Schumpeter, Theorie der wirtschaftlichen Entwicklung, 1912 observed that 19th century steady state theory had progressed marginal utility of further research to rock bottom, so the young 20th centurists had to explore the transitory processes that had been skipped; he carved himself a niche in the market. Before highlighting the distortion of regular routine, which he took for the defining ingredient of capitalism he devoted 102 pages to the steady state; about 100 pages too long for this book, of course. His steady state is an economy in which people are used to conditions, a traditional economy. (Daily home-office trips begin as a discovery voyage with intensive mental effort in preparation and execution just to limit inefficiency, but they soon become rational routes in reflex. In a futurist market economy the Jetsons can absorb the annual 5.4% productivity rise smoothly; a traditional economy.) In such an economy operational production has no external finance, no outsiders like shareholders and bankers minding management. Such production has no need for a bookkeeping to determine profit. Of course, there agriculture has fluctuating harvests and artisan industry has fluctuating business, but there is no profit. Such traditional production survived along a capitalist sector in the economy. Marshall wanted to highlight the modern capitalist sector. Samuelson was not aware of the traditional sector; he could not accept that traditional production did not pay income to external finance. Schumpeter stubbornly persisted on it, but failed to show the point that there is no external finance in sound traditional production.
Success needs all its 100 fathers, and a mother. One can sketch the fall of the bad bank of the Roman empire from several angles. If society cannot mobilise the present means, then the cause of the consequent crash is not a lack of means, but an organisation-flaw. There may have been others. Pax Romana deprived generals on the outskirts of a chance on glory, and thus directed all ambition and energy towards the center, upon which the empire imploded. If capitalism would structurally offer superior prospects in finance, it would drain production.
Schumpeter, Theorie der wirtschaftlichen Entwicklung, 1912 observed that 19th century steady state theory had progressed marginal utility of further research to rock bottom, so the young 20th centurists had to explore the transitory processes that had been skipped; he carved himself a niche in the market. Before highlighting the distortion of regular routine, which he took for the defining ingredient of capitalism he devoted 102 pages to the steady state; about 100 pages too long for this book, of course. His steady state is an economy in which people are used to conditions, a traditional economy. (Daily home-office trips begin as a discovery voyage with intensive mental effort in preparation and execution just to limit inefficiency, but they soon become rational routes in reflex. In a futurist market economy the Jetsons can absorb the annual 5.4% productivity rise smoothly; a traditional economy.) In such an economy operational production has no external finance, no outsiders like shareholders and bankers minding management. Such production has no need for a bookkeeping to determine profit. Of course, there agriculture has fluctuating harvests and artisan industry has fluctuating business, but there is no profit. Such traditional production survived along a capitalist sector in the economy. Marshall wanted to highlight the modern capitalist sector. Samuelson was not aware of the traditional sector; he could not accept that traditional production did not pay income to external finance. Schumpeter stubbornly persisted on it, but failed to show the point that there is no external finance in sound traditional production.
Success needs all its 100 fathers, and a mother. One can sketch the fall of the bad bank of the Roman empire from several angles. If society cannot mobilise the present means, then the cause of the consequent crash is not a lack of means, but an organisation-flaw. There may have been others. Pax Romana deprived generals on the outskirts of a chance on glory, and thus directed all ambition and energy towards the center, upon which the empire imploded. If capitalism would structurally offer superior prospects in finance, it would drain production.
You are neglecting to point out that the Roman government had essentially abandoned Rome in this period and moved to Constantinople. This occurred because of radical shifts in trade routes that went around Rome rather than through it. The historical record contains the Roman mission to east Africa to try and convince them to stop connecting to the far east when the Hindu's learned to sail directly from India to Africa. At the same time, trade routes from northern Europe were shifting away from the Rhine/Rhone to rivers of east Europe which connected to the Black Sea. The old Roman empire fell because it lacked the economic basis it once had. Western Europe became an economic backwater, hence the dark ages, while the Roman empire continued to thrive in its eastern location.
September 2, 2015 at 10:22 PM
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One of the books I found influential in graduate school in philosophy was M. I. Finley's The Ancient Economy, which appeared in 1973. Finley's book sought to explain important parts of the Roman world by piecing together the best knowledge available about the economic relations that defined its socioeconomic foundation. And the book proposes to consider economic history in a new way:
There is a fundamental question of method. The economic language and concepts we are all familiar with, even the laymen among us, the "principles", whether they are Alfred Marshall's or Paul Samuelson's, the models we employ, tend to draw us into a false account. For example, wage rates and interest rates in the Greek and Roman worlds were both fairly stable locally over long periods ... , so that to speak of a "labour market" or a "money market" is immediately to falsify the situation. (23)
Finley's point here is that we need to conceptualize the ancient economy in terms that are not drawn from current understandings of capitalist market economies; these economic concepts do not adequately capture the socioeconomic realities of the ancient world. Finley argues that the concepts and categories of modern market society fit the socioeconomic realities of the ancient world very poorly. (In this his approach resembles that of Karl Polanyi, who was indeed an important influence on Finley.) One thing that is interesting in this approach is that it is neither neo-classical nor Marxist.
Finley addresses a question that is particularly important in the human sciences, the problem of how to handle heterogeneity within a social whole.
Is it legitimate, then, to speak of the "ancient economy"? Must it not be broken down by further eliminations...? Walbank, following in the steps of Rostovtzeff, has recently called the Empire of the first century "a single economic unit", one that was "knit together by the intensive exchange of all types of primary commodities and manufactured articles, including the four fundamental articles of trade -- grain, wine, oil, and slaves". (33)
This is to take a regionalist perspective on defining an economic region: we emphasize not homogeneity and self-similarity, but rather systemic interconnections among the parts. But to conclude a set of places fall in a single "economic region", Finley argues something else is needed:
To be meaningful, "world market", "a single economic unit" must embrace something considerably more than the exchange of some goods over long distances.... One must show the existence of interlocking behaviour and responses over wide areas. (34)
So what distinguishes the "interlocking behaviour and responses" of the ancient world? Finley's view is that the dominant ethos of the ancient world is not one of producing for accumulation, but rather maintaining status and the social order. And these imply a society sharply divided between haves and have-nots -- nobility and the poor. Finley takes issue with the "individualist" view (43) as applied to the ancient world, according to which each person is equally able to strive for success based on his/her own merits. What he calls the prevailing ideology is one of the moral legitimacy of inequalities, social and economic. Hierarchy is normal in the order of things, in the world view of the ancients. Even the heterodox insistence in the modern world on the concepts of class and exploitation, according to Finley, have little grip on the ideologies and values of the ancients. The idea of the working class fails to illuminate social realities of the ancient world because it necessarily conflates free and bonded labor (49). (Finley quotes Lukács on this point: "status-consciousness ... masks class consciousness" (50).)
There are only a few "structural" factors in Finley's account of the ancient economy. The structure and social reality of property is one -- the ownership of land and labor in the form of estates, small farms, and slaves conditions much of productive activity. Another is the availability of roads and water transport. Production largely took place within one day's transport from the consumers of that production. "Towns could not safely outgrow the food production of their own immediate hinterlands unless they had direct access to waterways" (126). Finley summarizes the "balance of payments" through which towns and cities supported themselves under four categories: local agricultural production, the availability of special resources like silver; the availability of trade and tourism; and income from land ownership and empire (139).
It is interesting to compare Finley's intellectual style in The Ancient Economy with his writing in an earlier book, Aspects of Antiquity: Discoveries and Controversies, published in 1968. Here Finley takes up many topics in a broadly chronological order. And he is more declaratory in his analysis of the broad dynamics of social development. One chapter in particular is an interesting counterpoint to The Ancient Economy, "Manpower and the Fall of Rome". The time is the late fourth century, and the circumstances are the impending military collapse of Rome. Finley estimates the population of the empire at about 60 million, noting that it is impossible to provide anything like a precise estimate. This population supported an army of about 300,000 in the time of Marcus Aurelius (d. 180), and rising to perhaps 600,000 in in the coming century. But increasingly this army was incapable of protecting the Empire from the encroaching Germanic tribes.
Roman armies still fought well most of the time. In any straight fight they could, and they usually did, defeat superior numbers of Germans, because they were better trained, better equipped, better led. What they could not do was cope indefinitely with this kind of enemy [migratory tribes]. (150)
Finley offers what is essentially a demographic and technological explanation for Rome's failure to defend itself: it simply could not sustain the substantially greater manpower needs that the Germanic warfare required, given the nature of the agrarian economy.
With the stabilization of the empire and the establishment of the pax Romana under Augustus, a sort of social equilibrium was created. Most of the population, free or unfree, produced just enough for themselves to exist on, at a minimum standard of living, and enough to maintain a very rich and high-living aristocracy and urban upper class, the courts with its palace and administrative staffs, and the modest army of some 300,000. Any change in any of the elements making up the equilibrium -- for example, an increase in the army or other non-producing sectors of the population, or an increase in the bite taken out of the producers through increased rents and taxes -- had to be balanced elsewhere if the equilibrium were to be maintained. Otherwise something was bound to break. (151)
And this leads to a general causal conclusion:
In the later Roman Empire manpower was part of an interrelated complex of social conditions, which, together with the barbarian invasions, brought an end to the empire in the west.... It was the inflexible institutional underpinning, in the end, which failed: it could not support the perpetual strains of an empire of such magnitude within a hostile world. (152,153)
This is perhaps a sober reminder of the limits of imperial power for the contemporary world.
(For readers interested in the ancient world, here is a related post on agrarian history in Weber's scholarship. And here is a video interview of M. I. Finley that touches on the key influences in his development as an historian.)
"M I Finley on the dynamics of the Roman Empire"
3 Comments -
Schumpeter, Theorie der wirtschaftlichen Entwicklung, 1912 observed that 19th century steady state theory had progressed marginal utility of further research to rock bottom, so the young 20th centurists had to explore the transitory processes that had been skipped; he carved himself a niche in the market. Before highlighting the distortion of regular routine, which he took for the defining ingredient of capitalism he devoted 102 pages to the steady state; about 100 pages too long for this book, of course. His steady state is an economy in which people are used to conditions, a traditional economy. (Daily home-office trips begin as a discovery voyage with intensive mental effort in preparation and execution just to limit inefficiency, but they soon become rational routes in reflex. In a futurist market economy the Jetsons can absorb the annual 5.4% productivity rise smoothly; a traditional economy.) In such an economy operational production has no external finance, no outsiders like shareholders and bankers minding management. Such production has no need for a bookkeeping to determine profit. Of course, there agriculture has fluctuating harvests and artisan industry has fluctuating business, but there is no profit. Such traditional production survived along a capitalist sector in the economy. Marshall wanted to highlight the modern capitalist sector. Samuelson was not aware of the traditional sector; he could not accept that traditional production did not pay income to external finance. Schumpeter stubbornly persisted on it, but failed to show the point that there is no external finance in sound traditional production.
Success needs all its 100 fathers, and a mother. One can sketch the fall of the bad bank of the Roman empire from several angles. If society cannot mobilise the present means, then the cause of the consequent crash is not a lack of means, but an organisation-flaw. There may have been others. Pax Romana deprived generals on the outskirts of a chance on glory, and thus directed all ambition and energy towards the center, upon which the empire imploded. If capitalism would structurally offer superior prospects in finance, it would drain production.
September 2, 2015 at 7:21 PM
Schumpeter, Theorie der wirtschaftlichen Entwicklung, 1912 observed that 19th century steady state theory had progressed marginal utility of further research to rock bottom, so the young 20th centurists had to explore the transitory processes that had been skipped; he carved himself a niche in the market. Before highlighting the distortion of regular routine, which he took for the defining ingredient of capitalism he devoted 102 pages to the steady state; about 100 pages too long for this book, of course. His steady state is an economy in which people are used to conditions, a traditional economy. (Daily home-office trips begin as a discovery voyage with intensive mental effort in preparation and execution just to limit inefficiency, but they soon become rational routes in reflex. In a futurist market economy the Jetsons can absorb the annual 5.4% productivity rise smoothly; a traditional economy.) In such an economy operational production has no external finance, no outsiders like shareholders and bankers minding management. Such production has no need for a bookkeeping to determine profit. Of course, there agriculture has fluctuating harvests and artisan industry has fluctuating business, but there is no profit. Such traditional production survived along a capitalist sector in the economy. Marshall wanted to highlight the modern capitalist sector. Samuelson was not aware of the traditional sector; he could not accept that traditional production did not pay income to external finance. Schumpeter stubbornly persisted on it, but failed to show the point that there is no external finance in sound traditional production.
Success needs all its 100 fathers, and a mother. One can sketch the fall of the bad bank of the Roman empire from several angles. If society cannot mobilise the present means, then the cause of the consequent crash is not a lack of means, but an organisation-flaw. There may have been others. Pax Romana deprived generals on the outskirts of a chance on glory, and thus directed all ambition and energy towards the center, upon which the empire imploded. If capitalism would structurally offer superior prospects in finance, it would drain production.
September 2, 2015 at 7:24 PM
You are neglecting to point out that the Roman government had essentially abandoned Rome in this period and moved to Constantinople. This occurred because of radical shifts in trade routes that went around Rome rather than through it. The historical record contains the Roman mission to east Africa to try and convince them to stop connecting to the far east when the Hindu's learned to sail directly from India to Africa. At the same time, trade routes from northern Europe were shifting away from the Rhine/Rhone to rivers of east Europe which connected to the Black Sea. The old Roman empire fell because it lacked the economic basis it once had. Western Europe became an economic backwater, hence the dark ages, while the Roman empire continued to thrive in its eastern location.
September 2, 2015 at 10:22 PM