Nearly every economist has at some point in the standard coursework been exposed to a brief explanation that the origin of the word “economy” can be traced back to the Greek word oikonomia, which in turn is composed of two words: oikos, which is usually translated as “household”; and nemein, which is best translated as “management and dispensation.” Thus, the cursory story usually goes, the term oikonomia referred to “household management” and while this was in some loose way linked to the idea of budgeting, it has little or no relevance to contemporary economics. This article introduces in more detail what the ancient Greek philosophers meant by “oikonomia.” It begins with a short history of the word. It then explores some of the key elements of oikonomia, while offering some comparisons and contrasts with modern economic thought. For example, both Ancient Greek oikonomia and contemporary economics study human behavior as a relationship between ends and means which have alternative uses. However, while both approaches hold that the rationality of any economic action is dependent on the frugal use of means, contemporary economics is largely neutral between ends, while in ancient economic theory, an action is considered economically rational only when taken towards a praiseworthy end. Moreover, the ancient philosophers had a distinct view of what constituted such an end—specifically, acting as a philosopher or as an active participant in the life of the city-state.
Martín de Azpilcueta: The Spanish Scholastic on Usury and Time-Preference
