The Economics of Ancient Greece

Something remarkable happened in classical Greece, but we didn’t know about it until very recently. Against all historical odds, they nourished a successful class of entrepreneurs and became wealthy.

Greek authors usually didn’t portray their civilization that way. Herodotus famously contrasted Greek poverty with Eastern luxury in an encounter he recorded (or made up) between the Athenian lawgiver Solon and Croesus, the eponymously wealthy Lydian king. Croesus took Solon on a tour of his treasury, then asked him who was the happiest man he had ever seen. Solon replied that it was someone named Tellus, an Athenian of moderate means, who was lucky in having beautiful and good children and grandchildren, and who died old, and heroically, in battle.

Solon’s pointed indifference to Croesus’ wealth was not lost on his host, who rudely sent him on his way. The fact that Croesus later lost his kingdom and his riches drove home Herodotus’ point that wealth is fickle and dangerous, and that the Greeks were better off for not having much of it. The point isn’t original to Herodotus, and turns up often in Greek poetry—in this case, in Aeschylus’ Agamemnon:

Goddess Justice shines in poor homes,

And honors the righteous life. But gilded palaces

She flees, abashed by their corruption.

Modern scholars have tended to take the Greeks at their word about their own poverty, but Josiah Ober, professor of political science and classics at Stanford, does not. He points out that the Tellus/Croesus comparison doesn’t really make sense, since Tellus was a middle-class citizen and Croesus a king. The right comparison would be between the ancient Greek middle class and other middle classes, ancient or modern.

Those comparisons are hard to make, even for contemporary economists who are awash in data. For the ancient world, economic data are scarce. But we now have a mass of information about the ancient economy that we didn’t have a generation ago, thanks to the work of a team of international scholars, compiled in the monumental Inventory of Archaic and Classical Poleis (2005).

Ober marshals the data, using an impressive grasp of political and economic theory, to argue that a substantial Greek middle class started growing in the archaic period and soon outpaced that of nearly all ancient societies. Of course, the ancient Greeks would not be considered wealthy by modern American or European standards; but their unusually high standard of living lasted until well after Alexander’s conquests, and later Greeks wouldn’t reach it again until the early 20th century.

If this is true—and there seems little reason to doubt it—how did they do it? It is an unlikely outcome for a fractious constellation of city-states that had neither much interest in, nor talent for, empire-building.

Ober’s answer relies, provocatively—for a classical Greek historian, at least—on evolutionary biology, information science, and game theory, as well as on the more traditional disciplines of history, archaeology, political science (with an emphasis on Aristotle’s Politics), and economics. He devotes part of an early chapter to comparing the Greek city-states to ants around a pond, where no individual ant has much information about resources or colony planning but the entire colony of independent actors thrives as it processes information effectively in a decentralized, distributed system.

Ober is careful not to push the analogy too far, but it effectively frames a central tenet of his thesis: The absence of central planning among the Greek poleis facilitated rather than hindered the innovations that created and spread their remarkable prosperity. He also asserts that neither we nor the Greeks could have understood how this happened until very recently—not just because we lacked the data, but because we didn’t have the right intellectual tools.

To explain the world of the Greek poleis, we need to move forward in time, beyond the industrial era into the contemporary world of self-consciously knowledge-based enterprises. It is now widely understood that exchanging and aggregating diverse and dispersed forms of knowledge is a key factor to the success of contemporary purposeful organizations.

Traditional ancient societies, in this view, clogged the flow of vital economic information by channeling it through an informationally sclerotic social elite who controlled the peasantry with a combination of religious-political ideology and expertly deployed violence. This political configuration was so common in the ancient world that some economic historians have dubbed it the “natural state,” in which most people lived at subsistence level while a tiny ruling class siphoned off all the economy’s wealth. In such societies, incentives to innovate were rare: Peasants had no desire to increase their efficiency because they wouldn’t reap any economic benefits, and the wealthy already had more than they needed.

The Greeks escaped this economic sinkhole, for a time, partly through historical accident, climate, geography, and culture. The collapse of the Mycenaean palace culture in the late Bronze Age left a political vacuum that no great powers rushed to fill; the Mediterranean climate favored the cultivation of grapes, olives, and grain, which are easily processed and traded in the Mediterranean basin. Widespread colonization in the archaic period spread a common Hellenic culture and language around this “pond,” facilitating communication and interaction among about 1,500 independent poleis.

The Greeks leveraged these assets through citizen-centered government and relentless competition and innovation. Each independent polis was a petri dish of political experimentation, and information about what worked and what didn’t easily spread among the other poleis. Among the most important of these innovations, according to Ober, was democracy, not necessarily because it was a more just system of government (sometimes it wasn’t) but because it was a more efficient means of gathering and processing information, distributed among the citizens, that was vital to the success of the polis.

Although democracy wasn’t ubiquitous among the Greek poleis, many of its citizen-centered innovations spread to less democratic states, and some survived even Alexander’s conquests. Other essential conditions for prosperity were the maintenance of what Ober calls “fair rules” of government and trade as well as efforts to reduce transaction costs by establishing reliable currency, common weights and meas-ures, and public infrastructure.

Classics scholars will be familiar with some of these ideas, which Ober began developing in Democracy and Knowledge: Innovation and Learning in Classical Athens (2008). But his work will be of interest to anyone who is serious about the history of political economy, or who wants to know more about the relationship between democracy, economic growth, and human flourishing, whether in the ancient or modern world.

Although I would not recommend The Rise and Fall of Classical Greece as an introduction to Greek history, it will richly reward a serious lay reader. One of its most appealing qualities is its multidisciplinary approach, which is the fruit of Ober’s extensive and generously acknowledged collaboration with scholars from around the world as well as with his Stanford colleagues in a number of fields, including the sciences. In this respect, it points in a direction that future humanities scholars will need to go if they, too, wish to flourish.

David Wharton is associate professor of classical studies at the University of North Carolina, Greensboro.

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