Aristotle on Usury

The most hated sort, and with the greatest reason, is usury, which makes a gain out of money itself, and not from the natural object of it. For money was intended to be used in exchange, but not to increase at interest. And this term interest, which means the birth of money from money, is applied to the breeding of money because the offspring resembles the parent. Wherefore of an modes of getting wealth this is the most unnatural.

-Aristotle

4 Comments on “Aristotle on Usury

  1. This ignores time preference. Ie 100 crowns right now might be worth the same to me as 105 crowns in one year, because the 100 crowns allows me to make an investment which I could not make otherwise.

    Really, what is the alternative in a modern economy? How do you propose we create credit for the business sector?

  2. There was an interesting model in the 1920s in Wörgl,Austria:
    The “Free Money” experiment according to the economist Silvio Gsell. The money unit were monthly coupons,the value of the coupons was to expire after a certain time schedule on each coupon, and there was no interest rates at all.
    The Wörgl money was a great success in its region, but the corrupt usurped government of Austria made it illegal when it became obvious that the Wörgl system did work. Just google Wörgl money and Silvio Gsell.

  3. This quote is actually very weak and not glorious at all. Loans and interest serve a very important role in the market coordination. As in every voluntary exchange, they are subjectively profitable for both sides. Also, they allow capital to be allocated where it is most useful. Loans given to entrepreneurs enable them to start business even when they have no money. When you look at banks you may see only money giving birth to money, but underneath it there are complex market processes which allow civilization to thrive and this is really glorious.

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