A worthy item that outlines the rise of nascent modernism in emergent city states. The underlying protocol or protocols are the deus ex machina that we ignore at our peril. That the critical mass of the city allows these protocols to exponentially expanded needs to be better understood as well.
We need to understand today that our modernity provides everything a city ever provided without the necessity of building a city. That is the present revolution taking place not understood.
I am pleased to see economic thinking becoming more fundamentalist and truly attached to the idea of market. There they cannot go too far wrong.
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Cradles of Capitalism: the City-States of Greece and Italy
There
long has been a persistent academic debate as to whether an "ancient
economy,” referring mainly to Greece, even existed at all. In a field
dominated by Marx, Marxists, the 19th century sociologist Max Weber, and
such scholars of renown as Sir Moses Finley, the lingering image of the
economic world of the Greek polis is that of something very
static. We imagine a leisure class lounging at the sandaled foot of an
orator while slaves tended to the fields, flogging cows harnessed to
ploughs stuck in the mud. It is the notion of a "primitive" economy:
money made for status, not investment; credit extended for the purchase
of slaves, war waged for the capture of booty, elites in control of
craft guilds and tyrant-kings keeping the peace by randomly doling out
the goods.
Then there is ancient epic itself, with the noble Odysseus disdaining seafaring for profit (though he did take all the pay-offs he could collect) and the great Achilles pondering a discovery of precious treasure only so far as it might estimate his aristocratic worth. From this rudimentary foundation, an entire field of Socialist-Keynesian views on the Greek economy has prevailed, with occasional libertarian scholars such as Murray Rothbard and Jesús Huerta de Soto getting a word in edgewise. In recent time, however, academia has found much more evidence of technological advances and market-driven considerations on the part of the classical polis than previously thought.
Keeping in mind that in both ancient Greece (and Renaissance Italy) that democracy was not incompatible with aristocracy, and that oligarchies and tyrants were not necessarily illiberal, several points may be made in defense of the economic model of the city-state: 1) that the stronger the city-state, the greater the industrial and economic expansion; 2) that private property was considered a fundamental economic principle; 3) that banking standards were relatively conservative; 4) that the wealthiest city-states were of the most socially dynamic; 5) that city-state competition spearheaded the modern entrepreneurial Europe; and 6) that the visionary tyrant was almost always business-first in his rule.
When the Greek polis was its Strongest, Industrial, Technological and Monetary Revolution Followed
The first great industrial revolution of ancient Greece took place around 500 BC, the result of political power shifting into regional democratic clusters individually known as the polis. The great poleis — Athens, Corinth, Thebes, and the colonized areas of Hellenic Asia — began to specialize their industrial production within four areas: agriculture, food processing, mining, and pottery, the sources of wealth and expansion. It was a time of technological revolution as well: the iron tools made in Greece beginning in the 6th century were so advanced that they were used later to equip Rome and Ptolemaic Egypt. The strengthening of the independent polis also meant the beginning of investment in industry by wealthier classes, an activity previously frowned upon. Then came the introduction of coinage, the result of the new emphasis on local economies, then starting to expand. Now that wealth was becoming more widespread, a decline in aristocratic patronage took place, later replaced by economic-civic relationships. An explosion in inter-regional trade ties between city-states followed.
Even Aristotle Defended Private Property
In contrast to other ancient societies of the time, most of ancient Greece rested on a society of private property. Philosophers such as Democritus and Aristotle strongly defended property as a right and a necessity. Having witnessed the difference between the private property economy of Athens and the strict collectivism of Sparta, both thinkers concluded that the former was a superior form of economic organization. Aristotle defended it on several grounds: first, that only private property furnished men with the opportunity to act morally — to practice, as he put it, "benevolence and philanthropy"; second, he argued that it was more highly productive than communal property; third, that while "the Good" may be the same for all men, pleasure varies, and only "exclusive ownership" may grant that to a man; fourth, that private property had always existed and with good reason; and fifth, that in comparison to communally-owned property, private property gave more incentive for care, "toil and diligence." Ownership did not, the great thinker maintained, allow the rich to be above the law, however. Where privately-held property was most prominent — in the polis of Athens — the democratic legal organization of that city-state did not allow judgments to be based on ownership. A private-property based hierarchy was undermined in favor of democratic equality.
Ancient Greece (and Rome) Maintained High Banking Standards
Religious temples, such as that of Apollo at Delphi, Artemis at Ephesus, and Hera at Samos were the “original banks” as they were considered inviolable and therefore a relatively safe refuge for money; they even had their own militias to defend them. From today's standpoint, however, the most secure thing about these banks was the fact that Greek bankers sought to maintain a 100 percent reserve-ratio on demand deposits, as the libertarian historian Huerta de Soto has researched in depth. Banks were not even considered sources of credit and interest was not allowed. Clients made deposits for reasons of safety and expected bankers to provide custody and safekeeping — not unlike the contemporary private bankers of Switzerland today. Needless to say, there was fraudulent activity, but when the public lost trust in those banks, these went bankrupt and no "state" intervened to save them. "In short" wrote Huerta de Soto, "banking was based on depositors' trust, bankers' honesty, on the fact that bankers should always keep available to depositors money placed in demand deposits, and on the fact that money loaned to bankers should be used as prudently and sensibly as possible." Nor were Roman banks considered free to use deposits as they pleased, but obliged to diligently safeguard those deposits, which did not pay interest and were not to be lent.
The Renaissance City-state Rewarded Talent and the Entrepreneur
There was a surprisingly socially mobile make-up to the elite of the Italian city-state and nobility was not limited to birth. Social status was determined by talent, and the famous Swiss historian Jacob Burckhardt hailed this peculiar Renaissance social phenomenon as "the birth of the Individual."
Furthermore, the great Renaissance humanists approved of commerce and the private pursuit of wealth, rejecting the Franciscan and Stoic ideal of poverty — indeed, the first generation of civic humanists, such as Leonardo Bruni and Francesco Barbaro praised wealth as preconditions for "active civic virtue." For the first time in history and exclusively within the context of the Renaissance city-state, the "Economic Man" — such as Francesco Datini, the true rags-to-riches paradigm of the Florentine-Tuscan merchant-noble —-had arrived.
The Renaissance City-state Encouraged Competition and Industrial Production
The struggle between ascending city-states spurred so much competition between them that overseas exports began to far exceed imports due to economic battles between these states to outdo each other. It was no accident, for example, that Florence achieved the most economic and political hegemony in Tuscany, as that city-state was most susceptible of being cut off from critical lines of trade and food supplies by regional rivals. Tyrants tended to be economic visionaries: they encouraged this competition — as Viscontis, de Medicis, or Sforzas. In more republican states such as Florence, anti-tyrannical and anti-imperial Tuscan city leagues were founded that also became free-trade zones between one another.
The wool trade, salt, silks, olive oil, all flourished during this time and the phenomenon of the modern-day entrepreneur came on the scene, emerging out the guild-run craft economies of the Middle Ages. Where city-states flourished, the modernization of the general economy followed: the mobility of labor improved, jurisdictional sovereignty was codified in law, transportation systems were founded, and the division of labor expanded. Close to 500 years later, a newly unified Italy would be without leadership once more and the country would only begin to industrialize at the turn of the 20th century.
Small Was Beautiful — and Productive
The city-state of Lucca was an unusually successful example of the age, holding its own as an economic powerhouse in the silk industry. The city-state's leader, Paolo Guinigi, a descendant of one of the most acclaimed families of Lucca, promoted the trade of Carrera marble, the manufacture of silk products, and he modernized the banking system, while appeasing the powerful Viscontis in Milan. Nor was democracy entirely lacking: there was openness of access to office and positions of influence. Lucca's parlomento of 1430, for example, consisted of 97 citizens ranging from a merchant elite to doctors of law to weavers, leather workers, and butchers. The population all across class lines was made up of independent land-holders.
One must always be careful when reasoning backwards from a modern economic perspective to quite a different set of conditions in ancient or medieval times. But the stunning historic continuity of the human belief in the imperative of private property; in earned rewards for ingenuity and entrepreneurship, and in the role of honor in banking and commerce remain lessons to return to again and again — in the hope that such beliefs never merely remain interesting anecdotes of the past.
Then there is ancient epic itself, with the noble Odysseus disdaining seafaring for profit (though he did take all the pay-offs he could collect) and the great Achilles pondering a discovery of precious treasure only so far as it might estimate his aristocratic worth. From this rudimentary foundation, an entire field of Socialist-Keynesian views on the Greek economy has prevailed, with occasional libertarian scholars such as Murray Rothbard and Jesús Huerta de Soto getting a word in edgewise. In recent time, however, academia has found much more evidence of technological advances and market-driven considerations on the part of the classical polis than previously thought.
Keeping in mind that in both ancient Greece (and Renaissance Italy) that democracy was not incompatible with aristocracy, and that oligarchies and tyrants were not necessarily illiberal, several points may be made in defense of the economic model of the city-state: 1) that the stronger the city-state, the greater the industrial and economic expansion; 2) that private property was considered a fundamental economic principle; 3) that banking standards were relatively conservative; 4) that the wealthiest city-states were of the most socially dynamic; 5) that city-state competition spearheaded the modern entrepreneurial Europe; and 6) that the visionary tyrant was almost always business-first in his rule.
When the Greek polis was its Strongest, Industrial, Technological and Monetary Revolution Followed
The first great industrial revolution of ancient Greece took place around 500 BC, the result of political power shifting into regional democratic clusters individually known as the polis. The great poleis — Athens, Corinth, Thebes, and the colonized areas of Hellenic Asia — began to specialize their industrial production within four areas: agriculture, food processing, mining, and pottery, the sources of wealth and expansion. It was a time of technological revolution as well: the iron tools made in Greece beginning in the 6th century were so advanced that they were used later to equip Rome and Ptolemaic Egypt. The strengthening of the independent polis also meant the beginning of investment in industry by wealthier classes, an activity previously frowned upon. Then came the introduction of coinage, the result of the new emphasis on local economies, then starting to expand. Now that wealth was becoming more widespread, a decline in aristocratic patronage took place, later replaced by economic-civic relationships. An explosion in inter-regional trade ties between city-states followed.
Even Aristotle Defended Private Property
In contrast to other ancient societies of the time, most of ancient Greece rested on a society of private property. Philosophers such as Democritus and Aristotle strongly defended property as a right and a necessity. Having witnessed the difference between the private property economy of Athens and the strict collectivism of Sparta, both thinkers concluded that the former was a superior form of economic organization. Aristotle defended it on several grounds: first, that only private property furnished men with the opportunity to act morally — to practice, as he put it, "benevolence and philanthropy"; second, he argued that it was more highly productive than communal property; third, that while "the Good" may be the same for all men, pleasure varies, and only "exclusive ownership" may grant that to a man; fourth, that private property had always existed and with good reason; and fifth, that in comparison to communally-owned property, private property gave more incentive for care, "toil and diligence." Ownership did not, the great thinker maintained, allow the rich to be above the law, however. Where privately-held property was most prominent — in the polis of Athens — the democratic legal organization of that city-state did not allow judgments to be based on ownership. A private-property based hierarchy was undermined in favor of democratic equality.
Ancient Greece (and Rome) Maintained High Banking Standards
Religious temples, such as that of Apollo at Delphi, Artemis at Ephesus, and Hera at Samos were the “original banks” as they were considered inviolable and therefore a relatively safe refuge for money; they even had their own militias to defend them. From today's standpoint, however, the most secure thing about these banks was the fact that Greek bankers sought to maintain a 100 percent reserve-ratio on demand deposits, as the libertarian historian Huerta de Soto has researched in depth. Banks were not even considered sources of credit and interest was not allowed. Clients made deposits for reasons of safety and expected bankers to provide custody and safekeeping — not unlike the contemporary private bankers of Switzerland today. Needless to say, there was fraudulent activity, but when the public lost trust in those banks, these went bankrupt and no "state" intervened to save them. "In short" wrote Huerta de Soto, "banking was based on depositors' trust, bankers' honesty, on the fact that bankers should always keep available to depositors money placed in demand deposits, and on the fact that money loaned to bankers should be used as prudently and sensibly as possible." Nor were Roman banks considered free to use deposits as they pleased, but obliged to diligently safeguard those deposits, which did not pay interest and were not to be lent.
The Renaissance City-state Rewarded Talent and the Entrepreneur
There was a surprisingly socially mobile make-up to the elite of the Italian city-state and nobility was not limited to birth. Social status was determined by talent, and the famous Swiss historian Jacob Burckhardt hailed this peculiar Renaissance social phenomenon as "the birth of the Individual."
Furthermore, the great Renaissance humanists approved of commerce and the private pursuit of wealth, rejecting the Franciscan and Stoic ideal of poverty — indeed, the first generation of civic humanists, such as Leonardo Bruni and Francesco Barbaro praised wealth as preconditions for "active civic virtue." For the first time in history and exclusively within the context of the Renaissance city-state, the "Economic Man" — such as Francesco Datini, the true rags-to-riches paradigm of the Florentine-Tuscan merchant-noble —-had arrived.
The Renaissance City-state Encouraged Competition and Industrial Production
The struggle between ascending city-states spurred so much competition between them that overseas exports began to far exceed imports due to economic battles between these states to outdo each other. It was no accident, for example, that Florence achieved the most economic and political hegemony in Tuscany, as that city-state was most susceptible of being cut off from critical lines of trade and food supplies by regional rivals. Tyrants tended to be economic visionaries: they encouraged this competition — as Viscontis, de Medicis, or Sforzas. In more republican states such as Florence, anti-tyrannical and anti-imperial Tuscan city leagues were founded that also became free-trade zones between one another.
The wool trade, salt, silks, olive oil, all flourished during this time and the phenomenon of the modern-day entrepreneur came on the scene, emerging out the guild-run craft economies of the Middle Ages. Where city-states flourished, the modernization of the general economy followed: the mobility of labor improved, jurisdictional sovereignty was codified in law, transportation systems were founded, and the division of labor expanded. Close to 500 years later, a newly unified Italy would be without leadership once more and the country would only begin to industrialize at the turn of the 20th century.
Small Was Beautiful — and Productive
The city-state of Lucca was an unusually successful example of the age, holding its own as an economic powerhouse in the silk industry. The city-state's leader, Paolo Guinigi, a descendant of one of the most acclaimed families of Lucca, promoted the trade of Carrera marble, the manufacture of silk products, and he modernized the banking system, while appeasing the powerful Viscontis in Milan. Nor was democracy entirely lacking: there was openness of access to office and positions of influence. Lucca's parlomento of 1430, for example, consisted of 97 citizens ranging from a merchant elite to doctors of law to weavers, leather workers, and butchers. The population all across class lines was made up of independent land-holders.
One must always be careful when reasoning backwards from a modern economic perspective to quite a different set of conditions in ancient or medieval times. But the stunning historic continuity of the human belief in the imperative of private property; in earned rewards for ingenuity and entrepreneurship, and in the role of honor in banking and commerce remain lessons to return to again and again — in the hope that such beliefs never merely remain interesting anecdotes of the past.
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