Aristotle and The 'Satisfaction of Needs'

Utilitarism Exchange Accounting Preferences Observations
Conference of the International Society for Utilitarian Studies

August 20 22, 2014, Yokohama National University
Aristotle and the `satisfaction of needs'

an outline of arguments
G.M. Ambrosi
University of Trier, Germany
ambrosi@uni-trier.de
August 20-22, 2014
G.M. Ambrosi University of Trier, Jean Monnet Chair, FB IV, Emeritus
Aristotle: Satisfaction of needs

Overview
1 Utilitarianism and Aristotle
2 Aristotle's model of exchange
3 Aristotelian accounting
Equal values
Equated goods
Geometry
4 Preferences and exchange

Equality of preferences
Inequality of incomes
Satisfaction of needs
5 Sundry observations

Ancient roots
Utilitarianism has many roots in European antiquity.
The word comes from Latin utilitas = `usefulness'
Utilitas was used by some medieval scholars for translating

Aristotle's Greek term
chreia = `use', ` need' , `demand'
But the relation between Aristotle's term chreia in the sense of
`need' and later reections about the satisfaction of need is
problematic.
Other connections of utilitarianism with ancient roots:

Jeremy Bentham (1789), Chapter on Principles of Utility:
NATURE has placed mankind under the governance of

two sovereign masters, pain and pleasure.
Plato, in his Laws (644), wrote 348 BC, long before Bentham:
each [individual] possesses within himself two antagonistic

and foolish counsellors, whom we call by the names of
pleasure and pain
Wicksteed (1914), President of Royal Economic Society:
Aristotle's system of ethics and our reconstructed system

of economics are twin applications of one identical
principle or law
But this is open to debate.

Aristotle's fundamental utilitarianism
In 11 of his Nicomachean Ethics, Book V, ch.5 (NE, V,5) Aristotle

did indeed make the very utilitarian sounding statement:
Everything . . . must be measured by some one thing.

In truth this one thing is [the satisfaction of ] need . . .
But as a kind of substitute for need, convention has

brought money into existence . . .
This statement is the basis of my contribution.

Aristotle's model of exchange: the text
As Plato's disciple, Aristotle built on Plato's position that the

purpose of the state is to give its citizens the opportunity for
specialised production and economic exchange with each other,
usingmarkets and money. (Plato, Republic 371 B)
Aristotle (NE, V,5) 8 describes such exchange as follows
1
8 Now proportionate requital is eected by diametrical
conjunction. For example, let A be a builder, B a
shoemaker, C a house, and D a shoe. It is required that
the builder [A] shall receive from the shoemaker [B ] a
portion of the product [D ] of his labor, and give him a
portion [of C , namely] of the product of his own [labor].
1
Rackham: diagonal

Exchange: an illustration
Total production of houses C and

shoes D denes the dimension of the
outer rectangle.
Parts (portions) of these goods are
exchanged between artisans A and B
as the arrows show.
The arrows of retained and obtained
goods dene the households'
possibilities for the satisfaction of
needs.
The traditional interpretation looses
these distinctions.

Exchange: The medieval view
Langholm (1979, p.15) Justice of

proportionate reciprocity is eected
by diagonal conjunction.
With this obscure saying Aristotle
introduces a quasi-mathematical
argument in four terms, correspond-
ingaccording to the Latin tradition
to the angles of a square
Figure: Albertus Magnus (1252)
In fact Aristotle's passage is an accounting advice.


Exchange: The correct view
Table: Aristotelian exchange: the basics
product quantities
producer total traded retained price
builder A QC∗ QC QCr pC

shoemaker B QD∗ QD QDr pD
How to measure Aristotle's portions and the equating of goods:

QC∗ QC QCr
= +
QC∗ = QC + QCr QC∗ QC∗ QC∗ 1 = qC + qCr (1)
QD∗ = QD + QDr QD∗ QD Qr 1 = qD + r

qD (2)
∗ = ∗ + D∗
QD QD QD

Equal values
Aristotle's accounting I: equal values
Table: Equivalence and sustainable trade
money values
product name selling buying
houses (C) pC QCs = pC QCd
=
(budgetary requirement)
shoes (D) pD QDs = pD QDd
equivalence pC QC = pD QD
Rothbard's (1995; 16) wrong claim:

His [Aristotle's] reasoning was that for A and B to exchange two
products, the value of both products must be equal. . . The
Aristotelian concept of equal value in exchange is just plain wrong

Equated goods
Aristotle's accounting II: equated goods
Aristotle, NE V,5 10
As therefore a builder [A] is to a shoemaker [B ], so must

such and such a number of shoes [qD ] be to a house [qC ]
equivalenceas before pC × QC = pD × QD (3)

QC QD
expand with Q ∗ -s pC QC∗ × ∗ = pD QD∗ × ∗ (4)
| {z } QC | {z } QD
≡A ≡B
see equs. (1), (2) A × qC = B × qD (5)
A qD
proportionate requital
B =
qC (6)
A ≡ pC QC∗ → worth of builder ; B ≡ pD QD∗ → worth of shoemaker

Geometry
Aristotle's accounting III: Geometry
Netz (1998; 37): The meto-

nym of modern science is a
formula, a symbolic text.
The metonym of ancient
science is a diagram, a visual
representation.
Indeed, again and again

Aristotle refers to geometry
in the NE.
Figure: drawing qir , qi Figure: drawing qD /qC

Equality of preferences
Preferences and exchange
Problem:
relate qD /qC to A/B in simple way
Aristotle NE V,5 11 :

. . . if people did not need things, or
if theydo not need them to the
same extent, then either there will
be no exchange, or the exchange
will be a dierent one.
Interpretation:
Figure: Equal preferences Assumption of equal preferences

Problem:
Aristotle seems to write gibberish.
Rothbard (1995, p.16) Eh? How

can there possibly be a ratio of
`builder' to `shoemaker' ? Much less
an equating of that ratio to
shoes/houses? . . .
But see equs. (3) to (6). Remember:

A ≡ pC QC∗ ; B ≡ pD QD∗
Figure: A<B and qC > qD qC ≡ Q C
Q∗ ; qD ≡ Q
Q∗
D
The poor pays more C D

Satisfaction of needs
The households' situations
Satisfaction of households' needs

requires availability of goods. This
may be measured by the areas
qCr × qD and qD
r × q or by sides:
C
χA = qCr × qD ; χB = qCr × qD
p p
(7)
Rewriting this with exponents gives
Ui = (qir )0.5 (qj )0.5 (8)
with i =C , D ; j = D, C
Figure: Available goods

Fairness and Aristotle's proportions
A question of fairness
A qD qCr χA
= = =
B q qr χB
| {z C} | D {z }
(i) indirect proportional (ii) direct proportional
1 The higher the As, the more this party gets as qD .

2 The higher the As, the better the resulting satisfaction of
needs.
Is that fair?

Pythagoreans' erroneous arguments for justice
Pythagorean arguments for justice:
1 With A : B = χA : χB distributive justice is fullled.
2 We have a literally square deal of corrective justice.
3 Since always χA + χB = 1 , aggregate society is unaected by

questions of distribution. Distribution is no social concern.
Aristotelian arguments against justice:
1 Above proportionalities are pure accounting, hence not justice.
2 Likewise, the equalisation of goods is just formal (Q

∗ /Q ∗ ≡1
always). The resulting square has nothing to do with justice.
3 The plea for strict reciprocity endangers society. It lacks equity.

Aristotle's critique of the Pythagoreans
Nicomachean Ethics V,5 1

Some people think that it is in fact the reciprocal that is
unqualiedly just as the Pythagoreans asserted; for they used,
without qualication, to dene the just as what stands in a
reciprocal relation to something else.
However the reciprocal does not t the case either of the just in the
distributive [proportional] sense or of that in the recticatory
[corrective]

Relation to a Cobb-Douglas function
The Aristotelian measure of relative satisfaction of needs in relative

magnitudes can be seen in terms of Cobb-Douglas functions for
absolute magnitudes
r
D 0.5 QC 0.5
χA qD × qCr (Q ∗) ( Q∗ ) (QD )0.5 (QCr )0.5
p
q QD C
= = r = (9)
χB r C 0.5 QD 0.5 (QC )0.5 (QDr )0.5
p
qC × qD (Q
Q∗ ) ( Q∗ )
q
C D
since (QC∗ )0.5 and (QD∗ )0.5 cancel in the middle term of equ.(9).

A strange coincidence
Aristotle Metaphysics D.5 : and a man's sailing to Aegina is

necessary in order that he may get his money. (Ross, 1928, 1015a)
Figure: Aristotle, c.330 BC

Figure: Coin, Aegina island, c. 330 BC
Nicomachean Ethics, V,5

References
-Albertus Magnus ([1252], 1972). Opera omnia Super ethica: commentum et

quaestiones Ps. 1. Vol. 14. Monasterium Westfalorum Aschendor: Institutum
Alberti Magni Coloniense
Aristotle's Geometrical Accounting.
-Ambrosi, Gerhard Michael (2014). URL:
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2419927
-Bentham, Jeremy ([1789] 1907). Introduction to the Principles of Morals and
Legislation. London; New York; Toronto: Clarendon Press
-Bury, Robert Gregg (1926). Plato Laws with an English Translation. Vol. II.
The Loeb Classical Library. Harvard University Press & William Heinemann
-Langholm, Odd Inge (1979). Price and Value in the Aristotelian Tradition. A
study in scholastic economic sources. Bergen, Oslo, Tromso:
Universitetsforlaget
-Netz, Reviel (1998). Greek Mathematical Diagrams: Their Use and Their
Meaning. In: For the Learning of Mathematics 18.3, pp.3339.

References
-Rackham, Harris ([1926] 2003). Aristotle The Nicomachean Ethics with an

English Translation. Vol. 73. Loeb Classical Library. Cambridge, Mass. and
London: Harvard University Press
-Ross, William David (1928): Metaphysica, in: The Works of Aristotle, edited
by William David Ross, volume VIII (Oxford, London etc.: Clarendon Press),
(page numbering is only by Bekker numbers).
-Rothbard, Murray N. (1995). Economic Thought before Adam Smith An
Austrian Perspective on the History of Economic Thought. Vol. 1.
Cheltenham, UK: Elgar
-Rowe, Christopher J. and Sarah Broadie (2002). Nicomachean ethics -
translation and commentary. Oxford etc.: Oxford Univ. Press
-Wicksteed, Philip H. (1914). The Scope and Method of Political Economy in
the Light of the Marginal Theory of Value and of Distribution. In: The
Economic Journal 24.93, pp. 1-23.

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Utilitarism Exchange Accounting Preferences Observations

Conference of the International Society for Utilitarian Studies

Aristotle and the `satisfaction of needs'

University of Trier, Germany

August 20-22, 2014

G.M. Ambrosi University of Trier, Jean Monnet Chair, FB IV, Emeritus

Aristotle: Satisfaction of needs

1 Utilitarianism and Aristotle

2 Aristotle's model of exchange

4 Preferences and exchange

G.M. Ambrosi University of Trier, Jean Monnet Chair, FB IV, Emeritus

Aristotle: Satisfaction of needs

Utilitarianism has many roots in European antiquity.

The word comes from Latin utilitas = `usefulness'

Utilitas was used by some medieval scholars for translating

G.M. Ambrosi University of Trier, Jean Monnet Chair, FB IV, Emeritus

Aristotle: Satisfaction of needs

Jeremy Bentham (1789), Chapter on Principles of Utility:

NATURE has placed mankind under the governance of

each [individual] possesses within himself two antagonistic

Aristotle's system of ethics and our reconstructed system

But this is open to debate.

G.M. Ambrosi University of Trier, Jean Monnet Chair, FB IV, Emeritus

Aristotle: Satisfaction of needs

Aristotle's fundamental utilitarianism

In 11 of his Nicomachean Ethics, Book V, ch.5 (NE, V,5) Aristotle

Everything . . . must be measured by some one thing.

But as a kind of substitute for need, convention has

This statement is the basis of my contribution.

G.M. Ambrosi University of Trier, Jean Monnet Chair, FB IV, Emeritus

Aristotle: Satisfaction of needs

Aristotle's model of exchange: the text

As Plato's disciple, Aristotle built on Plato's position that the

Aristotle: Satisfaction of needs

Total production of houses C and

G.M. Ambrosi University of Trier, Jean Monnet Chair, FB IV, Emeritus

Aristotle: Satisfaction of needs

Exchange: The medieval view

Langholm (1979, p.15)  Justice of

In fact Aristotle's passage is an accounting advice.

Aristotle: Satisfaction of needs

Exchange: The correct view

Table: Aristotelian exchange: the basics

builder A QC∗ QC QCr pC

How to measure Aristotle's portions and the equating of goods:

QD∗ = QD + QDr QD∗ QD Qr 1 = qD + r

G.M. Ambrosi University of Trier, Jean Monnet Chair, FB IV, Emeritus

Aristotle: Satisfaction of needs

Aristotle's accounting I: equal values

Table: Equivalence and sustainable trade

houses (C) pC QCs = pC QCd

Rothbard's (1995; 16) wrong claim:

G.M. Ambrosi University of Trier, Jean Monnet Chair, FB IV, Emeritus

Aristotle: Satisfaction of needs

Aristotle's accounting II: equated goods

Aristotle, NE V,5 10

As therefore a builder [A] is to a shoemaker [B ], so must

equivalenceas before pC × QC = pD × QD (3)

A ≡ pC QC∗ → worth of builder ; B ≡ pD QD∗ → worth of shoemaker

G.M. Ambrosi University of Trier, Jean Monnet Chair, FB IV, Emeritus

Aristotle: Satisfaction of needs

Aristotle's accounting III: Geometry

Netz (1998; 37): The meto-

Jeremy Bentham (1789), Chapter on Principles of Utility:

In 11 of his Nicomachean Ethics, Book V, ch.5 (NE, V,5) Aristotle

Langholm (1979, p.15) Justice of

How to measure Aristotle's portions and the equating of goods:

Aristotle's accounting II: equated goods

Aristotle, NE V,5 10

As therefore a builder [A] is to a shoemaker [B ], so must

equivalenceas before pC × QC = pD × QD (3)

A ≡ pC QC∗ → worth of builder ; B ≡ pD QD∗ → worth of shoemaker

Netz (1998; 37): The meto-

Aristotle NE V,5 11 :

Rothbard (1995, p.16) Eh? How

The poor pays more C D

1 With A : B = χA : χB distributive justice is fullled.

2 We have a literally square deal of corrective justice.

3 Since always χA + χB = 1 , aggregate society is unaected by

Nicomachean Ethics V,5 1

Aristotle Metaphysics D.5 : and a man's sailing to Aegina is

-Albertus Magnus ([1252], 1972). Opera omnia Super ethica: commentum et

-Rackham, Harris ([1926] 2003). Aristotle The Nicomachean Ethics with an