- -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
- Essential Characteristics
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
