Aristotle defines money as “the substitute for need.” Currency enables us to acquire basic necessities, since it facilitates exchange between suppliers and those who need supplies.

For Aristotle, though, money signifies a more basic social need. The city depends on a division of labor among its citizens. No one has all the skills or time necessary to maintain himself and his household. A cobbler needs a skilled builder to build a house, and the builder needs the cobbler’s skills to put shoes on his children’s feet. Money weds the builder to the cobbler. Currency is more a social institution (“political” in the classic sense) than an economic one. It’s a medium of a social bond, an index of our need for one another.

Barter is also a sign of mutual need. The homeless cobbler might pay the builder in shoes. Money obviously makes the transaction more efficient. After all, what’s a builder to do with a house’s worth of shoes? But money isn’t preferable to barter simply because it’s efficient. Aristotle sees currency as an instrument of social justice, which ensures the transactions are equitable. Money is a middle term to translate shoes into houses: 1000 shoes = X drachmae = 1 house. Currency provides an agreed-upon standard to equalize the unequal.

Currency also directs private production toward the common good. In his shop, the cobbler expends his own energy, skill, and time to shape leather into shoes. He could stop after he makes enough shoes for his own household, but money gives him an incentive to put his skills to use on behalf of other households. As the medium of market exchange, money integrates the productive household (oikos) into the larger community (polis).  ….