Greek Thought Ancient Greek Philosophy

Classical Greek Thought, Ancient Greek Philosophy Thoughts

One might think that Greek economic thought has been thoroughly explored and that full agreement among scholars on the relative importance of various writers has been reached, but that is not the case. For example, recent scholarship by S. Todd Lowry, listed in the Suggested Readings, has found seminal contribu­tions to modern economic analysis by the Greek writer Protagoras. Should he be included? We decided to await confirmation of these conclusions by our colleagues before including Protagoras in our examination. Instead, we begin our analysis with Hesiod and Xenophon.

Hesiod and Xenophon Economic Theogany Summary

The ideas of Hesiod were orally presented during the eighth century BC. The most important work attributed to Hesiod is an accounting of the birth of the gods, Theogony. According to Hesiod, scarcity does not arise from a human condition related to limited resources and unlimited desires; rather, it was one of the evils released when Pandora opened the Box. Hesiod's economic ideas are presented in Works and Days, in which he initiates a pursuit of economic questions that continued for two centuries. Being a farmer, Hesiod was interested in efficiency. Economists use the concept of efficiency in a number of contexts. It is measured as a ratio of outputs to inputs. Maximum efficiency is taken to be achieving the largest possible output with a given input. The units of measure­ment of outputs and inputs can be stated in physical terms (e.g., bushels of wheat per acre) or in monetary units (e.g., dollars of output or input). Of course, one can take a different perspective and measure efficiency not in terms of produc­tivity but in terms of costs (e.g., cost per acre of a bushel of wheat, or the dollar cost of a unit of output). Maximizing efficiency can be expressed as maximizing output or minimizing costs.

It is to be expected that most farmers and producers would be interested in efficiency; indeed, much of the writing about efficiency during the early preclassical period concerned the level of the producer and household. A much more subtle and complex set of issues is encountered when one begins to examine questions of efficiency at the level of the economy. At this level one can no longer measure productivity or costs in physical terms, and economists have turned to monetary measures even though they are not fully satisfactory.

The early writers were not interested in efficiency at the level of society because they had no real insight into the concept of scarcity, its implications, and an economy. The word economics, derived from Greek, was used by Xenophon as the title of his book Oeconomicus. As used by the Greeks, however, the term refers to efficient management at the level of the producer and/or the household. Hesiod, Xenophon, and other early writers were pursuing a set of problems relating to efficiency at the level of the producer and the household that had to be tackled before the much more difficult and less obvious issues of efficiency for an entire economy could be dealt with. It is interesting that economics as a discipline was quite well developed before a full and complete understanding of efficiency at the level of the firm and household was established. (This took place at the end of the nineteenth century, with the use of marginal analysis and differential calculus.)

Xenophon, writing some four hundred years after Hesiod, took the concepts of efficient management much farther than Hesiod and applied them at the level of the household, the producer, the military, and the public administrator. This brought him insights into how efficiency can be improved by practicing a division of labor. Attention to the division of labor was continued by other Greek writers, including Aristotle, and, later, by the scholastics. We will see that at the level of the economy and society, Adam Smith gave special recognition to this influence on the wealth of a nation.

Aristotle Economic Theory Summary, Aristotle Theories

Aristotle is important not only for his contributions to philosophical thinking but for the impact he had on economic ideas during the period of scholasticism. It was to Aristotle's views that St. Thomas Aquinas and other churchmen reacted in the period 1300 to 1500.

Democritus (c. 460-c. 370 BC) had not only argued for a division of labor but also advocated the private ownership of property as an incentive that would lead to greater economic activity. Aristotle's teacher, Plato, had argued that the ruling class of his ideal society, the soldiers and philosophers, should not possess private property but should hold communal property, to avoid conflicts over property that might divert their attention from more important issues. However, Aristotle believed that private property served a useful function in society and that no regulations should be made to limit the amount of property in private hands. His apparent inconsistency in condemning the pursuit of economic gain while endorsing the right to private property troubled moral philosophers until the sixteenth century.

Aristotle's main contributions to economic thinking concerned the exchange of commodities and the use of money in this exchange. People's needs, he said, are moderate, but people's desires are limitless. Hence the production of commodities to satisfy needs was right and natural, whereas the production of goods in an attempt to satisfy unlimited desires was unnatural. Aristotle conceded that when goods are produced to be sold in a market, it can be difficult to determine if this activity is satisfying needs or inordinate desires; but he assumed that if a market exchange is in the form of barter, it is made to satisfy natural needs and no economic gain is intended. Using the medium of money, however, suggests that the objective of the exchange is monetary gain, which Aristotle condemned.

Aristotle agreed with Plato and most other Greek thinkers on the necessity of viewing economic activity in a broader context and not compartmentalizing inquiry. One of the interesting points Aristotle made is that the problem of scarcity can be addressed by reducing consumption, by changing human atti­tudes. This is a powerful idea for the various Utopians and socialists who hope to end societal conflicts by eliminating the conflicts that are inherent in scarcity.