The Ancient School of Economic Thought

7/29/2019 The Ancient School of Economic Thought

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B Y A M O G H S A H U

The Ancient School of

Economic Thought


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The Ancient School

Often referred to as the Pre-Classicals

Technically, every society is economic:- Sumer

- Persia- Ancient Greece(focus of Presentation)


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Ancient Greece

Considered themselves as poor(relatively)

Highly Dispersed

- No Central Palace Structure

- Independent Governments- Decentralized(more free-market compared toEgypt)

Had a Currency(Drachma)


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Economy of Ancient Greece

Land is the most important factor in the ancientworld.

- Agricultural produce is main store of value.

Prices were set, rather than allowed to float Economy grew largely through Labor

Business class not as prominent as Today


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The Greek Economy: A Philosophical Perspective

Moses Finley(American Historian) stated that:- Oikonomia (household management) was the

main source of economic ideology

Economy was subordinate to Society and Politics(Communist)

Greek value system emphasized collective overindividual


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Ancient Greek Economic Philosophy Continued

Entrepreneurial Risk taking activities werecondemned. (banausic)- Seen as unnatural and corrupting individualism

Prices were set by personal relationships, rather thanby supply and demand.


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Model of Greek Economy

Labor force at height of power (431 B.C.) 305,000 people total

160,000 were citizens (80K men and women, 80 children)

25,000 were free resident foreigners (metics)

120,000 were slaves (outnumbered male citizens 3:1)


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Finleys Model


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Summary

Generally a Centrally Planned Economy

Values over Profit

Little Entrepreneurship


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Ancient Greek Economic Thinkers

Hesiod

Plato

Aristotle

Xenophon


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Hesiod

Poet

Labor Economist

Wrote about Work in Hours and Days


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Works and Days

More Theological than Economic

A Moralistic View of Economic Life

Basic Economic Problem

Notions of Competition and Informational Efficiency


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Xenophon

Wrote The Economist

Economist=Estate Manager

Landed Estates= Paramount Source of Wealth


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Critobulus/Socrates

Critobulus is wealthier than Socrates

He has more friends, lives a fuller life.

Yet Socrates is Wealthier, How?


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Oikonomikos

Balance Sheet Concept (Assets/Liablities)

Theory of Effective Organization

More Management than Economics

A Model for Macroeconomic Management:1. Organized Bureaucracy2. Strong Leadership


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Plato

Philosopher

Student of Socrates

Wrote The Republic


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Economic Model of the Republic

Moralistic Perspective

Neither Democracy nor Tyranny

Totalitarian State

Philosopher Kings would receive no opportunities forrent-seeking.


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Model of the Worker and the Society

The Moral Worker

Static Society based on stability.

Small Administrative Units

Planned, Bureaucratic Society based on Scarcity


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Aristotle

Wrote on Markets

Had a notion of Justice


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Aristotle on Market Interactions

Negotiation between Buyer and Seller

Based on Ethics

Regulated Prices (EOD unresolved)


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Aristotles Theory of Justice

What is Justice?- Return allocated by Capital Invested(DsitributiveJustice)- For any wrongdoing, there is a necessity to use anarithmetic mean to redstribute (RectificatoryJustice)

- For any Transaction, Take the HARMONIC MEAN

between highest price demanded, and lowest PriceSpplied(Exchanging Justice)


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Acquisition of Wealth

Estate Management=GOOD

Anti Commerce and Usury(lending money atInterest)

Citizens aim at a good life(Implied: Not a rich life) Aristotle was Anti- Commerce due to unlimited

acquisition of Wealth


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Conclusion

Moralism and Justice

Planning and Bureaucracy

Order and Organization

Anti-Market and Anti-Individual Value Judgement Economics

Some Ideas of Competition as well as Supply and

Demand.

Documents

The Ancient School of Economic Thought