Chrematistics are masquerading as economics

* Book: Wendell Berry. What Matters? Economics for a Renewed Commonwealth.

The following excerpt, which distinguishes chrematistics, the study of individual accumulation, from oikonomia, the study of collective provisioning, is from the foreword by Herman Daly:

“What do we economists have to learn from Wendell Berry? Many things, but here I will mention only two. First is a definitional correction regarding the basic nature of our subject matter—exactly what reality matters most to our economic life and why? Second, what mode of thinking does this reality require of us in order to understand it as well as possible, without seducing us into spurious substitutes for honest ignorance?

The definitional correction goes back to Aristotle and, while somewhat retained by the classical economists, seems to have been dropped from the current neoclassical canon. Aristotle distinguished “oikonomia” from “chrematistics.” Oikonomia is the science or art of efficiently producing, distributing, and maintaining concrete use values for the household and community over the long run. Chrematistics is the art of maximizing the accumulation by individuals of abstract exchange value in the form of money in the short run. Although our word “economics” is derived from oikonomia, its present meaning is much closer to chrematistics. The word chrematistics is currently relegated to unabridged dictionaries, but the reality to which it refers is everywhere present and is frequently and incorrectly called economics. Wendell Berry is, I believe, urging us to correct our definition of economics by restoring to it the meaning of oikonomia and freeing it from confusion with, and excessive devotion to, chrematistics. In replacing chrematistics by oikonomia we not only refocus on a different reality but also embrace the purposes served within that different reality—community, frugality, efficiency, and long-term stewardship of particular places.

Where today do we find chrematistics masquerading as economics? Certainly in the recent Wall Street fiasco—“selling a bet on a debt [as] an asset” as Wendell succinctly put it. It is amazing that people who have recently engaged in this disastrous stupidity on such a massive scale still have any credibility at all! Yet belief in “free markets” as the philosopher’s stone that alchemically transmutes the dross of chrematistics into the gold of oikonomia remains strong.

Other examples of chrematistics at work include monopoly pricing, tax evasion, subsidies, rent seeking, forced mobility of labor, cheap labor from union busting and illegal immigration, off-shoring, mergers, hostile takeovers, usury, and bullying litigation—not to mention the airlines’ successful shifting on to their customers the labor previously done by former travel agents, check-in clerks, and baggage handlers. Externalizing environmental costs—shifting the cost of depletion and pollution from the producer to the general public, the future, and other species—is probably the most common and most disastrous chrematistic maneuver. The unaccounted costs range from irksome noise, to mountaintop removal and filling up of valleys with toxic tailings, to a dead zone in the Gulf of Mexico, to global climate change and species extinction. Confusing oikonomia and chrematistics, misdefining the proper subject matter of economics, has deadly consequences. In the face of all this it is hard to remember that there are still some people doing useful work and creating wealth to really benefit the community. Chrematistics has not entirely displaced oikonomia, but it is trying to. In Wendell’s terms the little economy is trying to impose its puny logic on the mysteries and complexities of the Great Economy.”

2 Comments Chrematistics are masquerading as economics

  1. happyseaurchin

    i hope chrematistics enters my vocabulary

    chremat – “wealth”?
    never seen it before

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