the goal. Then it’s no longer about what people need, but about how much money grows. Money breeding money. That disrupts the natural order.

Aristotle already saw what we see today. Once money can multiply itself, the focus shifts. From making to claiming. From serving to accumulating. Those who promise well have more power than those who deliver. For him, that was a political and moral problem, not just an economic one.

The Bible: Debt must be temporary

The Bible, both Torah and New Testament, has clear rules about money and debt.

Interest on loans to fellow citizens was forbidden. Not as a suggestion, but as law. Why? Because interest drains the weak and enriches the strong without any real value being produced. It’s extraction, not reciprocity.

But more importantly: debt couldn’t last forever. Every seventh year was a sabbath year in which debts were cancelled. Every fiftieth year was a jubilee, debts forgiven, land returned to its original owners.

That wasn’t naive idealism. Debts accumulate without intervention. Once you fall behind, you can’t catch up. This kept wealth from concentrating permanently.

Austrian School of Economics: Full reserve banking

Centuries later, the Austrian School emerged. Economists like Ludwig von Mises, Friedrich Hayek, and Murray Rothbard warned against exactly what Aristotle and the Bible had described: money created from nothing corrupts everything.

Their analysis was sharp. Fractional reserve banking, where banks lend out more than they hold in reserve, creates instability. Debt becomes cheap, speculation kicks in, bubbles form and burst. Each time, the community pays the bill.

Rothbard’s strand advocated full reserve banking: banks may only lend what they actually have. Money must stay redeemable for something real, like gold. No creation from nothing. Hayek went a different direction, toward free banking without a state monopoly on money, but a shared concern connects them: stop monetary manipulation.

The Austrian School didn’t defend the gold standard out of nostalgia, but out of necessity. Gold can’t be printed. It enforces discipline. It prevents governments and banks from endlessly creating money to cover debts. It’s a hard limit that can’t be moved by political pressure.

They were right. When Nixon suspended the dollar’s link to gold in 1971, the money supply exploded. Debts grew exponentially. Speculation became normal. And now we have a system completely decoupled from real value.

Keynes: The defense of debt

Not everyone agreed. John Maynard Keynes, the most influential economist of the 20th century, defended the opposite. He saw fractional reserve banking not as a problem, but as a solution.

His reasoning: economies sometimes need a push. When everyone stops spending out of fear, everything stagnates. Companies lay off workers, the unemployed buy less, companies lay off more. A downward spiral.

Keynes said: let the government borrow and spend. Let banks create credit so businesses can invest and households can consume. That breaks the spiral. Growth returns. And when growth returns, the debt gets repaid.

It sounded logical. And it seemed to work for a while. After the Great Depression, economies stabilized. After World War II, prosperity followed. But the problem was his assumption that politicians would have the discipline to borrow temporarily and then repay. They didn’t.

Debts kept growing. Governments never paid back; they just borrowed more. Banks created more and more money, not for production but for speculation. When someone asked Keynes: but this system can never work long-term? His answer was: in the long run we’re all dead.

We’re still here. And we’re paying the price.

Bitcoin: The modern rebel

In 2008, in the middle of the financial crisis, someone published a paper under the pseudonym Satoshi Nakamoto. The title: Bitcoin, a peer-to-peer electronic cash system.

The timing was no coincidence. Banks were bailed out with taxpayer money. Central banks printed more. Savers watched their purchasing power evaporate while bankers kept collecting bonuses. Trust in the system was broken.

Bitcoin was the response. A currency without a central bank, without a government, without banks creating money from nothing. The supply is fixed: at most 21 million coins. Nobody can change that. No manipulation, no bailouts.

Digital gold. Scarce, verifiable, can’t be seized. No bank needed to store it. No government needed to trust it. The code is the law.

But Bitcoin doesn’t solve everything. It’s volatile because it has no intrinsic use value. Gold can be processed, a house provides shelter, shares represent companies that deliver value. Bitcoin is scarce, but scarcity alone doesn’t make something valuable. And on top of that, Bitcoin consumes enormous amounts of energy.

Yet it reveals something real: millions of people are looking for an alternative. They don’t want their money manipulated by governments and banks."

(https://anselreed.substack.com/p/blog-2-from-aristotle-to-bitcoin)