• -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).

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    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

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  • -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.


  • 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

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