The Ancient World

Backhouse, Chp 1

The earliest Greek written works date from the 8^th century B.C., in which the Homeric epics and the poems of Hesiod were recorded.

Q What was the Greek economy like at that time?

Q How did Homer view trade?

Q What was the basis of the economy?

Q What was Hesiod’s economic ideal?

Xenophon and Plato lived in the fifth to fourth centuries B.C. By that time, Athens and Sparta had risen to power in Greece. Athens’ strengths were trade and sea power; Sparta’s were agriculture and its army. Socrates (469-399 B.C.) was raised in the hyper-democratic city of Athens, where he helped educate Xenophon and Plato. Xenophon wrote Oikonomikos, from whence comes “economics,” although his book was really about the proper management of an estate or household. Plato is most famous for his Republic, which attempts to provide a blueprint for the ideal state. Plato ended up eschewing both democracy and tyranny, in favor of a state run by philosopher-kings. “His was a static world, in which everyone had a fixed place, maintained by efficient administration undertaken by disinterested rulers.” He believed the market should be limited, largely to consumer goods. Aristotle (384-322 B.C.), who studied under Plato, had much more to say about economic issues.

Aristotle

Much of Aristotle’s “economic analysis” emerges from considerations of justice.

Q What three types of justice did Aristotle consider?

Q Which of these is of most interest to modern economists?

Q With what question does commutative justice deal?

Q What was Aristotle’s principle of justice?

In the reading “On Money,” the translator uses the words “retaliation” and “proportionate requital” to represent the concept of commutative justice. Note that Aristotle says, in paragraph two, that “it is proportionate requital which holds a state together.”

Q What does he mean?

Q Why does Aristotle say, in the third paragraph, that in exchange “it is proportionate, and not equal retaliation” that is required?

Q But “more” in what sense?

Q Money simply measures value. What is the source of the relative values?

Q On the second page of “On Money,” Aristotle writes: “Retaliation or reciprocity will take place, when the terms have been so equated that, as a husbandman is to a cobbler, so is the cobbler’s ware to the husbandman’s.” What might that mean?

We can see from this reading how difficult it is to know exactly what Aristotle intended. He writes about two things at once: the relative value of goods and the relative “value” of individuals. Thus, commentators can – and have – derived different meanings from it.

Q Why might we prefer the argument that Aristotle is focusing primarily on the relative value of goods rather than primarily on the relative social standing of individuals?

Q From Backhouse, what was Aristotle’s attitude about how wealth could best be acquired?

Rome

Roman thinkers contributed little to economics proper, although they contributed much to the development of law. A respect for property, coupled with contract law to protect property, was a major contribution to European thought. Furthermore, the concept of natural law, which we will discuss later in the semester, originated in the Roman milieu. Like the Greeks, justice and morality occupied center stage even in their economic thought.