Economic Doctrines: Aspects of Economic Thought from Antiquity and the Middle Ages Course: Conf. Univ. Dr. Octavian Jula Seminar: CDA Gianluca PhD Zanellato Index General Historical Background Ancient Times Classical Antiquity Plato and Aristotele Medieval Economic Thought Discussions Next seminar Ancient Times Human life - dominated by natural phenomena, wars and arbitrary use of political power. Religious sensibility Repetitive cycles of work and life, day by day, year by year were preferred to innovation and change Pre-classical literature – more disposed to judge economic performance than to analyze it. Ancient Times The Sumerians (app. 3000-2000 BC) used writing primarily as a form of record keeping. The Babylonian Code of Hammurabi (18th century BC) – normative prescriptions for economic relations. Ancient Times Law 6 • If a man has stolen property belonging to a god or a palace, that man shall be put to death, and also the one who has received the stolen property from his hand shall be put to death. Law 88 • If a merchant has given corn on loan, he may take 100 SILA of corn as interest on 1 GUR; if he has given silver on loan, he may take 1/6 shekel 6 grains as interest on 1 shekel of silver. Ancient Times example of the analysis of the Old price formation as a result of the Testament interplay of supply and demand • During the seven years of abundance the land produced plentifully. Joseph collected all the food produced in those seven years of abundance in Egypt and stored it in the cities… Joseph stored up huge quantities of grain, like the sand of the sea; it was so much that he stopped keeping records because it was beyond measure. When the famine had spread over the whole country, Joseph opened all the storehouses and sold grain to the Egyptians, for the famine was severe throughout Egypt. And all the world came to Egypt to buy grain from Joseph, because the famine was severe everywhere. Classical Antiquity The word economy comes from the Greek, where oikonomia can be taken to mean “domestic management” Athens (liberal and democratic) vs. Sparta (militarist) The most eminent Athenian thinkers invariably undervalued the commercial order that surrounded and supported them while they took every opportunity to extol the statist totalitarianism Sparta represented. Classical Antiquity Greeks contribution to economics was a rational approach to social science in general The word "economics“ takes its name from Xenophon's instructional treatise on efficient management and leadership, the Oeconomicus. Classical Antiquity Their economy may be described as "premarket," not that trade was absent, but rather in the sense that products were neither uniform, nor traded on organized exchanges, nor analyzed for their own sake. Interested primarily in economic and organizational efficiency and their view of the world was anthropocentric, not mechanistic. The ancient Greeks placed great stock in the self-regulating capacities of individuals who sought to maximize human happiness by making rational decisions, but they did not discover the self-regulating marketplace, which is the essence of modern economics. Classical Antiquity they developed the art of administration rather than the science of economics. Agricultural Economy Development of analytical structures the following components of modern economics originated in Greek thought: efficiency, resource allocation, the notion of subjective value, the hedonic calculus, and the concept of diminishing marginal utility. Plato 428–427 BC Ancient Greek Notable Economic Thought Influenced by Socrates, Hesiod Plato Attacks on private property. Praise for common ownership. Contempt for the institution of the traditional family. Typical characteristics of the intellectual who believes himself wiser than and superior to everyone else and who is ignorant of even the most essential principles of the spontaneous market order, which makes civilization possible. Plato Economic Thought of Plato • Economics is the science which deals with the satisfaction of human wants through exchange, seeking so to regulate the industries of the state as to make its citizens good and happy, and so to promote the highest well-being of the whole.” Plato's dialogue The Republic (ca. 380–360 BCE Plato Plato's first principle in his discourse on justice is that specialization and division of labor establish efficiency and productivity. How then, are the fruits of efficiency and productivity to be distributed? Plato answered that goods and services are distributed through a marketplace, with money as a token' of exchange. But he did not consider the marketplace capable of self-regulation. The marketplace, like the state, requires administrative control. Plato was the first to advocate the Credit Theory of Money, that money originated as a unit of account for debt. Aristotele Ancient Greek Notable Economic Thought Logic Influenced by Socrates, Plato Influences Adam Smith, Hobbes, William Petty, Francois Quesnay Aristotele Private property: “Property that is common to the greatest number of owners receives the least attention; men care most for their private possessions, and for that they own in common less, or only so far as it falls to their own individual share.” (Politics) Aristotele Commensurability and money: “ When the inhabitants of one country became more dependent on those of another, and they imported what they needed, and exported the surplus, money necessarily came into use. For the various necessaries of life are not easily carried about, and hence men agreed to employ in their dealing with each other something which was intrinsically useful and easily applicable to the purposes of life, for example, iron, silver, and the like. Of this the value was at first measured by size and weight, but in the process of time they put a stamp upon it, to save the trouble of weighing and to mark the value.” Aristotele “The most hated sort (of wealth getting) and with the greatest reason, is usury, which makes a gain out of money itself and not from the natural object of it. For money was intended to be used in exchange but not to increase at interest… Wherefore of all modes of getting wealth, this is the most unnatural.” (Politics) Aristotele The nearest approach made by Greek philosophy to developing a distinct theory of economics came in discussing the elements of household management. Here a distinction was drawn between economics (oikonomik) and chrematistics (chrematistik); the former embraces chiefly wealth consumption in the satisfaction of wants, and the provision of such necessary and useful commodities as can be stored to meet those wants; the latter deals with wealthgetting, including money-making and exchange. Concerning the latter, Aristotle says, “And there is another element of a household, the so called art of money-making which, according to some, is identical with household management, according to others, a principal part of it.” He based economics on needs, analyzed their nature and proceeded to isolate the economic goods by which economic needs are satisfied; Aristotle expresses that consumption was the objective of production, and the surplus should be allocated to the rearing of children, and personal satiation ought to be the natural limit of consumption. Aristotele Aristotle outlined the common characteristics of private property that solidified his support: Private property is more productive and leads to progress. Conflict is inherent in communal property management. Private property is intrinsic to man’s nature. The love of self, money, and property is tied to natural love of exclusive ownership. Private property has existed always and everywhere. Only private property allows for opportunity for moral action; to practice virtues of benevolence and philanthropy. Medieval Economic Thought The end of the ancient world marks the beginning of the Middle Ages which covered nearly 1000 years. For five centuries, from 700 to 1200, Islam led the world in power, organization, and extent of government; in social refinements and standards of living; in literature, scholarship, science, medicine, and philosophy. Roman Empire left place to Feudal System Medieval Economic Thought Society divided in Lords and Serfs Latifundia rent out holdings to tenants in exchange for a rent Coloni foundation Medieval Economic Thought Scholaticism: known for their moral and philosophical approach to the study of exchange, value, and ownership within period. Until the arrival of Mercantilism in the 14th century the Scholastics (or Schoolmen as they are commonly referred to today) were at the forefront of the foundations of establishing economic theory within the framework of philosophy. Most influential economic thinker of the Scholastic period was a Sicilian-born Roman Catholic by the name of Thomas Aquinas Medieval Economic Thought Thomas Aquinas Scholastic School Medieval Period Just price and usury Influenced by Socrates, Plato Influences John Locke Medieval Economic Thought In the treaty “Summa Theologica” Aquinas dealt with the concept of a just price, which he considered necessary for the reproduction of the social order; Thomas Aquinas argued that it was a moral obligation of businesses to sell goods at a just price. He argued it was immoral for sellers to raise their prices simply because buyers were in pressing need for a product. He reaffirmed the double measure of goods (value in use versus value in exchange) that Aristotle had established; second, he introduced wants into the price formula. This last contribution is especially important because it marked the earliest root of an analytical demand theory of value. Aquinas argued that price varies with wants. Indigentia became a regulator of value. This contribution, however, was strictly formal Medieval Economic Thought Aquinas viewed market forces as antagonistic to justice. difficult to reconcile the medieval notion of "just price" with the modern notion of "market price" as the former is generally defended on normative grounds whereas the latter is held to be an objective result of impersonal forces. Medieval Economic Thought Duns Scotus thought it possible to be more precise than Aquinas in calculating a just price, emphasizing the costs of labor and expenses, although he recognized that the latter might be inflated by exaggeration because buyer and seller usually have different ideas of what a just price comprises. If people did not benefit from a transaction, in Scotus' view, they would not trade. Scotus defended merchants as performing a necessary and useful social role, transporting goods and making them available to the public. Q&A Session
