Population and Poverty

Aristotle recognizes that in every society there will always be rich and poor people. What
stabilizes the social system is a large class of people who possess the means for a comfortable life:

“But surely the ideal of the state is to consist as much as possible of persons
that are equal and alike, and that similarity is most found in the middle class.” (1295b,
26-27)

“It is clear therefore also that the political community administered by the
middle class is the best, and that it is possible for those states to be well governed
that are of the kind in which the middle class is numerous.” (1295b, 35-38).

Poverty is a danger to the city, and there are two ways to deal with poverty. One is the
welfare system. Aristotle believes that the welfare system can offer temporary relief but does not
solve the problem “because this way of helping the poor is the legendary jar with a hole in it” (
1320a, 32-33). On the contrary, it perpetuates the problem. However, common tables as part of a
welfare system is accepted and recommended. The other way to reduce poverty is through
substantial financial aid to the poor citizens in order to buy property and start some productive
activity or allow them to use land for the same purpose:

“Measures must therefore be contrived that may bring about lasting

prosperity. And since this is advantageous also for the well-to-do, the proper course
is to collect all the proceeds of the revenues into a fund and distribute this in lump
sums to the needy, best of all, if one can, in sums large enough for acquiring a small
estate, or, failing this, to serve as capital for trade or husbandry…” (1320a, 35-40)

In Aristotle’s analysis, social stability depends on the existence of a large middle class of
citizens that can live a comfortable life. Crucial to the achievement of this, is a proper relation
between land and population. Overpopulation will lead to poverty and this involves dangers for
the stability of the city.

Comments
 The model presented above has a long-run equilibrium position which is reached through
birth controls. Citizens can support a life that is wise and generous, comfortable but not wasteful
nor luxurious, and thus social stability is achieved. The political and ethical views of Aristotle
included in this analysis perhaps explain his neglect of what today is called economic growth
theory. Although he recognizes the distinction between consumer goods and capital goods, or in
his terminology enjoyable ( απολαυστικα) and productive (καρπιμα) (Rhetoric 1361a, 16-18)1, he
does not explore the consequences of the nature of capital goods for economic growth. Perhars,
his neglect is explained by the understanding that at the long-run equilibrium the political and
moral requirements for a good life are satisfied and growth beyond that is meaningless. Aristotle’s
opposition to economic growth has been noted before (Gordon 1982, p. 418, Perrotta 2011) but it
is also a logical result of the above model .In this context, capital accumulation is not an issue for
analysis. Perhaps, this may help explain, in part, Aristotle’s views on the rate of interest, namely
that it should be zero. Indeed, if capital accumulation is zero, the need for a money market at the
macroeconomic level disappears, and thus the payment of interest is not justified. In that sense
money is sterile.

According to Gordon (1982, p.416) there are two related grounds on which Aristotle
condemns interest taking. First, lending money is a “vicious form of acquisitive activity which
degrades” the individuals involved and “Such persons are not desirable citizens”. Second, lending
money at interest is a “misuse of an important aid to social exchanges in civilized communities.
Usury involves distortion of the true functions of money”. An additional reason that has been
mentioned for Aristotle’s thesis that money is sterile is that at his time lending was mainly for
consumption purposes and interest rates were very high (Whittaker,1960 p.7).2 The model
presented above suggests a purely economic reason for zero interest rate .

1
It should be noted that Rhetoric was written in 330 BC., twenty years after Politics.

2
Xenophon in his Revenues III,9 informs us that for loans of ten mnas (1000 drachmae) the interest was
almost one fifth of the capital loaned, i.e. 20% per year, and for smaller loans of five mnas more than 33% per year.
Very high interest rates may explain Aristotle’s comment that “usury is most reasonably hated” (1258b,3) but not his
general opposition to interest taking.
 Aristotle is credited with the development of some fundamental economic ideas such as
the theory of money, the theory of exchange, and the distinction between use value and exchange
value of commodities. Although reference is some times given to his emphasis on the need for
birth control so that the population is restricted to proper level, the central role of the land-
population ratio for the stability and the welfare of the city-state has not been acknowledged so
far.

Discussion

It is reasonable to assume that today’s people are interested, like the ancients, in living a
happy life. It is also reasonable to assume that governments in modern states have the stability of
system as a primary objective. Aristotle’s “best life” as a general concept is still an objective of
individuals and collective entities. There may be a greater weight put today on the economic
content of good life than in ancient times, but happiness is a state of affairs sought by everyone.
The land –population ratio in Aristotle’s analysis corresponds to the capital- labor ratio of modern
economic theory. Capital contains a wide variety of produced commodities that increase in
quantity and productivity and therefore changes in population may not necessarily change the
capital-labor ratio. Thus, if the optimal ratio has been achieved it is not necessary to be changed
because of population changes as long as proportional changes can be brought to the quantity of
capital.

However, land can not be changed at will and it can not be substituted by capital beyond
narrow limits. Thus, land definitely a limiting factor. Obviously, the requirement of land and
population being in certain relation necessary for good life can not be maintained under conditions
of increasing population. Population increases will finally lead to overpopulation in the sense of
exceeding the proper size relative to land. The result would be too many people, poverty and social
instability. One may argue that description which follows from the Aristotelian analysis resembles
the situation the modern world faces.

Certainly, these points have been made before many times, e.g. by Malthus and more
recently by Ehrlich (1968), but Aristotle’s analysis is superior for two reasons. First, population is
a crucial variable in well defined model of the city. . Second, the size of population is connected
not to the maximum per citizen output but to the concept of “best life”, a goal that can be achieved
on the basis of economic as well as ethical considerations.

References

Aristotle, Politics, Loeb Classical Library, Harvard University Press, 2005.

Aristotle, Rhetoric,

Ehrlich, Paul, The Population Bomb, New York, Ballantine Books, 1968

Gordon, B. “Lending at Interest: some Jewish Greek and Christian approaches, 800 BC –
AD 100” History of Political Economy, 14:3, 1982, pp. 406-426.

Kreager, Ph. “Aristotle and Open Population Thinking”. Population and Development
Review 14(40): 599-629, Dec. 2008.

Lowry, S. Todd The Archaeology of Economic Ideas. The Classical Greek Tradition , Duke
University Press, Durham, 1987a.

Lowry, S. Todd “The Greek Heritage in Economic Thought” in Lowry, S. Todd (Ed.) Pre-
Classical Economic Thought, Kluwer Publ. Boston 1987b.

Malthus, T.R. An Essay on the Principle of Population, Everyman’s Library. 1973.

Perrotta, C. “Aristotle and the Modern Economy” The Journal of Economic Asymmetries,
vol. 8, No 1, pp.115-129, June 2011
 Spengler, J. and Allen, W. Essays in Economic Thought: Aristotle to Marshall. Rand
McNally, Chicago 1960.

Whittaker, E. Schools and Streams of Economic Thought, Rand McNally, Chicago 1960.

Xenophon, On Revenues.