Economic Thought Before Adam Smith

July 5, 2015
Mises Audio Books Podcast

The Greeks were the first civilized people to use reason to systematically analyze the natural world around them, as opposed to thinking that natural events and things resulted from, and were subject to, the whims of the gods. They developed a system of thought and scientific investigation that they called Natural Law. They examined the natural world and its properties, and classified things into categories. This included the study of man. According to Aristotle, man's existence is limited and n The Greeks were the first civilized people to use reason to systematically analyze the natural world around them, as opposed to thinking that natural events and things resulted from, and were subject to, the whims of the gods. They developed a system of thought and scientific investigation that they called Natural Law. They examined the natural world and its properties, and classified things into categories. This included the study of man. According to Aristotle, man's existence is limited and not necessary. According to Plato, however, man's existence is eternal and necessary; man has simply degraded from this original form; we are supposed to transcend and work our way back to our original, perfect, eternal selves. In political thought, both Aristotle and Plato favored the aristocratic, oligarchical rule of the "polis, " the city-state, where individual aspirations and endeavors are subjugated to the needs of the state, in this case, the polis; the "good" is not to be pursued by the individual, and the individual has no rights. Rather, virtue and the good life is to be found in the context of the polis. This statist view led to a feeling of contempt for innovation, entrepreneurship, labor and trade for profit. Hesiod, an early Greek poet, was the first "economist, " as one of his poems, Works and Days, focuses on the problem of how humans use scarce resources towards abundant ends; labor, Material, and time must be allocated efficiently and harmoniously through the just application of laws. Other pre-Socratic theorists include Pythagorus and Democritus who founded "subjective value theory, " i.e. wealth is a subjective value, although an over-abundant good is necessarily less valued. He also defended the idea of private property because it provides an incentive for work. Plato, Rothbard argues, favored in his Republic a "right-wing collectivist utopia." That is, the two ruling classes, the philosopher-kings and the soldiers were to live under absolute communism, sharing property, women, children, and meals, because private property corrupts virtue. The state would also be totalitarian where freedom of speech and the arts are suppressed. He proposed the idea of division of labor, although he ranked hierarchically the individual occupations, with laborers at the bottom. He denounced the use of gold and silver as money. Zenophon wrote on household management. One of his ideas was that an increase in supply of a commodity leads...

Private property rights and the idea of laissez-faire came to the west via the Theodosian code and the Corpus Juris Civilis of Justinian - a "just price" is any price freely arrived at by buyer and seller. "Canon Law" was the law governing the church. During early middle ages canon law incorporated Roman law but also the capitularies of the Carolingian empire which fixed "fair prices" (prices commonly charged) & prohibited usury. In the high middle ages, the University of Bologna published the Decretum (collection of canon law)which took an anti-merchant position. Later, a more favorable view of private property and merchants grew.

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