There
long has been a persistent academic debate as to whether an “ancient economy,” referring
mainly to Greece, even existed at all. In a field dominated by Marx, Marxists,
the 19th century sociologist Max Weber, and such scholars of renown as Sir
Moses Finley, the lingering image of the economic world of the Greek polis is that
of something very static. We imagine a leisure class lounging at the sandaled
foot of an orator while slaves tended to the fields, flogging cows harnessed to
ploughs stuck in the mud. It is the notion of a “primitive” economy: money made
for status, not investment; credit extended for the purchase of slaves, war
waged for the capture of booty, elites in control of craft guilds and
tyrant-kings keeping the peace by randomly doling out the goods.
Then
there is ancient epic itself, with the noble Odysseus disdaining seafaring for
profit (though he did take all the pay-offs he could collect) and the great
Achilles pondering a discovery of precious treasure only so far as it might
estimate his aristocratic worth. From this rudimentary foundation, an entire
field of Socialist-Keynesian views on the Greek economy has prevailed, with
occasional libertarian scholars such as Murray Rothbard and Jesús Huerta de
Soto getting a word in edgewise. In recent time, however, academia has found
much more evidence of technological advances and market-driven considerations
on the part of the classical polis than
previously thought.
Keeping in mind that in both
ancient Greece (and Renaissance Italy) that democracy was not incompatible with
aristocracy, and that oligarchies and tyrants were not necessarily illiberal,
several points may be made in defense of the economic model of the city-state:
1) that the stronger the city-state, the greater the industrial and economic
expansion; 2) that private property was considered a fundamental economic
principle; 3) that banking standards were relatively conservative; 4) that the
wealthiest city-states were of the most socially dynamic; 5) that city-state
competition spearheaded the modern entrepreneurial Europe; and 6) that the
visionary tyrant was almost always business-first in his rule.
When
the Greek polis was its Strongest,
Industrial, Technological and Monetary Revolution Followed
The
first great industrial revolution of ancient Greece took place around 500 BC,
the result of political power shifting into regional democratic clusters
individually known as the polis.
The great poleis —
Athens, Corinth, Thebes, and the colonized areas of Hellenic Asia — began to
specialize their industrial production within four areas: agriculture, food
processing, mining, and pottery, the sources of wealth and expansion. It was a
time of technological revolution as well: the iron tools made in Greece beginning
in the 6th century were so advanced that they were used later to equip Rome and
Ptolemaic Egypt. The strengthening of the independent polis also
meant the beginning of investment in industry by wealthier classes, an activity
previously frowned upon. Then came the introduction of coinage, the result of
the new emphasis on local economies, then starting to expand. Now that wealth
was becoming more widespread, a decline in aristocratic patronage took place,
later replaced by economic-civic relationships. An explosion in inter-regional
trade ties between city-states followed.
Even
Aristotle Defended Private Property
In
contrast to other ancient societies of the time, most of ancient Greece rested
on a society of private property. Philosophers such as Democritus (460–370 BC)
and Aristotle (384 0150322 BC) strongly defended property as a right and a
necessity. Having witnessed the difference between the private property economy
of Athens and the strict collectivism of Sparta, both thinkers concluded that the
former was a superior form of economic organization. Aristotle defended it on
several grounds: first, that only private property furnished men with the
opportunity to act morally — to practice, as he put it, “benevolence and
philanthropy”; second, he argued that it was more highly productive than
communal property; third, that while “the Good” may be the same for all men,
pleasure varies, and only “exclusive ownership” may grant that to a man;
fourth, that private property had always existed and with good reason; and
fifth, that in comparison to communally-owned property, private property gave
more incentive for care, “toil and diligence.” Ownership did not, the
great thinker maintained, allow the rich to be above the law, however. Where
privately-held property was most prominent — in the polisof Athens — the democratic legal
organization of that city-state did not allow judgments to be based on
ownership. A private-property based hierarchy was undermined in favor of
democratic equality.
Ancient
Greece (and Rome) Maintained High Banking Standards
Religious
temples, such as that of Apollo at Delphi, Artemis at Ephesus, and Hera at
Samos were the “original banks” as they were considered inviolable and
therefore a relatively safe refuge for money; they even had their own militias
to defend them. From today’s standpoint, however, the most secure thing about
these banks was the fact that Greek bankers sought to maintain a 100 percent
reserve-ratio on demand deposits, as the libertarian historian Huerta de Soto has
researched in depth. Banks were not even considered sources of credit and
interest was not allowed. Clients made deposits for reasons of safety and
expected bankers to provide custody and safekeeping — not unlike the
contemporary private bankers of Switzerland today.
Needless to say, there was fraudulent activity, but when the public lost trust
in those banks, these went bankrupt and no “state” intervened to save them. “In
short” wrote Huerta de Soto, “banking was based on depositors’ trust, bankers’
honesty, on the fact that bankers should always keep available to depositors
money placed in demand deposits, and on the fact that money loaned to bankers
should be used as prudently and sensibly as possible.” Nor were Roman
banks considered free to use deposits as they pleased, but obliged to
diligently safeguard those deposits, which did not pay interest and were not to
be lent.
The
Renaissance City-state Rewarded Talent and the Entrepreneur
There was a surprisingly
socially mobile make-up to the elite of the Italian city-state and nobility was
not limited to birth. Social status was determined by talent, and the famous
Swiss historian Jacob Burckhardt hailed this peculiar Renaissance social
phenomenon as “the birth of the Individual.”
Furthermore, the great
Renaissance humanists approved of commerce and the private pursuit of wealth,
rejecting the Franciscan and Stoic ideal of poverty — indeed, the first
generation of civic humanists, such as Leonardo Bruni and Francesco Barbaro
praised wealth as preconditions for “active civic virtue.” For the first
time in history and exclusively within the context of the Renaissance
city-state, the “Economic Man” — such as Francesco Datini, the true
rags-to-riches paradigm of the Florentine-Tuscan merchant-noble —-had arrived.
The
Renaissance City-state Encouraged Competition and Industrial Production
The struggle between
ascending city-states spurred so much competition between them that overseas
exports began to far exceed imports due to economic battles between these
states to outdo each other. It was no accident, for example, that Florence
achieved the most economic and political hegemony in Tuscany, as that
city-state was most susceptible of being cut off from critical lines of trade
and food supplies by regional rivals. Tyrants tended to be economic
visionaries: they encouraged this competition — as Viscontis, de Medicis, or
Sforzas. In more republican states such as Florence, anti-tyrannical and
anti-imperial Tuscan city leagues were founded that also became free-trade
zones between one another.
The wool trade, salt, silks,
olive oil, all flourished during this time and the phenomenon of the modern-day
entrepreneur came on the scene, emerging out the guild-run craft economies of
the Middle Ages. Where city-states flourished, the modernization of the general
economy followed: the mobility of labor improved, jurisdictional sovereignty
was codified in law, transportation systems were founded, and the division of
labor expanded. Close to 500 years later, a newly unified Italy would be
without leadership once more and the country would only begin to industrialize
at the turn of the 20th century.
Small
Was Beautiful — and Productive
The
city-state of Lucca was an unusually successful example of the age, holding its
own as an economic powerhouse in the silk industry. The city-state’s leader,
Paolo Guinigi, a descendant of one of the most acclaimed families of Lucca,
promoted the trade of Carrera marble, the manufacture of silk products, and he
modernized the banking system, while appeasing the powerful Viscontis in Milan.
Nor was democracy entirely lacking: there was openness of access to office and
positions of influence. Lucca’s parlomento of
1430, for example, consisted of 97 citizens ranging from a merchant elite to
doctors of law to weavers, leather workers, and butchers. The population all
across class lines was made up of independent land-holders.
One must always be careful
when reasoning backwards from a modern economic perspective to quite a
different set of conditions in ancient or medieval times. But the stunning
historic continuity of the human belief in the imperative of private property;
in earned rewards for ingenuity and entrepreneurship, and in the role of honor
in banking and commerce remain lessons to return to again and again — in the
hope that such beliefs never merely remain interesting anecdotes of the past.
Note: The
views expressed on Mises.org are
not necessarily those of the Mises Institute.
Marcia Christoff-Kurapovna contributed feature pieces and op-eds
on Swiss and Liechtenstein banking issues for The Wall Street Journal Europe
while based in Vienna, Austria; she also authored a column, ‘Swiss Watch.’ She
currently lives in Washington, DC where she is a speech and op-ed writer to
foreign dignitaries.
https://www.lewrockwell.com/2017/11/marcia-christoff-kurapovna/cradles-of-capitalism-the-city-states-of-greece-and-italy/
