Economic History

• -From the start there exists a materialist connection of humans with one another, i.e., the satisfaction of basic needs.
• – The first historical act is the act of production of the means to satisfy these needs, the production of material life itself.
• -Humans work on nature and through that relation emerges a cultural system of values, norms, and ideologies that determine the inner connections that holds difference social formations together.
• -Consciousness, ideas, values, norms are historical and must be studied in relation to the history of industry and exchange.
• It thus follows from this that a certain mode of production, or industrial stage, determines a certain set of social, political and economic relations within a society.
• Hence, economic ideas are always and intimately a product of their own time and place; they cannot be seen apart from the world they interpret.
• Social formations are in a constant process of transformation; if  economic ideas are to retain relevance, they must also change.Pre-Capitalist Social FormationsAll social formations have an underlying ‘structure’ (a set of underlying characteristics not necessarily
  visible which separate it from other societies).

  Why study the past:
  To understand how contemporary market society came into being
  More importantly: to understand its underlying framework so we may be able to understand,
  analyze and possibly solve the issues/problems/contradictions that face us.

• Did all societies use the market mechanism to answer
• their production, consumption and distribution questions?

• “Nobody ever saw a dog make a fair and deliberate exchange of one bone for another with another dog,”                                       Adam Smith, The Wealth of Nations.

• Smith was writing about a certain propensity in human
• nature…; the propensity to truck, barter, and exchange
• one thing for another.”
• A look at earlier economies disputes this proposition.

The Economic organization of Antiquity

• -Markets, buying and selling, even highly organized
• trading bodies were features of ancient society
• -However, they must not be confused with the presence of a market society; i.e.,
• -The markets of antiquity were not the means by which
• those societies solved their  basic economic problems.
  • Essential Characteristics
    of An Antiquarian Economy
  • Basic Industry was agriculture; All ancient societies are basically rural
  • economies
    • Producing unit was the household
    • Labour force was the slaves
    • Economic personage of antiquity was neither trader nor urban dweller
    • -He was a tiller of the soil; but very different from today:
    • Contemporary farmers are business people:
      • they sell their output on one market and buy from another
      • The accumulation of money, not wheat and corn, is the object of their efforts
      • Profit and loss effect changes and new agricultural technology is put into if profitable. They
      • are in every sense of the word agribusinesses

The peasant:

–       highly skilled and independent but stubborn and clung to traditional ways (necessary

• because small errors would cause starvation)
• -did not buy majority of supplies but made them himself
• -does not produce primarily for a market but for himself
• -often does not consume, but must hand over a portion- tenth, third, half or more to the
• owner of the land
• Main concerns of modern economics irrelevant
• There were independent citizen farmers in classical Greece and Republican
• Rome, but they were exceptions to the rule

• Over most of the modern period, the theory of value and theory of distribution, and theory of interest  have been the ultimate concern

• Not an issue in earlier societies because:

• With slaves, there was no compelling need for a theory of wages.

• Labour and manual work was not consigned a dignified role:
  • “The lower sort are by nature slaves, and it is better for them as for all inferiors that they should be under the rule of a master…Indeed the use made of slaves and of tame animals is not very different.

Aristotle

• Slaves were, of course, not the only source of labour

–       there were free workmen and unemployed individuals who were not slaves

• Central point: A flourishing market economy of the city rested atop an economic structure run by tradition and command. The merchants stood on the shoulders of innumerable peasants and slaves

• No interest in the absence of capital
• People borrow money and interest for two reasons:
  • to purchases capital –machinery and equipment- that will contribute to earnings;
  • to pay interest after borrowing for personal needs or extravagance)

• Since capital goods are of little visible importance in a household economy:
• lending and borrowing is of the second sort,
• interest is not viewed as part of the production cost

Economic Life of the cities

• Usury was also condemned:
  • “The most hated sort of money making and with the greatest reason, is usury…
  • For money was intended to be used in exchange, but not to increase at                                        interest”
    • -Aristotle
    • With production and consumption centered on the household, there was no necessity
    • for a theory of prices since interest and wages did not have a role in production costs

City and Rural Economies

• Huge contrasts between the relatively static life of the countryside and the active life of the city
• Rome boasted a thriving and domestic commerce; speculators converged regularly on an immense stock exchange

• Essential difference between modern and ancient cities:
  • modern city is a not only a receiver of goods shipped in from the hinterlands but also an importer
  • exporter of goods and services back to the countryside
    • cities of antiquity tended to assume an economically parasitical role vis-à-vis the rest of the economy: much of the trade was in the nature of luxury goods for its upper classes rather raw materials to be worked and then sent out to a goods-consuming economy
    • As centers of economic activity, they were seperated by a wide gulf from the country making them enclaves of economic life rather than components of an integrated rural urban economie

The Social Surplus

• In any society, wealth implies that a surplus has been wrung from nature, that society has not only solved its basic economic problem but has achieved a margin of effort above whatever is required for its own existence.
• Examples of surplus are astonishing in ancient societies:
  • Temples of the ancient Assyrian Kings              treasures of the Aztecs
  • the Pyramids of Egypt                                          the Acropolis of Athens
  • the magnificent architecture of Rome
  • All of the above testify to the ability of an agricultural civilization to achieve a massive surplus to pry considerable amounts of labour loose from the land.
  • A surplus that a society manages to achieve can be applied in many directions:
  • -agrictultural productivity     irrigation ditches or dams
  • -tools and equipment of the workman
    • Or
    • to support a nonworking religious order of both decent and indecent parasites, or a class of fat courtiers and idle nobility who deceive the others of their proclaimed rights to the fruits of others labour

• The social form taken by the accumulation of wealth reveals a great deal about any society.

• To whom does the Surplus Accrue
  A central issue concerning distributiom