Economic rationalism in fourth-century BCE Athens

Greece and Rome

Volumn 50, Issue 1, 2003, Pages 31-56

  Christesen, Paul ^a  

^a DARTMOUTH COLLEGE   (United States)

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EID: 48249119874     PISSN: 00173835     EISSN: 14774550     Source Type: Journal    
DOI: 10.1093/gr/50.1.31     Document Type: Review

References (102)

1. On the importance of value systems in economics, see A. Denzau and D. North, 'Shared Mental Models: Ideologies and Institutions', Kyklos 47 (1994), 3-31
2. and D. North, 'Economic Performance Through Time', American Economic Review 84 (1994), 359-68. All dates are BCE unless otherwise indicated. All translations of ancient Greek texts are my own. All currency amounts have been converted to drachmai for ease of comparison. I would like to thank Edward Harris, Meir Kohn, Joel Mokyr and Jeremy Rutter for their suggestions about earlier drafts of this article.
3. There is a growing body of scholarship impugning the deductions Weber, Finley et al. made based upon the assumption that homo politicus accurately described value systems in classical antiquity. See, for example, A. Bresson, La cité marchande (Bordeaux, 2000). The problems associated with the basis of those deductions have, however, not been addressed with the same vigour.
4. For this terminology, see S. Hargreaves Heap, Rationality in Economics (New York, 1989), 1-11. The definitions given by Hargreaves Heap have been slightly modified in order to make them more directly relevant to the issues discussed here.
5. Procedural rationality is not equivalent to Herbert Simon's bounded rationality. The latter consists of individually developed decision-making shortcuts serving as a substitute for instrumental rationality in an environment where information costs make consideration of all potential options too high. Simon's notion of 'bounded rationality' does not represent a fundamental critique of instrumental rationality because it is based on the assumption that individuals would like to employ income-maximizing instrumental rationality but are unable to do so because of cognitive limitations. On bounded rationality, see Simon's Models of Man (New York, 1957), 196-206.
6. For these critiques, see A. Sen, 'Rational Fools: A Critique of the Behavioural Foundations of Economic Theory') in H. Harris (ed. ), Scientific Models and Man, (Oxford, 1979), 1-26
7. and R. Frank, Choosing the Right Pond (New York, 1984).
8. There does not appear to be a recent survey of the various methodologies currently under discussion. Much of the relevant work has been published in the Journal of Economic Perspectives. The treatment of the current status of rationality in economics found here is based in part on personal communications from Duncan Foley of the Graduate Faculty of the New School for Social Research in New York. For a representative example of the sort of work currently being done in this area, see V. M. Darley and S. A. Kauffman, 'Natural Rationality', Sante Fe Institute Studies in the Sciences of Complexity 27 (1997), 45-80.
9. For a more detailed discussion of the reasons why economists have continued to use instrumental rationality, see H. Margolis, Selfishness, Altruism, and Rationality (Cambridge, 1982), 1-25.
10. Friedman, following Keynes, defines positive economics as the study of what is, normative economics as prescriptive (Essays in Positive Economics (Chicago, 1953), 3).
11. For an excellent discussion of the inherent limitations on empiricism and the role of rationalism, see L. Doyal and R. Harris, Empiricism, Explanation, and Rationality (London, 1986), 1-26.
12. See, for example, the introduction to and studies contained in J. Parry and M. Bloch (eds. ), Money and the Morality of Exchange (Cambridge, 1989).
13. On the work of Smith and his intellectual descendants, see R. H. Campbell and A. S. Skinner, 'Introduction to Adam Smith's An Inquiry into the Nature and Causes of the Wealth of Nations', (Indianapolis, 1981), 1-66,
14. S. Gordon, The History and Philosophy of the Social Sciences (London, 1991), 111-210,
15. nd ed. (Boston, 1989), 42-235.
16. Wealth of Nations is a complex text with many nuances that cannot be addressed here. In addition, Smith's specifically economic work needs to be read alongside his Theory of Moral Sentiments, where a different perspective on human nature is proposed. Ancient economic history' is something of a special case in that the prevailing methodologies and views in the field respond more to the ideas Smith articulated in Wealth of Nations and nineteenth-century elaborations of those ideas than the concepts found in Theory of Moral Sentiments or twentieth-century work on economic rationality. (For modern-day economists, income-maximizing rationality is much more closely associated with the work of Friedrich von Hayek and Milton Friedman than that of Smith. ) Those particular facets of Smith's work that have influenced ancient Greek economic history are highlighted here. This approach tends to exaggerate the importance of income maximization in the Wealth of Nations. On this subject, see H. Thomson, 'The Scottish Enlightenment and Political Economy', in S. Todd Lowry (ed. ), Pre-Classical Economic Thought (Boston, 1987), 221-55.
17. For information on Bücher's scholarship, see M. M. Austin and P. Vidal-Naquet, Economic and Social History of Ancient Greece, translated by M. M. Austin (Berkeley, 1977 (1973)), 1-8,
18. W. Nippel, 'Max Weber's The City Revisited', in K. Raaflaub, J. Emlen and A. Molho (eds. ), City-States in Classical Antiquity and Medieval Italy (Ann Arbor, 1991), 19-30
19. and E. Will, 'Trois quarts de siècle de recherches sur l'économie Grecque antique', Annales économies, sociétés, civilisations 9 (1954), 7-22.
20. For information on Weber's scholarship, see C. Antoni, From History to Sociology: The Transition in German Historical Thinking, translated by Hayden White (Detroit, 1959 (1940)), 119-84,
21. H. Bruhns, 'La cité antique de Max Weber', Opus 6/7 (1987/88), 29-42
22. and T. Parsons, 'Introduction to Max Weber's The Theory of Social and Economic Organization', (New York, 1947), 3-86.
23. nd ed. (Berkeley, 1999), 95-122 and passim.
24. For a discussion of the continuing influence of earlier scholarship, see Austin and Vidal-Naquet (n. 10) and S. C. Humphreys, Anthropology and the Greeks (London, 1978), 136-58.
25. nd edition of Finley's Ancient Economy, ix-xxxvi.
26. 'Columella's Vineyard and the Rationality of the Roman Economy', Opus 2 (1983), 177-204.
27. In an article that appeared just after Carradini's ('The Price of Agricultural Land in Roman Italy and the Problem of Economic Rationalism', Opus 4 (1985), 77-109),
28. P. W. de Neeve pursued many of the same issues as Carradini. Based on his examination of land prices, de Neeve explicitly agreed with Carradini's conclusions about rationality. Economic rationalism is also touched on, though no firm conclusions are reached, in N. Morley's Metropolis and Hinterland: The City of Rome and the Italian Economy, 200 B. C.-A. D. 200 (New York, 1996), 15, 58-9, 71-7, 90-5.
29. Robin Osborne, 'Pride, Prejudice, Sense and Sensibility', in John Rich and Andrew Wallace-Hadrill (eds. ), City and Country in the Ancient World (London, 1991), 119-45, has argued for the importance of income maximization in the context of estate management in Athens, but in so doing does not directly address the question of rationalism and does not consider the economy as a whole. In this respect his work is much like that of Carradini and de Neeve.
30. Economic Rationalism and Rural Society in Third-Century A. D. Egypt: The Heroninos Archive and the Appianus Estate (Cambridge, 1991). This conclusion is most clearly stated on 401.
31. For Kehoe's review, see JRA 6 (1993), 476-84. Kehoe calls this circumscribed rationality 'bounded rationality', giving the term a slightly different meaning from Simon.
32. This conclusion is buttressed by Kehoe's own, quite extensive work on Roman estate management, including 'Allocation of Risk and Investment on the Estates of Pliny the Younger', Chiron 18 (1988), 15-42
33. and Investment, Profit, and Tenancy (Ann Arbor, 1997), 18-20 and 218.
34. 'A Market Economy in the Early Roman Empire', JRS 91 (2001), 169-93.
35. The quote refers to Finley's assertion (in the Ancient Economy, 22) that markets of the kind familiar from modern industrialized economies were entirely lacking in the ancient world. Temin's arguments to the contrary are provocative, but cannot be examined here. Ian Morris has recently written a lengthy review of how the issue of economic gain is treated in various disciplines and has analyzed the Solonian land crisis using a neoclassical economic model in which income-maximization is taken to be the goal of the individuals involved (though Morris does not explicitly state this to be the case). This article ('Hard Surfaces', in P. Cartledge, E. Cohen and L. Foxhall (eds. ), Money, Labour and Land: Approaches to the Economies of Ancient Greece (London, 2002), 8-43) does not, however, make any attempt to discuss value systems.
36. Peter Temin, 'Modes of Behavior', Journal of Economic Behavior and Organization 1 (1980), 175-95 at 175 and 176, respectively.
37. Temin also uses the existence of variable prices as a test for the existence of the market. For Polanyi's categories, see Trade and Market in the Early Empires (Glencoe, Ill. , 1957), 250-6. The best single source on Polanyi's work is Humphreys (n. 11), 31-75.
38. The disjunction between value systems and modes of exchange has been thoroughly treated by economic anthropologists. See, for example, P. Bourdieu, Outline of a Theory of Practice, translated by R. Nice (Cambridge, 1977 (1972)), 171-83 and passim.
39. In this body of scholarship, economic rationalism is discussed almost exclusively in terms of the presence or absence of instrumental, income-maximizing rationality. The one exception can be found in Carradini's astute observation that Finley and others take homo economicus and homo politicus as descriptive terms rather than analytical assumptions. Two explicitly unrealistic concepts thus come to stand for the realities of modern and ancient economic activity. The stark contrast that results is, inevitably, misleading. Carradini seems to be suggesting something along the lines of expressive rationality, but does not pursue this line of thought. This scholarship does not otherwise explicitly address economic rationalism in larger terms. Many of the numerous recent studies of ancient Greek agriculture have (largely implicitly) employed the assumption that farming regimes were driven by a maximizing impulse of one kind or another. These studies do not, however, directly address the question of economic rationality. Paul Cartledge points this out in passing in a review article, 'The Economy (Economies) of Ancient Greece', Dialogos 5 (1998), 4-24.
40. On Attic silver mining in general, see C. Conophagos, Le laurium antique (Athens, 1980),
41. J. K. Cunningham, 'The Silver of Laurion', G&R 14 (1967), 145-56,
42. M. Faraguna, 'Atene nell'età di Alessandro: Problemi politici, economici, finanziari', Atti Della Accademia Nazionale Dei Lincei 2 (1992), 167-447,
43. J. Ellis-Jones, 'The Laurion Silver Mines', G&R 29 (1982), 169-83,
44. N. Gale and Z. Stos-Gale, 'Lead and Silver in the Ancient Aegean', Scientific American 244 (1981), 176-92
45. and 'Cycladic Lead and Silver Metallurgy', ABSA 76 (1981), 169-224,
46. G. Heinrich, 'Das Erzgebirge von Laureion und seine Silberbergwerke', in H. Kalcyk, B. Gullath and A. Graeber (eds. ), Studien zur alten Geschichte, 3 vols. (Rome, 1986), II: 399-411,
47. R. J. Hopper, 'The Laurion Mines: A Reconsideration', ABSA 63 (1968), 293-326
48. and Trade and Industry in Classical Greece (London, 1979), 164-89,
49. S. Isager and M. H. Hansen, Aspects of Athenian Society in the Fourth Century B. C. translated by J. Hsiang (Odense, 1975 (1972) ), 42-50
50. and H. Kalcyk, Untersuchungen zum allischen Silberbergbau (Frankfurt, 1982).
51. On the mining leases, see M. Crosby, 'The Leases of the Laureion Mines', Hesperia 19 (1950), 189-312
52. and 'More Fragments of Mining Leases from the Athenian Agora', Hesperia 26 (1957), 1-23,
53. and M. Langdon, 'The Poletai Records', Athenian Agora XIX (1991), 55-143,
54. as well as G. G. Aperghis, 'A Reassessment of the Laurion Mining Lease Records', BICS 42 (1997/98), 1-20,
55. R. J. Hopper, 'The Attic Silver Mines in the Fourth Century B. C. ', ABSA 48 (1953), 200-54,
56. K. Shipton, "The Prices of the Athenian Silver Mines', ZPE 120 (1998), 57-63
57. and D. Vanhove' 'Aristote et les mines du Laurion', AC 65 (1996), 243-9.
58. A mining engineer who worked in the Laurium region, Conophagos retired to become a university instructor. After his move into academia, Conophagos collected a mass of precious information from the archives of the companies that had operated in the Laurium region during the nineteenth and twentieth centuries. He built a working beneficiation installation as well as a smelter and excavated mining sites in the Laurium region. On the importance of Conophagos' work, see E. Photos-Jones and J. Ellis-Jones, 'The Building and Industrial Remains at Agrileza, Laurion (Fourth Century BC) and Their Contribution to the Workings at the Site', ABSA 89 (1994), 307-58.
59. For the geological background, see Conophagos (n. 21), 155-66 and Photos-Jones and Ellis-Jones (n. 21). For the extraction process, see Conophagos, 123-37, 167-212 and Cunningham (n. 21). For beneficiation, see Conophagos, 125-37, 213-73, 375-96, H. Mussche and C. Conophagos, 'Ore Washing Establishments and Furnaces at Megala Pevka and Demoliaki', in Thorikos 1969, edited by H. Mussche and J. Bingen (Brussels, 1973), 61-72 and Photo-Jones and Ellis-Jones (n. 21). For the smelting process, see Conophagos, 125-37, 274-304.
60. For the cupellation process, Conophagos, 125-37, 305-40, Gale and Stos-Gale 'Lead and Silver in the Ancient Aegean' (n. 21) and R. J. Forbes, Studies in Ancient Technology, 9 vols. (Leiden, 1955-1964), VIII: 172-7, 226-38.
61. A number of such workshops located in southern Attica have been excavated. The best published is the complex at Agrileza, on which see J. Ellis-Jones, 'Laurion: Agrileza, 1977-1983: Excavations at a Silver Mine Site', AR 31 (1984/5), 100-23
62. and 'The Planning and Construction of Attic Ergasteria', in A. Hoffman et al. (eds. ), Bautechnik der Antike, (Mainz am Rhein, 1991), 107-15.
63. For a careful analysis of the mining resources around Agrileza, see H. Kalcyk, 'Nape: Ein Beitrag zur Topographie des antiken Laureion', in H. Kalcyk, B. Gullath and A. Graeber (eds. ), Studien zur alten Geschichte, 3 vols. (Rome, 1986), II: 465-8.
64. Recent work by Evangelos Kakavoyannis has shown that the earliest beneficiation workshops in the Laurium region were built at the end of the sixth century. All the silver ore mined in Laurium prior to that time was not enriched prior to smelting. For this information, see Kakavoyannis, 'The Silver Ore-Processing Workshops in the Laurion Region', ABSA 96 (2001), 365-80. The addition of the beneficiation stage fundamentally changed the economics of silver mining in Attica by making it possible for the first time to process at a profit relatively low-grade ore. The windfall from silver-mining that funded Athens' first large fleet of triremes in the early part of the fifth century ([Arist. ] Ath. 22. 7) may well have had as much to do with the construction of the earliest beneficiation installations as with the location of new veins of ore.
65. Some sense of the expenses involved can be obtained from SEG xxxii. 236, D. xxxvii (4, 12-13) and J. Ellis-Jones and S. D. Lambert, 'Two Security Horoi from Southern Attica', ZPE 125 (1999), 131-6, which gives the text of two horoi found at a washery at Agrileza in southern Attica. These sources indicate that beneficiation workshops were valued well in excess of 6,000 drachmai.
66. On this subject, see Conophagos (n. 21), 213-73, 341-59.
67. Charcoal consists of processed wood. Depending on the nature of the wood used and the quality of the finished product, five to ten grams of wood were needed to produce a single gram of charcoal. Every kilogram of ore therefore required the processing of at least an equal amount of wood. On the production of charcoal and the reasons for its importance in metalworking, see D. S. Olson, 'Firewood and Charcoal in Classical Athens', Hesperia 40 (1991), 411-20.
68. On charcoal prices in antiquity, see G. Glotz, 'Le prix des denrées à Delos', JS 11 (1913), 16-29.
69. On this subject, see Conophagos (n. 21), 274-304.
70. The relevant passages include Plu. Nic. iv 2, Hyp. iv 35 and Dem. xlii 20.
71. Leasing and Lending: The Cash Economy in Fourth-Century BC Athens (London, 2000).
72. For a brief summary of this study, see K. Shipton, 'Money and the Élite in Classical Athens', in A. Meadows and K. Shipton (eds. ), Money and Its Uses in the Ancient Greek World (Oxford, 2001), 129-44.
73. See also S. Ito, 'Pheidippos, An Athenian Miner: A Note on the Poletai-Inscriptions', in H. Kalcyk, B. Gullath and A. Graeber (eds. ), Studien zur alten Geschichte, 3 vols. (Rome, 1986), II: 454-61. Shipton defines the wealthy élite as those who are known to have performed the most expensive liturgies (funding triremes and dramatic choruses).
74. Demos, The Discovery of Classical Anika (Cambridge, 1985), 124.
75. The following discussion of investment behaviour draws on L. Casson, "The Athenian Upper Class and New Comedy', TAPA 106 (1976), 29-59,
76. A. Karayiannis, 'Entrepreneurship in Classical Greek Literature', South African Journal of Economics 60 (1992), 67-93,
77. P. V. Stanley, 'The Value of Ergasteria in Athens', MBAH 9 (1990), 1-13,
78. W. Thompson, 'The Athenian Investor', RSC 26 (1978), 403-23
79. and 'The Athenian Entrepreneur', AC 51 (1983), 53-85.
80. For a different, strongly primitivist, interpretation, see P. Millett, Lending and Borrowing in Ancient Athens (Cambridge, 1991), 160-78. Millett argues that, 'there was . . . only the crudest conception of relative rates of profitability in Athens' (95).
81. It should be emphasized that the investors behaving rationally in the sense intended by Smith did not necessarily invest all of their resources in any one of these categories. The optimum arrangement in most cases is to spread one's resources out over a number of different types of investment with varying levels of risk-balanced reward. Diversification serves a number of goals, including assuring desired levels of liquidity, generating necessary cash income, and making it possible to equalize risk-adjusted returns at the margin. The last of these is particularly important because maximizing risk-balanced return requires locating the best possible investment for every dollar (or drachma) available to the investor. The strongest possible test for income-maximizing rationality would involve demonstrating that Athenians invested their funds in such a way that risk-balanced return could not have been improved by modifying the relative weighting of the components of an individual's portfolio. The available evidence will not support such a test. This is not a difficulty of great significance. Simon's insights about bounded rationality make it clear that even in the comparatively information-rich environment of the present day, income-maximizing investors and profit-maximizing firms regularly deploy their resources in ways that are less than optimal. Insofar as perfect rationality is an unrealizable ideal, its presence in fourth-century Athens would be considerably more surprising than its absence. That said, it is not without interest to consider what is known about the investment practice of Athenians who had significant amounts of wealth at their disposal. The relevant evidence is reviewed in great detail in J. Kron, 'Landed and Commercial Wealth in Classical Athens 500-300 B. C. ' (Ph. D. dissertation, University of Toronto, 1996). Kron finds that, though the evidence is too sparse to permit definitive conclusions, it does indicate that wealthy Athenians tended to invest their money in an eclectic mix of assets.
82. On this subject, see R. Osborne, Classical Landscape with Figures (London, 1987), 36-44.
83. The horoi indicated that the asset had been pledged as security and thus implicitly warned potential buyers or creditors. For prasis epi lysei, see E. Harris, 'When is a Sale Not a Sale? The Riddle of Athenian Terminology for Real Security Revisited', CQ 38 (1988), 351-81.
84. The discussion here generally follows E. Cohen, Athenian Economy and Society: A Banking Perspective (Princeton, 1992), 121-89,
85. though see also G. M. Calhoun, 'Risks in Sea Loans in Ancient Athens', Journal of Economic and Business History 2 (1929/30), 561-85,
86. G. E. M. de Ste. Croix, 'Ancient Greek and Roman Maritime Loans', in H. Edey and B. S. Yamey (eds. ), Debits, Credits, Finance and Profits, (London, 1974), 41-59,
87. E. Harris, 'The Liability of Business Partners in Athenian Law', CQ 39 (1988), 339-43
88. and P. Millett, 'Maritime Loans and the Structure of Credit in Fourth-Century Athens', in K. Hopkins, P. Garnsey and C. R. Whittaker (eds. ), Trade in the Ancient Economy (Berkeley, 1983), 36-52, 186-9.
89. 2. 2496. For an exceptionally lucid summary of the evidence pertaining to the leasing of land in ancient Greece, see R. Osborne, 'Social and Economic Implications of the Leasing of Land and Property in Classical and Hellenistic Greece', Chiron 18 (1988), 279-323.
90. In calculating the returns that might be expected from investments of this sort, assumptions must be made about the initial cost of the slaves, the cost of their maintenance and their useful lifetime. On this point, see Casson (n. 34), R. Osborne, 'The Economics and Politics of Slavery at Athens', in A. Powell (ed. ), The Greek World (London, 1995), 27-43 and Thompson (both works cited in n. 34).
91. For examples of individuals exercising these options, see Aeschin. i 97, Dem. xxvii 9-10 and Xen. Vect. iv 14-15.
92. Slaves working under the last of these three conditions were called choris oikountes. On this subject, see E. Cohen, The Athenian Nation (Princeton, 2000), 130-54
93. and E. Perotti, 'Les esclaves chôris oikountes', Annales Littéraires de l'Université de Besançon 163 (1974), 47-56.
94. For losses associated with investments in the silver mines, see Dem. xlii 20 and Hyp. iv 35.
95. Michele Faraguna (n. 21) has persuasively argued that Lycurgan Athens implemented a carefully designed program to make the most of all of Attica's economic resources, the polis-level equivalent of individual income-maximization. J. K. Davies, 'Temples, Credit, and the Circulation of Money, in A. Meadows and K. Shipton (eds. ), Money and Its Uses in the Ancient Greek World, (Oxford, 2001), 117-28, cites interesting evidence for productive investment of public funds.
96. Paul Cartledge, The Political Economy of Greek Slavery', in P. Cartledge, E. Cohen and L. Foxhall (eds. ), Money, Labour and Land: Approaches to the Economies of Ancient Greece (London, 2002), 156-66, argues (albeit very briefly) that income-maximizing investment was too risky for the average individual in ancient Greece and was therefore largely restricted to the élite. While there is no doubt some element of truth in this assertion, the evidence indicates that this particular form of rationality was less circumscribed than Cartledge supposes.
97. On this point see Osborne, 'Pride, Prejudice, Sense and Sensibility' (n. 12). The importance of dowry payments in influencing borrowing patterns is highlighted in M. I. Finley, Studies in Land and Credit in Ancient Athens, 500-200 B. C. (New Brunswick, N. J. , 1952), 79-87.
98. For further exploration of Ischomachos' approach to economic activity, as recorded by Xenophon, see M. Faraguna, 'Alle origini dell'Oikonomia: Dall'anonimo di Giamblico ad Aristotele', Atti Della Accademia Nazionale Dei Lincei V (1994), 551-89 at 565-7
99. and E. Harris, 'Workshop, Marketplace and Household', in L. Foxhall, P. Cartledge and E. Cohen (eds. ), Money, Labour and Land in Ancient Greece (London, 2002), 67-99 at 84.
100. See, for example, the articles collected in D. J. Mattingly and J. Salmon (eds. ), Economies Beyond Agriculture in the Classical World (London, 2001).
101. In economic anthropology the most relevant work is Parry and Bloch's concept of long-term and short-term transactional orders. On this subject see J. Parry and M. Bloch, 'Introduction', in Money and the Morality of Exchange (n. 8).
102. Parry and Bloch's work has been sparingly used by ancient economic historians. For economic sociology the most relevant work may be William Sewell's notion of 'thin coherence'. On this point, see Sewell's 'The Concept(s) of Culture' in V. Bonnell and L. Hunt (eds. ), Beyond the Cultural Turn (Berkeley, 1999), 35-61. 'Thin coherence' has not, at least to this author's knowledge, as yet been applied to the ancient world.