By Josiah Ober
Distillation of the core argument of "The Rise and Fall of Classical Greece."
History is an obvious testing ground for the competing theories about the relationship between institutions and economic growth. But most historical tests of core ideas in political economy have, until recently, been limited to the last several hundred years of (mostly) European history. Limiting the sample for studying the relationship between politics and economic growth to modern states is problematic, because factors other than institutional innovation, notably the exploitation of the New World and technological advance, have influenced modern economies. Ancient Greek history offers a detailed “out of sample” test.
Thanks to large-scale data collection by the Copenhagen Polis Center, and to advances in field archaeology, we now have the evidence to track long-term demographic and economic trends in the world of the ancient Greek city-states (poleis). By the time of Aristotle (late 4th century BCE) there were about 1000 more or less independent Greek poleis. Larger states sought to dominate their neighbors and smaller states organized into federal leagues, but there was never a central government of “Greece.” Greek states competed fiercely with one, but with competition came new forms of social cooperation and a sustained era of rapid economic growth.
The population of Greek speakers rose from a nadir of some 330,000 persons in ca. 1000 BCE to between 8-10 million by ca. 323 BCE. In the same period, average per capita consumption probably roughly doubled across the Greek world – and tripled in Athens, the most advanced and among the most democratic of the city-states. The aggregate growth rate was low compared to modern states, but blistering when compared to other pre-modern civilizations. By Aristotle’s day, close to a third of Greeks lived in towns of 5,000 persons or more – a figure that would not be reached again in Europe until the 17th century – and they lived in well-built homes comparable in size to American suburban residences. The Greek economy was monetized, as state-issued silver coins provided a ready means of exchange. Trade in commodities (including slaves), manufactured goods, and luxury goods boomed within the Greek world and between the Greeks and their neighbors.
Among the striking features of the economy of democratic Athens was the relatively low level of income inequality. Athens was home to many foreign “guest workers” and Athenians employed large numbers of slaves. But even taking slaves and foreigners into account, the distribution of Athenian income was much less unequal than most premodern societies. Athenian wages for non-skilled laborers were high - comparable to wages being paid in Golden Age Holland. Athens’ “Inequality Extraction Ratio,” a measure based on estimating the maximum feasible level of inequality for a given society, is lower than any other premodern economy for which data is available. While we do not have data to measure the Inequality Extraction Ratio for Greek states other than Athens, the evidence of nutrition, gleaned from the scientific study of bones, and of comparative house sizes is consistent with historically low inequality.
The strong performance of the ancient Greek economy helps to explain the so-called “Greek Miracle” – the cultural explosion of Greek literature, visual and performing arts, and science that laid the foundations for Rome, the Renaissance, and the Enlightenment. The classical Greek world is an example of “efflorescence” – the conjunction of sustained economic growth with rich cultural expression. The ancient Greek efflorescence was distinctive in its intensity, duration, and long-term impact on world history.
My book argues that institutions, rather than geography, climate, or luck, made the growth of the ancient Greek economy possible. By the fourth century BCE, the typical Greek city-state was, by world historical standards, very democratic. In Athens, and many other Greek states, most native adult males were participatory citizens, who set policy in citizen councils and assemblies, judged legal cases as jurors on People’s Courts, and were elected or chosen by lot to serve as public officials. Contrary to the common image of Greek democracy as mob rule, we can now trace, in well-documented Athens, how the legislative authority of the People was tempered by law. By the time Plato was writing the Republic, every policy decision made by the Athenian assembly was required to conform to a body of written constitutional law. The laws effectively protected the property, dignity, and bodies of citizens, and to some degree non-citizens as well, against exploitation by powerful individuals or over-reaching state officials.
The comparatively fair and open political institutions of the Greek city-states had their origins in the so-called Dark Age that followed the sudden collapse of the Bronze Age civilization around 1100 BCE. By 8th to 6th centuries BCE, populations had recovered and small settlements coalesced into city-states. In some regions, citizens resisted attempts by local elites to recreate the hierarchical forms of authority that had pertained in the Bronze Age. These Greek citizen-centered communities competed successfully with more hierarchical neighbors. Citizen-centered states mobilized more fighting men. But equally important, states that protected property and persons from exploitation gave residents reason to invest in themselves. Free of fear of expropriation by the powerful, Greeks gained an incentive to invest in developing economic specializations (in Athens, for example, olives and pottery rather than grain) that could give them a comparative advantage in market exchanges. As citizen-centered communities gained ground relative to their hierarchical neighbors, good institutions proved highly adaptive: democracy and formal law were widely adopted. More specializations followed, as did laws aimed at lowering transaction costs by equalizing access to information and dispute resolution.
People among whom the Greeks lived and with whom they traded increasingly adopted Greek institutions. Meanwhile, specialists who had proved their value within the Greek world – including military engineers and experts in state finance, were attractive to Greece’s neighbors -- most notably to Philip II, King of Macedon and his son Alexander III, “the Great.” Taking advantage of the mobility of specialized Greek talent, Philip and Alexander mobilized the technical resources they needed to build a military machine capable of taking over much of the Greek world.
The explosive rise of Macedon ended the era in which Greek city-states were the primary drivers of the history of the eastern Mediterranean. But the rise of Macedon did not lead to the collapse of the Greek economy. Although Alexander’s successors were predatory warlords, Greek states proved to be hard targets, thanks to their investment in civic infrastructure (including massive stone walls) and armies of well-trained citizen soldiers. The warlords taxed the cities at moderate rates, rather than trying to sack them. As a result, the products of Greek culture were preserved for posterity. But the coming of Rome eventually spelled the end of the strong civic institutions that drove the vibrant Greek economy. It was not until the 20th century that Greece finally regain the population and consumption levels of the age of Aristotle.
This article was adapted and abridged from Josiah Ober, Advice from Antiquity. Economic Lessons from Ancient Greece.