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Question of the day

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Did Plato and Aristotle have economic philosophies? Or were they smart enough to avoid the dismal science?

Response from Nickolas Pappas on March 20, 2014

Sometimes when you discuss ancient philosophers it’s all right to be a little anachronistic. So we can discuss Aristotle and technology, even though what he would have known as technology was close to nothing compared to what we find in the modern world. Or we talk about Plato and democracy in spite of the huge differences between the democracy that he lived in and the representative democracies of the past few centurie

There are other times when such tolerance for anachronism comes to an end, and I’d say that talk of economics is one of those times. No economic philosophy occurs in either one’s work, or in the work of any near-contemporary of theirs; and the most important reason must be that the economies they lived in were nowhere near sophisticated enough to make state economic policies possible, or to let such phenomena as employment fluctuations be studied.

Look at a city like Athens, one of the largest populations in Greece and probably the wealthiest. Its economy was based (as all ancient economies were) on farming, with food produced for mostly local consumption; but such durable commodities as olive oil were also produced in quantity, and added to the city’s wealth. For a long time Athens had been the most prestigious exporter of high-quality pottery as well. And on top of these exports, the city had its own silver mines. Then the league of allies that Athens put together after 479, before Socrates was born, brought hefty annual payments from the allies pouring into the local economy.

Even given all this substance and wealth, however, the city did not operate as even the most rudimentary modern economies do. There is no indication that it drew up a budget in advance, or borrowed money to pay for future infrastructural developments. Rather the city spent the money it had each year, until there was nothing left. Sometimes money was left over and was kept in reserve; often it was not.

Under these circumstances, an economist could not begin to study monetary policy, unemployment, inflation, or any other very elementary economic phenomenon – not to mention the more sophisticated phenomena (productivity, leading indicators) on which modern economic theories are based. And it is no surprise that, in the absence of most aspects of what we call an economy, the ancient philosophies we know of are absent most aspects of what we call economic theorizing.

You do find comments, here and there. As Socrates turns, in Book 2 of the Republic, from the primitive “first city” he has described to the more complex city that Glaucon asks him to investigate, he adds occupations and activities to the hypothetical city until it becomes rather large. At this point, he says, the city can no longer support itself on the farmland it started out with. War becomes inevitable. And there seems to be a general principle in Plato’s mind as he writes this, to the effect that any sufficiently large society will need to generate more wealth than it has just to maintain itself.

(Forget that most modern economists would say that the additional wealth is generated by a growing economy. Plato has no conception of a growing economy besides the act of seizing wealth from another city. Yet again, he’s not an economist.)

There is at least this much of interest in Socrates’ observation. The complexities of an economy are perceived as bringing about a pressure on existing wealth that can only be relieved by some collective (usually state) action, in this case war. I would call this something of an economic observation.

Another passage from the Republic: Socrates warns against leaving incomes unregulated among the good city’s large productive class. Their incomes cannot be permitted to grow too large, lest the city create an oligarchic class within its productive class; but also not too small, lest a permanently impoverished group come into existence that destabilizes the society in other ways. These may be good recommendations, even if they occur without any accompanying suggestion of how the city’s government will observe and enforce such policies.

Such observations do not add up to a philosophy of economics or a practical economic theory, but they begin to describe the subject that will later be known by such names.

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