Jon Goldman Athens and the Age of Perikles

11/22/11 James Capreedy

Debt, the economic order, and the monetary system of Ancient Greece & Athens: The early Bronze age through the time of Alexander: Was this ancient economic order a manifestation of a disciplinary paradigm? The modern conservative is engaged in one of man's oldest exercises in moral philosophy; that is, the search for a superior moral justification for selfishness. John Kenneth Galbraith The very concept of the economy in the modern sense is untranslatable in Greek, because it simply did not exist. M.M. Austin & P. Vidal-Naquet

Introduction:

The economic discipline, like all social or academic institutions, has its foundational legends and mythologies. There is the legendry of truly free-market economic orders, of social orders built on the back of the patriotic subsistence farmer, of monetary systems that endogenously arose from the people as an agreedupon way of simplifying daily life by creating a fungible, liquid trade commodity that could do away with barter systems, et al. Such mythologies are legion, manifesting separately in the particulars but nearly identically in the generalities, in every academic discipline. Such legends typically harken back to the earliest possible days of the timeframe relevant to the particular discipline. In economics, these days generally1 begin in the mists of the early Bronze Age, or about five and a half thousand years ago. The mainstream theorists of the economic discipline have not hesitated on many an occasion to use Ancient Greece as a founding example, even a paradigmatic aspiration, for the circumstances in which monetary systems endogenously, or autochthonously, arise.2 To a lesser extent this theorizing has also ascribed to Ancient Greece the worlds first capitalist (or nearly capitalist) economic orders. Is the economic discipline right on either count? Did the financial and production systems of Ancient Greece conform to modern models and terminologies

There is a rich amount of literature covering the (often theoretical) economics of the stone age and even earlier, but the lack of monetary systems renders the type of monetary-focused theorizing I will mostly engage in all but inapplicable. 2 (Homer S. , 2005) (P. 36)

by which we could understand their economics through a modern lens? Or does such ad-hoc theorizing fail in its objectives, and by doing so, fail to understand the inner workings of one of the ancient worlds richest cultures? This is the question that this essay will seek to answer. The lack of trustworthy primary-source knowledge. Primary-source knowledge regarding the Greek economy is rare, and often corrupted at that. It is certain that Greek civilization was very different from modern paradigms. Federal authorities had not yet arisen. From the Bronze until Phillip II and his sons3 victory at the battle of Chaeronea, Greece was fragmented, comprised of hundreds of small, independent poleis or "city-states." Thus the economic trade system that had been in place in between these poleis must have surely been quite complicated. Most of the surviving evidence for the ancient Greek economy comes from the literary works of Classical Athens, such as legal speeches, philosophical dialogues and treatises, historical narratives, and dramas and other poetic writings.4 Numerous speeches, such as those of Demosthenes, Lysias, Isokrates, survive. It is noteworthy that most of these speeches concern lawsuits. However, the surviving literature is but a remainder of what had once been a far greater whole. What survives is without exception what prior generations of historians had thought worthy of being preserved. Thus there is significant survivor bias that has
3

Alexander, not yet called the Great at age 18 was a commander of the Macedonian forces of this battle, and was instrumental to the victory which established Macedonian hegemony over the entire Greek peninsula save Sparta, which was by this time in a period of irreversible and systemic decline in nearly all of its social institutions. 4 (Engan, 2010) (P. 2)

led to an overwhelming amount of high literature, philosophy, and oratry at the expense of utilitarian writings, like accounting records and business ledgers (which would be ideal primary source material had such knowledge survived the passage of time). It must be mentioned that philosophical works, especially those of Xenophon, Plato, and Aristotle, provide modern readers with irreplaceable insight into how the ancient Greek aristocracy perceived and conducted economic matters. Greek social attitudes towards capitalist enterprise are known. Or are they? A significant downside to the surviving works of these philosophers is that they were without exception members of the landed elite or intimately associated with the elite, and thus their perspectives, their disdain for day-to-day economic activity,5 should not be taken to represent the views of all or even the majority of ancient Greeks, especially the Greeks whose livelihoods depending on capitalist enterprise.6 There are other sources who are probably more trustworthy. Thucydides especially takes great care to describe the financial resources of Athens during the Peloponnesian War, knowledge invaluable to modern theorists of warfare and economics. Furthermore, the surviving economic literature is insufficient to employ all but the most basic quantitative methods of modern economic analysis and has thus forced scholars to employ other more qualitative methods of investigation. This

5 6

(Engan, 2010) (P.2) (Engan, 2010) (P. 2)

essay will feature such statistical knowledge where possible, but regrettably, this is not a frequent occurrence. The great economic debate: The Ancient Greek economy has been the battlefield upon which economic theorists have warred for two centuries. This great debate began in the late nineteenth century, with the two sides attempting to resolve one core question; was the Greek Ancient economy "primitive" or "modern." These were, naturally, poor word choices, forcing theorists through language to conceptualize the ancient Greek economy in terminologies and contexts that are simply inapplicable. There is no modern analogue to the Greek poleis model, but that does not simultaneously mean that their financial or economic orders were primitive. Furthermore, the economic discipline is famously biased,7, 8 which becomes clear when the assumptions underlying the terminologies are analyzed. "Modern economy, was never carefully defined, but upon close reading was apparently assumed to be broadly capitalist, with market-determined pricing mechanisms.9, 10 One wonders how their interpretation harmoniously co-existed with State ownership of the Laurium silver mines and regular interference in market processes by the State.11, 12 Primitive economy apparently referred equally to the lack of sophisticated financial systems
7 8

(Galbraith, 2008) (The entire book.) (Klein, 2007) (Foreword.) 9 Market-determined referring to price being determined at the margin purely on the basis of supply and demand. 10 (Engan, 2010) (P. 8) 11 (Goldman, 2011) (P. 2) 12 Solon banned the export of grain products as a part of his economic reform program in 594 BC.

and state or public ownership of productive processes. The Modernists, seeing extensive trade and use of money in Greece from the fifth century B.C. onward, took these as being emblematic of the existence of a market economy. The Primitivists, reading into the surviving literature of Greek social and political values that disdained capitalist market economies, downplayed the significance of extensive trade and the use of money in the economy. Neither Primitivists nor Modernists were capable of conceptualizing the ancient Greek economy except when peering at it through the lens of free market economics, and discerning the Greeks strength in adhering to this model. Finally, neither side in the debate could understand an activity as being "economic" except if the activity was conducted with the objective of profits, a perspective crucially downplaying the economic significance of women, politics, and reciprocative cultural traditions.13 Historical methods were also a factor in the great debate. Classical historians who relied on philology and archaeology14 tended to side with Modernist interpretations, whereas other Classical historians, using the analytical social methods pioneered by Weber, advocated the Primitivist view. For example, Michael Rostovtzeff assembled a wealth of archaeological data to argue that the scale [size] of the ancient Greek economy in the Hellenistic period was so great that it could not be considered primitive.15 On the other hand, Johannes Hasebroek, drawing upon the surviving primary-source literature, used sociological methods developed by
13 14

(Waller, 2005)(P. 6) (Engan, 2010) (P. 7) 15 (Engan, 2010) (P. 5)

Max Weber to argue that the ancient Greek citizen was a homo politicus ("political man") and not a homo economicus ("economic man") - he disdained economic activities and subordinated them to traditional political interests.16 The great debate shifted with the work of Karl Polanyi, a heterodox Hungarian political economist of the nineteenth century who used socioanthropological methods to argue that economies could and should not be organized purely on the basis of a free-market order.17 He argued that where the power balance in between labor and capital shifted too far towards the latter, the former would be systematically deprived of economic opportunity, linearly leading to their political insurrection against capital.18 He argued that every time Ancient Greece favored capital at the expense of labor, class warfare then ensured.19 He concluded by arguing that when Greece was at the zenith of its economic prowess under Pericles, it had done so because it had struck an appropriate balance in between the two social classes.20 Polanyi created distinctions between what he called "substantivist" and "formalist" economic analysis.21 The former, proposed by Polanyi in his work The Great Transformation, argues that non-capitalist pre-industrial societies cannot be

16 17

(Engan, 2010) (P. 5) (Levitt, 2006) (P. 156) 18 The use of labor and capital terminology to denote the haves and the have -nots of Ancient Greece is only roughly accurate. The Marxian conceptualization of the terminologies is based upon capitalism, whereas my use of the terms is denoting a fundamentally feudal society. 19 The examples of this form of class conflict in our class readings are legion. 20 (Rotstein, 1970) (P. 120, 121) 21 (Croix, G.E.M. St. de, 1960) (P. 1)

understood on the basis of free markets. This vision of economics centers on social relationships, cultural values, moral concerns, politics, religion or the fear instilled by authoritarian leadership. Production in most peasant and tribal societies is for the producers, also called 'production for use' or subsistence production, as opposed to 'production for exchange' which has profit maximization as its chief aim. According to Polanyi, in modern capitalist economies the concepts of formalism and substantivism coincide, albeit with conflict, given the complicated nature of modern society that prominently features institutional and proletariat friction in tandem with a highly financialized economic order. However, in precapitalist, pre-industrial economies this assumption does not hold. The two do not mix, substantivism reigns. Unlike modern economies, according to Polanyi, ancient ones are not based on market exchange but rather are based on redistribution and reciprocity.22 Reciprocity is defined as the mutual exchange of goods or services as part of long-term relationships (note the proxenos system, and the system of king-on-king reciprocated gift-giving). Redistribution implies the existence of a strong political authority, such as the clan, landed oligarch, and monarch systems of the early Aegean Sea, such as Mycenae, which taxed the production of subsistence goods in kind and then redistributed the proceeds.23 In pre-capitalist societies reciprocity and redistribution generally occur together. Conversely, market exchange is seen as the dominant mode of integration in

22 23

(Levitt, 2006) (P. 16) (Sarah B. Pomroy, 2008) (P. 34)

modern capitalist societies, while reciprocity and redistribution counteract the volatility of capitalism in the form of welfare and other social-support/minimum standard of living programs. Formalist economic analysis, which Polanyi railed against, is closest to the modern neo-classical mainstream of economics, which is based upon the logic of rational action and decision-making, in the management of infinite wants against limited (scarce) means.24 This is typical of economic analysis today. Market economies operate independently of non-economic institutions and their most characteristic feature is that prices are set at the margin, by the forces of supply and demand among a group of interconnected, liquid markets. This understanding of Greek economics woefully misunderstood the nature of ancient Greek economics according to Polanyi.25 Polanyi believed that Greek history showed that it was possible to have a large, complex, economy without capitalism or a Marxist revolution, and therefore that the "Great Transformation" (the orientation of the world of Polanyis time around the conflicting free-market and Marxian paradigms) could be reversed to create a better world. Polanyi continuously reiterated how Athenian financial and economic prowess co-existed with just society under Pericles reign, noting that the Athenian economy [operated] on neither a territorial scale, nor with a general complexity even faintly comparable to that of the nineteenth-century West." And yet
24 25

(Engan, 2010) (P. 21) (Levitt, 2006) (P. 22)

this economic system granted opportunities to the masses to live decent livelihoods surpassed in the West only by the Roman Empire, and by no European regimes until well into relatively modern times. Polanyi concluded that ancient Greece did not have a fully developed economic system until the Hellenistic period.26, 27 Before that time, according to Polanyi, the market economy of ancient was "embedded" in other social and political institutions, having not yet reached a level of sophistication comprehensible to modern free-market theorists. Through his work, Polanyi redefined the terms by which debate of the ancient Greek was conducted, bringing the debate to a higher level of intellectual maturity. With that being said, freemarket theorists have never quite abandoned their presence in the great debate.28 These theorists are particularly vocal and have been thoroughly established in the Austrian school of economics, particularly under the leadership of Murray Rothbard.29 Though misinformation continues to be disseminated by these theorists, Polanyis influence now shadows over all involved. The Greek Economy: Attitude Bias? The ancient Greek word oikonomia is the root of our modern English word "economy." But, the two words are not synonymous. Whereas today "economy"

26 27

(Levitt, 2006) (P. 16) It is regrettable that Polanyi did not much distinguish between real economic processes and financial processes. 28 (Rothbard, 2006) 29 (Rothbard, 2006)

10

refers to a distinct sphere of human interactions involving the production, distribution, and consumption of goods and services, oikonomia meant "household management," a familial activity that was subsumed or "embedded" in traditional social and political institutions. That is the meaning that Xenophon had in mind when he wrote his Economics.30 It is in this respect that the Greek economy, especially in ancient times (though slightly less so in the ages including and after the ages of Pericles and Alexander) crucially differs from modern paradigms that orient around Adam Smith on the one hand and Karl Marx on the other. It is correct that the ancient Greeks produced and consumed goods, engaged in various forms of exchanges including long-distance trade, collected and disbursed taxes and credit, developed monetary systems employing coinage, may have had reasonably modern insurance institutions, had traders that would arbitrage the differing costs of goods whose costs varied depending on transport distance, had standardized systems of measures, but these traits shouldnt be interpreted as being emblematic of a prevailing capitalist economic or social order. Ancient Greek social values held in low esteem economic activities that were not subordinated to the traditional activities of managing the family farm and obtaining goods for necessary consumption.31 These frowned-upon activities, prominently including manufacturing, finance, trade, and other business that would be regarded as capitalist in modern times were then considered to be morally

30 31

(Xenophon) (Engan, 2010) (P. 14)

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corrupting and furthermore as being incompatible with active political participation (the mark of a good citizen). Capitalism was thus fundamentally at odds with the social ideal, that being a farmer tied to the land who was productive enough to have ample leisure time with which to take part in polis society and politics.32 Production and exchange were to be undertaken only for personal need, to help out friends, or to benefit the community as a whole. Surplus production going beyond the requirements for survival and maintenance of government was all but entirely oriented to conspicuous consumption; this is made clear from surviving loan records.33 Such activities were not to be undertaken simply to make a profit and certainly not to obtain capital for future investment and economic growth. This cultural disdain for capitalists, however, reflects an inherent bias that may not have been held by the majority of Greeks. Those who dominated the politics of elite of ancient Greek society were wealthy landowners, even in democratic poleis like Athens. Such men naturally had little interest in manufacturing, business, and trade.34 The perspectives of the Big Three philosophers on economics. Most of the surviving ancient Greek philosophers, Hesiod and Xenophon aside, were strongly in the political camp of the landed oligarchy.35 Socrates openly

32 33 34 35

(Sarah B. Pomroy, 2008) (P. 171) (Engan, 2010) (P. 9) (Rothbard, 2006)

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despised labor as being unhealthy and vulgar,36 placing himself firmly in line with aristocrats politically by quoting the king of Persia to the effect that by far the noblest arts are agriculture and war.37 Although he was the son of a stonemason, Socrates was an ultra-elitist38 who was executed a year after the restoration of democracy, largely on suspicion of Spartan and oligarchic sympathies. This inspired Plato, himself the son of a wealthy landowner, of the flaws of democracy, turning him to pro-wealthy political views that would now be regarded as ultra-right wing. A decade after the death of Socrates, Plato would set up his Academy not only as an institution for the education of the impressionable young in the fine arts and philosophies, but as a think tank advocating the imposition of social despotism. He himself tried three times unsuccessfully to set up despotic regimes in the city state of Syracuse, while no less than nine of Plato's students succeeded in establishing themselves as tyrants over Greek city-states.39 Murray Rothbard constructs a devastating critique of Plato on economics that, rather than roughly summarizing, is best repeated in the original.40 Plato's search for a hierarchical, collectivist utopia found its classic expression in his most famous and influential work, The Republic. There, and later in The Laws, Plato sets forth the outline of his ideal city-state: one in which right oligarchic rule is maintained by philosopherkings and their philosophic colleagues, thus
36 37

(Rothbard, 2006) (Rothbard, 2006) 38 (Rothbard, 2006) 39 (Rothbard, 2006) 40 (Rothbard, 2006)

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supposedly ensuring rule by the best and wisest in the community. Underneath the philosophers in the coercive hierarchy are the "guardians" the soldiers, whose role is to aggress against other cities and lands and to defend their polis from external aggression. Underneath them are to be the body of the people, the despised producers: laborers, peasants, and merchants who produce the material goods on which the lordly philosophers and guardians are to live. These three broad classes are supposed to reflect a shaky and pernicious leap if there ever was one the proper rule over the soul in each human being. To Plato, each human being is divided into three parts: "one that craves, one that fights, and one that thinks," and the proper hierarchy of rule within each soul is supposed to be reason first, fighting next, and finally, and the lowest, grubby desire. The two ruling classes the thinkers and the guardians that really count are, in Plato's ideal state, to be forced to live under pure communism. There is to be no private property whatsoever among the elite; all things are to be owned communally, including women and children. The elite are to be forced to live together and share common meals. Since money and private possessions, according to the aristocrat Plato, only corrupt virtue, they are to be denied to the upper classes. Marriage partners among the elite are to be selected strictly by the state, which is supposed to proceed according to the scientific breeding already known in animal husbandry. If any of the philosophers or guardians find themselves unhappy about this arrangement, they will have to learn that their personal happiness means nothing compared to the happiness of the polis as a whole a rather murky concept at best. In fact, those who are not
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seduced by Plato's theory of the essential reality of ideas will not believe that there is such a real living entity as a polis. Instead, the city-state or community consists only of living, choosing individuals. To keep the elite and the subject masses in line, Plato instructs the philosopherrulers to spread the "noble" lie that they themselves are descended from the gods whereas the other classes are of inferior heritage. Freedom of speech or of inquiry was, as one might expect, anathema to Plato. The arts are frowned on, and the life of the citizens was to be policed to suppress any dangerous thoughts or ideas that might come to the surface. Remarkably, in the very course of setting forth his classic apologia for totalitarianism, Plato contributed to genuine economic science by being the first to expound and analyze the importance of the division of labor in society. Since his social philosophy was founded on a necessary separation between classes, Plato went on to demonstrate that such specialization is grounded in basic human nature, in particular its diversity and inequality. Plato has Socrates say in The Republic that specialization arises because "we are not all alike; there are many diversities of natures among us which are adapted to different occupations."

Aristotle was less ultra-right wing than his two primary intellectual descendants, but given his enormous influence on the socioeconomic philosophies

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of the high and latter Middle Ages,41, 42 he was no doubt every bit as harmful, justifying centuries of social and political dominance by landowners not so unlike those of ancient Athens, men with similar attitudes towards democracy and strenuous employments.43 He, like his forbears, took a dim view to economic growth and thus favored a static society. These traits complement his opposition to moneymaking and the accumulation of wealth. His economics were that of poverty, advocating the virtue of scaling down one's desires to fit whatever means were available.44 By taking such a stance that could and had in the past provided comfortable livelihoods for the greater mass of the people, he was being neither leftwing nor politically neutral. He was a panderer, an apologist, to the landed with power to the detriment of those with neither wealth nor power. He wrote that no good citizens "should be permitted to exercise any low mechanical employment or traffic, as being ignoble and destructive to virtue."45 In summary, the economic statism of the big three betrays significant source and survivor biases. It cannot be a coincidence that the writings that survive to the present day are so heavily politically biased to the benefit of the wealthy and the powerful, when by and large, it was the wealthy and powerful who had through the centuries monopolization of the means to preserve these writings. Where are the writings and speeches of the populists who overcame the forces of oligarchy time
41

Philosophers of the time called themselves Aristotelian, suggesting more than mere influence, but outright dominance, of Aristotles philosophies over Christian Europe. 42 (Madden, 2005)(P. 83) 43 (Madden, 2005) (P. 24, 29) 44 (Rothbard, 2006) 45 (Bonn, 1853)(P. 249)

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and again? There can be little doubt that politically disfavorable (to the affluent) writings were allowed to fade into dust through the passing of the centuries. To conclude discussion of the big three, their writings were prolifically populated with the historically typical aristocratic exaltation of aristocrats, exaltation of the military, arts, and of agriculture. Nearly as prominently displayed were (also historically typical) contempt for labor, trade, and other base employments. They cannot be taken as being representative of Attican society as a whole, though they may well have been representative of the Athenian citizenry, which was by mandate populated only by relatively wealthy landowners. In fact, it has been estimated that of the roughly 400,000 citizens of Attica during the time of Pericles, only about 7%, or 30,000, had citizenship rights.46 The big three, and perhaps the citizen population as a whole, had a fundamentally pessimistic view of economic innovation and entrepreneurship. The entrepreneur, the dynamic innovator, is after all the locus of individual ego and creativity, and is therefore the harbinger of often disturbing social change, as well as economic growth. But the Greek and Socratic ethical ideal for the individual was not an unfolding and flowering of inner possibilities, but rather a public/political creature molded to conform to the demands of the polis. That kind of social ideal

46

(Rothbard, 2006)

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was designed to promote a frozen society of politically determined status, and certainly not a society of creative and dynamic individuals and innovators.47 Class conflicts over money, and by extension the means of production, are not new phenomena. This conflict drove much of Greek cultural history, especially in the Oligarchic period, directly antecedent to Solons reforms in Athens. Class conflict would continue in varying incarnations up until Cleisthenes tyranny purged most of the final remainders of the feudal oligarchy in 508 BC.48 Economic inequality was rooted in ancient social norms, reified in the Athenian constitutions. Prior to the Solonian reforms, the constitution was that of the heroic age As far as written history takes us back, we find the land already divided up and privately owned.the old gentile constitution, for its part, knew neither money nor advances of money nor debts in moneyAll the fields of Attica were thick with mortgage columns bearing inscriptions stating that the land on which they stood was mortgaged to such and such for so and so much. The fields not so marked had for the most part already been sold on account of unpaid mortgages or interest, and had passed into the ownership of the noble usurer; the peasant could count himself lucky if he was allowed to remain on the land as a tenant and live on one-sixth of the produce of his labor, while he paid five-sixths to his new master as rent. And that was not all. If the sale of the land did not
47 48

(Rothbard, 2006) (Engels, 1884)

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cover the debt, or if the debt had been contracted without any security, the debtor, in order to meet his creditor's claims, had to sell his children into slavery abroad. Children sold by their father such was the first fruit of father-right and monogamy! And if the blood-sucker was still not satisfied, he could sell the debtor himself as a slave. Thus the pleasant dawn of civilization began for the Athenian people.49 The lack of a central legal or rhetorical framework for dealing with economic issues, a dearth deriving from the absence of discussion of these issues in the original constitution, in effect meant that the feudal oligarchy had free reign to prey on the lower classes, devoid as they were of economic rights. While the political history of Athens up to Solons time is known only imperfectly, it is known that the office of basileus fell into disuse; the heads of the state were the archons elected from the nobility. The power of the nobility continuously increased, until about the year 600 B.C., when it became insupportable. By this time, ever-increasing economic injustices were resulting in sectarian conflict, otherwise known as class warfare. Many speculate, and some consider it probable, that civil war would have resulted if these economic vagaries had remained unaddressed. Solon was appointed primarily in order to ensure that this never came to pass; this is the reason all social classes supported his ascension to absolute powers over legislative functions.50

49 50

(Engels, 1884) (Millett, 1991)

19

The economic reforms dealt with in the Solonian Athenian constitution were, specifically: 51 (the following bullets are all sourced from Aristotle)

51

(Aristotle, 594 BC)

20

1) Part 5 exhorts the wealthy to never become too grasping, definitively calling for an end to the absolute oligarchic hegemony.

2) Part 6 liberated the people once and for all, by prohibiting all loans on the security of the debtor's person: and in addition he made laws by which he cancelled all debts, public and private. This measure is commonly called the Seisachtheia [removal of burdens], since thereby the people had their loads removed from them. This ended the enslavement of members of the lower classes for debt delinquency, a major source of tension between the social classes. This measure also restored citizenship to all persons who had previously been enslaved for financial reasons and mandated that the Athenian government search for former citizens who had been sold abroad by their oligarchic owners.

3) Part 10 fixed the standards of weights and measures, and of the currency. During his administration the measures were made larger than those of Pheidon, and the mina, which previously had a standard of seventy drachmas, was raised to the full hundred. The timing of this measure is hardly coincidental. In the Archaic period, Athens became less of a stereotypical polis and more of a fledgling commercial empire with extensive interests abroad. A system of weights and measures normalizing the rules of

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merchantry across the Aegean greatly benefited Athenian commercial interests.

4) Part 52 set a cap on annual interest rates for personal loans at 12.5%. It also reiterated that peoples bodies could not serve as loan collateral, i.e. people could not be enslaved for bad debts. They could, however, be held in debtors prison up until they repaid, assuming that the prisoner possessed relatively liquid assets.

5) Part 54 set a maximum cap on the amount of land that any individual could own, and in order to compromise and temper the mutual hostility between the nobility and the lower classes, it formalized timocratic elements into society, but ensured that decisive legislative power remained in the citizenry through the assembly. Specifically:

Solon divided the citizens into four classes according to their property in land and the amount of its yield: five hundred, three hundred and one hundred fifty medimni of grain (one medimnus equals about 1.16 bushels) were the minimum yields for the first three classes; those who owned less land or none at all were placed in the fourth class. All offices could be filled only from the three upper classes, and the highest offices only from the first. The fourth class only had the right to speak and vote in the assembly of the people; but it was in this
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assembly that all officers were elected, here they had to render their account, here all laws were made; and here the fourth class formed the majority. The privileges of the aristocracy were partially renewed in the form of privileges of wealth, but the people retained the decisive power. Further, the four classes formed the basis of a new military organization. The first two classes provided the cavalry; the third had to serve as heavy infantry; the fourth served either as light infantry without armor or in the fleet, for which they probably received wages.52

What exactly Solon mandated while in power remains obscure, as no primary source material survives. The above points are probably mere fragments of his legislations. He removed the mortgage pillars (horoi, a pillar of rock placed on a property by creditors showing that the estate was in a state of negative equity) from the land and "shook off the burdens" that vexed the people. It is here that the lack of source material becomes problematic. If land was inalienable, then what were these pillars doing on it, put in place by non-citizens? There would not seem much use in putting up a mortgage/for-sale sign if the debtor could not be physically dispossessed of his land. Finley suggests an answer; that before Solon, while the landowner could not be dispossessed he could be enslaved, and these pillars denoted not foreclosure on the land of the debtor but on his person; he became a

52

(Engels, 1884)

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debt slave and worked his own land for the benefit of his creditor.53 Debt slavery was the curse of the ancient world; again and again it crops up, always at a period of economic distress, never to be wholly eradicated.

Sectors of the Ancient Athenian Economy: Agriculture, Mining, Government, and Empire Agriculture: Arable land was the primary source and form of wealth in Ancient Greece, and more importantly, it was simultaneously the greatest source of social acceptability.54 Land was the preferred form of wealth by all social classes. It cannot be emphasized enough, however, that wealth wasnt the first objective achieved through land ownership. Rather, it was prestige. Wealth was secondary. The surviving ancient literature is replete with references to the sharp contrasts between the city and the countryside, starting for example with biases built into the ancient language itself. Artifacts of these biases survive to the present day. We still speak of the proverbial gentleman farmer, but never of gentleman merchants, manufacturers, or entrepreneurs. While today this descriptor is a mere fossil of a Jeffersonian ideal, because now farming is too a full part of the capitalist order, for most of agricultural history the distinction was fundamental. Anyone
53 54

(Finley, 1999)

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who confuses the gentlemanliness of agriculture with a disinterest in profits and wealth closes the door to an understanding of much of the past.55 An enduring theme in the ancient Greek economy is the persistent maintenance of the monopoly over landownership by citizens, thereby restricting social prestige and economic affluence to a more or less fixed stock of citizenry. In ancient poleis in general, especially including those of the Aegean Sea and Rome itself, land was basically free from taxation. Any form of direct land tax was so considered to be the mark of redolent tyranny. These taxes (eisphora), only implemented in times of national crisis, were never allowed to ossify into permanence.56, 57 It is fairly certain that land ownership in early and primitive times in Ancient Greece was inalienable; land belonged not to an individual but to a family, and the owner was a life tenant who enjoyed only the usufruct during his lifetime.58 Land in early Greece was not a liquid asset; land belonging to a family must never be lost, and the family must never die out. If there was no male heir to the household, adoption was the rule.59 A significant example serving to prove the lack of economic comprehension by the ancients is their utter ignorance of economies of scale. For example, in one of
55 56

(Finley, 1999) (P. 58) Contrast this with the United States, and its maintenance of the individual income tax even after the Civil War came to an end. 57 (Finley, 1999) (P. 95) 58 (Xenophon) 59 (Mitchell, 1953)

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his letters to Calvisius Rufus,60 Pliny the Elder discusses an opportunity that has come before him, to buy a farm estate that is contiguous to his at bargain prices due to mismanagement by the owners. In discussing the merits of this proposal, he primarily mentions an oligarchic motivation the beauty of seeing such an estate under his ownership. 61 Pliny secondarily mentions other largely psychological motivations both estates could be managed by one of Plinys agents and visited in one journey. Pliny then asked Rufus for advice, including no information regarding the topics that we would expect to see in the modern era. How logistically suitable were the two estates for a full merger into one greater whole? Was infrastructure in place that would easily allow for this, and would doing so lead to cost savings? Pliny mentions nothing of economies of scale, nothing that could be interpreted as a potential cost saving through estate combination. Nothing is mentioned of more efficient divisions of labor or other cost efficiencies. Pliny doesnt even consider to merge the workforces of the two estates even though they are right next to eachother, and pierce each-others otherwise straight borders in places. Management and control over labor is a pervasive theme through the surviving writings concerning estate management. Considering that most ancient estates were owned by absentee landlords who constituted the bulk of societys wealth, and that writing itself was more or less limited to those of the landowning classes or those servile to them, it would indeed make sense that there would be an

60 61

To love beauty.

26

abundance of surviving material concerning the topic. However, the surviving writings do not concern themselves with methods for improving the efficiency or output of a managed estate. Nothing is discussed of labor-saving devices or technological innovations. Economies of scale are never alluded to. The writings do, however, place great emphasis on management of the labor force, generally consisting of sharecroppers and slaves. Xenophon, for instance, discusses at length how one maintains the work ethic and honesty of a labor force that at best only shares marginally in the fruits of his labor. His writings were told from the perspective of a policeman, of a feudal tyrant, rather than an entrepreneur.62 According to Ernest Feder, who carried out extensive surveying of modern-day lutifundia of Latin America, absentee landlordism is a guarantee that customary methods of farming are strictly observed, though they may be antiquated.63 The social structures that give rise to an entrepreneurship society were not significantly present in the ancient world, and especially so in and around the estates of the absentee landlord oligarchy. In ancient Greece the manifestations of this agrarian problem are often obscure and in many cases baffle our clear understanding. But, setting aside many little points over which the scholars disagree, the over-all picture which does emerge is unequivocal. In the epics of Homer we see the brilliant MycenaeanMinoan epoch in its last stage. There is still a rude abundance in the land; there is

62 63

(Xenophon) (Section 1, paragraphs 18-20) (Feder, 1987) (P. 83-97, at P. 88)

27

plenty to eat and drink; the feasting in the halls of the kings and nobles is prodigious. We hear, it is true, of poor men and beggars, but poverty is not a serious menace and there is no land problem. And then the curtain falls and for three centuries we know nothing of the history of Greece. It rises with the Works and Days of Hesiod, and on a very different scene. Times are bad; poverty is everywhere; the judges are corrupt, and the great landowners are squeezing out the little men. What has happened? There seems no other explanation than the impoverishment of Greece. This impoverishment of the small landholder was corrected in various ways in Greece, partially if not wholly. The preferred way, and the most effective, was the murder of the creditors. Solon - That his solution of the agrarian problem was not decisive is plain, for we find that not long after the "tyrant" Peisistratus was able to impose himself on the people by the popular expedient of murdering the nobles and dividing their land among the poor. It was a matter of arrangement between debtor and creditor what form the agreement took. The debtor might remain in possession of the property, paying interest on the loan (usually 12%) subject to the right of the mortgagee to foreclose in case of default. Another method was "sale on condition of release" (prasis epi lysei) when apparently the revenues from the land went straight to the buyer but the seller retained an equity of redemption.64 Evidently these transactions were what modern lawyers term "conditional sales." Chattel mortgages were also common. We hear of loans on a stock of copper, of silver from a mine near Athens,
64

(Finley, 1999) (P. 41)

28

on a number of slaves, and on a valuable horse. The last involved the parties in a lawsuit, as the horse died. Bankers in Athens seldom, if ever, lent upon the security of real estate, because in the majority of cases they were not Athenian citizens; they were foreign residents in the city (metics) and by Athenian law were debarred from owning land and so would have no good title to the property on foreclosure. The cases argued in the courts which had to do with ownership of land and debts more than any other grant insight into the ancient economy. Significantly, it becomes clear that problems related to the ownership of land were never solved. Again and again, in seemingly inevitable form, the encroachment of the capitalist upon the small farmer and of the dispossession of the small holder by the large is the rule. This remains true today. The small farmer is inefficient; he has no capital, or not enough to allow him to improve his methods. The vagaries of nature, some prolonged disaster, droughts that produce "dust-bowl" conditions, will force him into debt, ruin him, deprive him of his land if he cannot hold on. The creditor forecloses, he can do nothing else; and with capital he can do what the small holder cannot, he can wait and eventually bring the land back. This reminds us of a particularly scandalous episode in the life of Alcibiades. He had received with his wife the record dowry of ten talents, an enormous sum, and this he had spent on riotous living and horse-racing. At last she petitioned for divorce and Alcibiades with a gang of rowdies broke into the court where the case was being heard and carried the lady

29

off bodily. He had no objection to losing his wife, but to repay her dowry would have ruined him.65 Why was the agrarian question so acute in the seventh century B,C. in Attica? Finley asserts that the problem arose due to the shift from subsistence farming (grains) for which Attica was not well suited, to production for export of such products as the land was more capable of raising, such olive oil, figs, and wine.66 A plantation of olive trees matures slowly and demands capital to plant and maintain. The small farmer lacked the capital for this, and thus hopelessly involved himself in debt in attempting to maintain his lifestyle (no records have been found involving a farmer taking on debt to aid in his economic transition from subsistence to export). The reforms of Solon, followed by the more drastic methods of Peisistratus, seem to have settled the difficulty. It is remarkable that no mortgage stones (horoi) have been found antedating the closing years of the fifth century BC.67 Apparently the problem of indebtedness on land was not a pressing one from the time of Peisistratus (middle of sixth century B.C.) to the close of the Peloponnesian War in 404, a period of 150 years. Immediately afterwards it undoubtedly became acute. Why was this? Athens had been enjoying a time of extraordinary prosperity. Greece had routed the Persian invasion; Athens was head of the Delian League and the tribute of her allies was pouring into the treasury. The mines of Laurium, "that running fountain of pure silver," as Aeschylus called them, were enriching the land.
65 66

(Thucydides, fifth century BC) (Finley, 1999) 67 (Finley, 1999)

30

Unemployment had been brought under control through the creation of an extensive military/support infrastructure. Finley makes out a very strong case for attributing the re-emergence of the agrarian problem in Athens after the war to the damage it sustained during it. The Spartans invaded Attica and laid its land waste to waste on an annual basis for a generation. The Athenians never dared to meet the Spartan army in a decisive battle on land; Pericles himself judged that to do so would have been to invite certain defeat.68 Thus the Athenians withdrew behind the "long walls" and the Piraeus of Athens and left their to their foes to their depredation of the Attican countryside. At first the Spartans only destroyed the standing fields of grain, and that did no irreparable damage; they could be replanted every season. As the war went on and bitterness mounted on both sides, however, Thucydides says that the Spartans resorted to cutting down the fig and olive groves, an act considered unholy.69 It was around this period that horoi stones begin to re-appear.70 The connection between economic distress and debt and default is clear. Mining: Discovery of the silver-lead deposits of Laurium, which were generally within 75 kilometers southeast of Athens itself, probably dates back some three thousand

68 69

(Thucydides, fifth century BC) (The Funeral Oration) (Thucydides, fifth century BC) 70 (Finley, 1999)

31

years.71 The early Greeks found that the heavy dark crystals72 contained within the white marble of the area yielded a bright metal alloy when heated. With further refinement of this ore extract, a final very bright metal, silver, was obtained. The leftover consisted of low-purity lead and zinc, which were dumped into massive tailings pits and the neighboring sea. These mines, although they had limited gold mineralization, were not significant sources of the yellow metal. The silver resources of these mines in large part financed the rise to power of classical Athens.73 After the mysterious yet nearly absolute destruction of the Minoan civilization in 1600 B.C., the decline of Mycenaean culture around 1200 B.C., and the Dark Ages, the focus of silver production changed. Up until that point silver production in the Aegean had been under the purview of these powers. 74 With their passing, the mines of Laurium became the leading Aegean production center for the white metal and provided a source of economic power to the growing Greek civilizations, Athens in particular. Until the exploitation of Macedonian resources in the time of Philip II and his son Alexander, there were no other significant sources of silver in the Greek world aside from that obtained via foreign trade. 75 Thus Athens held a highly lucrative monopoly for many centuries.

71 72

Invalid source specified. Galena crystals, heavy dark cubic crystals that are a primary source of lead. These crystals are also high in silver and zinc content. 73 Invalid source specified. (P. 69) 74 (Sarah B. Pomroy, 2008) (P. 32, 43) 75 (Murray, 1978) (P. 25)

32

According to Sidney Homer,76 the economic power of Athens was originally founded on silver. The poleis struck one of the first coinages in the world (the Athenian drachma) roughly around 580 BC. The Laurium mines were highly productive; estimates from historical writings and physical evidence from old mine dumps indicate silver production to have been about 1 million troy ounces per year during the height of production (600 B.C. to 300 B.C.). In the twelve years from 338326, the mines provided the Athenian government with a yearly income of 200 talents.77 In fact, for about 1,000 years ending around the 1st century A.D., the Laurium mines were the largest individual source of world silver production in the world, if the physical evidence is to be trusted.78 The mines were one of the largest sources of revenues that the Athenian government ever possessed, and were the largest source prior to the tribute system of the Delian league. The Athenian currency, the de-facto standard of international trade throughout the Greek peninsula, granted the Athenian government the ability to monetize its silver and to wield significant economic power, as an exchange rate system was in place that provided advantageous seigniorage revenues to the State.79 To ensure the demand for its silver, The Athenian government took great care to maintain the image and reputation for quality of its coinage for high quality. Official devaluation of the Owl was extremely rare, practiced only under Solon and at the tail end of the Peloponnesian War, after the mines were temporarily lost to Athenian control.
76 77

(Homer S. , 2005) (P. 52) (Engan, 2010) 78 Invalid source specified. (P. 4) 79 (Mitchell, 1953)

33

Coinage of the Owl was practiced, albeit interruptedly, for many centuries.80, 81 Athens loss in the Peloponnesian War was not a significant factor in the economic history or the social acceptability of the Owl. The face of the coinage has remained more or less constant since the seventh century BC up to the present day. After the battle of Marathon, Themistocles persuaded the Athenians to devote the anticipated revenue derived from a major silver vein strike in the mines of Laurion circa 483 BC to expanding the Athenian fleet to 200 triremes, and thus laid the foundation of the Athenian naval power.82 The mines, which were the property of the State, were highly environmentally damaging, and were worked by a population of roughly 20,000 barbarian slaves, primarily Thracians, among whom the annual death toll was, according to Lawrence, roughly 25%.83 The mines continued to be worked for centuries, though they were never again so lucrative as they had been in the Classical period. French conglomerates continue to mine the Laurion district to the present day. 84 Trade and Empire: It is little wonder that international trade became an integral part of the ancient economy. Overland transportation costs of ancient Greece were certainly, by modern standards, onerous. The transport figures in Diocletians edict of maximum

80 81

(Sarah B. Pomroy, 2008) (P. 64) Invalid source specified. (P. 6) 82 (Sarah B. Pomroy, 2008) (P. 216) 83 Invalid source specified. (P. 2) 84 Invalid source specified.

34

prices implied that a 1,200 pound wagonload of wheat would double in price every 300 miles, meaning that barring loss risk that the purchase price of the equivalent cart of wheat, transported from the Black Sea to the Pillars of Gibraltar, would cost less than a wagonload transported 75 miles by land. And this was in the age of the famed Roman roads, in geographically mild land. In Ancient Greece, before the advent of a unified road network in a country far more characterized by rough terrain, overland transportation costs would have surely been even more onerous.85 For a specific example of how limited the viability of overland transportation of bulk goods in the ancient world was, note the famine of Antioch in 362-363 AD. Antioch was only fifty miles away from a core Roman road, and yet the city still starved despite the direct intervention of Emperor Julian. There can be little doubt that overland transport in Ancient Greece, which was much more geographically variable and lacked unified government or transportation systems, would have been even less viable.86 This data makes it clear that access to the sea was a necessary prerequisite for a poleis to have any hope of becoming a commercial center. For Athens, it was the great harbor, the Piraeus, which served to replace the sand-beach of Phalerum after Themistocles shipbuilding program required a greater port. Water transport was the core of the ancient international economy, and became the core of the domestic economy of nearly all of the greater powers of the
85 86

(Finley, 1999) (Finley, 1999)

35

Classical and Hellenistic ages, Sparta aside. Water transport permitted for the economic bulk transport of commodity goods such as food, in turn allowing communities to grow beyond the constraints imposed by local geography. Water transport opened up international trade markets in culture and luxury goods, contributing to the intellectual flowering of the ancient world. Water transport also increased the degree of the division of labor, geographically and socially, no doubt leading to greater productive efficiency. At the height of Periclean Athens, tributes derived from the Delian League accounted for roughly sixty percent of the public (government) income.87 When the city had reached the height of its power at the helm of the Delian League, it was highly import dependent. The city imported perhaps two thirds of its wheat, all of the iron and other base metals that it required, all of the timber, and most of its slaves (other than those bred domestically). Most luxury goods, and all ivory and precious gems, required importation. The same for an immense range of other baser commodities, like papyrus for writing, flax for clothing, and most leathers. Athens was self-sufficient only in honey, olive oil, ordinary wine, silver, building stone (including marble), potting clay, pottery, and fuel. Athens was probably nearly self sufficient in wool, fish, and meat. The city made it a capital offense to export homegrown grains, despite the citys control over the Aegean sea and therefore control over the importation of the massive wheat markets of the Black Sea and the Levant. There is no evidence that this policy was a part of a broader protectionist economic
87

(Thucydides, fifth century BC) (2.13.3)

36

policy; indeed, the ubiquitous presence of Owls in sites throughout the Mediterranean suggests by accounting tautology that Athens was in a state of (presumably large) trade deficit for many years, or else other poleis would have never been able to net acquire large sums of Athenian currency. Athens exported immense quantities of olive oil as a cash crop, but olive oil was not Athens largest export commodity.88 That title belongs to silver derived from the Laurium mines. According to Xenophon, Athens had a highly advantageous position in international trade because the citys silver, which funded massive acquisition of imports (trade deficits) and furthermore provided importing merchants who didnt wish to take on a return cargo with the option of filling their hold with silver instead.89 Another significant source of Athenian revenues were metics, or foreigners who chose to live in Athens. Metics came to Athens because of Athens relatively lax policies on their presence, and because of Athens evolution into an international trade center and clearing-house by the end of the sixth century. Athens also became a popular tourist destination not long thereafter. The Piraeus was almost certainly the most frequented port in the Aegean Sea the constant coming and going of so many people and goods surely constituted a large, though immeasurable for lack of statistics, part of the Athenian foreign trade balance. Regarding manufactured exports,
88 89

(Finley, 1999) (P. 134) (Croix, G.E.M. St. de, 1960)

37

The rise of international trade contributed significantly to the rise of the division of labor. Xenophon himself obliquely notes this, explaining that the superiority of the meals served at Persian court is to be expected given the size of the kitchen staff.90 Just as the various trades are the most highly developed in large cities, in the same way the food at the palace is prepared in a far superior manner. In small towns the same man makes couches, doors, ploughs, and tables, and often he even builds houses, and still he is thankful if only he can find enough work to support himself. And it is impossible for a man of many trades to do all of them well. In large cities, however, because many make demands on each trade, one alone is enough to support a man, and often less than one; for instance, one man makes shoes for men, another for women, there are places even where one man earns a living just by mending shoes, another by cutting them out, another just by sewing the uppers together, while there is another who performs none of these operations but assembles the parts. Of necessity he who pursues a very specialized task will do it best. Implicit in Xenophons analysis is his analysis of supply and demand. Demand is proportional to the population, and without enough persons supplying demand, capacity will be strained. The ability of supply to meet demand is made more efficiency by specialization into the different aspects of manufacture. This analysis of Xenophon is further reinforced through the following excerpt regarding silver mining.

90

Cyropaedia 8.2.5)

38

Of all the activities I know, silver mining is the only one in which expansion arouses no envy. ..if there are more coppersmiths, for example, copperwork becomes cheap and the coppersmiths retire. The same is true in the iron tradebut an increase in the amount of the silver orebrings more people into this industry. Considerable primary source material regarding ancient Athenian finance and banking survives. Given the frequent antipathy to worldly affairs expressed by the greater philosophers, this is surprising.. The ancient economy and financial system cannot be understood if one takes a uniformitarian or universalist approach to socioeconomic analysis. Doing so would necessary lead to trying to contextualize the ancient economy, trying to fit it among the competing modern economic paradigms of Marxism and Captialism. The ancient economy was different to its core it was its own paradigm. To attempt to analyze the ancient economy invites gross and sometimes grotesque distortion: assumption as to interest rates that ignore the very different Athenian conceptualization of yield on principal It has become fashionable to warn readers against the excessively bourgeois nature of Athenian literary sources, which were written by a privileged elite for a privileged elite, and thus often dealt with unrepresentative concerns. Modern classical literature sees Athenian banking as being a marginal activity primarily engaged in by those on the margins of society, such as metics and slaves. This view cannot harmoniously co-exist with the survival of substantial primary source material regarding the ancient financial system. The mere continued existence of
39

these sources suggests a significant impact of the financial system on the Athenian elite. Most modern understanding of Athenian financing comes from five surviving courtroom speeches prepared by Demosthenes for his clients.91 This section of this essay deals with the significant role of the financial system in Athens, primarily focusing on the Classical period while touching on both the Archaic and the Hellenistic. Thus the very premise of this line of research would be regarded as false by the primitivist scholars, and yet will at the same time fall afoul of the research of the modernists, who ascribed to Athens an economic system that significantly resembled modern capitalist paradigms in everything but scale. The fourth century of Athens witnessed two significant innovations; the transition to an economy governed by monetary acquisition rather than traditional social motivations, and the development of the worlds first private businesses, trapezai (banks), which accepted from the populace depositor funds which could then be deployed as the managers saw fit. Thus one of if not the worlds first corporate innovations was fractional reserve banking. However, credit for purposes of investment (business expansion) was noteworthy only in its utter absence. There are no surviving records of even a single clear instance of credit being granted for purposes of investment (as defined by the expansion of fixed capital or equipment).92 Many records survive of credit granted for real estate,

91 92

(Casson, 1984) (P. 23) (Hopper, 1979) (P. 11-12)

40

commercial banking, and merchant financing, but nothing for what is now regarded as investment in anything but the financial-speculative sense. In prehistoric times, before the existence of standardized media of exchange, and even before the existence of physical money, credit existed. In fact the historical record of debt antecedes the record of the first coinage denominations by at least two millennia.93 There are many ethnological instances of credit repaid in kind in communities where no trace has been discovered of any form of media of exchange or store of value. Credit therefore existed from the very earliest phases of social activity, even before the evolution of barter systems.94 Consider credit in its simplest forms. Primitive credit would have probably been a loan of seed to a brother, son, or other close companion, the expectation being repayment in kind at harvest time. Credit would just as well have consisted of a loan of an animal, of food, or of useful tools. These basic forms of credit were generally informally negotiated, and oftentimes probably didnt carry an expectation of repayment beyond the refurbishment of an equal amount of seed or the return of the tool or animal in equal condition. Thus these were loans at zero percent interest, though just like the gifts between chieftains, these loans no doubt carried a connotation of expected reciprocity, binding inter and extra-community trade and thus domestic and foreign relations.95

93 94

(Homer, 2005) (Homer, 2005) 95 (Millett, 1991)

41

The Bronze age civilizations of the Aegean Sea, which rose and fell between 2400 and 1200 BC, reached levels of cultural and economic activity that were unmatched for centuries after the cataclysm that ended the age of the Myceneans. Despite their affluence, relatively little information regarding the forms and rates of credit of these civilizations have survived to the modern day.96 Cattle were the first standard of value; indeed, the word capital itself comes from the word pecus, or flock, in latin.97 Early Greeks actually valued their precious metals in terms of cattle, as noted in The Odyssey when one of Penelopes suitors, begging, promised Ulysses a contribution of bronze and gold to the value of twenty oxen.98 Where repayment of credit at interest was expected, typical rates between private parties seemed to average at 20-50% per annum, which naturally led to the prevalence of loan sharks, generally members of the oligarchy, who would use credit as a tool of social domination.99, 100 Homeric trade was often done by barter, with the pecuniary value of metals (which, again, were priced in terms of cattle) being determined by volume, as there were no standardized facilities for measuring weight, not to mention poor assurance of the volumetric similarity of one coin to another.101 This inefficiency,

96 97

(Sarah B. Pomroy, 2008) (Murray, 1978) 98 (Homer, 527 BC) 99 This practice would in time direly stratify Athenian society, leading to Solons appointment and subsequent economic reforms, which among other legislative economic decrees abolished most private debts and capped the annual rate of interest.
100 101

(Engels, 1884) Volumetric measurement of coinage would in this context naturally lead to fraud via debasement of coinage. Hence King Hieron IIs commissioning of Archimedes in 250 B.C., leading to the discovery of specific gravity; an innovation that would have surely been of great utility to Athenian financiers of preHellenistic times had it then been known.

42

especially in regards to converting the coinage of one poleis to that of another, is why the rates charged for money-clearing averaged at 5% of the total transaction, rather than the much smaller rates known today (because of the lack of international quality standards, judging the weight and purity equivalence of different currencies was a very time-intensive process).102 Money-clearing from one currency to another was the primary source of revenues for Athenian bankers. Ancient Greek coinage: This explains the definitions for the measures of the various units of Athenian currency, for example a talent being defined as the amount of gold or silver required to fill an amphorae, roughly 39 liters in modern terms. Homerian money, in terms of sophistication, pales before the financial prowess of Minoan Crete, where the qualities of metallic currency had been closely regulated by the state.103 The official coinage of money in the Aegean is assumed by most scholars to have begun in Lydia in the seventh century BC, although some credit the Ionians or even earlier peoples. Coins were originally brought into being as a system for the payment of taxes and other public debts coins wouldnt intrude on private trade to a meaningful extent until after Solons reforms, as these first coins, composed of electrum, were generally equivalent in their lowest denomination to the value of ten oxen, or well beyond the point of convenience for most private parties in everyday transactions.
102 103

(Casson, 1984) (P. 30) (Murray, 1978)

43

The Ancient Financial System:

The importance of private banks (called trapezai) in the Athenian economy is only beginning to be recognized. Many historians have dismissed the trapezai as little more than pawnbrokers or coin-changers; but a closer examination of the evidence, thanks mainly to the research efforts of Cohen, reveals that banks were crucial to the city's ability to function as a center of international trade.104 Hundreds of ship cargoes were required annually to satisfy Attica's enormous need for food and other items. Virtually all of these cargoes were dependent on loans. Financiers also preferred to spread their risk; no records survive of a financier investing more than 7,000 drachma in a single enterprise (4,000 was typical) whereas a single ships cargo could easily be worth over 40,000).105 Such a system of financing provided creditors with an opportunity to absorb over many transactions the risk of a total loss from the sinking of a single ship.

The bankers also expedited commerce through the use of demand deposits. By guaranteeing payments of funds at far-off locations using signed documents, the banks allowed customers to avoid the dangers and inconvenience inherent in transporting a large amount of coins or bullion.106 Thus when Stratokles needed funds available at the distant Black Sea, to which he was about to journey, he was

104 105

(Cohen, 1997) (Casson, 1984) (P. 25) 106 (Cohen, 1997)

44

able to leave his own money on loan in Athens and carry instead a bank guarantee of payment of principal and interest on 300 Cyzicene staters.107

The trapezai were unincorporated businesses operated by individual proprietors or partners, almost entirely free of governmental regulation; modern banks are almost always corporate institutions, invariably governed by official regulation. ... At Athens, banking "powers" and business arrangements were determined without state interference -- by economic, not legal, constraints. Governmental "charters" permitting specified activities, or limiting competition, were nonexistent. ... In sharp contrast to virtually all modern systems ... loans from the trapezaiwere explicitly independent of parochial legal governance. Indeed, concerning contractual provisions, Athenian law seems to have mandated the primacy of "whatever arrangements either party willingly agreed on with the other." ... In contractual contexts there is frequent reference to Athenian law mandating absolute government noninvolvement in the conditions and terms of nongovernmental dealings .... Financial arrangements were subject to no control other than that of market conditions. ... Athenian bankers were free to vary the conduct of their operations .... No activity was governmentally proscribed, no activity was governmentally mandated. ... [T]he absence of governmental restriction or economic monopoly ... resulted in wide variance in the terms on which, and the

107

(Cohen, 1997)

45

mechanisms through which, bankers sought funds.

Greek Financial and Economic Reform:

By the seventh century BC, Greek trade had evolved beyond the point of interest-free reciprocated credit due to the maturation of poleis economics, which was in turn due to progress in the viability of inter-poleis trade. Low to no-interest reciprocated credit transactions were generally limited to family units and other personal networks, which could not be sustained in the realm of commoditized international trade.108 The maturation of foreign trade was reflected in the increasing financial sophistication of Greek traders by this point in time, in turn reflected in the form of extensive borrowing-at-interest and the rise of an insurance industry. Financial speculation as the term is in modern times recognized was born. In next to no time the commercial genius of the Greek rises to the notion of speculationcapital accumulation is only an investment with an eye to accumulating more.109 The poets of the day bitterly complained about the domination of new capitalist manners over the traditional Heroic-age ideals. The power of the old kings, based on soil, cattle, and descent from the gods was eroded, replaced by a rapidly growing feudal and commercial oligarchy whose skill at capital accumulation was not yet significantly regulated by the government.110 The stage

108 109

(Engels, 1884) (Homer S. , 2005) 110 (Engels, 1884)

46

was set for class conflicts between the economic classes, which would continue in varying incarnations up until Cleisthenes tyranny purged most of the final remainders of the feudal oligarchy in 508 BC.111 By the beginning of the sixth century BC, the rural homestead farmer had long since given way to the tenant farmer, a highly indebted social class whose person and entire family could be enslaved and sold as mortgage collateral. Tenant farmers were by the time of Solons appointment in 594 BC in such a state of economic distress that they were threatening open rebellion. Redistribution of wealth of some form or another had to occur. The favorite method of achieving this in later times, and the most effective in retrospect as proven by Peisistrasos administration, was the murder of the creditors.112 However, in Attica at least, these class conflicts were relatively peacefully settled by the legislations of the lawgiver Solon, who was born in about 638 B.C and enacted his famous laws in 594 B.C. It has been suggested that before Solon, while the landowner could not be dispossessed legally, he and his family could still be enslaved, albeit as sharecroppers on their own land.113 This meant that the remaining tenant farmers had to compete with slave labor.114 Laws that had been in place before Solon forbade the foreclosure on the land of the debtor, but permitted it on his person; he and his could and often did become debt slaves and who worked

111 112

(Engels, 1884) (Murray, 1978) 113 (Mitchell, 1953) 114 (Homer S. , 2005)

47

their own land for the benefit of oligarchs, who seized from their sharecroppers up to 5/6 of all produce production.115 Despite the influx of goods from recent colonizations, private sector debt burdens among the lower classes caused such states of generalized economic distress that the situation, the prevailing overly stratified social order, had become insupportable. Judging from the list of Solons economic reforms, and their by-and-large acceptance, it is likely that Athens was in a state of dire economic crisis during the period directly antecedent to Solons reforms.116 By 508 BC, after the reforms of Peisistrasos and Cleisthenes, Athens long history with economic class struggle had finally for the most part abated, with the economic purge of much of the feudal nobility and the murder of most of the rest.117 After 508 BC, Athens so rapidly outdistanced the other Greek city states economically and financially that from thence on the history of Greek trade and finance is for the most part, but not entirely, a history of Athenian trade and finance.118 Athens refusal to devalue the owl silver coinage through the Peloponnesian war, alongside the sheer power of Athens commercial empire, led to the dominance of the owl coinage as by far the most commonly accepted and fungible currency in Greece, for over 600 years, or long after Athens defeat in the Peloponnesian Wars.119 The financial innovations credited to Athens were quickly
115 116

(Homer S. , 2005) (Murray, 1978) 117 (Engels, 1884) 118 (Homer, 527 BC) 119 (Homer, 527 BC)

48

copied by other city states in the aftermath. The defeat of Athens was not a turning point in the history of Greek finance.120 Athenian maintenance of full employment: Particularly in the period following Solons reforms, the surviving primary literature shows a declining rate of mention of unemployment, in spite of population growth. I assert that this is largely due to the growth of the Athenian navy and related industry, not to mention government. The navy especially was highly labor intensive. The typical trireme of the classical period would have had a crew of roughly 200,121 including 5 officers (government employment for the educated and the uneducated). Trierarchos the commanding officer, responsible for supporting the ship Kybernetes executive officer, responsible for the cruising safety Keleustes responsible for the training and morale of the crew Pentecontarchos administration officer Prorates bow officer, responsible for keeping a sharp lookout 1 auletes a musician supplying the oar timing with his flute 170 oarsmen in three banks a. 62 thranites the upper bank b. 54 zygites the middle bank c. 54 thalamites lower bank
120 121

(Homer S. , 2005)

49

10 sailors for handling the sails 14 Marines (10 spearsmen, 4 archers)

In Thucydides, it is mentioned that during the fourth year of the Peloponnesian War, Athens had almost the largest number of first-rate ships in commission that she ever possessed at any one moment, she had as many or even more when the war began. At that time one hundred guarded Attica, Euboea, and Salamis; a hundred more were cruising round Peloponnese, besides those employed at Potidaea and in other places; making a grand total of two hundred and fifty vessels employed on active service in a single summer. At this same time Athens was also hard-pressed for revenues to maintain the siege of Mytilene. The massive amount of ships deployed during this summer were an outstanding drain on the public treasury relative to GDP. Exact statistics are impossible to provide, but given the going rate of one Attic talent (~26 kg silver) being sufficient to employ a trireme for a month, this implies that the employment of 250 triremes would have been a net monthly drain in current dollars, assuming for a price of $20/ounce of silver, of $4,160,000,000 this sum being levied from an empire of about 1.5 million people. Contrast to the current population and GDP of Iceland, 317,400 and $12.6 billion respectively. Athens population in the fifth and fourth centuries has been, conservatively, estimated to be over 150,000.122 This was, almost certainly an extremely conservative estimate (to the point of being outright
122

(Casson, 1984)

50

false), as the numbers of soldiers that Thucydides specifically references to would have required a larger supporting economy than such a small population would imply. Even a far larger population of half a million would still be extremely conservative if Thucydides military numbers can be trusted. Employed in the triremes alone during the fourth year of the Peloponnesian war were 50,000 men, which would have been a huge proportion of the number of employable men of military age in Athens. Many more were surely employed in the administrative, logistical, and productive complex that supported this navy; it is a common rule of war that every frontline solder requires several direct and indirect supporting staff. These numbers show it to be highly likely that Athens, alone (in the surviving records) among fifth and fourth century powers in controlling unemployment, did so through the creation of a massive military-industrial complex. It is likely that these particular fourth-century employment figures were unusual by Athenian standards. It is regrettable that the data of Thucydides isnt sufficient to present time-series data. Everything below up to, but not including, the conclusion constitutes notes, which were copy/pasted from interesting sources.

51

Annual Tribute to Athens, 477-454 B.C.

Date Attic Talents 477 B.C. 454 B.C. 431 B.C. 428 B.C. 425 B.C. 421 B.C. 460 500 600 800 1,500 1,200

Sum Drachmae 2,760,000 3,000,000 3,600,000 4,800,000 9,000,000 7,200,000

Source Thuc. I. 96 Meiggs, AE, p. 253 Thuc. I. 99. 3 & II. 13. 6-7* Meiggs, AE, p. 325** Meiggs, AE, p. 343 Andoc. III. 9

*Meiggs, AE, pp. 62-63, doubts Thucydides' figures for 477 and 432 B.C. Meiggs' lower sums are implausible, and his proposed sum of 400 talents in 432 B.C. is

based on fragmentary ATL in which many of the sums are guesswork. **Plut., Aristides 24. 3, notes tribute was raised to 1,300 talents after the death of Pericles in 429 B.C.

Reported Reserves of Athens

Date 454 B.C. Attic Talents

Sum Drachmae

Source Diod. XII. 28. 2

52

432 B.C. 430 B.C.

8,000 10,000 9,000 6,000

48 million 60 million 54 million 36 million

Diod. XII. 30. 1-2 Thuc. II. 13. 6-7 Thuc. II. 13. 6-7*

*Meiggs, AE, pp. 524-39; figures of Diodorus are often doubted and reduced to 5,000 talents (a sum inferred from Demosthenes). The siege of Potidaea and naval operations in 432-430 B.C. reduced the reserve from 9,000 to 6,000 talents.

BUILDING COSTS AT ATHENS, 447-425 B.C.

Date B.C. Attic 447-432 447-432 447-432 447-432 Talents 700 1,000 400

Sum Drachmae 4,200,000 6,000,000 2,400,000 18,000,000 1,200,000 16,200,000 48,000,000

Project Parthenon Gold and Ivory Statues of Athena Propylaea Odeum, Ship-houses, Middle Wall and expansion of docks at Piraeus Two gold statues of Nike Temple of Athena Nike, completion of Parthenon & related projects TOTAL
53

447-432 3,000 433-425 200 2,700

8,000

WAGES AND PRICES AT ATHENS, 480-300 B.C. WAGES. In imperial Athens (475-400 B.C.), a hoplite, rower, and laborer (free or slave) each received a daily wage of 1 Attic drachma. In 400-320 B.C. the daily wage rose to 1.5 Attic drachmae. Craftsmen and masons working on public projects in 447-408 B.C. received daily wages from 2 to 2.5 drachmae. Many artisans were paid by the amount of work. Bricklayers in 395-391 B.C. received 12 or 15 drachmae per 1,000 bricks laid; in 329-328. B.C. they received 17 to 25 drachmae for the same amount of work. Stonecutters of public decrees received a drachma for every fifty letters cut. In the Athenian democracy, 6,000 jurors received each a daily wage (opsonion) sufficient to purchase the minimum subsistence. In 460 B.C. this was 2 obols (1/3 drachma); in 408 B.C. it was raised to 3 obols (1/2 drachma).

At the siege of Potidaea (432-429 B.C.), each hoplite received 2 drachmae per day (one for himself, one for his servant); each cavalryman received double this rate (Thuc. III. 17. 4). An Athenian trireme, manned by 170 rowers and 30 officers and marines, cost 200 drachmae per day in wages or 1 talent per month. Athens paid her citizens well. In 420 B.C. Athens agreed to a treaty whereby Argos agreed to pay each Athenian hoplite, archer, or peltast 3 Aeginetic obols per day and each
54

cavalryman 1 Aeginetic drachma, which was equivalent to only two-thirds of their usual pay. Wages were a fraction of total military costs. The siege of Potidaea cost Athens between 2,000 and 2,400 talents or 12 to 14.4 million drachmae (Thuc. II. 70. 2 and Isoc. XV. 113). The total wages of the 3,000 hoplites and the sailors on the 30 triremes deployed in this operation (984 talents or 5,904,000 drachmae) account for less than half of total expenditures. STATE REVENUES. In 450 B.C. Athens received an annual tribute of 500 talents or 3 million drachmae, which was tripled to 1,500 talents or 9 million drachmae in 425 B.C. Profits from mines, justice, customs netted another 2,000 talents or 12 million drachmae per year. This was only part of the wealth of Athens. It can be argued that total revenues might have exceeded 6,000 talents (or 36 million drachmae)--an impressive sum for a commercial city whose annual revenues might have been half of the revenues of King Artaxerxes I (465-425 B.C.) who received in annual tribute perhaps 12,000 talents after the losses of India, Ionia, and Egypt. In 428 B.C. Athens levied an emergency war tax or EISPHORA on property at 1% of assessed value. Since the tax yielded 200 talents or 1.2 million drachmae, the propertied classes of Athens were assessed at a net worth of 20,000 talents or 120 million drachmae. In 413 B.C. Athens abolished the tribute (phoros) in favor of a 5% customs on imports and exports within the empire. Customs revenues annually netted 1,200 to 1,500 talents, implying a volume of commerce valued at 30,000 to 32,000 talents (180 to 192 million drachmae).
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STATE EXPENDITURES In contrast to the Great King, the Athenian democracy was committed to a high expenditures each year. In 431 B.C., the service of 200 triremes for six months cost 800 talents or 4.8 million drachmae. In 483-410 B..C. Athens commissioned 1,500 triremes at a cost of 15,000 talents or 90 million drachmae. In 460 B.C., Athens had to pay out in wages at least 360,000 drachmae or 60 talents for the 180 days marked for jury service . In 408 B.C. this sum rose to 540,000 drachmae or 90 talents. The building costs recorded in 447-425 B.C. totaled at least 48 million drachmae for the construction of the main monuments on the Acropolis (Parthenon, Propylaea, Temple of Athena Nike, and cult statues), the Middle Walls linking the city to the Piraeus, and the expansion of harbor facilities at the Piraeus. PRICES AND SUBSISTENCE. The cost of wheat is the best index of buying power. The Spartan hoplite received a generous daily ration of 1 choenix of wheat (or 2 choenikes of barley) per day or an annual ration of 7.5 medimnoi. An Athenian adult male of the thetic class required less, 3/4 choenix of wheat daily, or 6 medimnoi per year (150 kilogrs.) His grain needs (sitos) was 3/4 of minimum caloric intake. The other 50 kilograms came from oil, vegetables, and protein. A thetic family of four required annually 15 medimnoi of wheat. In 460-400 B.C. 1 medimnos of wheat cost 3 drachmae so that the minimum needs of the adult thete cost annually 18 drachmae. The thetic family of four paid 45 drachmae for annual wheat. In 400-325 B.C., 1 medimnos of wheat averaged 5
56

drachmae so that the annual needs of wheat for adult male rose to 30 drachmae and that of the family of four to 75 drachmae. The price of wheat fluctuated seasonally. In times of famine prices soared as high as 16 drachmae per medimnos (over three times customary price). Xenophon (Anab. I. 15) reports that, in the market following the army of Cyrus the Younger in 401 B.C., Greek mercenaries bought wheat at the outrageous price of four shekels per capith, the equivalent of 5 Attic drachmae for every 2 choenikes of wheat or 120 drachmae per medimnos, i.e. 24 times greater than customary prices. Olive oil was the principal fat consumed, and 1 kyathos of oil (1/6 kotyle), equivalent to 1.56 fluid ounces, was the daily minimum for an adult male. In markets, oil was prices at 1/2 obol per kotyle or 1 drachma per chous. The minimum needs of an adult male was 5 choes priced at 5 drachmae; that of a family of four was 12.5 choes at 12.5 drachmae. Most thetes grew a substantial portion of their needs on private or leased land. An Attic farm of 20-40 plethera (5-10 acres or 2-4 hectares) could sustain most thetic families. INCOME LEVELS. The first propertied class (pentakosmedimnoi) had annual incomes at or above 500 medimnoi of wheat (250 times the daily minimum of an adult male). This income carried a value of 1,500 drachmae in 460-400 B.C. The second class or cavalry (hippeis) had incomes between 300 and 500 medimnoi or 900 to 1,500 drachmae. The third class of hoplites (zeugitae) had annual incomes of
57

200 to 300 medimnoi or 600 to 900 drachmae. The PANOPLY or the suit of hoplite armor and weapons cost between 300 and 500 drachmae (equivalent of 1/2 to 1 years income of a zeugites). In 415 B.C. Athens armed 700 thetes as hoplites for service in Sicily at a cost of 210,000 to 350,000 drachmae (35 to 58 talents). Price stability: Class attitudes and consciousness: The Marxian dichotomy of class consciousness has compromised applicability for gaining an intellectual grasp upon historical social contortions in ancient Greek history. This is because certain events that may appear to be representative of class war, such as the political contortions occurring in Athens prior to Solons reforms and the Regarding Paul Milletts Lending and Borrowing in Ancient Athens, Originally a Cambridge doctoral thesis under the direction of M. I. Finley, it has, since its completion in 1983, undergone extensive revision aimed at breadth of approach and accessi-bility. It has achieved both. The chapter is diachronic and attempts to trace the origins of credit and ethical attitudes to credit from the peasant society of Hesiod with its reciprocal gift-giving to the fourth century, when the Attic orators reveal two sets of credit relations. In that era reciprocity still prevailed among kin and friends, as well as among members of the broader community, who owed one another mutual assistance, but it was now complemented by formal credit relations and the exac-tion of interest. In Millett concludes that credit in Athens was firmly
58

embedded in society. For undeniable as it is that impersonal credit mechanisms were important in comple-menting reciprocal relations, yet both in reality and in ideology it was reciprocity that prevailed. Finley and Polanyi were right. Millett deserves to be commended for his subtle analyses of the ancient sources, especially the Attic lawsuits and the much-neglected author, Theophrastus. Other structural features of fourth-century credit relations are the subject of Chapter 3, which begins, characteristically, with the analysis of an Attic ora-tion (Demosthenes 53). The numerous credit transactions-loans and gifts-described there are significant for Millett's view of Athens' structure of credit. "Overwhelmingly" credit was sought for non-productive purposes (59). The rest of the chapter documents the purposes for which loans were sought, finding only one unequivocal example of productive credit (Xen. Mem. 2.7). Pace Thompson, Millett believes that these data point to the absence of an entrepreneurial men-tality in Athens. Chapters 5 to 8 analyze the sources of credit open to Athenians. First comes "pure" reciprocity, initiated by a study of philia and the mutual obligations imposed on philoi, whether members of the family or non-kin such as fellow-tribesmen or guest-friends. Loans here are a form of gift-giving. On the other hand, this kind of "generalized reciprocity" among kin could shade off into "bal-anced reciprocity," that is, non-professional loans, without interest to be sure, but where a return is expected and formalities like guarantors instituted to en-sure it (136-137). Erainos-credit is the obvious example and Millett's discussion of the institution is excellent. He believes that eranos-loans extended "pure" credit beyond philoi, theoretically to the citizen body as a whole.
59

Credit, however, was not all reciprocal: there were deviations from the ideal such as non-professional moneylending both by individuals like Demosthenes the elder and by corporate institutions like demes and temples. Finally, there was also professional moneylending on the part of petty usurers and maritime creditors. As for bankers, Millett rejects Bogaert's view that their primary function was to furnish credit: credit was only one of a range of services offered by banks. "Typically," bankers' credit was extended to those outside the community of citizens such as metics and xenoi or to citizens who did not have the usual network of support and so sources of credit (217). Hence, both traders and bankers were viewed as external to the polis and to the solidarity of citizens at its heart.

Conclusion:

I undertook this examination because, if analyses of the ancient economy hope to be useful, they must first make substantive contributions to the corpus of economic knowledge, contributions unadulterated by uniformitarian or universalist thought. This task has been my endeavor. The two core paradigms in economics from which a veritable cornucopia of possibilities radiate, the capitalist and the Marxist, are both unwelcoming to views on economic methodology capable of understanding the ancient economy in its own historical and social context. A tremendous amount of scholarship has been devoted to incorporating the ancient
60

economy along the spectrum of possibilities residing in between these two paradigms. These analyses were fatally flawed from their origination, because they failed to admit for the possibility of cultural differences so fundamental that they confound attempts at applying universalist contextualization. The very structure of ancient thought and society precluded the existence of an economic or entrepreneurial thought as understood in modernity. The implications are of infinite utility in understanding the surviving writings of the Greek intelligentsia, who like all men shaped and were shaped by the economic contexts of their lives. The spirited attempts by both primitivists and modernists to incorporate the ancient economy into a paradigm of Manichean simplicity are alike terminally simplistic. Analyses of the ancient economy that aspire for some degree of intellectual usefulness must understand the ancient economy on its own terms, in its own historical context. I can only hope that I have been successful in this task.

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Bibliography: 1. Aristotle. (594 BC). Athenian Constitution. Athens. 2. Bonn, H. (1853). The Poltics and Economics of Aristotle. 3. Croix, G.E.M. St. de. (1960). Review: Trade and Markets in the Early Empires. The Economic History Review, 510-511. 4. Engan, D. T. (2010). The Economy of Ancient Greece. California State University. 5. Engels, F. (1884). Origins of the Family, Private Property, and the State. Munich. 6. Feder, E. (1987). Latifundia and Agricultural Labor in Latin America, in Peasants and Peasant Societies by Theodore Shanin. Blackwell Publishers. 7. Finley, M. I. (1999). The Ancient Economy. University of California Press. 8. Galbraith, J. (2008). The Predator State: Why Conservatives Abandoned the Free Market and why Liberals Should too. New York: Free Press. 9. Goldman, J. (2011). What was the significance and history of the lead-silver mines of Laurium? Geneva, NY: Hobart & William Smith Colleges. 10. Homer. (527 BC). The Odyssey. Athens: Peisistratos. 11. Homer, S. (2005). A History of Interest Rates, Fourth Edition. Hoboken, New Jersey: John Wiley & Sons, Inc. 12. Klein, N. (2007). The Shock Doctine: The Rise of Disaster Capitalism. Cambridge: Cambridge University Press.
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13. Levitt, K. P. (2006). Keynes and POlanyi: The 1920s and the 1990s. Review of International Political Economy, 152-177. 14. Madden, T. F. (2005). The New Concise History of the Crusades. Rowman & Littlefield Publishers. 15. Millett, P. (1991). Lending and Borrowing in Ancient Athens. New York: Cambridge University Press. 16. Mitchell, H. (1953). Land Tenure in Ancient Greece. The Canadian Journal of Economics and Political Science, Vol. 19, No. 2 (May, 1953), pp. 245-253. 17. Murray, O. (1978). Early Greece. Harvard University Press: Cambridge, Massachusetts. 18. Rothbard, M. (2006, February 11). It all began, as usual, with the Greeks. Retrieved December 18, 2011, from Mises.org: http://mises.org/daily/2054 19. Rotstein, A. (1970). Karl Polanyi's Concept of Non-Market Trade. The Journal of Economic History, 117-126. 20. Sarah B. Pomroy, S. M. (2008). Ancient Greece. Ny, NY: Oxford University Press. 21. Thucydides. (fifth century BC). The History of the Peloponessian War. 22. Tymoigne, L. R. (1996). Money: An Alternative Story. In M. C. Philip Arestis, A Handbook of Alternative Monetary Economics. Edward Elgar Publishing.

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23. Waller, W. (2005, June). Accidental Veblenian, Intentional Institutionalist, and Inevitable Feminist. Journal of Economic Issues, pp. P. 326-334. 24. Xenophon. (n.d.). The Economist.

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More notes: Nothing is more tempting to the student of ancient Greek and Roman culture than to draw analogies between it and the civiliza-tion of the present day.1 Perhaps nowhere in the field of the classics has this tendency given rise to more striking parallels or more false comparisons than in the study of ancient economic life. It is clear, moreover, from the shifting theories and uncertain principles which govern research in this subject why much of what is written about ancient commerce and industry should be thoroughly polemical in nature. Without doubt most of the errors involved spring from the inclination to reason backward from modern economic conditions to a quite different set of conditions in classical antiquity. One might present for what it is worth as an example of such obvious analogies the "New Deal program" of Solon, the Greek law giver of the sixth century B.c. On entering office as chief archon of Athens he was confronted with a desperate agrarian situation. Owners of large tracts were "freezing out" the small landholders; the increased use of currency with a correspondingly high rate of interest on loans had sharply curtailed the customary payment in kind. Debtors were being sold into slavery, and a revolutionary movement toward the redistribution of lands was imminent. Solon, who besides having a head for business and politics was also a poet, attempted a reform of which we have a fragmentary account. In addition to placing an embargo upon the export of food-stuffs, passing sumptuary laws, and forbidding the enslave-ment of debtors, he cancelled the debts of the small farmers, and by changing from the Aeginetan to the Euboean standard of cur-rency he brought about an inflation of 30 per cent. With the estab-lishment of popular

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courts and a system of government which was based upon a committee-system somewhat similar to our own Senate committees, he laid the foundations for Athenian democ-racy and postponed Fascism in the form of the tyranny of Pisistra-tus by at least a generation. The analogy between Solon's program and that of the Roosevelt administration appeared particularly vivid to me in February, 1934, while I was teaching a course in Greek history. At that time, our chief executive had won seventy-seven new powers not originally granted him under the American constitution. Solon, too, had extraordinary and absolute powers voted him for carrying out his reforms; and, like the Roosevelt administration, he steered a middle course. His cancellation of debts and prevention of fore-closure on farm mortgages are somewhat similar to methods of farm relief used by the New Deal in America, while the fear that a dictatorship would inevitably replace a decadent capitalism was probably quite as strong an impelling force in Athens at that time as it is in some quarters in our country today. If, like wild-eyed soothsayers, we seek to prophesy from the success or failure of his program, we cannot expect that "New Deal" measures will completely succeed; for Athens, only thirty years after Solon's reforms were put into effect, fell into the hands of one of the earliest European Fascists-the benevolent tyrant, Pisistratus. Modern students of ancient Greek economics have long since discarded the nineteenthcentury theories of Rodbertus and Bficher, who held that Greece did not proceed beyond what is called "house-economy." Indeed, the very foundations of ancient Greek life made any-thing approaching modern capitalism an impossibility. The ques-tion can be immediately clarified by listing the numerous reasons why Greece,

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I have delayed mention of what I consider the most important reason why capitalism could not come to full blossom in ancient Greece in order that it may serve as a transition to a discussion of the central features of ancient Greek economics-the social and aesthetic attitude toward trade and industry. It will surprise the modern uninformed inquirer; it will shock that vast bourgeoisie who have been accustomed by more than a century of "big business" to look up with worshipful awe to the captain of in-dustry, to learn that the Greeks despised business men. They were interested in humanity, art, letters, and the full expression of the personality; not in money and machines. Plato, as well as other Greek social theorists, understood, of course, the essential need for those who served as middlemen and retailers; but notice how he puts them in their place according to the traditional Greek view when he discusses the subject of trade in the ideal Republic (371): ... in well-ordereds tates they are commonlyt hose who are the weakest in bodily strength and therefore of little use for any other purpose. Their duty is to be in them arket placea ndt o givem oneyi n exchangefo rg oodst o those whod esiret o sell,a ndt o takem oneyf romt hosew hod esiret o buy. Aristotle, likewise, in the first book of the Politics, where he gives a brief list of the various branches of economic life (i, 11, 5), dismisses the subject after a few remarks as too commonplace to dwell upon. It is this attitude which accounts for the lack in Greek literature of any thorough treatise on economics. Among the Greeks all wholesale and retail trade as well as the greater share of industry were left in the hands of slaves and foreigners. A class of society important from an economic point of view but socially at the bottom of the scale were the residentforeigners or metics. No Greek city-state ever attained that eco-nomic self-sufficiency (a?r6pKEta) which, perhaps because of its very unattainability, is emphasized so much in
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the ideal state as Plato imagined it. Therefore, since grain was a necessary import, foreigners engaged in the grain trade and were encouraged, es-pecially during the r6gime of Pericles, to settle at Athens, where they were not permitted to vote or own land but sometimes re-ceived exemption from military service, just as the Roman traders Livy speaks of were likewise exempted in Rome.4 The state maintained a moderate control over economic activity for two purposes only, neither of them calculated to develop the widespread national economy assumed by some historians: first, the exploitation of trade for revenue purposes by means of duties, taxes, monopolies; and second, the utilisation of trade and traders to secure the provision of food from the granaries of the ancient world---the Crimea, Cyprus, Egypt, and Sicily. If any free-born Athenian engaged in trade, it was only as a "silent partner" in some occasional shipping venture, such as a cargo of pots to the West or a few barrels of wine to Egypt. The risk was great, and the interest he received on his loans to shippers (gyropoL) was high. He usually made such ventures only through necessity, and retired from the business as soon as he could to invest what profits he had made in the only respectable form of property countenanced by the Greeks-and that was land. If his partner, the shipcaptain, chose to cheat him, it was difficult to obtain redress by law; it is interesting to refer here to the evidence given by the Greek orators, who wrote law-court speeches for many such defrauded clients. Contracts had to be made in the presence of witnesses; there was no insurance company such as Lloyds to underwrite shipping ventures. Shipwreck, piracy, war, fire, and earthquakes were constant dangers to any sort of trading; the declaration of war (and the Greeks were almost continually at war) could instantly wipe out not only

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profits but working capital, ships, cargo, and crew. Bottomry loans, it is significant to observe, were the chief form of investment in overseas trade.6 The Greek citizen, if he served regularly as a juryman or per-formed other services for the state, was, to a considerable degree, relieved of the necessity of spending his life in merely earning a living, even though his fees for services were usually small. This partial freedom from economic anxiety left him plenty of time for following his two chief dutieswar and politics. He was not forced, as politicians are among us, to make his fortune before he could assume the jovial, opulent dignity of the average United States congressman; he was engaged in public life and public service from the moment he became of age. It is no wonder, there-fore, that we hear of no serious unemployment problem in an-tiquity, no suicides because of business reverses, no economic insecurity except through war. Industry never grew to any size in Greece; the largest workshop we hear of was the shield and spear factory operated by Lysias, the orator, and his brother Polemarchus, which had 120 workers, though we are nowhere specifically told that all of this number were employed in the shop itself. The father of Demosthenes made knives and bedsteads; his force of workers numbered fifty-two or fifty-three.7 In the case of the contractor for public works the Ipractice of giving small-lot orders and paying in advance by in-stallments made the possession of capital a negligible factor.s In small shops the slave, foreigner, and freeman worked side by side at making garments, vases, leather goods, bronze ware, sail cloth, and other products. Competition was not a source of danger, dis-sension, and over-production; there were markets and work enough for all. Much home industry went on as always; products like wreaths, ribbons, and yarn were sold; trades were handed down from father

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to son, although the son frequently turned to other pursuits, and workers' guilds came into existence. The state made no regulations on labor conditions, hours, or wages beyond the prohibition of free child labor. The worker treated his craft as an art; the Greek word rxY?7im plies both craft and art. Slow, careful workmanship,s ome-thing which has almost disappeared from the modern world, pro-duced the lovely and enduring things we see today in museums of Greek antiquities. Wages were low; ordinary labor by the day at Athens in the last third of the fifth century was paid at the rate of a drachma, or eighteen cents. At least sixty holidays must be reckoned in the Athenian calendar beside the days when, for other reasons, no work was done. Building operations especially, such as those on the Acropolis, were very intermittent. Other skilled trades were paid at higher rates in proportion to talent and skill, but since a man could live with ease on two or three obols (six or nine cents) a day and could support a family on eighteen cents, and since the food and household furnishings1' of the average Athenian family

70