Economics in the ancient world?

Part of my research is located between philosophy and specific disciplines in the humanities and social sciences. I’m currently working on a project on several facets of economic life in the ancient Near East. I’m very serious about it, and even did some study in Akkadian, Sumerian, and Hebrew to understand some of the debates on the interpretation of primary sources.

Some crucial questions that anybody in my situation have to ask relate to theory: Was there any such thing as an economy, to begin with? Okay, the answer is straightforward: people were indeed allocating scarce resources, trading them, producing them, and so on. I don’t know of anyone who doubts that, and in case anyone tries, I’d point them to the enormous amount of ancient Mesopotamian contracts, receipts and court cases dealing with the issue, not to mention the famous “law codes” of Hammurabi and other kings.

The answer to next question, though, is less obvious: Can we apply contemporary economic theory to interpret, understand, explain, model, etc. economic behaviour in the ancient world? So far, I’ve identified three schools of thought on this matter in the field of Ancient Near Eastern Studies.

First, there are those who focus on particulars on the “micro” level. Their research is predominantly concerned with the publication, translation, and commentary on hundreds and hundreds of inscribed clay tablets containing valuable information about everyday life in the ancient world. These scholars won’t have much to say in terms of generalisation, because the questions they address are a degree further removed from the questions we tend to ask, say, in economics or sociology.

A common type of research in this line (and, frankly, a type of research I wouldn’t mind executing someday) looks at the complete set of cuneiform tablets found in a specific place and tries to elucidate some patterns within that set of texts. I’ve heard, for example, of someone who did his PhD on the archives of a certain family in Babylon which was involved in trade. That scholar didn’t stop at telling the story of that family, but also synthesised a considerable amount of information about economic transactions and the everyday struggles for that town in that particular period. He also pointed out some interesting linguistic features present in the contracts, letters, and receipts that he transcribed, translated and published as part of his thesis.

In this kind of research, the emphasis is on detailed observation and description, and on a modest type of generalisation to a mid-range view of the local situation. It doesn’t really deal with the economy in general and, arguably, doesn’t make much room for any of today’s economic theories to be used.

The second school of thought borrows from economic sociologists and anthropologists the idea that any economy is intrinsically linked to the way a specific society operates in a given period of history. The works of Karl Marx, Max Weber and, more recently, Karl Polanyi and Immanuel Wallerstein are examples of broad statements of this thesis. Polanyi, in particular, has applied some of this thinking to ancient economies, arguing that, in the ancient Near East, there was no such thing as a “market” in the modern sense. If that’s indeed the case, then the task is to develop a new economics (or at least a new economic theory) to account for phenomena which are particular to that historical context.

In this second kind of research, a key procedure is to ask what the ancients thought they were doing when they were engaged in economic activity. This is analogous to the anthropologist’s “thick description” of a culture in its own terms. Hermeneutics and interpretation should play a major role. We’d need to read those primary sources in search for clues about the ancient view of the economy. Did they imagine the economy as we imagine it today? Or was it something different in their view? What were the words and notions they used to describe economic activity? And so on.

However, how would we know what to look for in the first place? Wouldn’t the very notion of an “economy” be alien to the ancient mind, at least until much later with the Greeks and Romans? Because of this tricky implication, people in this line of research may choose to ignore any subjective or discursive features and may opt instead for a reduction of ideas to material factors, perhaps driven by a Marxist philosophy.

Then, thirdly, there’s the view that presupposes the applicability of contemporary economics to ancient economies. So far, I’ve come across two lines of research, both of which seem underexplored because of the lack of interest of economists in the ancient world, or lack of ability to tackle primary sources. The first line of research looks at the relationship between institutions and the general operation of the economy. I’d place this within the broader approach of neo-institutional economics, or also the so-called law and economics tradition of economic thought.

One interesting question that has been asked in this line of research has to do with the impact of government regulations in the everyday functioning of the economy. For example, how clear were property rights? If we look at the “law codes” of ancient Mesopotamia, we see a large number of definitions of what was allowed and what was forbidden, but were those rules enforced? Were they simply a suggestion? Sometimes, there’s a contrast between what the law code says and what local judges decided in a concrete court case. This way of researching ancient economies, in my view, is more productively executed as teamwork, with an economist and a specialist in ancient texts, languages, and archaeology joining forces.

A second way of applying contemporary economic science to ancient economies resembles the mainstream way of doing research. A model is constructed on the basis of some initial hypothesis, and then the hypothesis is tested against “data”. An important problem with this is that there’s a dearth of concrete and unambiguous information amenable to this sort of treatment. However, this is not the case for all periods. As a matter of fact, we do happen to have access to sizeable sets of information about prices and wages for Babylonia in the Hellenistic period. The crucial source is a set of records that people made correlating the position of the stars and planets with all sorts of information, including economic information. Some preliminary analysis of those series has suggested that prices, for example, behaved more or less like a mainstream economist would expect them to behave.

This issue of the dearth of data leads me to the following thought. I believe that even a mainstream economist should be open to the possibility of another style of economics in the study of ancient economies. I don’t think economists should give up studying them altogether. Some cross-theoretical dialogue with those engaged in other ways of thinking about ancient economies may be in order. However, I understand that many on both sides of the attempted dialogue will feel uncomfortable. After all, a mainstream economist and a Marxist don’t just disagree on method. They also disagree on politics, ethics, the meaning of life, and a number of other issues.

As a possible avenue of research, then, I’d like to suggest a more deductive approach in theory construction and a more discursive approach in the study of historical patterns. From the deductive system we’d know how an economy works in general, even if there are historically-specific possibilities to tackle. From the discursive approach we’d be able to make the most of the “data” that we do have in abundance – thousands of clay tablets with textual information – and with that illustrate the general points.

In my view, this would look like a combination of Austrian political economy with rigorous philological use of primary sources. It would be the sort of research programme to be tackled with a team of people, good libraries, near a museum and in constant dialogue, learning, and interaction. Both fields could potentially benefit from the original interdisciplinary research programme that would emerge.

7 thoughts on “Economics in the ancient world?

  1. I don’t see why the basic laws of economics (e.g. diminishing returns, marginal utility) should be different across time or space. They aren’t even different across species, I think. Tullock had a small volume, the Economics of Non-Human Societies, which discusses application of economic theory to ants and other animals.

    I hear there are a few experimental economists working with chimpanzees in Vanderbilt. They’ve introduced tokens that can be traded for fruits to see if they’ll adopt a currency system. Don’t quote me on it though. I’m never sure if experimental economists are being honest or just messing with me.

  2. I think I’d say more or less the same about the laws of economics being no different. But (putting on philosopher’s hat) people arguing otherwise could challenge the point externally by saying that you’re presupposing mainstream economics knows what those “basic laws” are, and that to the contrary, the basic law is that any economy is embedded in a broader system of social relations, which change over time. In a Marxist view that system operates dialectically, and this is the “universal” law. But another “universal” law is that the way in which the system operates dialectically depends on the mode of production at hand. So the functioning of non-capitalist economies would be different.

    Now, to challenge the point internally, even if we assume those laws are the same, what we can say is that such laws of economics (and the laws of aesthetics etc. for that matter) are normative. A society can choose to break them sometimes, to its own harm. So it’s possible that a society can operate “as if” the laws were different and still carry on for some time (see Keynesianism in the 20th century). The way around that would be to postulate a hierarchy of laws, with the really fundamental ones being less prone to be broken, and the marginal ones being more flexible.

    This is why I think the issue can’t be settled on empirics alone, but requires interaction between theoretical deduction and thorough use of historical sources.

    • If economics is based on deduction, then its unclear why its law should be context specific.

      As you may know, the first big debate the Austrian school of economics got itself into was with the Historical School over methodology. If you agree with the Austrians (or any classical economics-derived school) then the laws of economics are universal. If you agree with the Historicalists, economic laws are time and place specific.

      Here is a good back grounder on the debate on the off chance you aren’t familiar with it:

      A few things in economics aren’t universal and depend on the preferences of individuals/society, such as elasticities. For example, we can say that a 10% increase in Coca Cola’s price in Atlanta might decrease consumption only 0.05% percent. Demand for Coca Cola is simply too inelastic in Atlanta. However a similar price increase in Denver might yield a decrease in consumption of 50%. These are not however laws. They’re simply empirical measures of preferences at time and place of measurement.

      By economic laws I am referring to the basic principles of economics that you’ll find in any micro 101 textbook. I.e. diminishing returns: additional units of a given thing will yield less utility than the initial thing.

    • Thanks. As I said, I’m on board. Years ago, I wrote my undergrad dissertation on Austrian economic methodology.

      But you should have spotted the funny bits in the description of the “relativistic” and historically-specific view: aren’t they being “universalistic” about everything being relative to context? 😉

  3. I did undergraduate research on the trade routes of the ancient Mediterranean, including looking at the money involved. The money was, of course, coinage and the weights of gold and silver determined the value. I did this work 50 years ago so there has undoubtedly been a lot more learned since then. But I did prepare a paper showing that the major coinages were exchangeable integers. But the biggest thing I did was trace the trade routes and found that much of the commerce and economic activity involved nomads that didn’t really appear much in tablets. At the time I thought I had really discovered something until I ran across Teggart’s Rome and China pointing out the crucial role of trade routes. Much of the trade in the age after Alexander was competitive between the north-south Aegean trade from Europe to Egypt and the east-west trade from Africa and India (Africa through Timbuktu and Carthage). These trade networks worked very much like conglomerates competing against each other. Also Frederic Barth did interesting work on contemporary nomads in Iran and the role that a single soldier could have in coordinating fording of a river between herders made it clear that government often worked efficiencies that were not readily apparent and likely had the same effect in the ancient world.

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