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| − | [[Category:Politics and social sciences]]
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| − | [[Category:Economics]]
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| − | {{epname|Early economic thought}}
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| − | {{History of economic thought}}
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| − | In the [[history of economic thought]], '''early economic thought''' refers to ideas from before and during the [[Middle Ages]]. The earliest discussions of economics date back to ancient times, such as [[Chanakya]]'s ''[[Arthashastra]]'' or [[Xenophon]]'s ''Oeconomicus,'' and continues through the religious-based ideas of [[Judaism|Jewish]] thought, the [[Scholasticism|Scholastics]], and medieval [[Islam]]ic scholars. In those early times, and until the [[industrial revolution]], economics was not a separate discipline but part of [[philosophy]]. [[Religion|Religious]] tenets and a concern for [[morality]] and [[ethics]] played a significant role in the views of early theorists.
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| − | The concerns of those early [[economics|economists]] involved a number of issues which they held in common, the answers to which are the basis of the structure of well-functioning societies today as much as in those early times. These include how to make [[market]]s, [[taxation]] policies, and other monetary instruments transparent and free from [[corruption]]; when is profit permissible (and how much) based on the labors of others, such as in the case of merchants, the charging of [[interest]] and when does it become unacceptable [[usury]]; and other practices that would otherwise destroy the well-being of ordinary law-abiding people on which strong and unified states were built.
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| − | While their ideas were not always complete, and in some cases involved long-lasting debates rather than answers, much similarity can be found in their efforts. It is also of note that early economic thinking, closely tied to philosophical and/or religious tenets, generally took into account the welfare of the common man, the worker, rather than seeking ways to benefit a few elite individuals, themselves or others.
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| − | ==General principle==
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| − | Economics was not considered a separate discipline until the nineteenth century. Still, economic thought has existed from the ancient world right up to the present day:
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| − | <blockquote>Men undoubtedly behaved economically for many centuries before they undertook to analyze economic behavior and arrive at explanatory principles. At first, this analysis was more implicit than explicit, more inarticulate than articulate, and more philosophical and political in mode than economic. But in the face of ubiquitous and inevitable scarcity, the study, in various forms and for various proximate purposes, went on. (Spengler and Allen 1960:2)</blockquote>
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| − | The earliest writings were not clearly separated from other discussions, particularly those of [[justice]] and [[morality]]. This reflects the reality of early societies—as [[Karl Polanyi]] noted, early economies were "embedded economies," not separate and certainly not dominant institutions (Eggleston 2008).
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| − | Early economic thought was in general hostile to enrichment and saw [[wealth]] as inner wealth. This attitude was coherent with an [[economy]] that was basically closed and static, based on [[agriculture]] and on [[slave]] work. However, it greatly contributed to restrain economic development in ancient societies. Ancient economic thought had an enormous influence on early modern thought. The latter borrowed its hostility from enrichment, which contradicted the real tendency of the new society. Thus, from the beginning, modern economy could not enjoy the support of a high economic theory. It could not legitimate enrichment and the increase in [[consumption]].
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| − | ==Near East==
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| − | [[Image:Milkau Oberer Teil der Stele mit dem Text von Hammurapis Gesetzescode 369-2.jpg|thumb|left|The upper part of the stele of [[code of Hammurabi|Hammurabi's code of laws]]]]
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| − | Economic organization in the earliest [[civilization]]s of the [[Middle East]]ern [[fertile crescent]] was driven by the need to efficiently grow crops in river basins. The [[Euphrates river|Euphrates]] and [[Nile river|Nile]] valleys were homes to the earliest examples of codified measurements written in [[base 60]] and [[Egyptian fraction]]s. Egyptian keepers of royal granaries, and absentee Egyptian landowners reported in the [[Heqanakht papyri]]. Historians of this period note that the major tool of [[accounting]] for agrarian societies, the [[scales]] used to measure grain inventory, reflected dual religious and ethical symbolic meanings (Lowry 2003:12.)
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| − | The [[Erlenmeyer tablets]] give a picture of [[Sumerian]] production in the Euphrates Valley around 2,200-2,100 B.C.E., and show an understanding of the relationship between grain and [[labor]] inputs (valued in "female labor days") and outputs and an emphasis on [[efficiency]]. Egyptians measured work output in man-days.
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| − | The development of sophisticated economic administration continued in the Euphrates and Nile valleys during the [[Babylonian Empire]] and [[Ancient Egypt|Egyptian Empire]]s when trading units spread through the Near East within monetary systems. Egyptian fraction and base 60 monetary units were extended in use and diversity to Greek, [[Islamic golden age|early Islamic culture]], and [[medieval]] cultures. By 1202 C.E. [[Fibonacci]]'s use of [[zero]] and Vedic-Islamic numerals motivated Europeans to apply zero as an [[exponent]], birthing modern [[decimal]]s 350 years later.
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| − | The [[city-state]]s of [[Sumer]] developed a trade and market [[economy]] based originally on the [[commodity money]] of the [[Shekel]] which was a certain weight measure of [[barley]], while the [[Babylonia]]ns and their city state neighbors later developed the earliest system of [[economics]] using a [[Metrics|metric]] of various [[commodities]], that was fixed in a legal code. The early law codes from Sumer could be considered the first (written) economic formula, and had many attributes still in use in the current [[price system]] today... such as codified amounts of [[money]] for business deals (interest rates), fines in money for 'wrong doing', [[inheritance]] rules, laws concerning how [[private property]] is to be [[tax]]ed or divided, and so forth (Horne 1915).
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| − | Earlier collections of (written) laws, just prior to [[code of Hammurabi|Hammurabi]], that could also be considered rules and regulations as to economic law for their cities include the [[Code of Ur-Nammu|codex of Ur-Nammu]], king of [[Ur]] (ca. 2050 B.C.E.), the Codex of [[Eshnunna]] (ca. 1930 B.C.E.) and the codex of [[Lipit-Ishtar]] of [[Isin]] (ca. 1870 B.C.E.).
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| − | ==Europe==
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| − | Some prominent classical scholars have asserted that relevant economic thought did not arise in Europe until the [[Enlightenment]] (Meikle (1997), Finley (1970)), as early economic thought was based on [[metaphysics|metaphysical]] principles which are incommensurate with contemporary dominant economic theories such as neo-classical economics (Lowry 2003).
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| − | However, several ancient Greek and Roman thinkers made various economic observations, starting with [[Hesiod]] in eighth century B.C.E. Being a farmer, Hesiod was interested in [[Economic efficiency|efficiency]]—an economic concept measured as a ratio of outputs to inputs. Maximum efficiency is taken to be achieving the largest possible output with a given input. Hesiod lived in a place that was not exactly conducive to agriculture, a "sorry place ... bad in winter, hard in summer, never good" (Rand 1911). Because of this, he understood and wanted to help alleviate the problem of [[scarcity]] on earth. In ''Works and Days'', he noted that because of scarcity time, labor, and production goods had to be carefully allocated. He advocated more freedom in land owning and less stringent rules on the payment of [[interest]]. When one considers the audience for whom he wrote, it can be understood that Hesiod wanted to help alleviate the problems of [[hunger]] and [[debt]]. (Rand 1911: 131-165).
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| − | Many other Greek writings (in addition to those of [[Aristotle]] and [[Xenophon]] discussed below) show understanding of sophisticated economic concepts. For instance, a form of [[Gresham’s Law]] is presented in [[Aristophanes]]’ ''Frogs'', and beyond [[Plato]]'s application of sophisticated mathematical advances influenced by the [[Pythagoreanism|Pythagoreans]] is his appreciation of [[fiat money]] in his ''[[Laws (dialogue)|Laws]]'' (742a–b) and in the pseudo-Platonic dialogue, ''[[Eryxias]]'' (Lowry 2003 :23). [[Bryson of Heraclea]] was a neo-platonic who is cited as having heavily influenced early Muslim economic scholarship (Spengler 1964).
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| − | In [[Roman Empire|Roman]] times, the law clearly took into account important economic analyses. Later, the [[Scholasticism|Scholastic]] [[theology|theologians]] took on the role of guiding society, and their writings included economic aspects of life. In this area they built on Greek thought as revived by [[medieval]] [[Muslim]] scholars.
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| − | ===Xenophon===
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| − | {{main|Xenophon}}
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| − | [[Image:xenophon.jpg|thumb|right|150px|Xenophon, [[Ancient Greece|Greek]] [[historian]]]]
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| − | The influence of [[Babylonia]]n and [[Persian Empire|Persian]] thought on Greek administrative economics is present in the work of Greek historian Xenophon. Xenophon’s 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]].
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| − | Discussion of economic principles are especially present in ''[[Oeconomicus]],'' ''[[Cyropaedia]]'' his biography of [[Cyrus the Great]], ''[[Hiero (Xenophon)|Hiero]],'' and ''Ways and Means'' (Lowry 2003:14.) ''Hiero'' is a minor work which includes discussion of leaders stimulating private production and technology through various means including public recognition and prizes. ''Ways and Means'' is a short treatise on economic development, and showed an understanding of the importance of taking advantage of economies of scale and advocated laws promoting foreign merchants.
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| − | The ''Oeconomicus'' discusses the administration of agricultural land. The Greek word ''oikonomia'' ({{Polytonic|οἰκονομία}}) designates mainly the ''oikos'' ({{Polytonic|οἶκος}}), meaning the [[home]] or [[hearth]]. Thus Xenophon's ''Oeconomicus'' is concerned with [[household management]] and [[agriculture]]. The Greeks had no precise term to designate the processes of production and exchange. In this work, subjective personal value of goods is analyzed and compared with exchange value. Xenophon uses the example of a horse, which may be of no use to a person who does not know how to handle it, but still has exchange value (''Oeconomicus I'': 5-6, 8). Although this broadens the idea of value based on individual use to a more general social concept of value that comes through exchange, it is not yet a market theory of value (Lowry 2003:17.)
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| − | In ''Cyropaedia'' Xenophon presents what in hindsight can be seen as the foundation for a theory of fair exchange in the market. In one anecdote, the young Cyrus is to judge the fairness of an exchange made between a tall and a short boy. The tall boy forces the pair to exchange tunics, because the tall boy's tunic is too short, shorter than the short boy's, which is too long for him. Cyrus rules the exchange fair because it results in a better fit for both boys. Cyrus' mentors were not pleased with Cyrus' basing his decision on the values involved, as a just exchange must be voluntary (''Cyropaedia'' I(3): 15–17). Later in the biography, Xenophon discusses the concept of division of labor, referencing specialized cooks and workers in a shoemaking shop (''Cyropaedia'' VIII(2): 5–6). Scholars have noted that [[Adam Smith]]'s early notes about this concept "read like a paraphrase of Xenophon's discussion of the role of the carpenter as a 'jack of all trades' in small cities and as a specialist in large cities" (Lowry 2003: 18). Xenophon also presents an example of mutual advantage from exchange in a story about Cyrus coordinating an exchange of surplus farmland from Armenians, who were herders, and surplus grazing land from Chaldeans, who were farmers (''Cyropaedia'' III(2): 17–33).
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| − | ===Aristotle===
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| − | {{main|Aristotle}}
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| − | [[Image:Sanzio 01 Plato Aristotle.jpg|thumb|left|150px|Plato (left) and Aristotle (right), a detail of ''[[The School of Athens]],'' a fresco by [[Raphael]]. Aristotle is holding a copy of his ''Nicomachean Ethics.'']]
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| − | [[Aristotle]]'s main contributions to economic thinking concern the exchange of [[commodity|commodities]] and the use of [[money]] in this exchange. He regarded economic activity as the way to realize well-being within the idea [[city-state]]—a just and harmonious community (Eggleston 2008). People's needs, he said, are moderate, but people's [[desire]]s 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.
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| − | Allocation of scarce resources was, therefore, a [[moral]] issue to Aristotle, and in Book I of his ''Politics,'' Aristotle expressed that consumption was the objective of production, and the surplus should be allocated to the rearing of children, and personal satiation ought to be the natural limit of consumption. (To Aristotle, this question was a moral one: in his era child mortality was high.) In transactions, Aristotle used the labels of "natural" and "unnatural." Natural transactions were related to the satisfaction of needs and yielded [[wealth]] that was limited in quantity by the purpose it served. Un-natural transactions aimed at monetary gain and the wealth they yielded was potentially without limits. He explained the un-natural wealth had no limits because it became an end in itself rather than a means to another end—satisfaction of needs. For Aristotle, wealth was an instrument for the achievement of [[happiness]], but was never to become an end in itself. This distinction is the basis for Aristotle's moral rejection of [[usury]] (Lowry 2003:15.)
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| − | Aristotle's ''[[Nicomachean Ethics]],'' particularly Book V, has been called the most economically provocative analytic writing in ancient Greece (Lowry 2003:20). Therein, Aristotle discussed [[justice]] in distribution and exchange. Still considering isolated exchanges rather than markets, Aristotle sought to discuss just exchange prices between individuals with different subjective values for their goods. Aristotle suggested three different proportions to analyze distributive, corrective, and reciprocal or exchange transactions: the [[arithmetic mean|arithmetic]], the [[geometric mean|geometric]], and the [[harmonic mean|harmonic]]. The harmonic proportion is interesting, as it implies a strong commitment to the subjective values of the traders. Sixth century C.E. philosopher [[Boethius]] used the example of 16 as the harmonic mean of 10 and 40. 16 is the same percentage larger than 10 as it is smaller than 40 (60 percent of 10 is 6, while 60 percent of 40 is 24). Thus if two bargainers have subjective prices for a good of 10 and 40, Aristotle pointed out that in exchange, it is most fair to price the good at 16, due to the equality proportional differences from their price to the new price. Another interesting nuance in this analysis of exchange is that Aristotle also saw a zone of [[consumer surplus]] or mutual advantage to both consumers that had to be divided (Lowry 2003:20.)
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| − | ===Roman law===
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| − | {{main|Roman law}}
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| − | Early [[Ancient Greek law|Greek]] and [[Halakha|Judaic law]] follow a voluntaristic principle of just exchange—a party was only held to an agreement after the point of sale. [[Roman law]], written on [[Twelve Tables]], developed the [[contract]] with the recognition that planning and commitments over time are necessary for efficient production and [[trade]]. According to [[Cicero]] in 450 C.E.:
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| − | <blockquote>Though all the world exclaim against me, I will say what I think: that single little book of the Twelve Tables, if anyone look to the fountains and sources of laws, seems to me, assuredly, to surpass the libraries of all the philosophers, both in weight of authority, and in plenitude of utility (Cicero, De Oratore, I.44. In: Thatcher 1901: 9-11.)</blockquote>
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| − | Following are some examples of those laws having direct impact on economy:
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| − | ;Table III
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| − | :1.One who has confessed a debt, or against whom judgment has been pronounced, shall have 30 days to pay it in. After that forcible seizure of his person is allowed. The creditor shall bring him before the magistrate. Unless he pays the amount of the judgment or some one in the presence of the magistrate interferes in his behalf as protector the creditor so shall take him home and fasten him in stocks or fetters. He shall fasten him with not less than fifteen pounds of weight or, if he choose, with more. If the prisoner choose, he may furnish his own food. If he does not, the creditor must give him a pound of meal daily; if he choose he may give him more (Thatcher 1901: 9-11)
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| − | ;Table VI
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| − | :1. When one makes a bond and a conveyance of property, as he has made formal declaration so let it be binding (Thatcher 1901: 9-11).
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| − | ;Table VII
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| − | :9. Should a tree on a neighbor's farm be bend crooked by the wind and lean over your farm, you may take legal action for removal of that tree.
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| − | :10. A man might gather up fruit that was falling down onto another man's farm (Thatcher 1901: 9-11).
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| − | ;Table IX
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| − | :4. The penalty shall be capital for a judge or arbiter legally appointed who has been found guilty of receiving a bribe for giving a decision (Thatcher 1901: 9-11).
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| − | The large body of law was unified in the 530s C.E. by [[Justinian]] who was Emperor of the [[Eastern Roman Empire]] from 526-565 C.E. This "Code of Justinian" or ''[[Corpus Juris Civilis]]'' formed the base of most European [[civil law (legal system)|civil law]] legal systems, still in force today. In the ''[[Institutiones]],'' the principle of just trade is stated as ''tantum bona valent, quantum vendi possunt'' ("goods are worth as much as they can be sold for") (''Institutiones'' 3:305).
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| − | ===Jewish thought===
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| − | Five axioms of early Jewish economic theory can be expressed as follows (Sauer & Sauer 2007):
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| − | # “Man is created in God's image.” In [[Judaism]], this statement is interpreted as meaning that God is the creator of the world, and man is the creator in the world. ([[Babylonia]]n [[Talmud]] [[Shabbat (Talmud)|Shabbat]] 10a)
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| − | # Private property rights are essential and must be protected. Note that two of the [[Ten Commandments]] directly relate to the safeguarding of [[private property]]: “you shall not steal” and “you shall not covet anything that belongs to your neighbor.” The prohibition against stealing includes outright [[robbery]], but also various forms of [[theft]] by deception and unethical business practices, such as the use of [[fraud|false]] [[measurement|weights]] in a transaction.
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| − | # Accumulation of [[wealth]] is a [[virtue]] not a vice. Man is obligated to participate in the creative process, should not be demotivated by inadequate protection of private property, and is blessed when the outcome of honest labor is the accumulation of wealth. (Berachot 8a, Avot 4:1) also ([[Mishneh Torah]] ''Hafla'ah'' (Separation): Laws of vows and oaths 8:13).
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| − | # There is the obligation to care for the needy through charitable giving. The Torah mentions the commandment to give [[charity]] in ''parashat Re'eh'': “You should not harden your heart or shut your hand from your needy brother” ([[Deuteronomy]] 15:7—8).
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| − | # It concerns the inefficiency of government and the dangers of concentrated power. The [[Torah]] repeatedly warns about the evil nature of government and bureaucracy:
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| − | <blockquote>These will be the rights of the king who is to reign over you. He will take your sons and assign them to his chariotry and cavalry, and they will run in front of his chariot. He will use them as leaders of a thousand and leaders of fifty; he will make them plough his ploughland and harvest his harvest and make his weapons of war and the gear for his chariots. He will also take your daughters as perfumers, cooks, and bakers. He will take the best of your fields, of your vineyards and olive groves and give them to his officials. He will [[tithe]] your crops and vineyards to provide for his eunuchs and his officials. He will take the best of your manservants and maidservants, of your cattle and your donkeys, and make them work for him. He will tithe your flocks, and you yourselves will become his slaves. When that day comes, you will cry out on account of the king you have chosen for yourselves, but on that day God will not answer you ([[Books of Samuel|1 Samuel]] 8:11—18).</blockquote>
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| − | These words could be compared to [[Friedrich Hayek]]'s warning in ''The Road to Serfdom.'' Simply stated, when governments play an important role in allocating resources in society and/or map out a detailed plan for the workings of an economy, we risk the prospect of ever-increasing degrees of oppression in order to meet the plan's goals (Sauer & Sauer 2007).
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| − | As the early Jewish philosophy, politics, and economics had developed within the [[Babylonia]]n and Greco-Roman worlds in the Near East—during the period that the early Islamic scholars were also very much present in the same area—the interpretation of ethical canons vis-a-vis their respective populations among the three religions was almost absolute. It is, therefore, of no surprise that the early thinkers of all three religions had almost exactly the same views on the micro- and sometimes even macro-economic matters. In fact, most of these early thinkers pre-dated with their theories much more famous European [[mercantilism|mercantilists]] and even [[classical economics|classical economists]] that appeared 400 to 1400 year later.
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| − | There is, however, an interesting difference between Judaism and Christianity and ancient Islamic thoughts regarding ''[[riba]]'' ([[interest]] and [[usury]]). While Christianity unequivocally condemns this practice and the institution (Wilson 1997: 82-85), the same does not seem to be the case with Judaism, especially when the Jews are in a state of [[diaspora]] (Wilson 1997: 33-36). The Islamic position is the most explicit on the abolition of ''riba,'' which is seen as one of the most "visible" defining characteristics of an Islamic economic system (Wilson 1997: 124-125).
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| − | ===The Scholastics===
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| − | {{Main|Scholasticism}}
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| − | [[Image:St-thomas-aquinas.jpg|thumb|Depiction of Saint Thomas Aquinas from ''The Demidoff Altarpiece'' by [[Carlo Crivelli]]]]
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| − | The "[[Scholasticism|Scholastics]]" were the group of thirteenth and fourteenth century [[theology|theologians]], notably the Dominican [[Thomas Aquinas]], that set down the dogma of the [[Catholic Church]] in light of the resurrection of [[Greek philosophy]] in the hands of twelfth century [[Islam]]ic scholars. In the economic sphere, we can discern roughly four themes the Scholastics were particularly concerned with: [[property]], [[justice]] in economic exchange, [[money]], and [[usury]].
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| − | The coexistence of private property with [[Christian]] teachings was never comfortable. In the fifth century, the early [[Church fathers]] (the Patricians, such as [[Augustine of Hippo|Augustine]]) had struck down "communistic" Christian movements and the Church itself went on to accumulate enormous amounts of property.
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| − | In the twelfth century, Saint [[Francis of Assisi]] began a movement (the [[Franciscan]]s), which insisted on vows of [[poverty]], "brotherhood" and deplored the accumulative tendencies of the Church. Against the Franciscans were arrayed Saint Thomas and the [[Dominican Order|Dominicans]], who extracted from [[Aristotle]] and the [[Bible]] the necessary arguments for their challenge. The Thomists took a practical stance: they argued that private property was a "conventional" human arrangement with no moral implications, and furthermore, it had the beneficial side-effect of stimulating economic activity and thus general welfare. The Thomists cautioned that this did not mean they endorsed all private enterprise: the "love of lucre," they noted, was a serious [[sin]]. They stressed the fact that man only has "[[stewardship]]" of [[God]]'s property and should make property available for communal use. They also claimed that [[theft]] in times of need was justifiable (Lapidus 1994).
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| − | The growth of [[commerce]] forced the Scholastics to deal with the impact of market exchanges. They identified the "[[just price]]" as that which supported the continued reproduction of the social order. The Christian should "do unto others as you would have them do unto you," meaning he should trade value for value. Aquinas believed that it was specifically immoral to raise prices because a particular buyer had an urgent need for what was being sold and could be persuaded to pay a higher price because of local conditions.
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| − | Thomas Aquinas held that it was immoral to gain financially without actually creating something. This led to the distinction between legitimate [[interest]] and illegitimate usury. Interest taking became acceptable when lenders could demonstrate that by making the [[loan]] they suffered a loss (through missing an opportunity to use the money for another purpose) or had incurred [[risk]] that the loan might not be repaid (Eggleston 2008).
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| − | Another question that arose was that of [[entrepreneurship]]. Should a merchant be allowed to [[profit]] from differentials in prices? The Scholastics replied with a qualified yes, provided the merchant was not motivated by pure gain and profit be only just enough to cover his labor expenses (sacrifices) of the merchant. They went on to argue that the trader performs a valuable service and increases general welfare by meeting different needs.
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| − | ==India==
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| − | The earliest known treatise on economic principles in India is the ''Arthashastra,'' authored by [[Chanakya]].
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| − | [[Image:India CG3.jpg|thumb|200px|The court of Chandragupta Maurya of the [[Maurya dynasty]].]]
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| − | ===Chanakya===
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| − | {{main|Chanakya|Arthashastra}}
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| − | [[Chanakya]] (c. 350 B.C.E.-275 B.C.E.) was a professor of [[political science]] at the [[Takshashila University]] of [[History of India|ancient India]], and later the [[Prime Minister]] of the [[Maurya Empire|Mauryan]] emperor [[Chandragupta Maurya]]. He wrote the ''[[Arthashastra]]'' ("Science of Material Gain" or "Science of political economy" in [[Sanskrit]]). Many of the topics discussed in the ''Arthashastra'' are still prevalent in modern economics, including its discussions on the management of an efficient and solid economy, and the [[ethics]] of economics. Chanakya also focused on issues of [[welfare]] (for instance, redistribution of wealth during a [[famine]]) and the collective ethics that hold a society together. According to Chanakya, a conducive atmosphere is necessary for the state's economy to thrive. This requires that a state's law and order be maintained. ''Arthashastra'' specified [[fine]]s and [[punishment]]s to support strict enforcement of laws (the ''Dandaniti'').
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| − | The ''Arthashastra'' argues for an [[autocracy]] managing an efficient and solid economy. The qualities describing the system, in effect, are that of a [[command economy]]. Chanakya says that ''artha'' (sound economy) is the most important quality and discipline required for a [[Rajarshi]], and that [[dharma]] and [[Kama (Purusharthas)|kama]] are both dependent on it. He wrote on the economic duties of a king:
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| − | <blockquote>Hence the king shall be ever active in the management of the economy. The root of wealth is (economic) activity and lack of it (brings) material distress. In the absence of (fruitful economic) activity, both current prosperity and future growth will be destroyed. A king can achieve the desired objectives and abundance of riches by undertaking (productive) economic activity.</blockquote>
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| − | ==China==
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| − | ===Qin Shi Huang===
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| − | [[Image:Qinshihuang2.jpg|right|thumb|150px|The first emperor of China, Qin Shi Huang]]
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| − | {{main|Qin Shi Huang}}
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| − | Ideal and effective economic policy was long sought for in ancient [[China]], and one of the greatest early reformers was the Emperor [[Qin Shi Huang]] (260 B.C.E.–210 B.C.E., ruled as First Emperor 221 B.C.E.-210 B.C.E.). He standardized [[coin]] currency throughout the old [[Warring States]] once he unified them under a strong central [[bureaucracy]].
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| − | He claimed that both the [[agriculture]] and [[commerce]] were very important for the [[economy]]. He also standardized the [[coin]]age, introducing a circular [[copper]] coin with a square hole in the center. Equally important reforms were the standardization of weights and measures, and codification of the law. These reforms benefited both the economy and cultural exchange during the period.
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| − | ===Wang Anshi===
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| − | {{main|Wang Anshi}}
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| − | However, one of the greatest economic reformers in China lived during the medieval [[Song Dynasty]] (960-1279 C.E.), that being [[Chancellor of China|Chancellor]] [[Wang Anshi]] (1021-1086). Espousing heated reaction by conservative ministers at court, Wang Anshi's political faction of the [[New Policies Group]] enacted a series of reforms that centered around [[military]] reform, [[bureaucracy|bureaucratic]] reform, and economic reform.
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| − | Among the initiated major economic reforms in the interest of merchants and small farmers—whom he considered the backbone of the Chinese economy in terms of production of goods and greatest source of the [[land tax]]—were: reduced [[interest]], commutation of labor services, and reduced prices and land taxes.
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| − | ==Medieval Islamic economic thought==
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| − | {{main|Islamic economics}}
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| − | The possible indebtedness of political economy to fourth-century [[Ancient Greece|Greek]] thinkers has been widely debated, the contribution of [[Islam]], on the other hand, has been consistently forgotten. Islamic economic thought is as old as Islam itself, for the [[Qur'an]] and the [[Sunnah]], the sayings and acts of [[Muhammad]], contain economic teachings. However, their contents are considered divine, and thus it is only their interpretation that can be considered Islamic economic thought. The early Muslims generally based their economic analyses on the Qur'an (such as opposition to ''[[riba]],'' meaning [[usury]] or [[interest]]), and from Sunnah. These efforts in Islamic economic thinking are thus ascribed to the writers who made these attempts, rather than to the Qur'an and the Sunnah.
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| − | Throughout its 14 centuries there are works in which economic issues are discussed in light of the [[Shari'ah]]. However, the vast literature on the [[exegesis]] of the Qur'an, commentaries on [[Hadith]], principles of [[jurisprudence]] ''(usul al-fiqh),'' and [[law]] ''(fiqh)'' has greatly overshadowed the economic treatises. Nevertheless, a number of writings on economic thought are available.
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| − | [[Persia]]n philosopher [[Nasir al-Din al-Tusi]] (1201-1274) presented an early definition of economics (what he called ''hekmat-e-madani,'' the science of city life) in his ''Ethics'':
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| − | <blockquote>the study of universal laws governing the public interest (welfare?) in so far as they are directed, through cooperation, toward the optimal (perfection) (Hosseini 2003: 39).</blockquote>
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| − | The concept of ''tadbîr'' is of significance in this context. There is a slightly different meaning of the ''tadbîr'' from that of Hellenic ''oikonomia.'' Tadbîr also includes God-determined harmony and rationally organized administration. Thus, it reflects an idealized model of enlightened yet authoritarian administration, rather than the building of an exact notion related to the economy.
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| − | Muslim economic thought enriched the Hellenic contribution to economic thought in the areas of government of the kingdom by the caliph, of the city, and the household organization. In rejecting profit, usury, [[egoism]], and [[monopoly]], and in preaching moderation, [[altruism]], the practice of fair prices, and unselfishness, Islam inaugurated an "economic system" which has derived from that of the Greeks and which laid the basis for pre-capitalist thought (Essid 1995).
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| − | ===Zaid bin 'Ali===
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| − | [[Zaid bin 'Ali]] (10-80 AH/699-738 C.E.), the grandson of [[Imam Husain]], was one of the most eminent jurists of [[Medina]], whom other eminent jurists like [[Abu Hanifa]] held in high esteem. Zaid permitted the sale of a commodity on [[credit]] at a price higher than its cash price. [[Muhammad Abu Zahra]] discussed a rationale of its permission at some length, which is worth quoting in view of the contemporary relevance of the issue:
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| − | <blockquote>Those who disallow the deferred price to be higher than the cash price argue that the difference is ''riba'' as it is an increase (in payment against time), and every increase against deferment (or payment) is ''riba''. There is no difference between saying "Either you pay now or pay more in lieu of deferment," and selling at a higher (than cash) price because of deferred payment. The essence is the same and it is ''riba'' (Hosseini 2003: 40).</blockquote>
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| − | One who sells on credit does so out of necessity, he cannot be regarded as doing so willingly. He is therefore not covered by the Qur'anic verse "except when it is trade among you with mutual consent [IV: 29]."
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| − | ===Abu Hanifa===
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| − | [[Abu Hanifa]] (80-150 AH/699-767 C.E.), ('''{{lang-ar|أبو حنيفة}}''') was the founder of the [[Sunni]] [[Hanafi]] [[madhhab|school]] of [[fiqh|Islamic jurisprudence]].
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| − | Abu Hanifa's concern for the poor and the weak was well known, as was the human values in his juristic method (Hosseini 2003:36) A transaction which was becoming increasingly popular was ''salam'' or sale of commodity to be delivered in future against a price paid in cash at the time of contract. Abu Hanifa found confusion surrounding this type of [[contract]] often led to disputes. He tried to eliminate these disputes by specifying what must be known and stated clearly in the contract, such as the commodity, its kind, quality and quantity, and the date and place of delivery. He laid down a further condition that the commodity be available in the market during the period intervening between the contract and the date of delivery so that both parties knew that its delivery was possible.
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| − | ===Abu Yusuf===
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| − | An emphasis on the economic responsibilities of the rulers has been a recurrent theme of Islamic economic thought since the earliest days. This was the focal point of [[Abu Yusuf]] (113-182 AH/731-798 C.E.) ({{lang-ar|أبو يوسف}}), chief jurist for Abbasid Caliph [[Harun al-Rashid]], for whom he wrote the ''Book of Taxation'' ''(Kitab al-Kharaj)''.
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| − | This book outlined Abu Yusuf's ideas on [[taxation]], [[public finance]], and agricultural production. He discussed proportional tax on produce instead of fixed taxes on property as being superior as an incentive to bring more land into cultivation. He also advocated forgiving tax policies which favor the producer and a centralized tax administration to reduce corruption. Abu Yusuf favored the use of tax revenues for socioeconomic infrastructure, and included discussion of various types of taxes, including [[sales tax]], [[death tax]]es, and import [[tariff]]s (Hosseini 2003: 34).
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| − | Abu Yusuf preferred the state taking a proportion of the agricultural produce from the cultivator rather than levy a fixed [[rent]] on agricultural land. This was more just and likely to yield a larger revenue by facilitating expansion of the area under cultivation. In discussing [[taxation]], he laid down certain principles which anticipate those introduced many centuries later by the economists as "canons of taxation." He suggested salaried staff to act as tax collectors, who should be under strict supervision in order to prevent corrupt and oppressive practices.
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| − | The main strength of Abu Yusuf's thinking, however, lies in the area of [[public finance]]. Apart from the responsibilities of the Islamic state related to welfare of the people, he wrote detailed suggestions on how to meet long term development expenditures like those on building [[bridge]]s and [[dam]]s, and digging [[canal]]s. They speak highly of his foresight, sagacity and concern for the well-being of the population (Hosseini 2003: 38).
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| − | ===Ibn Khaldun===
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| − | {{main|Ibn Khaldun|Muqaddimah}}
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| − | [[Image:Ibn Khaldoun.jpg|thumb|150px|Statue of Ibn Khaldoun in [[Tunis]]]]
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| − | {| class="toccolours" style="float: left; margin-left: 1em; margin-right: 2em; font-size: 85%; background:#c6dbf7; color:black; width:30em; max-width: 40%;" cellspacing="5"
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| − | | style="text-align: left;" | When civilization [population] increases, the available labor again increases. In turn, luxury again increases in correspondence with the increasing profit, and the customs and needs of luxury increase. Crafts are created to obtain luxury products. The value realized from them increases, and, as a result, profits are again multiplied in the town. Production there is thriving even more than before. And so it goes with the second and third increase. All the additional labor serves luxury and wealth, in contrast to the original labor that served the necessity of life (Weiss 1995: 30).
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| − | |-
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| − | | style="text-align: left;" | '''''Ibn Khaldun on economic growth'''''
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| − | |}
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| − | Perhaps the most well known Islamic scholar who wrote about economics was [[Ibn Khaldun]] (732-808 AH/1332-1404 C.E.) of [[Tunisia]]. [[Joseph Schumpeter]] (1954: 136) mentions his [[sociology]], others, including Hosseini (2003) consider him a father of modern economics. It is his insight into the laws governing human behavior and socio-economic phenomena like [[division of labor]], growth and decline of population, and rise and fall of prices, which distinguished him from many other social thinkers. The focus of his attention was the various stages of growth and decline through which, according to his insight, every society must pass. This theory has been compared with [[John Hicks]]' theory of [[trade cycle]]s (Weiss 1995: 29-30).
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| − | Ibn Khaldun's idea about the benefits of the division of labor relate to ''asabiyya,'' the greater the social cohesion, the more complex the successful division may be, the greater the economic growth. He noted that growth and development positively stimulate both [[supply and demand]], and that the forces of supply and demand are what determine the prices of goods (Weiss 1995: 31). He also noted macroeconomic forces of population growth, [[human capital]] development, and [[technology|technological developments]] effects on development. In fact, Ibn Khaldun thought that population growth was directly a function of wealth (Weiss 1995:33).
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| − | A distinctive feature of Ibn Khaldun's approach to economic problems is his keenness to take into consideration the various geographical, ethnic, political, and sociological forces involved in the situation. He did not confine himself to the so-called economic factors alone. He would rather examine whatever forces he found relevant to the issue under study. It is in this context that one can appreciate his tendency to take a people's religious beliefs and traditions into account while discussing their economic behavior and social institutions. He was fully aware of the truth that production of [[wealth]] is not a result of individual labor and enterprise only. It owes itself as much to man's social and socio-political institutions, especially the state and its administration.
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| − | ==Conclusion==
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| − | It is notable that in virtually all early cultures economic thinking converged onto several basic items: How to make [[agriculture|agricultural]] production more efficient; how to make [[market]]s, [[taxation]] policies, and other [[money|monetary]] instruments transparent and free from [[corruption]], [[usury]], and other practices that would otherwise destroy the well-being of ordinary law-abiding people on which strong and unified states were built.
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| − | It is worth remembering that the early economists and [[jurisprudence]] specialists, even though they strongly advocated the efficiency of productive sectors, were also much more sympathetic to the ordinary workers' plight than, say, the later [[mercantilism|mercantilists]]. During the mercantilist period, industrial and agricultural workers lived on the brink of [[poverty]] with very little protection in the law statutes of the time, but the ancient philosophers, jurists, and economists always had the interest of these working classes in mind.
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| − | The other aim of these early thinkers was to ensure that their teachings in [[jurisprudence]] or economics were reaching the highest administrative levels of the country: emperors, kings, caliphs, and so on, and that those rulers would take care of enforcing the “canons of law.”
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| − | ==References==
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| − | *Ebrey, Patricia Buckley, Anne Walthall, and James Palais. 2006. ''Modern East Asia: A Cultural, Social, and Political History.'' Boston, MA: Houghton Mifflin Company. ISBN 978-0618133857
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| − | *Eggleston, Brian. 2008. [http://www.augie.edu/pub/values/BrianEggleston080310.pdf ''Economics and/as Ethics: From Aristotle to Adam to Arrow'']. ''Augustana College''. Retrieved November 20, 2008.
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| − | *Essid, Yassine. 1995. ''A Critique of the Origins of Islamic Economic Thought.'' Boston, MA: Brill Academic Publishers. ISBN 978-9004100794
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| − | *Falagas, Matthew E. Zarkadoulia, Effie A. Samonis George. 2006. [http://www.fasebj.org/cgi/content/full/20/10/1581 Arab science in the golden age (750–1258 C.E.) and today]. ''The FASEB Journal'' 20: 1581-1586. Retrieved December 2, 2008.
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| − | *Finley, M. I. 1970. Aristotle and economic analysis. ''Past & Present'' 70: 3–25.
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| − | *Horne, F. Charles. (1915) 2007. ''The Code of Hammurabi: Introduction.'' Forgotten Books. ISBN 978-1605060514
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| − | *Hosseini, Hamid S. 2006. Contributions of Medieval Muslim Scholars to the History of Economics and their Impact: A Refutation of the Schumpeterian Great Gap. In Warren J. Samuels, Jeff E. Biddle, and John B. Davis (eds.) ''A Companion to the History of Economic Thought.'' Malden, MA: Blackwell. ISBN 0631225730
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| − | *Islamic-world.net. 2003. [http://www.islamic-world.net/economics/history_of_economic_thought.htm Recent Works on History of Economic Thought in Islam: A Survey] ''Iqtisad al Islamy (Islamic Economics).'' Retrieved November 18, 2008.
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| − | *Lapidus, Andre. 1994. Norm, virtue and information: Individual behaviour and the just price in Thomas Aquinas' Summa theologica. ''European Journal of the History of Economic Thought'' 1(3): 435-473.
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| − | *Lowry, S. Todd. 2003. Ancient and Medieval Economics. In Warren J. Samuels, Jeff E. Biddle, and John B. Davis (eds.) ''A Companion to the History of Economic Thought.'' Malden, MA: Blackwell. ISBN 0631225730
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| − | *Meikle, Scott. 1997. ''Aristotle’s Economic Thought.'' Oxford: Oxford University Press. ISBN 0198152256
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| − | *Rand, E. K. 1911. Horatian urbanity in Hesiod’s Works and Days. ''The American Journal of Philology'' 32 (2): 131-165.
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| − | *Samuels, Warren J., Jeff E. Biddle, and John B. Davis, eds. 2003. ''A Companion to the History of Economic Thought.'' Malden MA: Blackwell. ISBN 0631225730
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| − | *Sauer, Corinne and Robert M. Sauer. 2007. [http://www.acton.org/publications/randl/rl_article_579.php Jewish Theology and Economic Theory]. ''Religion & Liberty'' 17(1). The Acton Institute. Retrieved December 2, 2008.
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| − | *Schumpeter, Joseph. 1954. ''History of Economic Analysis.'' Oxford University Press.
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| − | *Spengler, Joseph, and William Allen. 1960. ''Essays in Economic Thought: Aristotle to Marshall.'' Chicago, IL: Rand McNally.
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| − | *Spengler, Joseph. 1964. Economic thought of Islam: Ibn Khaldun. ''Comparative Studies in Society and History'' VI(3): 264–306.
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| − | *Thatcher, Oliver J., ed. 1901. ''The Library of Original Sources, Vol. 3: The Roman World.'' Milwaukee, WI: University Research Extension.
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| − | *Weiss, Dieter. 1995. Ibn Khaldun on Economic Transformation. ''International Journal of Middle East Studies'' 21 (1): 29-37.
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| − | *Wilson, Rodney. 1997. ''Economics, Ethics and Religion: Jewish, Christian and Muslim Economic Thought.'' New York, NY: Palgrave-Macmillan. ISBN 0333626427
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| − | *Xenophon. ''Oeconomicus,'' English translation [http://www.gutenberg.org/etext/1173 The Economist] Henry Graham Dakyns (trans.). ''Project Gutenberg''. Retrieved November 19, 2008.
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| − | *Xenophon. ''Cyropaedia,'' English translation [http://onlinebooks.library.upenn.edu/webbin/gutbook/lookup?num=2085 The Education of Cyrus]'' Henry Graham Dakyns (trans.). Retrieved November 19, 2008.
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