What did the Greeks – and what do we – understand about economics?

One of the many, many words that the English language owes to ancient Greek is “economics”. The irony here is that the Greeks (or the Romans for that matter) had no understanding whatsoever of economics as we understand it today. The word derives from “oikos” (house) and “nomos” (law, order). In the early 4th century BC Xenophon wrote a book called the “oikonomikos” or “household manager” and that’s the closest thing we get to an actual economic treatise for the whole of antiquity. Looking up the word “economics” in the Oxford English Dictionary shows that the first attested appearances in English were in the 16th Century when it was also used to mean the “art of household management”. In a world where we’re constantly bombarded in the media with the importance of “the economy” it’s hard for us to imagine that modern economic thinking, and with it the modern use of the word, only really began in the 18th century.

An economic graph of the kind we're all so used to seeing
An economic graph of the kind we’re all so used to seeing

For the last weeks the volatile confrontation between Greece and the rest of the EU has dominated the headlines and generated endless speculation about the potential outcome. In the run up to the UK general election voters are polled constantly not only on who they will vote for but also which party they trust most to manage the economy. It seems to be much less common for voters to be asked where they rank the economy on their list of priorities and I often wonder about the extent to which such polls work to reinforce the idea that the economy (for which read: the pursuit of economic growth) matters above all else. Nonetheless there can be no escaping that the economy looms very large in the modern collective experience. To fully appreciate the strangeness and exoticness of ancient Greek and Roman culture we need to try to think away this way of looking at the world and recognize that their understanding of economics was minimal and that they may also have cared far less about economic issues than we do today.

Occasionally we do get glimpses in the written sources of governments carrying out what seem to be surprisingly modern economic policies. The 6th century Athenian lawgiver Solon is said to have banned the export from Athens of any product apart from olive oil, which seems to show a remarkable degree of government concern for stimulating trade; Perikles is supposed to have initiated his famous 5th century building project on the Acropolis of Athens – the project that included the Parthenon – partly in order to create work for people which sounds rather like the “New Deal” by which Roosevelt responded to the Great Depression. (Interestingly both these reports are found in biographies by the Roman period author Plutarch, which does raise the issue of whether economic understanding might have been slightly different then than it had been in earlier periods of Greek history).

On the other hand, however, there’s the notorious Price Edict of Diocletian, by which the late 3rd century AD Roman Emperor attempted to hold back inflation by making a list of the maximum prices people in the Empire were allowed to charge for all sorts of products. Needless to say this economic equivalent of King Cnut telling the tide to turn back was an unmitigated failure and demonstrates quite clearly how naïve thinking on economic matters could be in the ancient world even in the highest circles of imperial government.

An inscribed copy of Diocletian's Edict on Maximum Prices
One of many surviving  inscribed copies of Diocletian’s Edict on Maximum Prices

Nobody in ancient society would have recognized economics as a field of study or a force through which their world was shaped. That’s not the same thing, of course, as saying that there was no economy in the ancient world. Of course there was. People, for the most part needed to work in order to live, cities were dependent on foodstuffs, consumer products and services and the Roman Empire taxed its subjects to pay for its armies and infrastructure. The people of the ancient world were just as much bound up in an economic system as we are. The difference is that they don’t seem to have been much aware of that fact and don’t seem to have been too interested in finding out about it. The important question, and one which has steered the course of debate on this subject for nearly half a century, is the extent to which this lack of interest and awareness affected the way that the ancient economy actually worked.

Moses Finley (1912-1986) Cambridge historian and author of "The Ancient Economy" (1973)
Moses Finley (1912-1986) Cambridge historian and author of “The Ancient Economy” (1973)

I can’t think of many books in the field of ancient history that have had such a pervasive influence over a particular aspect of the subject as Moses Finley’s The Ancient Economy from 1973. In a nutshell Finley’s argument was that the way the ancient economy worked was fundamentally different to how it works since the emergence of modern capitalism. According to Finley trade in the ancient world was fairly minimal, there was little notion that capital could be invested with the prospect of increasing returns, cities functioned primarily not as producers but as consumers sucking in wealth from the countryside – and in the case of Rome from the entire Empire – like parasites, and as a result of all this there was no real economic growth.

The reason things worked so differently than they do now? Because all real wealth was concentrated, mainly in the form of land, in the hands of an elite. These elite looked down on any kind of work or business and who used their riches to indulge in conspicuous consumption, to act as benefactors to their civic communities and to buy up more land, as opposed to finding ways of intensifying the yield of the land they had. The evidence that Finley marshaled to make this case was, above all, literary – authors from Aristotle to Cicero sneering at traders and merchants and reinforcing this prejudice against economic activity. The fact that both Greek and Roman authors, who all came from the elite class, seemed to share this attitude led to a fairly static picture of the ancient economy, fundamentally unchanging from the time of Homer to the time of Constantine.

Over the last few decades most historians of the ancient economy have moved away from Finley’s model, though it’s a testament to his influence that it’s hard to find a book or article on the subject that doesn’t present its argument in opposition to his view. The general consensus now is that there was far more trade in the ancient world than Finley thought, that elite attitudes exerted less of a constraining force of economic activity and that even the elite used their wealth to engage in trade more often than the literary source suggest. Archaeological evidence for the movement of products around the ancient world has played a big role in moving away from Finley’s standpoint. In the new view the ancient economy might not have operated quite like ours but it was a lot more like it than Finley thought.

Amphora from a Roman ship wreck - archaeological evidence for investigating the ancient economy
Amphora from a Roman ship wreck – archaeological evidence for investigating the ancient economy

Now, I am certainly not an economic historian and I find myself largely convinced by the arguments of those who know far more about the subject than I do that ancient economy was less primitive and more modern than Finley believed. Still, I have to confess that I do find myself attracted to the key assumption that underlay Finley’s vision – the assumption that culture has the power to override economic forces.

It’s not the only historical argument to take that point of departure. The argument of Max Weber, the great German sociologist, that the it was the “protestant work ethic” that led to modern capitalism is famous and it’s probably no coincidence that Finley was greatly influenced by Weber and discusses him extensively in his own work. Weber’s vision too has come into criticism in recent decades – if Protestantism is needed to explain capitalism, how can we account for all those rich and successful Roman Catholic bankers of the Italian Renaissance? While it’s now clear that interpretations like Finley’s and Weber’s are far too simplistic I can’t help finding the alternative – the view that our destinies are driven purely by economics, and that culture and politics are just by-products of market forces – more than a little bit depressing.

We’re constantly having the message drilled into us that there’s little we can do to resist economic pressures – whether we’re talking about the extent to which governments pay heed to the demands of big business or the intrusion of commerce into higher education, which has resulted in one university that I know reducing the amount of study space in its central library to make way for an enlarged coffee bar (why would students go to the library if you don’t give them something fun to do there?).

Without passing judgment on policies of governments or universities it seems to me that it’s rather pessimistic to assume that we don’t have a choice when it comes to such issues because of the irresistible power of economic progress. I also wonder if economic historians in prioritzing the importance of the economy over culture and politics in looking at past societies aren’t also, probably not intentionally, doing their bit to reinforce the idea that people and communities are little more than tiny cogs in a machine over which they have no control. By telling us that things have always been this way they offer little hope that things might not have to be this way in the future.

That is probably why I’m not an economic historian. I’d rather think of myself as a citizen than a consumer and I’d rather think about the ways in which people’s lives were shaped through politics and culture than to examine how ancient society functioned as an economic system. I must stress that I’m not knocking the work of my colleagues who are economic historians. The questions they are asking are extremely important for helping us understand the past better. It’s just that by its very nature the approach they take and the methods they use – looking at the ancient world from the vantage point of modern economic understanding and using statistical analysis of data and the creation of models – doesn’t really concern itself with how people experienced life in the ancient world. Of course, economic concerns such as work, food, buying and selling were a fundamental part of day-to-day life in antiquity as they are today. But religion, politics, sport, and human interaction were the things that gave life meaning and that is what fascinates me.

I’m not so much interested in the Greeks and Romans were just like us as in the ways that they were very different. I’m fascinated by the public monuments of the cities of Roman Greece largely because I find it such a strange idea to imagine a city in which the hustle and bustle of daily life took place surrounded by statues, ancient and new, of men and gods, all competing for attention. Thinking about just how different life in ancient city was from life in a modern city illustrates the diversity of the human condition and can, I believe help us, to question the things about our own lives that we take for granted.

I’m not saying I would want to change place with a Roman farmer, soldier or even senator but realizing that their lives were very different from ours can help put our own way of life into perspective. It should also cause us to ask questions whenever anybody tells us that anything about our way of life – our political system, our moral values, the economy – has to be the way it is and is beyond our power to change.

Thinking about how little the ancient Greeks or Romans knew about the Roman economy does, however, also cause me to wonder whether most of us, if we are honest, really know as much more than they did as we like to think. It’s a cliché to say that economics is not an exact science but like most clichés it contains a great deal of truth. Leading economists do often take radically different views on issues of major importance. That doesn’t mean that they don’t know what they are doing, it is just an incredibly complex subject that even those who’ve devoted their lives to studying it only partially understand. So what hope is there for the rest of us?

How many of us really understands what happens when sums of billions of pounds are transferred between countries, why inflation is bad but so is deflation, what the knock-on effects for the rest of the world would be if Greece did default on its debts and leave the Euro, or what banking terms like junk bonds, collateralized debt obligations, deleveraging or naked short-selling mean. I took A-level economics and passed with an A grade (admittedly some time ago) and I’m happy to hold my hands up and say that I’m baffled by most of these issues. And on that note I’d like to finish with a proposal.

In view of the importance given to the economy in our society – the attention paid to economic issues in the news and the extent to which economic policies determine our political decisions – isn’t it an absolutely crazy situation that most of us know so little about the subject? My suggestion, therefore, is that economics should become a compulsory school subject. I haven’t gone so far as deciding for how long or at what level but even a couple of years of basic economic theory would be enormously beneficial. Then when the next generation cross their ballot papers at a general election their decisions about which party’s economic policy is best, and indeed the weight which they give to economic policies over other concerns, would at least be based on slightly better informed opinions than they are now.


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