Download ancient and medieval economic thought

ANCIENT AND MEDIEVAL
ECONOMIC THOUGHT
PART I
General Historical Background
• Human life - dominated by
natural phenomena, wars
and arbitrary use of
political power.
• Religious sensibility.
• Repetitive cycles of work
and life, day by day, year
by year were preferred to
innovation and change.
• Pre-classical literature –
more disposed to judge
economic performance
than to analyze it.
Ancient Times
• The Sumerians (app. 3000-2000 BC) used writing
primarily as a form of record keeping.
• The Babylonian Code of Hammurabi (18th century BC) –
normative prescriptions for economic relations.
Law 6:
If a man has stolen property belonging to a god or a palace,
that man shall be put to death, and also the one who has
received the stolen property from his hand shall be put to
death.
Law 88:
If a merchant has given corn on loan, he may take 100 SILA
of corn as interest on 1 GUR; if he has given silver on
loan, he may take 1/6 shekel 6 grains as interest on 1
shekel of silver.
Ancient Times – The Holy Bible
Work was seen both as expiation for original sin and, with a
decisively positive connotation as an element intrinsic to the
very nature of man and the means for his fulfillment as part
of a divine project.
• The LORD God took the man
and put him in the Garden of
Eden to work it and take care
of it (Genesis 2:15).
• “Cursed is the ground
because of you;
through painful toil you will
eat food from it
all the days of your life.”
(Genesis 3:17-19)
The Old Testament
The story of Joseph in Egypt
• During the seven years of abundance the land produced
plentifully. Joseph collected all the food produced in
those seven years of abundance in Egypt and stored it in
the cities… Joseph stored up huge quantities of grain, like
the sand of the sea; it was so much that he stopped
keeping records because it was beyond measure.
• When the famine had spread over the whole country,
Joseph opened all the storehouses and sold grain to the
Egyptians, for the famine was severe throughout Egypt.
And all the world came to Egypt to buy grain from
Joseph, because the famine was severe everywhere.
An example of the analysis of the price formation as a
result of the interplay of supply and demand.
Classical Antiquity
• The word economy comes from the Greek, where
oikonomia can be taken to mean “domestic management”
• Athens (liberal and democratic) vs. Sparta (militarist)
• The most eminent Athenian thinkers invariably
undervalued the commercial order that surrounded and
supported them while they took every opportunity to
extol the statist totalitarianism Sparta represented.
Plato and Aristotle
inability to grasp the nature of the flourishing mercantile and
commercial process taking place between the different
Greek cities
Plato (428-348 BC)
• The first famous writer, to lay down the principle of the
division of labour.
• For Plato the drive for more comfort and riches corrupts
the mind and disrupts social harmony.
Plato
• Attacks on private property.
• Praise for common ownership.
• Contempt for the institution of
the traditional family.
Typical characteristics of the
intellectual who believes
himself wiser than and superior
to everyone else and who is
ignorant of even the most
essential principles of the
spontaneous market order,
which makes civilization
possible.
Aristotle (384-322 BC)
A pupil of Plato, private teacher of Alexander the Great
• Private property: “Property
that is common to the
greatest number of owners
receives the least attention;
men care most for their
private possessions, and for
that they own in common
less, or only so far as it falls
to their own individual
share.” (Politics)
Aristotle
• Commensurability and money: “ When the inhabitants
of one country became more dependent on those of
another, and they imported what they needed, and
exported the surplus, money necessarily came into use.
For the various necessaries of life are not easily carried
about, and hence men agreed to employ in their dealing
with each other something which was intrinsically useful
and easily applicable to the purposes of life, for example,
iron, silver, and the like. Of this the value was at first
measured by size and weight, but in the process of time
they put a stamp upon it, to save the trouble of weighing
and to mark the value.”
Aristotle formulated the Classical view against usury
“The most hated sort (of wealth getting) and with the
greatest reason, is usury, which makes a gain out of
money itself and not from the natural object of it. For
money was intended to be used in exchange but not to
increase at interest… Wherefore of all modes of getting
wealth, this is the most unnatural.” (Politics)