Ancient and Modern Conceptions of the Economy
We attribute to the ancient Greeks the origin of the major disciplines in the natural sciences, such as physics or biology, of medicine, and also of disciplines in the humanities such as philosophy, rhetoric, and grammar.
Among the social sciences, politics could be mentioned but not economics, although many single ideas of modern economics can be traced back to first formulations in the writings of ancient authors. However, this is little known because the mercantilists, such as Petty (Schefold 2011a: 13-40) and even Adam Smith (on Smith and antiquity, see the important study by Vivenza 2001), admitted only sparingly their debt to humanist and scholastic writers and to their invariably extensive readings of the ancients (Roover 1955: 161-90). When Antonio Serra discovered economics, he did not name it, but he was fully aware that its origin, as a discipline, was not in antiquity, in the sense of Aristotle neither part of politics nor of ethics (Schefold 1994: 5-27). Economic insights were thus found in ancient writings as part of historiography (Tukydides, Polybios, and Livius) and ethnology (Herodotos), as generalisations in writings about special economic activities, such as agriculture (Varro, Columella), as views on economic policy expressed by the orators, as regulations in Greek and especially Roman law, and as ethical judgements and rules in philosophy (Plato, Aristotle).The historical school would read all these sources and occasionally use them to illustrate specific economic problems (for example, Roscher 1861: 353, on the role of credit during economic crises), but more often and systematically would use them to illustrate the historicity of economics, contrasting stages of ancient and modern economics (Hildebrand 1864: 1-24, 1869: 1-25, 130-55) and discussing changing ethical norms as a contribution to the emergence of sociology.
A leading member of the youngest historical school, Karl Bucher (Schefold 1988: 239-67), launched a debate which is still topical among ancient historians and in historical sociology, by comparing a “primitivist” interpretation of antiquity with a “modernist” interpretation. The former emphasises the specificity of ancient institutions, patriarchal households, the striving for autarchy, gift giving in exchange and other remnants of the pre-monetary economy which were thought to be still relevant to the classical Athenian economy, while the modernists regarded the integration of the Mediterranean world through trade with the emergence of the Hellenistic and, later, the Roman empires, as evidence of economic growth and capitalist forces which suggested analogies between the economy of imperial Rome and the economic development reached in the early mercantilist period (Finley 1979). To reach a balanced view of the history of economic thought in antiquity, taking account of the real economic life behind it, remains a difficult task, but it is comparatively easy to follow the main texts, where economic considerations come up as simple illustrations of a more sophisticated ethical discourse. The gap between the modern and ancient conceptions can be bridged by recognising that both are concerned with action. Modern economists ask which actions produce efficient outcomes; the ancient philosopher asked which action was good. The Stoic philosophers prepared for the link: the creator has made the world harmonious so that the good is achieved by pursuing one’s true selfinterest (Kraus 2000).We need to understand the economic insights of antiquity in their context, but this does not mean that there are no common regularities in economic rationality, behaviour, and causality. Xenophon is recognised to have been the first who observed and expressed the link between the degree of the division of labour and the extent of the market, and he seems to have seen that the causality runs both ways, as Adam Smith would later emphasise.
He explicitly said that crafts can be more specialised (one example is the preparation of food) if the market (the city) is larger (Xenophon, Cyroupaideia VIII, 2, 5:ev δ∈ τα⅛ μ∈yccλocuς π6λ∈σu δ∞c τ∂ 7r0λλ0υς ∈κaστoυ δ∈uσ^θau apκ∈C κau μua ∈κdστω τ∈χvη ∈lς τ∂ τp∈φ∈σ'θocu). Elsewhere he expressed the idea of increasing returns (Poroi). However, he does not combine both to formulate, or at least to visualise, the principle of cumulative causation. In these separate observations, the economy does not feature as an independent subsystem of societal intercourse; on the contrary, economic insights are invariably part of reflections of larger societal interconnectedness, reflecting the embedding of the economy in society. Even to the extent that similar economic mechanisms and institutions were visible then which we have now - there was money, exchange, taxation, there was production and distribution - their combination was different and varied a great deal within the world of antiquity both in space and time (we mainly focus on Athens and Rome because of the sources available). Differences in rationality and economic functioning therefore become most visible where the situation is more complex. If we look at an isolated procedure such as the haggling in a market for a particular commodity, different mores may become apparent, but the economist may be pardoned if he abstracts from historical specificities such as different formulas of politeness in this context and speaks simply of supply and demand. But all aspects of culture inevitably come in, if it is a matter of financing the activities of the state. The Athenians expected donations from rich citizens to pay for choruses in the theatre or for the equipment of a military ship. These contributions were voluntary, but also prestigious. The social mechanism of this so-called liturgy system made it a matter of honour to pay, and a variety of subsidiary legal and moral institutions helped to keep it going. The proof of liberty was said to be in giving and spontaneous action (for the unfree, the slaves, are ordered around), the hierarchy of virtues reflected this conception of the dignity of free citizen and what we call economic concepts were structured accordingly (Schefold 1998: 235-56). We encounter a distinction between “visible” and “invisible” wealth made in the Athenian orators (we found this opposition, for example, in Lysias XX, 23, XX, 33). The visible part of the riches of a citizen consisted of the house, land, olive trees. Invisible, by contrast, were the credits outstanding. If the community wanted to challenge someone to provide for the state, they had to rely on what they saw. Hence the temptation to hide riches by lending and the consequent popular distrust of moneyed men (Salin 1963: 153-81). Such institutions served to avoid the build-up of a state bureaucracy, but they presupposed social cohesion. Contrasting roles had to be fulfilled: the citizen had to look after the family and his house, to engage in politics, to serve in war. To order one's priorities would not have been easy. The role conflicts help to explain the general and intense interest in philosophy as the basis of ethics and of all learning from the later classical period onwards (Schefold 2011c: 131-63).Cultural and economic life and the forms of government varied in antiquity, but there were important continuities. There is the general view from Homer on the downfall of Rome that the good life was to be led in the well-ordered house in which production and consumption were a whole (Finley 1973 [1975]). The agora, the place for the market and reunions, represented the economic and political centre. Household and firm would separate only much later in early modern times; hence the inevitable tension between the acquisitive principle which the household must respect to the extent that it is a producer and the satisfaction of needs as the principle of consumption.
In the past there had been the royal and aristocratic households and the smallholdings of independent peasants. Later, the large latifundia of Roman times were the economic centres of the households of the ruling elite. Oikonomos (oLκovoμoς), householder, was the title of a royal manager of agricultural estates in Ptolemaic Egypt, and the economy of the country as a whole was planned and regarded as a royal household (Rostovtzeff 1941 [1972]). There were not only the households of the citizens in classical Athens, but also those of the metoikoi (μ∈τouκθL, immigrants), and there were considerable differences of wealth, with poor wage earners being at the bottom of the ladder, as far as the free were concerned, while the lot of the slaves varied enormously, depending on whether they were employed in a household and belonged to the family or whether they were estate managers or had to work in the fields or the mines. There was a contradictory tension in the crafts. The free would rather be farmers, if they had to work with their hands at all, but good handicraft was much admired and its historically exceptional quality during the classical period is obvious from archaeological remains. City life did not disappear but ceased to dominate the political process at large when the Hellenistic kingdoms formed and cosmopolitan intellectual currents took over, as seen in Hellenistic philosophy and in Stoicism in particular.