Wednesday, September 15, 2010

A Response to "Economic Thought in Ancient Greece"

A Response to "Economic Thought in Ancient Greece" by Jesus Huerta de Soto.
Original article at the Mises Institute:

Precis of de Soto's article:

The intellectual odyssey that laid the foundations for Western civilization began in classical Greece. Unfortunately, Greek thinkers failed in their attempt to grasp the essential principles of the spontaneous market order.

This is a fine article and a very good look at the thought which separates 21st century economic thinking from that of the Classical world, the essence of which is the conception of spontaneous market order. Now I must as a Classicist admit I have more affection and respect for the parties in question, even when I [vociferously] disagree.

That said, there are a few points I would like to comment on. My intent is not to "correct" Mr. de Soto, but rather to expand upon various points of his since where Plato and Aristotle go awry, I believe they go awry in interesting and instructive ways. I have not been comprehensive here, but I hope I have provided some context and interesting questions.

N.B. This is a brief first and slightly off-the-cuff reaction to the article. I may add to or otherwise revise it in the near future, but I have posted it so soon toward the end of sharing it with more people by getting it out closer to the publication of the original article. Comments/corrections are still, of course, welcome.


Now it is not hard to criticize Socrates and indeed his final self-defense did not endear him to the assembly. Nonetheless, and it seems odd to have to say this, but Socrates deserves some commendation. No matter how sympathetic you are to the charges of "corrupting the youth," the philosophizing and questioning Socrates was advocating were not yet in the air, let alone in the lifeblood of Western Civilization. Socrates was, really for the first time, widely presenting and disseminating it. Today we can pick up philosophy books, take classes, and freely and openly question just about anything. Now I do not only mean that we are free from compulsion or free from repression in the sense that we might be forcefully restrained from questioning. More important is that we know to question in the first place, and I think Socrates deserves a little credit for that.

As Socrates says in his defense, [I paraphrase] You bring me here for corrupting the youth. But who is more criminal: me, or you who pretend to be serious and to care for things which you never cared about at all?

Not all of the Greeks were amused, and in fact this summary from Wikipedia, intentionally or not, captures the hilarity of Aristophanes Clouds (Νεφέλαι):

Faced with legal action for non-payment of debts, Strepsiades, an elderly Athenian, enrolls his son in The Thinkery (the "Phrontisterion") so that he might learn the rhetorical skills necessary to defeat their creditors in court. The son thereby learns cynical disrespect for social mores and contempt for authority and he subsequently beats his father up during a domestic argument, in return for which Strepsiades sets The Thinkery on fire.

Aristophanes' description of the "Thinkery" or "Thinking Shop" (Clouds, 94)

ψυχῶν σοφῶν τοῦτ᾽ ἐστὶ φροντιστήριον.
ἐνταῦθ᾽ ἐνοικοῦσ᾽ ἄνδρες, οἳ τὸν οὐρανὸν
λέγοντες ἀναπείθουσιν ὡς ἔστιν πνιγεύς,
κἄστιν περὶ ἡμᾶς οὗτος, ἡμεῖς δ᾽ ἄνθρακες.
οὗτοι διδάσκουσ᾽, ἀργύριον ἤν τις διδῷ,
λέγοντα νικᾶν καὶ δίκαια κἄδικα.

Translation (Hickey) via Perseus Project:

This is a thinking-shop of wise spirits.
There dwell men who in speaking of the heavens
persuade people that it is an oven,
and that it encompasses us, and that we are the embers.
These men teach, if one give them money,
to conquer in speaking, right or wrong.

Socrates (up), Students (down), amidst studies. [1]

Of course it's all slightly less "funny" and more darkly ironic when you recall they did in fact poison him. Indeed Socrates mentions the unflattering and  false (he says) portrayal in his defense. [2] What was that line about being "remembered as the fools who killed Socrates?" Indeed.


Now clearly there is a lot in The Republic that. . . well, anyone would disagree with. I should point out Anders Mikkelsen' piece also at the Mises Institute, "The Politics of Plunder in Plato's Republic" [3] which offers the novel and interesting argument that "Plato's Republic is an exposition of the logical consequences of basing civic and personal life on injustice. It condemns political life based on institutionalized injustice — specifically theft and plunder." Let us then confine ourselves here to a few points.

de Soto writes

What is even worse is that Socrates's statolatry was so obsessive that it led him to confuse the positive law derived from the city-state with natural law. He believed people should obey all the positive laws derived from the state, even if they are contra naturam, and thus he laid the philosophical foundations for the legal positivism on which every tyranny to emerge after him in history would rest.
First, I don't know if "confusion" is the proper word. I believe the section in question is from the Crito (The Crito is quite short and the whole dialogue addresses this question.) Second, this is an excellent point I wish de Soto had delved into. Socrates' point seems particularly puzzling since he starts the dialogue by rebuking his old friend Criton for caring what other people think and then goes on to say one should obey unjust laws. I don't think one could argue the dialogue is very paternalistic and statist in tone. Most people would in fact find it off-putting. Socrates, having been convicted, imagines what the state would ask him if he tried to run away: [Translations, W.H.D. Rouse]

Tell me Socrates, what have you in mind to do? In trying to do this, can't you see that you are trying to destroy us, the Laws, and the whole state, as far as yo can do to it? Or do you think it possible that a city can exist and not be overturned, where sentence given has no force but is made null by private persons and destroyed. [Crito, 50b.]
Shortly later, the voice of the laws says, "you must either persuade [your country] or do what she commands; you must bear in quiet anything she bids you to bear" [Crito, 51b] Wow! That's certainly unambiguous and at the moment I can't imagine a more statist line. It reminds me of a quote from Theodore Roosevelt, "No man is above the law and no man is below it; nor do we ask any man's permission when we ask him to obey it. Obedience to the law is demanded as a right; not asked as a favor." Sort of makes you want to aim to misbehave, doesn't it?

Yet it would be dishonest to end the discussion here, as the voice of the laws goes on to make the case that Socrates, before he committed this crime, was a free resident of the city. That is, he could have left. Instead, he stayed and chose to be subject to the laws. This is in fact the third of the laws' three arguments, that the criminal does wrong against the state in three ways, 1) because the state is his parents, 2) because the state is his nurturer, and 3) because he was there voluntarily. Speaking of remaining in the city voluntarily, Socrates could have proposed banishment as his punishment. How does this affect his relationship to the laws and state? The situation is now more complicated: if Socrates liked Sparta so much and was free to leave, why didn't he? I don't find de Soto's encapsulation of Socrates' choice very enlightening, and not just because it is unflattering to the philosopher. It would seem worthwhile, though, to take all of Socrates' claims at face value; I think doing so would provide more interesting venues of explanation even if one disagrees.

It seems a perverse situation, perhaps it is just to follow unjust laws but unjust to carry out unjust laws? Is is not just to carry out any law, then? Clearly Socrates thought his situation was just here, and he was also concerned with justice (see the opening two books of the Republic, Republic (588b-592b,  (608c-end.)) I am not presently at liberty to discuss the sections in question as well as the remainder of the Apology, but my point is that it is more profitable to approach the apparent problem with Socrates' ideas by reducing them to the principles which generated them and not simply saying, "he said x which was wrong, y which was bad, et cetera.) Lastly regarding Plato, there is one seemingly very liberal quote I cannot verify or place:
Good people do not need laws to tell them to act responsibly, while bad people will find a way around the laws.
I'm not at all sure where this quote comes from, whether it is from the main canon of Plato or if it was found as a quotation in another author. It would seem to reflect the Hamiltonian notion that the need for government (for Hamilton a particular type of government [4]) was needed because of man's nature, or at least the "bad" inclinations of some." We might broadly say that "the only need for government is because of criminals." That sounds paradoxical since if there is no law there is no illegality, though we are presumably discussing natural law here. Similarly, Plato says education would reduce the need for laws. (Then again, he would only educate the guardians. Aristotle finds understandable fault with this in Politics 1264a.)

Anyway, perhaps this question was better posed by Aristotle,

"The law has the power to command obedience only by habit, so that a readiness to change laws quickly enfeebles them." So when does one change them then? "Do not change the laws lightly; what you gain may be outweighed by what you lose in obedience." [Politics, II.vii. 1269a]

Clearly to us there is some perhaps unpleasant deference to the state. Again, the state seems to exist for its own sake.Yet we must remember a principle which runs throughout all of Aristotle, that "the whole precedes the part." Thus the state which evolves from the community which evolves from the family is just as legitimate as the family and the pairing of man and woman, which is natural and just (according to Aristotle) because it is of necessity.

We might say that both Aristotle and Socrates seem to say order is more important than liberty, but to say so we would have to consider their definitions of liberty. No one is pro chaos, even if he is against a coercive monopoly of law. As de Soto's phrase spontaneous market order suggests, faith in markets is neither faith in chaos or disorder nor love of disorder, but rather faith in spontaneously arising order. As de Soto quite properly says, the grasping of the spontaneity is truly the issue in discussing "ancient economics."

Prejudices Against Usury

de Soto understandably finds fault with some of the philosopher's positions on usury and money-making. Like Tibor Machan in his article from a few weeks ago [5], I think also and generally finds the philosophers just do not enough value the necessity of making a living.

Aristotle says, "Men want to increase their money without limit because they are intent upon living only, not living well." [Politics, I.ix. 1258a] Yet we must recall the Aristotelian principle that "that which is done for its own sake," that which is an end itself is more valuable. One does not work because he loves working, though he may love what he does, but because it is necessary to support himself. Yet if he plays a musical instrument or studies or takes up a hobby, those things are ends in themselves, done for no other purpose. [Nichomachean Ethics, I.i. 1094a]

Wealth is thus of value, but one must not understand things only in terms of their monetary value. [Rhetoric, II.xiii. 1389b.] One could of course translate that into an axiom more obviously "economic" but Aristotle's point is rather obvious.

Wealth-getting is a natural part of managing a household. Yet some people "turn every quality or art into a means of getting wealth; this they conceive to be the end, and to the promotion of the end they think all things must contribute. [Politics I.ix. 1258a]

Aristotle's censure of usury seems to me to be sensible even if you do not share it. Money, to Aristotle, was simply a stand in for work. You converted your work into coin so you could more easily trade it. Without money you could only barter; if you needed eggs but only had wine to trade, and the man with the eggs didn't want your wine, then you couldn't get eggs. Usury, in contrast, generates more money without adding any new product. There is more coin but the coin is, in this thinking, detached; it does not represent anything. The Greek word for interest, τόκος (tokos) is the same as the word for offspring, meaning that the money is born from money. Yet the disconnection from something of apparent and obvious value makes earning money via usury seem like a cheat.

In Politics, I.ix. 1258b Aristotle says such "wealth-getting" concerns are not "unworthy of philosophy" but rather they are illiberal. For various discussions of Aristotle and "liberality" see Recommended Reading below.

Aristotle on Property

On the one hand Aristotle does say common property would destroy liberality, and (humorously) that, "man will not simply become everyone's friend if property is made common." Certain evils, Aristotle says too, arise from man's nature, like perjury and breaking contracts (See Shuchman in Recommended Reading below.) Aristotle says property should be private, "How immeasurably greater is the pleasure when a man feels a thing to be his own" [Politics, II.v. 1263a.] but that its use should be common. See Swanson in Recommended Reading.

Regarding land and property, I think it is difficult for us in the 21st century with all of our technology to appreciate what seemed plausible in the past. Aristotle and Plato both thought there was an ideal size for a city. Jefferson writing in 1816 describing his system of wards and republicanism wrote:
Were I to assign to [republicanism] a precise and definite idea, I would say, purely and imply, it means a government by its citizens in mass, acting directly and personally, according to rules established by the majority; and that every other government is more or less republican, in proportion as it has in its composition more  or less of this ingredient of the direct action of its citizens. Such a government is evidently restrained to very narrow limits of space and population. I doubt if it would be practicable beyond the extent of a New England township. The first shade from this pure element, which, like that of pure vital air, cannot sustain life of itself, would be where the powers of the government, being divided, should be exercised each by representatives chosen either pro hac vice, or for such short terms as should render secure the duty of expressing the will of their constituents. This I should consider as the nearest approach to a pure republic, which is practicable on a large scale of country or population. [6]

I hope I have pointed out some things of interest, built on some of de Soto's statements, and elucidated some of his quotations.

If I may make one point, though, it would be that the aims of Plato and Aristotle's states were not liberty. The greatest good for the state, for them, was predicated on the greatest good for man. The ideal state is what it is because of what the ideal man is. A liberal state does not pretend that it has a template for the ideal man or citizen, though clearly there is behavior incompatible with liberal-democratic-republican-capitalist society. As Plato says in Republic VIII 561-562, you will find many various "constitutions" to which you will be tempted in a democratic state. Risky indeed, but it beats "being ruled."

Similarly, though, we may ask: Is it legitimate to criticize these authors for making economic mistakes when they were not, properly speaking, considering economics? (i.e. The distinct discipline we know as Economics)

Notionally I appreciate this point but I wonder if the premise would permit fruitful inquiry: because Plato et al didn’t realize they weren’t writing about “economics” we can’t criticize them for being wrong about economics. It would seem not to if one considers economics an objective science. It would appear to be more productive  to take the statements of the philosophers in question in context because these “mistakes” of theirs were made for particular reasons, i.e. not having conceptions of “economics” and a spontaneous order, being consistent with principles stated elsewhere in their work, and working toward a different end. On the one hand we don’t want to pigeon-hole them into later conceptions, on the other we somehow must if we consider there to be a larger set of “true”/objective categories.

In addition to being more constructive and elucidating, perhaps such a discussion about “the why” of their “mistakes” would have tempered the tone of Prof. de Soto’s article and made certain people not bristle so much, particularly those inclined toward philosophizing. We must consider that Plato and Aristotle hold philosophizing itself in high esteem. For them, choosing to spend your free time reflecting on philosophy is a great good.

Overall, I think it is less useful to say, "Socrates, Plato, Aristotle et al" missed x, y, and z" or that "they were wrong about a, b, c et cetera" than to say, "Why wouldn't this have occurred to them?" and "Why did they think this was necessary?" For an important reason probably, and maybe a good one. How can we accomplish that goal by a different means?

[1] Plato attempts to reverse this caricature of Socrates (and philosophers) in Republic VII.529b-529c
[2] Plato. Apology of Socrates, 19c.
[3] Mikkelsen, Anders. The Politics of Plunder in Plato's Republic.
[4] Rosano, Michael J. Liberty, Nobility, Philanthropy, and Power in Alexander Hamilton's Conception of Human Nature. American Journal of Political Science, Vol. 47, No. 1 (Jan., 2003), pp. 61-74
[5] Machan, Tibor R. A Problem with Aristotle's Ethical Essentialism.
[6] Letter to John Taylor. Monticello, May 28, 1816, M.E., XV, 19. in Koch, Adrienne. The Philosophy of Thomas Jefferson. Columbia University Press, New York. 1957. p. 164

Recommended Reading

Long, Roderick T. Aristotle's Conception of Freedom. The Review of Metaphysics, Vol. 49, No. 4 (Jun., 1996), pp. 775-802

McGrade, A. S. Aristotle's Place in the History of Natural Rights. The Review of Metaphysics, Vol. 49, No. 4 (Jun., 1996), pp. 803-829

Mayhew, Robert. Aristotle on Property. The Review of Metaphysics.

Shuchman, Philip. Aristotle's Conception of Contract.  Journal of the History of Ideas, Vol. 23, No. 2 (Apr. - Jun., 1962), pp. 257-264

Swanson, Judith A. Aristotle on Liberality: Its Relation to Justice and Its Public and Private Practice. Polity, Vol. 27, No. 1 (Autumn, 1994), pp. 3-23

Younkins, Edward W. Aristotle, Human Flourishing, and the Limited State.

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