The intellectual odyssey that laid the foundations for Western civilization began in classical Greece. Unfortunately, Greek thinkers failed in their attempt to grasp the essential principles of the spontaneous market order. FULL ARTICLE by Jesus Huerta de Soto
Source link: http://archive.mises.org/13905/economic-thought-in-ancient-greece/
Economic Thought in Ancient Greece
Previous post: Evolutionary Psychology and the Antimarket Bias
Next post: “Who’s Funding This?!”
{ 35 comments }
Awesome article. Very Rothbardian in style. I wish it had many, many more footnotes, though, as I’d like to read from the Greek writers themselves what de Soto is summarizing.
I tend to agree. I would love especially to know where I could find the writings of Plato that permits Prof. Huerta de Soto to write the following (3rd para. following the subtitle “The Particularly Alarming”… : “We must note the arrogant tone and false modesty shown by Socrates in his defense speech before the jury which tried him, a speech Plato records. There is no doubt that Socrates exerted a negative influence on the youth of the city of Athens, whom he attracted by ridiculing the life’s work of their parents, who selflessly devoted themselves to their honest, daily efforts in the fields of trade, craftsmanship, and the market.”
I don’t ask this out of defiance but rather because I found this passage so strong that I would love to use it myself in future debates. Of course I could refer to the article, but the source itself would be better.
Socrates’ speech is here.
You’ve not read the Apology? You should. It’s pretty short and rather stirring.
Muy buen artículo, Jesús! Muchas gracias.
For those interested in some sources, here’s a link I’ve kept, for Aristotle’s writings (can’t guarantee accuracy, as I am not versed in Ancient Greek):
http://www.perseus.tufts.edu/hopper/text?doc=Perseus%3Atext%3A1999.01.0058&redirect=true
Saludos,
Gracias Jesús!
It’s always a (too rare) pleasure to read your pieces.
Thank you Professor de Soto, that was a wonderful article.
Have you written any more about the Taoist philosophers and their contribution to Libertarianism and Free-market economics? That was really interesting I would love to read more on this subject.
Ethan,
http://mises.org/daily/1967
To me Lao Tzu shows the greatest way to maximize liberty. His writings are for to a young ruler. He’s basically telling him to do what a father does when he takes his child’s training wheels off and gives him a shove:
If you want to be a great leader,
you must learn to follow the Tao.
Stop trying to control.
Let go of fixed plans and concepts,
and the world will govern itself.
The more prohibitions you have,
the less virtuous people will be.
The more weapons you have,
the less secure people will be.
The more subsidies you have,
the less self-reliant people will be.
Therefore the Master says:
I let go of the law,
and people become honest.
I let go of economics,
and people become prosperous.
I let go of religion,
and people become serene.
I let go of all desire for the common good,
and the good becomes common as grass.
A gem.
And yet another omission in my education; I must read more of Lao Tzu.
Thanks for this.
You bet, Franklin.
This explains why it took so long for Western Europe to develop economically. I would like to have de Soto’s opinion on how the scholastics of Salamanca were able, and brave enough, to go against Aristotle when the church virtually worshipped him.
Yes, Western civilization is built on the logic of Plato and Aristotle, but as de Soto demonstrates we had to get away from their economics in order to advance. The scholastics who did so based their ideas on observation and the Bible. In other words, freedom and capitalism came from abandoning the Greek heritage where it touched on those points.
Also, this explains to a large degree why Catholocism opposed capitalism of the Dutch Republic for so long. They were still wedded to Aristotle.
Awesome piece, very well reasoned and written. Challenging in places for someone not as well versed in the ancients but well worth reading to the finish. I’m struck by the similarities of thought between Aristotle and our modern statists such as Rangel, Frank and Pelosi. If only we could offer them the cup.
Huerta,
There is no doubt, as further illustrated by this article, that you are a major intellectual force. I found your most recent book an outstanding economic and historical treatise.
However, I must ask you this: from a practical point of view (i.e. applied v. theoretical), is it really necessary or helpful to carry your insights through to what you appear to believe is their fullest logical extension, i.e. anarchism?
It seems to me that such a position merely contributes to misunderstandings and endless, unproductive debates among “purists” who believe it is all (statism) or nothing (anarchism), and those vastly more numerous among us who are searching for practical, meaningful leadership in economic/political/social thought. To defenders of the status quo, it becomes an effective weapon used to dismiss the entire libertarian/Austrian argument. This tactic becomes persuasive to those who might otherwise be attracted to the common sense of our economic viewpoint, but reject it as “utopian” or worse because of a very rational belief that its most articulate advocates subscribe to anarchism as the necessary logical conclusion of this view. Many, including myself, cannot cross over that last bridge.
By reaching so far back historically, while fascinating, you are merely reiterating the basic themes that have been repeated throughout human history; people self-organize, markets and economies emerge along with a form of self-governance, and then struggles for power intervene upon otherwise “pristine” markets and evolve into one form of statism or another. There is no doubt that we can pinpoint this pattern at numerous times throughout history. You have contributed greatly to the analysis of these historical patterns.
However, unlike many who write here, I do not believe this pattern of history is based upon a fundamental “misunderstanding” of the true nature of free human action. Rather, much like individual human action which is driven by self-interest and personal values, Statism is likewise driven by self-interest that crosses into greed, power and coercion. The fact is that the State does exist because it can emerge from the forces of self-interested associations and thrives because it succeeds against opposing forces. It is not my view that it would have done otherwise except for a misunderstanding of the economic model upon which it depends, or that can this be corrected purely by academic debate. This is, in my opinion, the practical reality.
A break in this cycle must be possible short of advocating a theory of governance that is somehow immune from this most natural and persistent of historical patterns.
Big thinkers assume much, and bigger thinkers assume more. A solution that assumes a complete transition from what is, to something that has never been (except perhaps at the very beginnings of primitive societies), is no solution at all. Lack of “market acceptance” is a reasonable analogy to explain why this is true.
If we as a society are destined to pursue a new course that breaks from this historical cycle, something new and workable must find its way between processes of self-governance and those of statism that sends us, much like a chemical catalyst, in a new direction. Progress along that path would be measured by the experience that the State is somehow becoming less than it was before. This would be evidence of a reversal of the current trend, where clearly the State is growing larger and more influential. It would also be an indication that a new social form was successfully competing in the “market” of political and economic ideas and conduct.
I believe that there is a simple, understandable, personal argument that can resonate with the common person, much as the Tea Party movement is doing in America at the moment, which can help to catalyze that transition. I believe you can help us find it.
Humbly yours,
Wildberry
Is this the same Wildberry that posted on the patriotism article of Kel Kelly the other day? I don’t wish to imply that you need any approval from me at all, but if it’s the one and same, I’m a little shocked: this is an excellent post! I was nodding the whole way through. For what it’s worth, many, many thanks for posting it.
Conciliatorily yours
Jon
Jon,
One and the same. Thank you for your kind words.
Wildberry
Hello, I’d like to point to Ryan Faulk’s book, For An Emergent Governance.
http://fringeelements.flux.com/foranemergentgovernance
It is a great book on libertarianism, although from a moral nihilist standpoint.
The kid is a great integrator/synthesizer of concepts and also subscribes to the methods of the Austrian School of understanding economics.
Chapter 2, “Examples” is a great read on how anarchist societies function as they have historically.
http://blip.tv/file/get/Khydraa-Examples212.mp3
starting with the premise that everyone who shares the values of this site would rejoice at any diminution of state power, the question for minarchists is whether acknowledging the state’s legitimacy acts to defeat very objective of shrinking leviathan. accepting small crimes frustrates crime reduction in general ( the other “broken window” theory).
if anarchists achieve minarchy, failing in the quest for utopia, ain’t that a great victory?
“the question for minarchists is whether acknowledging the state’s legitimacy acts to defeat very objective of shrinking leviathan.”
Most people acknowledge that government is necessary. Most people also concede that there has to be some boundary past which government should not go. The argument, for most, is where exactly that line should be drawn. Does this give more room for government abuses than a very hardcore approach like ancap? Absolutely. But the rub is that most people still do believe that government is necessary.
“if anarchists achieve minarchy, failing in the quest for utopia, ain’t that a great victory?”
If anarchists did achieve that, sure. The question is, could they achieve that? Would it be likely? I don’t think so. Most people see anarchism as a sort of fringey utopianism (rightly, IMO). If most people believe that anarchism is not achievable or desirable, why would they support it? And if most people don’t support anarchism, will it ever achieve anything? I think that to ask the question is to answer it.
your line, russ, versus the line of “most people”, united in acknowledging that the state is necessary, evil or otherwise. lacking any clear-cut moral argument, it’s just down to whose line has the most backers. in this sense, minimal government is just as utopian as anarchism, but harder to argue for in clear terms. dogmatic ain’t always bad. i confess that i’ve come from a position like yours, so i guess i too am an apostate.
A very interesting article, and good exposition of Socrates, Plato and Aristotle. Though had the author taken one more step, and noticed the next most influential Greek thinker after Aristotle, Epicurus, he could not claim that “Greek thinkers failed in their attempt to grasp the essential principles of the spontaneous market order and of the dynamic process of social cooperation which surrounded them.” Epicurus understood the spontaneous nature of social cooperation. He disdained all politics and claimed that politics serves only the interests of the politicians. His hedonistic philosophy also recognized the subjective nature of values. He also offered a kind of social contract theory of justice, claiming that laws should be passed only so people would not harm each other, and if any law does not serve this purpose, it is not just.
It is a pitty, that Epicurus is overshadow by the Socrates-Plato-Aristotle trio. Western philosophy might look somewhat different if that wasn’t the case.
“Western philosophy might have looked somewhat different if Epicurus had not been overshadowed by the Socrates-Plato-Aristotle trio.”
Indeed! There would be none.
There is Western philosophy only because of that trio. But for them, the writings of Epicurus would not be of much interest to anyone except possibly a historian of physics who would take note of Democritus’ theory of “atoms” and Epicurus’ slight ad hoc emendation of it.
The moral theory of Epicurus is essentially a series of comforting platitudes from a sickly man who desired to have little to do with the outside world and was obsessed with death to the point of endlessly repeating that it meant nothing to him.
Incidentally, he was no hedonist! As he put it in his letter to Menoeceus: “We do not mean the pleasures of profligates and those that consist in sensuality… but freedom from pain in the body and from trouble in the mind… sober reasoning… banishing mere opinions, to which are due the greatest disturbance of the spirit.”
His “theory of justice” consists of just eight propositions, with no argument to support them. And these propositions survive in a document that is only probably authentic. Plus a few scattered gems of wisdom such as these: “The greatest fruit of justice is serenity”; “The laws exist for the sake of the wise, not that they may not do wrong, but that they may not suffer it.”
Apart from all this, where is the evidence that “Epicurus understood the spontaneous nature of social cooperation”? I thought I had all texts by or attributed to him, but that particular point must have escaped my notice.
Look, you can’t judge the man on the scattered scraps that were left of his work. Lucretius’s De Rerum Natura is a pretty good exposition of Epicureanism that many people find quite persuasive. But whether or not you agree with the scraps of Epicurus himself that survive, we can determine the size of the impact by the crater left behind, and clearly Epicurus had something going for him, even if it isn’t reflected in the surviving texts.
First, I am not judging the man Epicurus. I am just not attributing to him ideas for which there is no evidence that he held them.
Second, Lucretius’ De Rerum Natura is far more impressive than anything we can attribute to Epicurus. However, his views on the origin of society, laws and the like (in Book V of DRN) were basically the same as those of Aristotle and Plato (and others): parenting, bonds of friendship, fear of violence, advantage of co-operation, and so on. But it is hard to extract from this book V anything resembling a coherent (explanatory, analytically worked out) theory on the origin and evolution of society let alone “economic spontaneous order” (which Andrius claimed Epicurus understood so well).
Moreover, if Lucretius was not an original thinker but merely a gifted follower of Epicurus, then – contrary to what Andrius wrote – Epicurus’ ideas on society entered the mainstream of the Western intellectual tradition immediately after Lucretius wrote his book. Cicero (a contemporary of Lucretius) referred to it with appreciation and in fact emphasized the “contractual” aspects Lucretius had only vaguely hinted at. Remember that, at least until the eighteenth century, Cicero was a constant companion of every reader in the West with an interest in human affairs.
Arguably, despite what Andrius claims, modern Western philosophy (from the sixteenth century onward) is at least as much indebted to the “Epicurean tradition” (with its tendencies toward subjectivism, empiricism, relativism, scientism and the like) as it is to the Platonic or Aristotelian tradition.
As for economics, one can understand that Professor Huerta de Soto rather prefers to trace back sound economic theory to the Scholastics (infused as they were with Platonic and especially Aristotelian philosophy) than to the Epicurus-inspired “everything is matter in motion” of Hobbes and other philosophical “modernists.” Which makes his diatribe against Socrates, Plato and Aristotle sound somewhat odd, doesn’t it?
Great article, I thoroughly enjoyed it. I must however object to the idea that Socrates (as Plato presents him) is guilty of “more-than-egotistic self-immolation.” I do not believe that Plato’s account in Apology suggests Socrates has a death wish. Rather, Socrates defends himself both in word and in deed by actively continuing to reform his fellow Athenians even as he is being prosecuted for doing the same. I agree that the Ancients have little to offer in terms of understanding economic science and spontaneous order. But I do think that libertarians can learn things from the Ancients, and understanding them requires more than superficial skimming of the text.
Jeremy, I too thoroughly enjoyed de Soto’s article, but disagreed with his characterization of Socrates. He was a modest and humble man, quick to acknowledge that he knew very little. Nor was his life over at the age of 72, and his wife appealed to him to remain alive for the sake of their children. Rather he chose death instead of abandoning his (perhaps mistaken) vision of justice. The Greeks were not mistaken in their attempt to find the ideals that should be sought.
I further agree with you that “the Ancients have little to offer in terms of understanding economic science and spontaneous order…[but] that libertarians can learn things from the Ancients…”
This is exactly what I was thinking. I love the article and agree with the majority of it but in my opinion De Soto presumes too much in his interpretation of Socrates. For instance it is absolutely true that Socrates critiqued liberal Athenian democracy, but his own social philosophy wasn’t grounded in totalitarianism by any means. it was based on the natural fluctuations of change in society and the state and the role of people in that. It seems more as if his philosophy was less advocating statism and more trying to find out how people best fit in with the state. His fundamental flaw was his assumption that the state was a fixed entity. Yes, Socrates didn’t agree with a liberal gov’t but did he believe in Spartan-esque dictatorship? I doubt it.
“It is true that Aristotle shared the errors of Socrates and Plato, since he did not understand customary law, nor the market, nor THE REST OF THE SOCIAL INSTITUTIONS as spontaneous orders, nor was he able to distinguish between civil society and the state (a distinction the Roman Stoics would grasp perfectly two centuries later).”
To which social institutions is the author attributing the characteristic of “spontaneous order”?
Starting with Menger, the Austrians have held that a spontaneous order is one which arises unintentionally (i.e. as the unintended result of individual action—not the result of the action of a group(s), nor the will of a group(s)). Thus, those institutions which can correctly be described as being examples “spontaneous order” are limited in this regard to: common law; commodity money; free market exchange; the division of labor.
The distinction is important, I think, because there can be a slippery slope whereby some thinkers will characterize all social institutions, by the fact of their mere existence, as being examples of “spontaneous order”—and therefore sacrosanct.
What an excellent article. I have made a few comments on my blog because I didn’t want to make an obscenely large comment here.
I also provided a few quotations and citations for those who would like to look at the original works. As a classicist and studier-of-philosophy I’m more attached to the philosophers, but you have made specific and important criticisms. Criticisms which certainly make us appreciate the contributions of thinkers like Mises and Hayek even more, as well as the acknowledgment of economics as a separate discipline worthy of dedicated study.
http://apologiaproliterativita.blogspot.com/2010/09/response-to-economic-thought-in-ancient.html
Mas Jesus Huerta de Soto, por favor!
Excellent article!
Much as I respect Prof. De Soto’s work in expounding and carrying on the Austrian tradition, his comments in the present article merely show how easy it is to fall prey to the biases instilled in schools about the relevance or irrelevance of the great minds of the past. The article is at best tendentious and at worst wide off the mark as far as its interpretation of Socrates, Plato and Aristotle is concerned.
Let me briefly note what Plato actually wrote.
1) Civilized life cannot do without division of labor, specialization, markets, tradesmen, merchants, paid employees, local and long-distance trade, and coined money.
2) These things constitute a healthy, natural economy (community).
(Republic 369b-372e)
3) What makes an economy unhealthy?
4) excessive consumption (not for food, rest, etcetera, but for self-indulgence); (373a-c)
[Cf. the Austrian critique of the idea that consumption is / contributes to wealth; the American "addiction to consumption".]
5) the desire to live at the expense of others (373d),
[Cf. Bastiat's idea that the State is the grand illusion that this desire can be satisfied for everybody.]
6) which leads to conflict and war; (373d-e)
7) which requires adding armed guardians to the community. (374a)
9) But such men are dangerous, likely “to behave like brutes to one another and the rest of the community.” (375b)
10) Where then are good guardians to be found? (375c)
9) Nowhere, but perhaps they can be bred in the way we breed guard dogs. (375e)
[All of the above in Book 2 of Republic]
These propositions establish the basic question which most of the rest of Republic deals with (in Books 3 to 10): How can we make a class of guardians in such a way that they no longer use their talents for violence for their own advantage but for the defense of the workers, merchants, traders that make up the economic base of the community?
The point is: Republic is a book is about the education of the guardian class (its leader, its officers and its personnel) not of productive men and women.
The big problem identified in Republic:
» Political guardianship and human nature do not mix. «
Solution[*]: Change the nature of the humans who would be guardians (in the way we need to change the nature of a wild dog if we want to get a guard dog) by all sorts of restrictions and regulation on their breeding, training, daily life, etc. “Guardians” cannot be allowed to have a free hand in going about their business because then they are bound to use their power (force) in ways that corrupt their intended function.
Question: Is it possible to change the nature of people?
Answer: In theory, yes, perhaps. In practice, no (Book 11). Eventually, fallible human nature reasserts itself even among well-educated guardians. The inevitable end-state of a politicized community is a form of institutionalized slavery under an autocratic, dictatorial regime supported by favorites and mercenaries. (562b, sqq.)
Conclusion: Plato did not have the motives or prejudices De Soto ascribes to him. He just was not writing about economics but about politics, not about the productive classes but about the political classes (politicians and military and administrative government personnel). Did not the classical liberals use his notion that there should be two regimes: one of freedom for ordinary people, and one of extreme regulation for “public servants”? Did that make them communists, anti-capitalists, economic illiterates?
Prof. De Soto’s treatment of Socrates and Aristotle is equally questionable (although for other reasons) but its mistakes with respect to them cannot be discussed in a short note. Their arguments on the subject were not structured as neatly as were Plato’s.
[* Plato did not discuss anarcho-libertarian ideas about market-based defense services. Neither did Hayek or Mises.]
Notionally I appreciate your point but I wonder if the premise is sound: because Plato et al didn’t realize they weren’t writing about “economics” we can’t criticize them for being wrong about economics. It would seem not to be if one considers economics an objective science. I did, though and in similar spirit to you I think, argue it was more profitable to take the statements of the philosophers in question in context because these “mistakes” of theirs were made for particular reasons, i.e. not having conceptions of “economics” and a spontaneous order, being consistent with principles stated elsewhere in their work, and working toward a different end.
In addition to being more constructive and elucidating, perhaps such a discussion about “the why” of their “mistakes” would have tempered the tone of Prof. de Soto’s article and made certain people not bristle so much. On the one hand we don’t want to pigeon-hole them into later conceptions, on the other we somehow must if we consider there to be a larger set of “true”/objective categories.
Having lived in Asia for nearly a decade and having made no small effort to come to terms with the cultural differences that exist between “East” and “West”, I find it very frustrating to read these kinds of articles and then the slew of comments that follow. You cannot just throw “thinkers” from a very foreign culture in a very different age into a debate that is effectively one peculiar to the West.
First of all, Asian culture has had very little interest in the status and identity of the individual. The individual is never held in high regard. The Daoists, it is true, relative to Confucianists and Legalists, objected to governance. This was not in favor of the individual, but rather in favor of the cosmos. For the Confucianists, the Son of Heaven played a vital role, both in terms of ritual and governance (which for the Confucianists and Chinese more generally were barely differentiated) in the perpetuation of cosmic order. For the Daoist the ebb and flow of the cosmos did not require the amount of “correction” (which is the same word for “governing” in Chinese) that the Confucianists claimed. Daoists also objected to education, logic, categorization, and so forth. Although it is rather unfair to the Daoists, they resemble Rousseauistic romanticism more than anything else.
Confucianism has been a stifling force in many ways in East Asia, and Daoism and (later) Buddhism provided a valve for the social pressure and conformism of society, but that was towards a dissolution of the self through “wuwei”, which is corrupted when regarded as laissez-faire. A better interpretation would be “pointlessness”. One should refrain from trying to achieve or accomplish anything, since all is cosmic will. The Confucianists themselves used to refer to the story of the farmer who tried to make his crops grow faster by pulling them.
It was the Greeks who gave the world the notion of the individual, without which libertarianism and freedom would be inconceivable. Prometheus and Achilles come to mind, but more importantly is Herodotus, the first historian and–what is unfortunately ignored–the first political philosopher. The Persian Empire was a typical liberal, oriental despotism. Do whatever you like, but know your place! The Persians only asked the Greeks for earth and water, but the Greeks knew very well what that simple gesture meant. And Herodotus, not my beloved Socrates or Plato, nor Aristotle, pointed out that the victory of these theretofore insignificant and disunited city-states defeated the empire because of liberty and the rule of law, not for benevolent despotism. Each community was fighting for that blend of law and liberty that we find in the best forms of republicanism.
This misinterpretation of Greece and China is rooted in economistic libertarianism. Freedom is ultimately about the individual, not economic productivity. Productivity is just the material aspect of freedom.
“Freedom is ultimately about the individual, not economic productivity.”
ldo.
This reminds me of an entry on philosphy from the “Uncyclopedia” website (a paraody of Wikipedia).
“Philosophy is a common psychological disorder that causes people to endlessly ponder the inane, the unfalsifiable, and the pointless, rather than go out and get a job. It also refers to the incessant posing of questions that have no answers…
Practically, philosophy is useful while trying to disprove your religion, the laws of society, any concept of ethics you might have, even the existence of that chair you’re sitting on (although never convincingly enough so as to make you feel that you have to stand up). Bonus points are awarded for disproving that you disproved anything.
athens-now.blogspot.com
the latest news from Greece in English
24h live feed
Comments on this entry are closed.