THE CHREMATIST

Chrematism is simply the process of acquiring money using money.In Aristotle’s Politics, he distinguishes between two ways of acquisition: oikonomía and khrematistiké. We get our modern words ‘economy’ and ‘chrematism’ from them even though, rather confusingly, the way we use the word economy these days embraces both Aristotelian terms. A popular (and sufficiently though not completely accurate) way of understanding this is to think of oikonomía as a ‘normal’ way of making money, ie. by producing and exchanging goods. Khrematistiké on the other hand is the ‘abnormal’ way of making money, like speculation and lending money.

The best-known chrematistic practice is banks lending money and charging interest. For individuals, an excellent example is trading in the stock, futures, options or commodity markets. Realize that even putting your money in the bank to attract interest is chrematism in a low-level way. In contrast, earning money by trading your time or skill – having a normal job – is not chrematism. Instead it is oikonomia – the ‘normal’ way of acquiring goods to satisfy the needs of your household.

Aristotle was quite disparaging about chrematism so he would have been utterly dismayed at modern society. He believed that greed was at the root of chrematism, and one of the problems was its ‘unlimited’ manner of acquiring money. Nonetheless, after much thought I have come to the conclusion that money, contrary to pervasive beliefs in both directions, is neither good nor bad. Or it can be either. Money is simply a manifestation of our energy. It is our relationship with money that makes us judge money to be good or bad.

People who distrust money would agree with Balzac that “behind every great fortune is a great crime.” I’m more inclined to agree with Jonathan Swift who said that “A wise man should have money in his head, but not in his heart.” Only a fool doesn’t pay attention to money, yet only a fool falls in love with it. Understand the relationship of money to happiness – there isn’t one. Happy people have enough for everything they want. Unhappy people will never have enough for anything they want.

My favourite chrematistic practice is the buying and selling of exchange-traded options. I like it because it requires skill, knowledge, strategy, courage and not a little self-mastery – in short because I can have the kind of fun you would playing a game, like chess or basketball, Scrabble or rugby, mahjong or poker. Chrematistic practice is a game and should be treated as such. Like all games, you must concentrate on playing well, not on winning or losing. If you play well, the winning usually follows automatically.

In options trading, therefore, I pay attention to everything, including my capital at risk and my potential profit. But I focus on playing well, which is analysing the market thoroughly and correctly picking the direction of an equity’s next move. And by playing well, I tend to end up with more money than I started. Conversely, if I were to focus on ‘winning’ money, I would be distracted from playing well and consequently lose money.

This is a philosophy I share with Carlo Castellano, an options trader I admire and for whose tutelage and the guidance of his team at Traders Circle I am grateful.

Soon I will write some thoughts about whether it is possible for chrematistic practice in and off itself to create value in society. I think, like life in general, it is possible but you must want to. At the moment, I treat my chrematistic practice in a larger context – it allows me to support my dirty little composing habit. My chrematism frees me from having to write the music that serves the agenda of others. This way I am able to write the music that I hear, music that wants to be written down.

If anyone wants to share thoughts on options trading in particular or chrematistic practice in general, feel free to write me.

Lyle Chan Music
PO Box 870
Potts Point NSW 1335
Australia

+61-(0)430-787515

president@lylechanmusic.com