Premodern and Mercantilist Economic Thought

Aristotle, in the Nicomachean Ethics and the Politics (4th century BCE), distinguished "oikonomia" (household management, which he regarded as a natural and legitimate activity) from "chrematistics" (the accumulation of wealth as an end in itself, which he viewed with suspicion). He held that exchange value arose from reciprocal need between parties and that money existed merely to facilitate exchange, not to be an end in itself. On this basis he condemned lending money at interest, or usury, as unnatural, reasoning that money was inherently "sterile" and should not be made to "breed" more money through interest. This argument became the philosophical foundation for the medieval Christian prohibition on usury.