Economics History
“Hitherto, every form of society has been based on the antagonism of oppressing and oppressed classes.” ~ Karl Marx
The history of economics coincides with the story of human sociality, driven by sociological dynamics largely dictated by desires and an abiding unwillingness to share in a familial way. Economics is a fulcrum for activity, and so woven into its gyre has been the rise and fall of civilizations. Economics will ultimately prove the fate of humanity. Life is short and art is long, but since the earliest societies economics has endured in calling the shots, casting an inauspicious pale on human prospects.
“Economics is, in essence, the study of poverty.” ~ Australian economic historian Ronald Hartwell
The Founding of Economics
A mind-set of materialism got the economic ball rolling, abetted by surpluses from agriculture. Trade grew in the transition from hamlets to societies which increasingly practiced specialized crafts.
Another consequence of agriculture was being able to support a larger population. Division of labor and food surplus concentrated people so that villages grew into towns when they succeeded in ramping production and trade.
Jericho, the oldest continuously occupied site in the world, was settled by 9000 bce. Within a thousand years, it had a huge stone wall around it: a monumental testament to the materialist mind-set and the concomitant need for defense.
The power of organized labor was quickly appreciated in the ancient world. The city-states of the Sumer civilization in southern Mesopotamia, Egypt, and other empires, all depended upon mobilized masses under someone’s thumb. Slavery was rife in the ancient world, and the population masses otherwise mostly serfs.
“All early civilizations were based on social and economic inequality. A defining feature of all early civilizations was the institutionalized appropriation by a small ruling group of most of the wealth produced by the lower classes.” ~ Canadian anthropologist Bruce Trigger
Trade was the lubricant which invariably led to concentrations of economic and political power into a small minority of hands. Rulers came to rely up economic growth as a means to maintain and augment their supremacy. When internal limits were hit, expansion created conflicts with neighbors which often led to war and conquest. This trend was ubiquitous.
“The economic bases of these ancient empires lay in the booty, tribute, and taxation that the conquerors could wring from the conquered and from peasant taxes.” ~ American economic historian Rondo Cameron
Ethical Qualms
Material exchange for personal benefit predates hominids by billions of years. Bacteria have profitably swapped gene packages for eons. Yet commerce has long been morally suspect. The predatory character of ancient empires and the natural inclination to profit from trade cast a pall for any who cared to view commerce through a moral lens.
The ancient Greeks tolerated commerce as a necessity but feared that the specialization it engendered would lead to a differentiation of interests that would destroy any sense of common purpose, and thereby rent the social fabric. There were merchants and moneylenders in ancient Athens, but they were seen as outsiders, and denied citizenship status.
“Money was intended to be used in exchange, but not to increase at interest. And this term interest, which means the birth of money from money, is applied to the breeding of money because the offspring resembles the parent. Wherefore of all modes of getting wealth this is the most unnatural.” ~ 4th-century-bce Greek philosopher Aristotle
Aristotle’s anathema to usury was widespread among classical writers attuned to societal interests. Its condemnation came to occupy a locus in the writings of Christian theologians and lawyers up to early modern times, until the ascent of commercial interests so overwhelmed political leaders that the morality of money withered to an ethical arcanum.
“Trade, insofar as it aims at making profits, is most reprehensible, since the desire for gain knows no bounds but reaches into the infinite.” ~ 13th-century Italian Dominican priest Thomas Aquinas
Even as the Christian church hypocritically condemned the profits of commerce as a mortal sin, the pulse of Europe’s economy depended upon it. The Church resolved this dilemma following ancient Athens tradition: relegate it to outsiders.
Jews
Jews once earned their living from farming and handicrafts. But they were forced out of landowning in Europe by the Catholic Church, which collected ecclesiastical tithes on land holdings, and which might no longer be paid if land fell into Jewish hands. The craft guilds that arose in the later Middle Ages shut Jews out by exclusionary policies.
As Jewish settlements became insecure by their dependence upon the toleration of the Christian monarchs and nobles in power, Jews gravitated to movable property, especially precious gems and metals which could be readily concealed, transported, and trafficked.
This dynamic engendered contempt for Jews among western Christendom, as commerce became closely connected with Jews, who were regarded as avaricious.
Odious to conservative Christians, Jews nonetheless became indispensable to the political authorities. Besides borrowing money to the powers that be, Jews were often employed as indirect tax collectors.
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Trade as inimical to communal cohesion was long a staple of European intellectual thinking. In writing at the onset of the 18th century that trade and wealth extinguish virtue, Charles Davenant – mercantilist economist, politician, and British establishmentarian – was reciting a hoary civic cliché.
Mercantilism is the economic doctrine that the military security of a country depends upon its balance of trade. Based upon the assumption that global wealth was a fixed constant, governments should control foreign trade so as to maximize exports and minimize imports, thus gaining a favorable balance of trade.
Mercantilism dominated western European political policy from the 16th century to the end of the 18th century. It motivated both colonial expansion and frequent wars in Europe, as well as co-opting the political class into acting as a plutocratic patsy, favoring the concentration of wealth by keeping wages low.
The intertwining of economic and political power was as inevitable as the axis of thought regarding the desirability of both. In the early 16 century, Italian historian Niccolò Machiavelli and other civic theorists revived the classical, pagan ideal of citizenship. This included the need for self-sacrifice for the sake of the common good: a social virtue well paid in preparing for and promoting war as a means for enrichment.
Civic virtue was aligned with devotion to public interests and liberty in participating in political life, including helping preserve the freedom of the commonwealth from foreign domination. Construing virtue and liberty as such required citizens to be financially independent. Possessing property was a prerequisite for citizenship, as it freed men from the need to work for a living. This was a consistent political axiom all the way from Aristotle to slaveholders in the antebellum South and beyond.
Christian civic tradition got its rulebook from ancient Rome, notably the Code of Civil Law, compiled by Justinian I in the mid-6th century. That came with a built-in irony. In contrast to Christian suspicion of commerce, the pagan Roman system was thoroughly commercial: a posture which befit a sprawling empire.
Rather than valuing liberty as a ticket for participation in government, Roman law valued freedom from government: unencumbered enterprise, excepting taxes. The Romans were concerned with individual rights, including protection of private property. This attitude goes a long way in explaining the long success of the Roman Empire and the lasting impression that it made.
