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)