Economic Realities in Xenophon and among the Romans

Xenophon was probably, of all known authors of antiquity, the author whose economic ideas are closest to modernity. They appear mostly as challenges to the Socratic tradi­tion which he at the same time represents.

with the demand for silver. “But nobody ever required so much silver, that he could not make use of more. If, however, one had a big amount of it, one is no less pleased to bury what is superfluous than to use it” (ibid. IV, 7). Silver is the monetary commodity, hence there is no limit to the accumulation of silver, as Aristotle also observes - but in a more critical vein - in his theory of chrematistics.

What Aristotle attacks as chrematistics must have been defended by others. The Oikonomikos of Xenophon, also in the Socratic tradition, gives a more realistic picture. The core of the dialogue consists of a discussion between Socrates and Ischomachos, the latter being a rich landowner; it takes some time to discover whether he pursues his agricultural interests for the enjoyment of gardening or as a business. We first hear much about the pleasures of farming, and its natural character is proved by pointing out that nature itself teaches how to plant and to harvest - the arts of gardening and farming are visual: we learn from observation with a little instruction by experienced persons.

However, Ischomachos often has to be absent in the city. He seems to be engaged in considerable liturgies, of which he is proud, but he has to fight off exorbitant claims to pay even more. At any rate, he needs a supervisor for his estate, and he admits paying a large salary (πoλυv μuσ⅛ov) for a supervisor (Oikonomikos I, 4) who is able to enlarge the estate (αυξ∈uv τov oCκov). It seems not to be a matter of living the good life on an estate, with modest and definite needs, but the question is how to improve it and to get more out of it. Management requires keeping order and discipline among the slaves - rewards, not only punishment, are needed, and so the dialogue offers us also some insight into the life of the family.

This is what Ischomachos suggests (though he does not use the term “good life”), but Socrates then asks from whom Ischomachos got the estate and what he wants to do with it in the long run. Gradually, as Socrates presses him, it turns out that Ischomachos has bought it, that he is going to sell it at a large profit, because of the improvements, and that he has learnt the art of buying estates, improving them and selling them again with a profit, from his father and that he has exerted it many times. He is unmasked: he strives for money and operates farms not for the love of farming. As Socrates puts it, he loves his estate like a corn merchant loves his wheat (Memorabilia XX, 27): this is Xenophon's critique of chrematistics.

Max Weber's theory, according to which the household and the firm had to be separated for modern rational capitalism to develop, is illustrated by this episode (Schefold 2011b: 179-97). The tension between the rationality of house­holding, represented by the wife, who wants to keep the house in good order, and of profit-making, represented by Ischomachos, who wants to sell the estate, is obvious. However, households and firms could not be separated, since the firm was not a legal entity, and this institutional obstacle also came up in banking.

The example demonstrates how the economic institutions were not modern, but his­torically specific. We turn briefly from economic specificities of the house as unity of household and firm to the state as economic organiser. Ancient reflections on political life and political constitutions were in part motivated by economic considerations and led to original economic experiments. Xenophon suggested, in the Poroi, using the pro­ceeds from silver mining in Athens, carried out by means of state slaves, to provide for the basic needs of the poor citizens. He did not propose the modern solution: redistribu­tion of the proceeds from taxation.

Cicero, in his De officiis, where he, on the whole, follows Panaitios (Schefold 2001), thought that it was wise to spend for public purposes, but not to the extent of damag­ing the family fortune. In his comparison of benficentia and liberalitas, he gave advice rather to render services (opera were regarded as praiseworthy) than spending money (pecunia). There was the danger of spending too much and of getting involved in cor­ruption (“Tota... ratio talium largitionum genere vitiosa est” (De officiis II 52, 60). Services, performed as a lawyer, were applauded: “... opera... tum in universam rem publicam, tum in singulos cives conferuntur. Nam in iure cavere, consilio iuvare... et ad opes augendas pertinet et ad gratiam” (ibid. II 65).

The Roman economy was larger and had more developed means of communication, including credit, than most countries of the early modern period; yet Rome did not develop a theory of political economy. The best we have are conceptualisations of eco­nomic transactions in Roman law and the texts of the Agrarian writers. For example, Roman law stated that a transaction could be invalidated in court, if it could be shown that the price paid was less than half the just price (the market price according to experts, on Laesio enormis, see Gordon 1975: 130). The insights of the agrarian writers concerned management techniques. It was advised to have the dangerous work done by wage labourers and not by the more precious slaves. Further, it was recommended that the activities of the labourers should be evenly spread throughout the year, so that slaves would have to do the steady basic work and wage labourers had to be hired at harvest time. A principle of the division of labour was formulated: labour should be so divided as to avoid revolts. Plato had related the division of labour to the quality of work and Xenophon to productivity; here it was related to domination and control.

The old discussions about the economic underpinnings of the good life reappeared in later Roman philosophy. Philodem, an Epicurean writer at the time of Cicero, wrote about the household principles which would be fit for an Epicurean philosopher: it is better for the Epicurean if he does not have to work and owns a fortune. If this is the case, he should not be distracted by attempts to enlarge it but try to develop an income from it by honest employments of the capital, for example, in house-letting or, prefer­ably, in agriculture, but the best life is that of the philosopher who earns money from his pupils by means of his lectures, which should neither be demagogic nor hair-splitting (Peri oikonomias 21).

Much more important was Stoic philosophy. Cicero’s discussion of asymmetric infor­mation in markets has remained famous (De officiis III, 12-13). Should a merchant who arrives with a ship full of corn at an island, where people are hungry because of a bad harvest, reveal that other ships with corn follow him and will arrive a day later? Or is he allowed to sell at a price reflecting his temporary monopoly? Cicero insisted that the apparent contradiction between the “useful” and the “honest” could be overcome by observing that it is not useful to be called a deceiver; the problem of the asymmetry of information therefore is solved by taking the value of a good reputation into account. The case was discussed by Scholastic authors and humanists alike. Other examples of the use of Stoic philosophy are Seneca’s considerations (Ad Lucilium 90) of whether innovations are primarily due to the ingenious minds of the few or to the experience of the many - a discussion later reflected in Adam Smith who sided with practice. The most important heritage of the Stoics consisted in the idea that the creator of the world had made it such that anyone who recognises his true personal interest can benefit even from evil, much as the wrestler learns from his adversary: the wrestler gets training from a strong adversary, the philosophically minded person learns to bear if evil befalls him (Epictet, Diatribes III, 20; I, 19). This Stoic idea was taken up by the German author Fronsperger at the time of the Reformation who tried to prove that harmony resulted if each followed his own interest, as beautiful melodies emanate from an organ, not although but because the pipes are of different length (Fronsperger 1564). Later, the working of self-interest was described by Mandeville and Adam Smith, who also were indebted to the Stoic tradition (Vivenza 2001).

The famous edictum on prices and wages by Emperor Diocletian is more important for economic history than for the history of economic thought (Lauffer 1971), but it results from this text in which the emperor ascribed inflation to imperfect competition among merchants, not to his own debasement of the currency. This and other monetary reforms prove that there was some understanding of the working of metallic currencies; however, we do not possess much direct textual evidence of it. The edictum on prices and wages demonstrates that Emperor Diocletian related prices to remuneration and costs.

The latest additions to the economic thought of antiquity came from the Fathers of the Church (Seipel 1907 [1972]; Troeltsch 1912 [1994]). The New Testament gave dignity to work. Some Fathers radicalised the classical idea of gift-giving by postulating that charity be extended even at the risk of spending the fortune of the family - God would look after the children. Sophisticated theories of the prohibition of interest would arise only in the high Middle Ages, when charging interest was regarded as unnatural, follow­ing Aristotle, while the early Fathers of the Church thought that interest-taking simply resulted from avarice.

Bertram Schefθld

See also:

Karl Heinrich Marx (I); Methods in the history of economic thought (III); Karl Polanyi (I); Political philosophy and economics: freedom and labour (III); Joseph Alois Schumpeter (I); Adam Smith (I).