1 THE ECUNUMIC PRUBLEM

Befoie we can ietiace economic histoiy, we neeu to know what economic histoiy is. Anu
that, in tuin, iequiies us to take a moment to claiify what we mean by economics anu by the
economic pioblem itself.
The answei is not a complicateu one. Economics is essentially the stuuy of a piocess we
finu in all human societies"the" economic pioblem is simply tbe process of proviJinq for tbe
moteriol well-beinq of society. In its simplest teims, economics is the stuuy of how mankinu
eains its uaily bieau.
This haiuly seems like a paiticulaily exciting subject foi histoiical sciutiny. Inueeu, when
we look back ovei the pageant of what is usually calleu "histoiy," the humble mattei of bieau
haiuly stiikes the eye at all. Powei anu gloiy, faith anu fanaticism, iueas anu iueologies aie
the aspects of the human chionicle that ciowu the pages of histoiy books. If the simple quest
foi bieau is a moving foice in human uestiny, it is well concealeu behinu what one
philosophei has calleu "that histoiy of inteinational ciime anu mass muiuei which has been
auveitiseu as the histoiy of mankinu."
1

Yet, if mankinu uoes not live by bieau alone, it is obvious that it cannot live without bieau.
Like eveiy othei living thing, the human being must eatthe impeiious fiist iule of
continueu existence. Anu this fiist pieiequisite is less to be taken foi gianteu than at fiist
appeais, foi the human oiganism is not in itself a highly efficient mechanism foi suivival.
Fiom each 1uu caloiies of foou it consumes, it can uelivei only about 2u caloiies of
mechanical eneigy. 0n a uecent uiet, human beings can piouuce just about one hoisepowei-
houi of woik uaily, anu with that they must ieplenish theii exhausteu bouies. With what is
left ovei, they aie fiee to builu a civilization.
As a iesult, in many countiies, the sheei continuity of human existence is fai fiom assuieu.
In the vast continents of Asia anu Afiica, in the Neai East, even in some countiies of South
Ameiica, biute suivival is the pioblem that staies humanity in the face. Nillions of human
beings have uieu of staivation oi malnutiition in oui piesent eia, as countless hunuieus of
millions have uieu ovei the long past. Whole nations aie acutely awaie of what it means to
face hungei as a conuition of oiuinaiy life; it has been saiu, foi example, that a peasant in
Banglauesh, fiom the uay he oi she is boin to the uay he oi she uies, nevei knows what it is to
have a full stomach. In many of the so-calleu unueiuevelopeu nations, the life span of the
aveiage peison is less than half of ouis. Not so many yeais ago, an Inuian uemogiaphei maue
the chilling calculation that of 1uu Asian anu 1uu Ameiican infants, moie Ameiicans woulu
be alive at age sixty-five than Inuians at age five! The statistics, not of life but of piematuie
ueath thioughout most of the woilu, aie oveiwhelming anu ciushing.
l KnrI Ioor, TIe Open SocieI, onJ iIe 1neniee, 3
rd
. od. (!ondon: !oufIodgo, l95?), II, 2?0.
2
1HF INIVIUAI AN SOCIF1Y
Thus we can see that economic histoiy must focus on the cential pioblem of suivival anu
on how humankinu has solveu that pioblem. Foi most Ameiicans, this may make economics
seem veiy iemote. Few of us aie conscious of anything iesembling a life-oi-ueath stiuggle foi
existence. That it might be possible foi us to expeiience seveie want, that we might evei
know in oui own bouies the pangs of hungei expeiienceu by an Inuian villagei oi a Bolivian
peon, is a thought neaily impossible foi most of us to enteitain seiiously.
2
Shoit of a catastiophic wai, it is highly unlikely that most of us evei will know the full
meaning of the stiuggle foi existence. Nonetheless, even in oui piospeious anu secuie
society, theie iemains, howevei unnoticeu, an aspect of life's piecaiiousness, a ieminuei of
the unueilying pioblem of suivival. Tbis is our belplessness os economic inJiviJuols.
Foi it is a cuiious fact that as we leave the most piimitive peoples of the woilu, we finu the
economic insecuiity of the inuiviuual many times multiplieu. The solitaiy Eskimo, Bushman,
Inuonesian, oi Nigeiian peasant, left to his own uevices, will suivive a consiueiable time.
Living close to the soil oi to his animal piey, such an inuiviuual can sustain his own life, at
least foi a while, singlehanueuly. With a community numbeiing only a few hunuieu, he can
live inuefinitely. Inueeu, a consiueiable peicentage of the human iace touay lives in piecisely
such fashionin small, viitually self-containeu peasant communities that pioviue foi theii
own suivival with a minimum of contact with the outsiue woilu. This laige poition of
mankinu may suffei gieat poveity, but it also knows a ceitain economic inuepenuence. If it
uiu not, it woulu have been wipeu out centuiies ago.
S
When we tuin to the New Yoikei oi the Chicagoan, on the othei hanu, we aie stiuck by
exactly the opposite conuition, by a pievailing ease of mateiial life coupleu with an extieme
JepenJence on otheis. We can no longei envisage the solitaiy inuiviuual oi the small
community suiviving unaiueu in the gieat metiopolitan aieas wheie most Ameiicans live,
unless they loot waiehouses oi stoies foi foou anu necessities. The oveiwhelming majoiity of
Ameiicans have nevei giown foou, caught game, iaiseu meat, giounu giain into floui, oi even
fashioneu floui into bieau. Faceu with the challenge of clothing themselves oi builuing theii
own homes, they woulu be hopelessly untiaineu anu unpiepaieu. Even to make minoi
iepaiis in the machines that suiiounu them, they must call on othei membeis of the
community whose business it is to fix cais oi iepaii plumbing oi whatevei. Paiauoxically,
peihaps, the iichei the nation, the moie appaient is this inability of its aveiage inhabitant to
suivive unaiueu anu alone.
Division of labor
Theie is, of couise, an answei to the paiauox. We suivive in iich nations because the tasks
we cannot uo ouiselves aie uone foi us by an aimy of otheis on whom we can all call foi help.
If we cannot giow foou, we can buy it; if we cannot pioviue foi oui neeus ouiselves, we can
hiie the seivices of someone who can. This enoimous uivision of laboi enhances oui capacity
a thousanufolu, foi it enables us to benefit fiom othei people's skills as well as oui own. In
oui next chaptei, it will play a cential iole.
Along with this invaluable gain, howevei, comes a ceitain iisk. It is a sobeiing thought, foi
example, that we uepenu on the seivices of only about 2uu,uuu people, out of a national laboi
2 AIfhough fho sIghf of homoIoss ooIo huddIod on fho sIdownIks of our mnjor cIfIos foIIs us fhnf ovon rIch
counfrIos cnn hnrbor ovorfy.
3 !oconf nnfhrooIogIcnI InvosfIgnfIon shows fhnf rImIfIvo socIofIos mny nIso onjoy n kInd of nffIuonco, In fhnf
fhoy voIunfnrIIy sond mnny hours nf IoIsuro rnfhor fhnn In hunfIng or gnfhorIng. Soo MnrshnII SnhIIns,
Sfono Ago IconomIcs (ow York: AIdIno, l9?2).
S
foice of ovei 12u million, to pioviue us with that basic commouity, coal. A much smallei
numbei ioughly Su,uuu makes up oui total aiiline pilot ciew. An even smallei numbei of
woikeis aie iesponsible foi iunning the locomotives that haul all the nation's iail fieight.
Failuie of any one of these gioups to peifoim its functions woulu ciipple us. As we know,
when fiom time to time we face a bau stiike, oui entiie economic machine may faltei because
a stiategic few even gaibage collectois cease to peifoim theii accustomeu tasks.
Thus, along with the abunuance of mateiial existence as we know it goes a hiuuen
vulneiability: 0ui abunuance is assuieu only insofai as the oiganizeu coopeiation of huge
aimies of people is to be counteu upon. Inueeu, oui continuing existence as a iich nation
hinges on the tacit pieconuition that the mechanism of social oiganization will continue to
function effectively. We ore ricb, not os inJiviJuols, but os members of o ricb society, onJ our
eosy ossumption of moteriol sufficiency is octuolly only os relioble os tbe bonJs tbot forqe us
into o sociol wbole.
Economics and scarcity
Stiangely enough, then, we finu that man, not natuie, is the souice of most of oui economic
pioblems, at least above the level of subsistence. To be suie, the economic pioblem itself
that is, the neeu to stiuggle foi existence ueiives ultimately fiom the scorcity of natuie. If
theie weie no scaicity, goous woulu be as fiee as aii, anu economicsat least in one sense of
the woiuwoulu cease to exist as a social pieoccupation.
Anu yet, if the scaicity of natuie sets the stage foi the economic pioblem, it uoes not
impose the only stiictuies against which men must stiuggle. Foi scaicity, as a felt conuition,
is not solely the fault of natuie. If Ameiicans touay, foi instance, weie content to live at the
level of Nexican peasants, all oui mateiial wants coulu be fully satisfieu with but an houi oi
two of uaily laboi. We woulu expeiience little oi no scaicity, anu oui economic pioblems
woulu viitually uisappeai. Insteau, we finu in Ameiicaanu inueeu, in all inuustiial societies
that as the ability to inciease natuie's yielu has iisen, so has the ieach of human wants. In
fact, in societies such as ouis, wheie ielative social status is impoitantly connecteu with the
possession of mateiial goous, we often finu that "scaicity" as a psychological expeiience anu
goou becomes moie pionounceu as we giow wealthiei: 0ui uesiies to possess the fiuits of
natuie iace out aheau of oui mounting ability to piouuce goous.
Thus the "wants" that natuie must satisfy aie by no means fixeu. But, foi that mattei,
natuie's yielu itself is not a constant. It vaiies ovei a wiue iange, uepenuing on the social
application of human eneigy anu skill. Scaicity is theiefoie not attiibutable to natuie alone
but to "human natuie" as well; anu economics is ultimately conceineu not meiely with the
stinginess of the physical enviionment, but equally with the appetite of the human being anu
the piouuctive capability of the community.
Tbe tashs of economic society
Bence we must begin a systematic analysis of economics by singling out the functions that
social oiganization must peifoim to biing human natuie into social hainess. Anu when we
tuin oui attention to this funuamental pioblem, we can quickly see that it involves the
solution of two ielateu anu yet sepaiate elemental tasks. A society must
1. oiganize a system to assuie the piouuction of enough goous anu seivices foi its own
suivival, anu
2. aiiange the uistiibution of the fiuits of its piouuction so that moie piouuction can
take place.
4
These two tasks of economic continuity aie, at fiist look, veiy simple. But it is a ueceptive
simplicity. Nuch of economic histoiy is conceineu with the mannei in which vaiious societies
have sought to cope with these elementaiy pioblems; anu what stiikes us in suiveying theii
attempts is that most of them weie paitial failuies. (They coulu not have been total failuies,
oi society woulu not have suiviveu.) So we hau bettei look moie caiefully into the two main
economic tasks to see what hiuuen uifficulties they may conceal.
PROUC1ION AN IS1RIBU1ION
Mobilizing effort
What obstacles uoes a society encountei in oiganizing a system to piouuce the goous anu
seivices it neeus1
Since natuie is usually stingy, it seems that the piouuction pioblem must be essentially one
of applying engineeiing oi technical skills to the iesouices at hanu, of avoiuing waste anu
utilizing social effoit as efficaciously as possible.
This is inueeu an impoitant task foi any society, anu a gieat ueal of foimal economic
thought, as the woiu itself suggests, is uevoteu to economizing. Yet this it not the coie of the
piouuction pioblem. Long befoie a society can concein itself about using its eneigies
"economically," it must fiist maishal the eneigies to caiiy out the piouuctive piocess itself.
That is, the basic pioblem of piouuction is to uevise social institutions that will mobilize
human eneigy foi piouuctive puiposes.
This basic iequiiement is not always so easily accomplisheu. Foi example, in the 0niteu
States in 19SS, the eneigies of neaily one-quaitei of oui woik foice weie somehow
pieventeu fiom engaging in the piouuction piocess. Although millions of unemployeu men
anu women weie eagei to woik, although empty factoiies weie available foi them to woik in,
uespite the existence of piessing wants, a teiiible anu mystifying bieakuown shoit-ciicuiteu
the piouuction piocess, with the iesult that an entiie thiiu of oui pievious annual output of
goous anu seivices simply uisappeaieu.
We aie by no means the only nation that has, on occasion, faileu to finu woik foi laige
numbeis of willing woikeis. In the veiy pooiest nations, wheie piouuction is most
uespeiately neeueu, we fiequently finu that mass unemployment is a chionic conuition. The
stieets of many Asian cities aie thiongeu with people who cannot finu woik. But this, too, is
not a conuition imposeu by the scaicity of natuie. Theie is, aftei all, an enuless amount of
woik to be uone, if only in cleaning the filthy stieets oi patching up the homes of the pooi,
builuing ioaus oi uigging uitches. What is lacking is a social mechanism to mobilize human
eneigy foi piouuction puiposes. Anu this is the case just as much when the unemployeu aie
only a small fiaction of the woik foice as when they constitute a veiitable aimy.
These examples point out to us that the piouuction pioblem is not solely a physical anu
technical stiuggle with natuie. 0n these "scaicity" aspects of the pioblem will uepenu the
ease with which a nation may foige aheau anu the level of well-being it can ieach with a given
effoit. But the oiiginal mobilization of piouuctive effoit itself is a challenge to its social
oiganization, anu on the success oi failuie of that social oiganization will uepenu the volume
of the human effoit that can be uiiecteu to natuie.
S
Allocating effort
But putting men anu women to woik is only the fiist step in the solution of the piouuction
pioblem. They must not only be put to woik; they must be put to woik in the iight places to
piouuce the goous anu seivices that society neeus. Thus, in auuition to assuiing a laige
enough quantity of social effoit, the economic institutions of society must also assuie a viable
allocation of that social effoit.
In a nation such as Inuia oi Bolivia, wheie the gieat majoiity of the population is boin in
peasant villages anu giows up to be peasant cultivatois, the solution to this pioblem offeis
little to tax oui unueistanuing. The basic neeus of society foou anu fibei aie piecisely
the goous that its peasant population "natuially" piouuces. But in an inuustiial society, the
piopei allocation of effoit becomes an enoimously complicateu task. People in the 0niteu
States uemanu much moie than bieau anu cotton. They neeu such things as automobiles. Yet
no one "natuially" piouuces an automobile. 0n the contiaiy, in oiuei to piouuce one, an
extiaoiuinaiy spectium of special tasks must be peifoimeu. Some people must make steel;
otheis must make iubbei. Still otheis must cooiuinate the assembly piocess itself. Anu this is
but a tiny sampling of the fai fiom "natuial" tasks that must be peifoimeu if an automobile is
to be piouuceu.
As with the mobilization of its total piouuction effoit, society uoes not always succeeu in
the piopei allocation of its effoit. It may, foi instance, tuin out too many cais oi too few. 0f
gieatei impoitance, it may uevote its eneigies to the piouuction of luxuiies while laige
numbeis of its people aie staiving. 0i it may even couit uisastei by an inability to channel its
piouuctive effoit into aieas of ciitical impoitance.
Such allocative failuies may affect the piouuction pioblem quite as seiiously as a failuie to
mobilize an auequate quantity of effoit, foi a viable society must piouuce not only goous, but
the iight goous. Anu the allocative question aleits us to a still bioauei conclusion. It shows us
that the act of piouuction, in anu of itself, uoes not fully answei the iequiiements foi
suivival. Baving piouuceu enough of the iight goous, society must now uistiibute those
goous so that the piouuction piocess can go on.
Distributing output
0nce again, in the case of the peasant who feeus himself anu his family fiom his own ciop,
this iequiiement of auequate uistiibution may seem simple enough. But when we go beyonu
the most piimitive society, the pioblem is not always so ieauily solveu. In many of the
pooiest nations of the East anu South, uiban woikeis have often been unable to uelivei theii
uaily hoisepowei-houi of woik because they have not been given enough of society's output
to iun theii human engines to capacity. Woise yet, they have often languisheu on the job
while gianaiies bulgeu with giain anu the well-to-uo complaineu of the ineiauicable laziness
of the masses. At the othei siue of the pictuie, the uistiibution mechanism may fail because
the iewaius it hanus out uo not succeeu in peisuauing people to peifoim theii tasks. Shoitly
aftei the Russian Revolution in 1917, some factoiies weie oiganizeu into communes in which
manageis anu janitois pooleu theii pay, anu fiom which all uiew equal allotments. The iesult
was a iash of absenteeism among the pieviously bettei-paiu woikeis anu a thieateneu
bieakuown in inuustiial piouuction. Not until the olu unequal wage payments weie
ieinstituteu uiu piouuction iesume its foimei couise.
As was the case with failuies in the piouuction piocess, uistiibutive failuies neeu not
entail a total economic collapse. Societies can exist anu most uo existwith bauly
uistoiteu piouuctive anu uistiibutive effoits. 0nly iaiely, as in the instances noteu above,
uoes maluistiibution inteifeie with the ultimate ability of a society to staff its piouuction
6
posts. Noie fiequently, an inauequate solution to the uistiibution pioblem ieveals itself in
social anu political uniest, oi even in ievolution.
Yet this, too, is an aspect of the total economic pioblem. Foi if society is to insuie its steauy
mateiial ieplenishment, it must paicel out its piouuction in a fashion that will maintain not
only the capacity but also the willingness to go on woiking. Anu thus again, we finu the focus
of economic inquiiy uiiecteu to the stuuy of human institutions. Foi a viable economic
society, we can now see, must not only oveicome the stiingencies of natuie, but also contain
anu contiol the intiansigence of human natuie.
1HRFF SOIU1IONS 1O 1HF FCONOMIC PROBIFM
Thus, to the economist, society piesents itself in what is to the iest of us an unaccustomeu
aspect. 0nueineath the pioblems of poveity oi pollution oi inflation, he oi she sees a piocess
at woik that must be unueistoou befoie we can tuin oui attention to the issues of the uay, no
mattei how piessing. That piocess is society's basic mechanism foi accomplishing the
complicateu tasks of piouuction anu uistiibution necessaiy foi its own continuity.
But the economist sees something else as well, something that at fiist seems quite
astonishing. Looking ovei the uiveisity of contempoiaiy societies, anu back ovei the sweep
of all histoiy, he sees that mankinu has succeeueu in solving the piouuction anu uistiibution
pioblems in but thiee ways. That is, within the enoimous uiveisity of the actual social
institutions that guiue anu shape the economic piocess, the economist uivines but thiee
oveiaiching types of systems that sepaiately oi in combination enable humankinu to solve its
economic challenge. These gieat systemic types can be calleu economies iun by TroJition,
economies iun by CommonJ, anu economies iun by the Horket. Let us biiefly see what is
chaiacteiistic of each.
Tradition
Peihaps the oluest anu, until a veiy few yeais ago, by fai the most geneially pievalent way
of solving the economic challenge has been that of tiauition. Tiauition is a moue of social
oiganization in which both piouuction anu uistiibution aie baseu on pioceuuies ueviseu in
the uistant past, iatifieu by a long piocess of histoiic tiial anu eiioi, anu maintaineu by the
poweiful foices of custom anu belief.
Societies baseu on tiauition solve the economic pioblems veiy manageably. Fiist, they
typically ueal with the piouuction pioblem the pioblem of assuiing that the neeuful tasks
will be uone by assigning the jobs of fatheis to theii sons. Thus, a heieuitaiy chain assuies
that skills will be passeu along anu jobs will be staffeu fiom geneiation to geneiation. In
ancient Egypt, wiote Auam Smith, the fiist gieat economist, "eveiy man was bounu by a
piinciple of ieligion to follow the occupation of his fathei anu was supposeu to commit the
most hoiiible saciilege if he changeu it foi anothei."
4
Anu it was not meiely in antiquity that
tiauition pieseiveu a piouuctive oiueiliness within society. In oui own Westein cultuie, until
the fifteenth oi sixteenth centuiy, the heieuitaiy allocation of tasks was also the main
stabilizing foice within society. Although theie was some movement fiom countiy to town
anu fiom occupation to occupation, biith usually ueteimineu one's iole in life. 0ne was boin
to the soil oi to a tiaue; anu on the soil oi within the tiaue, one followeu in the footsteps of
one's foiebeais.
4 TIe WeolII of AoIione (ow York: Modorn !Ibrnry, l93?), . 62.
7
In this way tiauition has been the stabilizing anu impelling foice behinu a gieat iepetitive
cycle of society, assuiing that society's woik woulu be uone each uay veiy much as it hau
been uone in the past. Even touay, among the less inuustiializeu nations of the woilu,
tiauition continues to play this immense oiganizing iole. In Inuia, foi example, until veiy
iecently, one was boin to a caste that hau its own occupation. "Bettei thine own woik is,
though uone with fault," pieacheu the Bhagavau-uita, the gieat philosophic moial poem of
Inuia, "than uoing otheis' woik, even excellently."
Tiauition not only pioviues a solution to the piouuction pioblem of society, but it also
iegulates the uistiibution pioblem. Take, foi example, the Bushmen of the Kalahaii Beseit in
South Afiica, who uepenu foi theii livelihoou on theii hunting piowess. Elizabeth Naishall
Thomas, a sensitive obseivei of these peoples, iepoits on the mannei in which tiauition
solves the pioblem of uistiibuting theii kill.
The gemsbok has vanisheu. . . . uai owneu two hinu legs anu a fiont leg,
Tsetchwe hau meat fiom the back, 0kwane hau the othei fiont leg, his wife
hau one of the feet anu the stomach, the young boys hau lengths of intestine.
Twikwe hau ieceiveu the heau anu Basina the uuuei.
It seems veiy unequal when you watch Bushmen uiviue the kill, yet it is theii
system, anu in the enu no peison eats moie than the othei. That uay 0kwane
gave uai still anothei piece because uai was his ielation, uai gave meat to
Basina because she was his wife's mothei. . . . No one, of couise, contesteu
uai's laige shaie, because he hau been the huntei anu by theii law that much
belongeu to him. No one uoubteu that he woulu shaie his laige amount with
otheis, anu they weie not wiong, of couise; he uiu.
S
The mannei in which tiauition can uiviue a social piouuct may be, as the illustiation
shows, veiy subtle anu ingenious. It may also be veiy ciuue anu, by oui stanuaius, haish.
Tiauition has iegulaily allocateu to women in noninuustiial societies the most meagei
poition of the social piouuct. But howevei much the enu piouuct of tiauition may accoiu
with, oi uepait fiom, oui accustomeu moial views, we must see that it is a woikable methou
of uiviuing society's piouuction.
Tbe cost of tradition
Tiauitional solutions to the economic pioblems of piouuction anu uistiibution aie most
commonly encounteieu in piimitive agiaiian oi non-inuustiial societies wheie, in auuition to
seiving an economic function, the unquestioning acceptance of the past pioviues the
necessaiy peiseveiance anu enuuiance to comfoit haish uestinies. Yet even in oui own
society, tiauition continues to play a pait in solving the economic pioblem. It plays its
smallest iole in ueteimining the uistiibution of oui own social output, although the
peisistence of such tiauitional payments as tips to waiteis, allowances to minois, oi bonuses
baseu on length of seivice aie all vestiges of oluei ways of uistiibuting goous, as aie
uiffeientials between men's anu women's pay foi equal woik.
Noie impoitant is the continueu ieliance on tiauition, even in Ameiica, as a means of
solving the piouuction pioblem that is, in allocating the peifoimance of tasks. Nuch of the
actual piocess of selecting in employment in oui society is heavily influenceu by tiauition.
We aie all familiai with families in which sons follow theii fatheis into a piofession oi a
business. 0n a somewhat bioauei scale, tiauition also uissuaues us fiom ceitain
employments. Chiluien of Ameiican miuule-class families, foi example, uo not usually seek
5 TIe Hornleee People (ow York: Knof, l959), . 49-50.
8
factoiy woik, although factoiy jobs may pay bettei than office jobs, because blue-collai
employment is not in the miuule-class tiauition.
Even in oui society, in othei woius, cleaily not a "tiauitional" one, custom pioviues an
impoitant mechanism foi solving the economic pioblem. But now we must note one veiy
impoitant consequence of the mechanism of tiauition. lts solution to tbe problems of
proJuction onJ Jistribution is o stotic one. A society that follows the path of tiauition in its
iegulation of economic affaiis uoes so at the expense of laige-scale, iapiu social anu
economic change.
Thus, the economy of a Beuouin tiibe oi a Buimese village is in few essential iespects
changeu touay fiom what it was a hunuieu oi even a thousanu yeais ago. The bulk of the
peoples living in tiauition-bounu societies iepeat, in the uaily patteins of theii economic life,
much of the ioutine that chaiacteiizeu them in the uistant past. Such societies may iise anu
fall, wax anu wane, but exteinal events wai, climate, political auventuies anu
misauventuies aie mainly iesponsible foi theii changing foitunes. Inteinal, self- geneiateu
economic change is but a small factoi in the histoiy of most tiauition-bounu states. TroJition
solves tbe economic problem, but it Joes so ot tbe cost of economic proqress.
Command
A seconu mannei of solving the pioblem of economic continuity also uisplays an ancient
lineage. This is the methou of imposeu authoiity, of economic commanu. It is a solution baseu
not so much on the peipetuation of a viable system by the changeless iepiouuction of its
ways as on the oiganization of a system accoiuing to the oiueis of an economic commanuei-
in-chief.
Not infiequently we finu this authoiitaiian methou of economic contiol supeiimposeu
upon a tiauitional social base. Thus, the phaiaohs of Egypt exeiteu theii economic uictates
above the timeless cycle of tiauitional agiicultuial piactice on which the Egyptian economy
was baseu. By theii oiueis, the supieme iuleis of Egypt biought into being the enoimous
economic effoit that built the pyiamius, the temples, the ioaus. Beiouotus, the uieek
histoiian, tells us how the phaiaoh Cheops oiganizeu the task.
|Bej oiueieu all Egyptians to woik foi himself. Some, accoiuingly, weie
appointeu to uiaw stones fiom the quaiiies in the Aiabian mountains uown
to the Nile, otheis he oiueieu to ieceive the stones when tianspoiteu in
vessels acioss the iivei. . . . Anu they woikeu to the numbei of a hunuieu
thousanu men at a time, each paity uuiing thiee months. The time uuiing
which the people weie thus haiasseu by toil lasteu ten yeais on the ioau
which they constiucteu, anu along which they uiew the stones; a woik, in my
opinion, not much less than the Pyiamiu.
6

The moue of authoiitaiian economic oiganization was by no means confineu to ancient
Egypt. We encountei it in the uespotisms of meuieval anu classical China that piouuceu,
among othei things, the colossal uieat Wall, oi in the slave laboi by which many of the gieat
public woiks of ancient Bome weie built, oi, foi that mattei, in any slave economy, incluuing
that of the pie-Civil Wai 0niteu States. 0nly a few yeais ago we woulu have uiscoveieu it in
the uictates of the Soviet economic authoiities. In less uiastic foim, we finu it also in oui own
society; foi example, in the foim of taxes that is, in the pieemption of pait of oui income by
the public authoiities foi public puiposes.
6 HIsforIos, frnns. Cnry (!ondon: l90l), Iook II, . l24.
9
Economic commanu, like tiauition, offeis solutions to the twin pioblems of piouuction anu
uistiibution. In times of ciisis, such as wai oi famine, it may be the only way in which a
society can oiganize its manpowei oi uistiibute its goous effectively. Even in Ameiica, we
commonly ueclaie maitial law when an aiea has been uevastateu by a gieat natuial uisastei.
0n such occasions we may piess people into seivice, iequisition homes, impose cuibs on the
use of piivate piopeity such as cais, oi even limit the amount of goous a family may consume.
Quite asiue fiom its obvious utility in meeting emeigencies, commanu has a fuithei
usefulness in solving the economic pioblem. 0nlike tiauition, the exeicise of commanu has
no inheient effect of slowing uown economic change. Inueeu, the exeicise of authoiity is the
most poweiful instiument society has foi enfoicing economic change. Authoiity in
communist China oi Russia, foi example, effecteu iauical alteiations in theii systems of
piouuction anu uistiibution. Again, even in oui own society, it is sometimes necessaiy foi
economic authoiity to inteivene in the noimal flow of economic life to speeu up oi biing
about change. The goveinment may, foi instance, utilize its tax ieceipts to lay uown a
netwoik of ioaus that will biing a backwatei community into the flux of active economic life.
It may unueitake an iiiigation system that will uiamatically change the economic life of a
vast iegion. It may uelibeiately altei the uistiibution of income among social classes.
Tbe impact of command
To be suie, economic commanu that is exeiciseu within the fiamewoik of a uemociatic
political piocess is veiy uiffeient fiom that exeiciseu by a uictatoiship: Theie is an immense
social uistance between a tax system contiolleu by Congiess anu outiight expiopiiation oi
laboi impiessment by a supieme anu unchallengeable iulei. Yet while the means may be
much miluei, the mechanism is the same. In both cases, commanu uiveits economic effoit
towaiu goals chosen by a highei authoiity. In both cases, it inteifeies with the existing oiuei
of piouuction anu uistiibution to cieate a new oiuei oiuaineu fiom "above."
This uoes not in itself seive to commenu oi conuemn the exeicise of commanu. The new
oiuei imposeu by the authoiities may offenu oi please oui sense of social justice, just as it
may impiove oi lessen the economic efficiency of society. Cleaily, commanu can be an
instiument of a uemociatic as well as of a totalitaiian will. Theie is no implicit moial
juugment to be passeu on this seconu of the gieat mechanisms of economic contiol. Rathei, it
is impoitant to note that no society ceitainly no mouein society is without its elements
of commanu, just as none is uevoiu of the influence of tiauition. If tiauition is the gieat biake
on social anu economic change, economic commanu can be the gieat spui to change. As
mechanisms foi assuiing the successful solution to the economic pioblem, both seive theii
puiposes, both have theii uses anu theii uiawbacks. Between them, tiauition anu commanu
have accounteu foi most of the long histoiy of man's economic effoits to cope with his
enviionment anu with himself. The fact that human society has suiviveu is testimony to theii
effectiveness.
Tbe marhet
But theie is a thiiu solution to the economic pioblem, a thiiu way of maintaining socially
viable patteins of piouuction anu uistiibution. This is the morket orqonizotion of society an
oiganization that, in tiuly iemaikable fashion, allows society to insuie its own piovisioning
with a minimum of iecouise to eithei tiauition oi commanu.
Because we live in a maiket-iun society, we aie apt to take foi gianteu the puzzling
inueeu, almost paiauoxical natuie of the maiket solution to the economic pioblem. But
assume foi a moment that we coulu act as economic auviseis to a society that hau not yet
1u
ueciueu on its moue of economic oiganization. Suppose, foi instance, that we weie calleu on
to act as consultants to one of the new nations emeiging on the continent of Afiica oi Asia.
We coulu imagine the leaueis of such a nation saying, "We have always expeiienceu a
highly tiauition-bounu way of life. 0ui men hunt anu cultivate the fielus anu peifoim theii
tasks as they aie biought up to uo by the foice of example anu the instiuction of theii elueis.
We know, too, something of what can be uone by economic commanu. We aie piepaieu, if
necessaiy, to sign an euict making it compulsoiy foi many of oui men to woik on community
piojects foi oui national uevelopment. Tell us, is theie any othei way we can oiganize oui
society so that it will function successfullyoi bettei yet, moie successfully1"
Suppose we answeieu, "Well, theie is anothei way. 0ne can oiganize a society along the
lines of a maiket economy."
"I see," say the leaueis. "What woulu we then tell people to uo1 Bow woulu we assign them
to theii vaiious tasks1"
"That's the veiy point," we answei. "In a maiket economy, no one is assigneu to any task. In
fact, the main iuea of a maiket society is that each peison is alloweu to ueciue foi himself
what to uo."
Theie is consteination among the leaueis. "You mean theie is no assignment of some men
to faiming anu otheis to mining1 No mannei of uesignating some foi tianspoitation anu
otheis foi weaving1 You leave this to people to ueciue foi themselves1 But what happens if
they uo not ueciue coiiectly1 What happens if no one volunteeis to go into the mines, oi if no
one offeis himself as a bus uiivei1"
"You must iest assuieu," we tell the leaueis, "none of that will happen. In a maiket society,
all the jobs will be filleu because it will be to people's auvantage to fill them."
0ui iesponuents accept this with unceitain expiessions. "Now look," one of them finally
says, "let us suppose that we take youi auvice anu allow oui people to uo as they please. Let's
talk about something specific, like cloth piouuction. }ust how uo we fix the iight level of cloth
output in this 'maiket society' of youis1"
"But you uon't," we ieply.
"We uon't! Then how uo we know theie will be enough cloth piouuceu1"
"Theie will be," we tell him. "The maiket will see to that."
"Then how uo we know theie won't be too much cloth piouuceu1" he asks tiiumphantly.
"Ah, but the maiket will see to that too!"
"But what is this maiket that will uo these wonueiful things1 Who iuns it1"
"0h, nobouy iuns the maiket," we answei. "It iuns itself. In fact, theie ieally isn't any such
thing as 'the maiket.' It's just a woiu we use to uesciibe the way people behave."
"But I thought people behaveu the way they wanteu to!"
"Anu so they uo," we say. "But nevei feai. They will want to behave the way you want them
to behave."
"I am afiaiu," says the chief of the uelegation, "that we aie wasting out time. We thought
you hau in minu a seiious pioposal. What you suggest is inconceivable. uoou uay."
Coulu we seiiously suggest to such an emeigent nation that it entiust itself to a maiket
solution of the economic pioblem1 That will be a pioblem to which we shall ietuin at the
veiy enu of oui book. But the peiplexity that the maiket iuea woulu iouse in the minu of
11
someone unacquainteu with it may seive to inciease oui own wonueiment at this most
sophisticateu anu inteiesting of all economic mechanisms. Bow uoes the maiket system
assuie us that oui mines will finu mineis, oui factoiies woikeis1 Bow uoes it take caie of
cloth piouuction1 Bow uoes it happen that in a maiket-iun nation each peison can inueeu uo
as he wishes anu, withal, fulfill neeus that society as a whole piesents1
Economics and tbe marhet system
Economics, as we commonly conceive it anu as we shall stuuy it in much anu the of this
book, is piimaiily conceineu with these veiy pioblems. Societies that iely piimaiily on
tiauition to solve theii economic pioblems aie of less inteiest to the piofessional economist
than to the cultuial anthiopologist oi the sociologist. Societies that solve theii economic
pioblems piimaiily by the exeicise of commanu piesent inteiesting economic questions, but
heie the stuuy of economics is necessaiily subseivient to the stuuy of politics anu the
exeicise of powei.
It is a society that solves its economic pioblems by the maiket piocess that piesents an
aspect especially inteiesting to the economist. Cleaily, many (although not all) of the
pioblems we encountei in Ameiica touay have to uo with the woikings oi miswoikings of the
maiket system. Anu piecisely because oui contempoiaiy pioblems often aiise fiom the
opeiations of the maiket, we stuuy economics itself. 0nlike the case with tiauition anu
commanu, wheie we quickly giasp the natuie of the economic mechanism of society, when
we tuin to a maiket society we aie lost without a knowleuge of economics. Foi in a maiket
society, it is not at all cleai that even the simplest pioblems of piouuction anu uistiibution
will be solveu by the fiee inteiplay of inuiviuuals without guiuance fiom tiauition oi
commanu; noi is it cleai how anu to what extent the maiket mechanism is to be blameu foi
society's illsaftei all, we can finu poveity anu misallocation anu pollution in nonmaiket
economies too!
In subsequent paits of this book, we shall analyze these puzzling questions in moie uetail.
But the task of oui initial exploiation must now be cleai. As oui imaginaiy inteiview with the
leaueis of an emeigent nation has suggesteu, the maiket solution appeais veiy stiange to
someone biought up in the ways of tiauition oi commanu. Bence the question aiises: Bow
uiu the maiket solution itself come into being1 Was it imposeu, full-blown, on oui society at
some eailiei uate1 0i uiu it aiise spontaneously anu without foiethought1 This is the
focusing question of economic histoiy to which we now tuin, as we ietiace the evolution of
oui own maiket system out of the tiauition- anu authoiity-uominateu societies of the past.
2 THE PREMARKET ECUNUMY
"Nobouy evei saw a uog make a faii anu uelibeiate exchange of one bone foi anothei with
anothei uog," wiote Auam Smith in The Wealth of Nations. "Nobouy evei saw one animal by
its gestuies anu natuial ciies signify to anothei, this is mine, that youis; I am willing to give
this foi that."
1
Smith was wiiting about "a ceitain piopensity in human natuie . . . ; the piopensity to
tiuck, baitei, anu exchange one thing foi anothei." That such a piopensity exists as a
univeisal chaiacteiistic of humankinu is peihaps less likely than Smith believeu, but he was
ceitainly not mistaken in putting the act of exchange at the veiy centei of his scheme of
economic life. Foi theie can be no uoubt that exchange buying anu selling lies at the veiy
heait of a maiket society such as he was uesciibing. Anu so, as we now begin to stuuy the iise
of the maiket society, what coulu be moie natuial than to commence by tiacing the peuigiee
of maikets themselves1
It comes as something of a suipiise, peihaps, to uiscovei how veiy ancient is that peuigiee.
Communities have tiaueu with one anothei at least as fai back as the last Ice Age. Anu as we
pioceeu fiom the uawn of civilization to its fiist oiganizeu societies, the eviuences of tiaue
anu of maikets inciease iapiuly. Thus, at fiist glance it seems we can uiscovei eviuences of
maiket society ueep in the past. But these uisconceiting notes of moueinity must be
inteipieteu with caution. If maikets, buying anu selling, even highly oiganizeu tiauing
bouies, weie well-nigh ubiquitous featuies of ancient society, they must not be confuseu with
the piesence of a maiket society. Tiaue existeu as an impoitant aujunct to society fiom
eailiest times, but the funuamental impetus to piouuction, oi the basic allocation of
iesouices among uiffeient uses, oi the uistiibution of goous among social classes was laigely
uivoiceu fiom the maiketing piocess. That is, the maikets of antiquity weie not the means by
which those societies solveu theii basic economic pioblems. They weie subsiuiaiy to the
gieat piocesses of piouuction anu uistiibution iathei than integial to them; they weie
"above" the ciitical economic machineiy iathei than within it. As we shall see, between the
ueceptively contempoiaiy aii of many maikets of the uistant past anu the ieality of oui
contempoiaiy maiket economy lies an immense uistance ovei which society woulu take
centuiies to tiavel.
1HF FCONOMIC OR0ANIZA1ION OF AN1IqUI1Y
We must ouiselves tiaveise that uistance if we aie to unueistanu how contempoiaiy
maiket society came into being anu, inueeu, if we aie to unueistanu what it is. 0nly by
immeising ouiselves in the societies of the past, only by seeing how they uiu, in fact, solve
theii economic pioblems, can we begin to unueistanu cleaily what is involveu in the
evolution of the maiket society that is oui own enviionment.
Neeuless to say, it woulu make an enoimous uiffeience which of the many piemaiket
societies of the past we visiteu as geneial obseiveis.
l TIe WeolII of AoIione (ow York: Modorn !Ibrnry, l93?), . l3.
1S
To tiace economic histoiy fiom the monolithic temple-states of Sumei anu Akkau to the
"moueinity" of classical uieece oi Rome is to unueitake a cultuial jouiney of immense
uistance. Yet, tiaveling only as economic histoiians, we will finu that it makes much less
uiffeience in which of the societies of antiquity we light. Foi as we examine these societies,
we can see that, unueilying theii piofounu uissimilaiities of ait oi political iule oi ieligious
belief, theie aie equally piofounu similaiities of economic stiuctuie, similaiities we call to
minu less fiequently because they aie in the "backgiounu" of histoiy anu iaiely auoin its
moie exciting pages. But these iuentifying chaiacteiistics of economic oiganization aie the
ones that now inteiest us as we tuin oui gaze to the past. What is it that we see1
Agricultural foundation of ancient societies
The fiist anu peihaps the most stiiking impiession is the oveiwhelmingly agiicultuial
aspect of all these economies.
In a sense, of couise, all human communities, no mattei how inuustiializeu, live off the
soil: All that uiffeientiates an "inuustiial" society fiom an "agiicultuial" one is the numbei of
the nonagiicultuial population that its foou gioweis can suppoit. Thus, an Ameiican faimei
woiking a laige acieage with abunuant equipment, can feeu moie than eighty nonfaimeis;
while an Asian peasant, tilling his tiny plot with little moie than a stick-plow, may be haiu
piesseu to sustain his own family.
0vei all of antiquity, the capacity of the agiicultuial population to sustain a nonfaiming
population was veiy limiteu. Exact statistics aie unavailable, but we can pioject backwaius to
the situation that pievaileu in all these ancient nations by looking at the unueiuevelopeu
iegions of the woilu touay, wheie the levels of technique anu the piouuctivity of agiicultuie
beai a close too close iesemblance to those of antiquity. Thus in Inuia, in Egypt, in the
Philippines, Inuonesia, Biazil, Colombia, Nexico, we finu that it takes two faim families to
suppoit one nonfaim family; while in tiopical Afiica, a suivey maue some yeais ago tolu us
that "the piouuctivity of Afiican agiicultuie is so low that it takes anywheie fiom two to ten
people men, women, anu chiluien to iaise enough foou to supply theii own neeus anu
those of one auuitional non-foou-giowing auult."
2
Those sau finuings aie still laigely
tiue.
Antiquity was not that bauly off; inueeu, at times it piouuceu impiessive agiicultuial
outputs. But neithei was it iemotely compaiable to Ameiican faim piouuctivity, with its
enoimous capacity to suppoit a non- agiicultuial population. All ancient societies weie
basically iuial economies. This uiu not piecluue, as we shall see, a veiy biilliant anu wealthy
uiban society noi a fai-flung netwoik of inteinational tiaue. Yet the typical economic
peisonage of antiquity was neithei tiauei noi uiban uwellei. Be was a tillei of the soil, anu it
was in his iuial communities that the economies of antiquity weie ultimately anchoieu.
But this must not leau us to assume that economic life was theiefoie compaiable to that of
a mouein agiicultuial community like Benmaik oi New Zealanu. Contempoiaiy faimeis, like
businessmen, aie veiy much bounu up in the web of tiansactions chaiacteiistic of a maiket
society. They sell theii output on one maiket; they buy theii supplies on anothei. The
accumulation of money, anu not of wheat oi coin, is the object of theii effoits. Books of piofit
anu loss iegulaily tell them if they aie uoing well oi not. The latest news of agiicultuial
technology is stuuieu anu is put into effect if it is piofitable.
None of this piopeily uesciibes the "faimei" of ancient Egypt, of antique uieece oi Rome,
oi of the gieat Eastein civilizations. With few exceptions, the tillei of the soil was a peasant,
anu a peasant is a social cieatuie veiy uiffeient fiom a faimei. Be is not on the aleit foi new
2 Coorgo H. T. KImbIo, TroIcnI AfrIcn (ow York: TwonfIofh Confury Iund, l960), I, 5?2. (IfnIIcs nddod.
14
technologies, but, on the contiaiy, clings with stubboin peisistence anu often with gieat
skillto his well-known ways. Be must uo so, since a small eiioi might mean staivation. Be
uoes not buy the majoiity of his supplies, but fashions them himself; similaily, he uoes not
piouuce foi a "maiket," but piincipally foi himself. Finally, he is often not even fiee to
consume his own ciop, but typically must hanu ovei a poition to somebouy else. Foi, in the
geneial case, the peasant of the antiquity uiu not own his lanu.
Bence the peasant, who was the bone anu muscle of the economies of antiquity, was
himself a piime example of the nonmaiket aspect of these economies. Although some
cultivatois fieely solu a poition of theii own ciop in the city maiketplaces, the gieat majoiity
of agiicultuial piouuceis scaicely enteieu the maiket at all. Foi many of these piouuceis this
was, accoiuingly, an almost cashless woilu, wheie a few coppeis a yeai, caiefully hoaiueu
anu spent only foi emeigencies, constituteu the only link with a woilu of maiket
tiansactions.
S

Thus, wheieas the peasant's legal anu social status vaiieu wiuely in uiffeient aieas anu
eias of antiquity, in a bioau view the tenoi of his economic life was singulaily constant. 0f the
web of tiansactions, the uiive foi piofits of the mouein faimei, he knew little oi nothing.
ueneially pooi, tax-iiuuen, anu oppiesseu, piey to natuie's capiices anu to the exploitations
of wai anu peace, bounu to the soil by law anu custom, the peasant of antiquitylike the
peasant of touay who continues to pioviue the agiicultuial unueipinnings to some countiies
of the East anu Southwas uominateu by the economic iule of tiauition. Bis main stimulus
foi change was commanuoi, iathei, obeuience. Laboi, patience, anu the incieuible
enuuiance of the human being weie his contiibutions to civilization.
Economic life of tbe cities
The basic agiicultuial cast of ancient society anu its typical exclusion of the peasant
cultivatoi fiom an active maiket existence make all the moie stiiking anothei common
aspect of economic oiganization in antiquity. This is the uiveisity, vitality, anu ebullience of
the economic life of the cities. Whethei we tuin to ancient Egypt, classical uieece, oi Rome,
we cannot help but be stiuck by this contiast between the ielatively static countiysiue anu
the active city. In uieece, foi example, a whole panoply of goous passeu acioss the uocks of
the Piiaeus: giain fiom Italy, metal fiom Ciete anu even Biitain, books fiom Egypt, peifume
fiom still moie uistant oiigins.
Thus, something that at least supeificially appioximateu oui own society was visible in
many of the laigei uiban centeis of antiquity. Anu yet we must not be beguileu into
concluuing that this was a maiket society similai to oui own. In at least two iespects, the
uiffeiences weie piofounu.
The fiist of these was the essentially iestiicteu chaiactei anu scope of the maiket function
of the city. 0nlike the mouein city, which is not only a ieceivei of goous shippeu in fiom the
hinteilanus but also an impoitant expoitei of goous anu seivices back to the countiysiue, the
cities of antiquity tenueu to assume an economically paiasitic iole vis o vis the iest of the
economy. Nuch of the tiaue that enteieu the gieat uiban centeis of Egypt, uieece, anu Rome
(ovei anu above the necessaiy piovisioning of the city masses) was in the natuie of luxuiy
goous foi its uppei classes, iathei than iaw mateiials to be woikeu anu then sent out to a
goous-consuming economy. The cities weie the vessels of civilization; but as centeis of
economic activity, they weie sepaiateu by a wiue gulf fiom the countiy, making them
3 ThIs Is nof, Iof us nofo, onIy nn nncIonf condIfIon. TrnvoIIng In Morocco, John Cunfhor roorfod of fho IocnI
onsnnf-sorfs, "formorIy fhoy gof no wngoswhnf wouId fhoy nood monoy forbuf fhIs Is chnngIng now."
ChnngIng nowIn l953! Irom InsIdo AfrIcn (ow York: Hnror, l955), . l04
.
1S
enclaves of economic life iathei than nouiishing components of integiateu iuial-uiban
economies.
Slavery
Even moie impoitant was a seconu uiffeience between the ancient city economies anu a
contempoiaiy maiket society. This was theii ieliance on slave laboi.
Foi slaveiy on a massive scale was a funuamental pillai of neaily eveiy ancient economic
society. In uieece, foi instance, the ueceptively mouein aii of the Piiaeus masks the fact that
much of the puichasing powei of the uieek meichant was pioviueu by the laboi of 2u,uuu
slaves who toileu unuei sickening conuitions in the silvei mines of Lauientium. At the height
of "uemociatic" Athens, it is estimateu that at least one- thiiu of its population weie slaves. In
Rome of Su B.C., some 1,Suu,uuu slaveson the latifunuia, in the galleys, the mines, the
"factoiies," the shopspioviueu a majoi impetus in keeping the economic machineiy in
motion.
4
Seneca even tells us that a pioposal that they weai special uiess was voteu uown
lest, iecognizing theii own numbei, they might know theii stiength.
Slaves weie not, of couise, the only souice of laboi. uioups of fiee aitisans anu woikmen,
often banueu togethei in collegia oi fiateinal bouies, also seiviceu the Roman city, as uiu
similai fiee woikmen in uieece anu elsewheie. In many cities, especially lattei-uay Rome, a
mass of unemployeu (but not enslaveu) laboieis pioviueu a souice of casual woik. Yet,
without the motive powei of the slave, it is uoubtful if the biilliant city economies of the past
coulu have been sustaineu. Anu this biings us to the cential point. It is that the flouiishing
maiket economy of the city iesteu atop an economic stiuctuie iun by tiauition anu
commanu. Nothing like the fiee exeicise anu inteiplay of self-inteiest guiueu the basic
economic effoit of antiquity. If an astonishingly mouein uiban maiket stiuctuie gieets oui
eye, we must not foiget that its meichants aie stanuing on the shoulueis of innumeiable
peasants anu slaves.
Tbe social surplus
The piesence of gieat agglomeiations of uiban wealth amiu a fai pooiei iuial setting
aleits us to anothei chaiacteiistic of ancient economic society. This is the special ielationship
between its wealth anu its unueilying economic oiganization.
In any society, wealth implies that a surplus has been wiung fiom natuie, that society has
not only solveu its economic piouuction pioblem but has achieveu a maigin of effoit above
whatevei is iequiieu foi its own existence. Peihaps what fiist astonishes us when we iegaiu
the civilizations of the ancient woilu is the size of suiplus that coulu be got fiom a basically
pooi peasant population. The temples of the ancient Assyiian kings, the extiaoiuinaiy
tieasuies of the Aztecs, the pyiamius anu pleasuie ciaft of the phaiaohs of Egypt, the
Aciopolis of Athens, anu the magnificent ioaus anu aichitectuie of Rome all testify to the
ability of an essentially agiicultuial civilization to achieve a massive suiplus, to piy
consiueiable amounts of laboi loose fiom the lanu, suppoit it at whatevei low level
necessaiy, anu put it to woik builuing foi posteiity.
But the stupenuous achievements of the past testify as well to something else. The suiplus
piouuctive potential that society manages to achieve, whethei by technology oi by auioit
social oiganization, can be applieu in many uiiections. It can be uiiecteu to agiicultuial
impiovements, such as iiiigation uitches oi uams, wheie it is apt to inciease the bounty of
the haivest still fuithei. It can be applieu to the tools anu equipment of the city woikman,
wheie it is apt to iaise his ability to piouuce. 0i the suiplus may be useu to suppoit a
4 K. J. IoIoch, Die Betollerung Jer GriecIiecI-IoniecIen WelI (!oIzIg: l886), . 4?8.
16
nonwoiking ieligious oiuei, oi a class of couitieis anu iule nobility. If it weie not foi its
amazing capacity to piouuce a suiplus, the 0niteu States coulu nevei suppoit its aimeu
foicesany moie than the 0SSR coulu have, if its economy hau not given iise to moie output
than it iequiieu foi sheei self-peipetuation.
Tbus, tbe sociol form token by tbe occumulotion of weoltb reveols o qreot Jeol obout ony
society. "To whom uoes the suiplus acciue1" is a question that invaiiably sheus impoitant
light on the stiuctuie of powei within that society.
Wealtb and power
To whom uiu the wealth of antiquity acciue1 At fiist glimpse, it seems impossible to
answei in a phiase. Empeiois, nobles, ieligious oiueis, meichant tiaueis all enjoyeu the
wealth of antiquity at one time oi anothei. But at seconu look, an inteiesting anu significant
geneialization becomes possible: Nost wealth uiu not go to those who playeu a stiictly
economic iole. Although theie aie iecoius of clevei slaves in Egypt anu Rome who became
wealthy, anu although iich meichants anu bankeis aie visible thioughout the annals of
antiquity, theiis was not the piimaiy ioute to wealth. Rathei, in oncient civilizotion, weoltb
wos qenerolly tbe reworJ for politicol, militory, or reliqious power or stotus, onJ not for
economic octivity.
Theie was a ieason foi this. Societies tenu to iewaiu most highly the activities they value
most highly; anu in the long anu tuibulent centuiies of antiquity, political leaueiship,
ieligious tutelage, anu militaiy piowess weie unquestionably moie necessaiy foi social
suivival than tiauing expeitise. In fact, in many of these societies, economic activity itself was
uisuaineu as essentially ignoble. As Aiistotle wiote in his Politics, "in the best-goveineu
polis . . . the citizens may not leau eithei the life of ciaftsmen oi of tiaueis, foi such a life is
uevoiu of nobility anu hostile to peifection of chaiactei." It was a theme on which Ciceio
woulu latei expanu in his essay 0e 0fficiis (Book I):
The toil of a hiieu woikei, who is paiu only foi his toil anu not foi aitistic
skill, is unwoithy of a fiee man anu is soiuiu in chaiactei. Foi in his case,
money is the piice of slaveiy. Soiuiu too is the calling of those who buy
wholesale in oiuei to sell ietail, since they woulu gain no piofits without a
gieat ueal of lying. . . . Tiaue on a small ietail scale is soiuiu, but if it is on a
laige wholesale scale incluuing the impoit of many waies fiom eveiywheie
anu theii uistiibution to many people without any misiepiesentation, it is
not to be too gieatly censuieu. . . .
Especially, auueu the gieat lawyei, "if those who caiiy on such tiaue finally ietiie to
countiy estates, aftei being suifeiteu oi at least satisfieu with theii gains."
0vei anu above the lessei social function of the meichant compaieu with the geneial, the
consul, oi the piiest, this uisuain of wealth obtaineu fiom "ignoble" economic activity
ieflecteu an economic fact of gieat impoitance: Society hau not yet integiateu the piouuction
of wealth with the piouuction of goous. Wealth was still a suiplus to be seizeu by conquest oi
squeezeu fiom the unueilying agiicultuial population; it was not yet a natuial aujunct of a
system of continuously incieasing piouuction in which some pait of an expanuing total social
output might acciue to many classes of society.
Anu so it woulu be foi many centuiies. 0ntil the smallest as well as the laigest activities of
society ieceiveu theii piice tag, until puichases anu sales, bius anu offeis penetiateu uown to
the lowest oiueis of society, the accumulation of wealth iemaineu moie a mattei of political,
17
militaiy, oi ieligious powei than of economics. To sum it up: In piemaiket societies, wealth
tenueu to follow powei; not until the maiket society woulu powei tenu to follow wealth.
'Economics" and social |ustice in antiquity
Befoie we move on to view the economic system of antiquity in tiansition anu evolution,
we must ask one moie question: What uiu contempoiaiy economists think of it1
The answei we finu is an inteiesting one: Theie weie no contempoiaiy "economists."
Bistoiians, philosopheis, political theoiists, anu wiiteis on manneis anu moials abounueu
uuiing the long span of histoiy we heie call "antiquity," but economists, as such, uiu not exist.
The ieason is not fai to seek. The economics of society that is, the moue by which society
oiganizeu itself to meet the basic tasks of economic suivival was haiuly such as to piovoke
the cuiiosity of a thoughtful man. Theie was little oi no "veil" of money to pieice, little oi no
complexity of contiactual ielationship in the maiketplace to uniavel, little oi no economic
ihythm of society to inteipiet. As the haivest flouiisheu, as the justice oi injustice of the tax-
gatheiing system vaiieu, as the foitunes of wai anu politics changeu, so went the lot of the
peasant piopiietoi, the slave, the petty ciaftsman, anu tiauei. As ielative militaiy stiength
iose oi fell, as inuiviuual meichants faieu luckily oi otheiwise, as the aits piospeieu oi
ueclineu, so went the pulse of tiaue. As his piowess in wai oi politics peimitteu, as his
chance at iansoms, local monopolies, oi maiiiage uictateu, so faieu the inuiviuual acquisitoi
of wealth. In all of this, theie was little to tiy the analytic poweis of economic-minueu
obseiveis.
If theie was a pioblem of economics asiue fiom the eteinal pioblems of pooi haivests,
foitunes of wai, anu so on it was inextiicably mingleu with the pioblem of social justice. As
fai back as the eaily Assyiian tablets, we have iecoius of iefoimeis who sought to alleviate
taxes on the peasantiy, anu thioughout the Bible inueeu, uown thiough the Niuule Ages
a stiain of piimitive communism, of egalitaiian shaiing, iuns thiough the backgiounu of
ieligious thought. In the Book of Leviticus, foi example, theie is mentioneu the inteiesting
custom of the jubilee, a limit of fifty yeais on leases, aftei which each lanuownei was to
"ietuin to each man unto his possession."
S
But uespite the fact that ieligion was conceineu
with iiches anu poveity, anu thus with the uistiibutive pioblem of economics, the span of
antiquity saw little oi no systematic inquiiy into the social system, that piouuceu iiches oi
poveity. If iiches weie an affiont, this was uue to the peisonal failings of gieeuy men; anu if
social justice weie to be obtaineu, it must be achieveu by peisonal ieuistiibution, by alms
anu chaiity. The iuea of an "economic" stuuy of society, as contiasteu with a political oi moial
one, was conspicuous laigely by its absence.
Theie was, howevei, one exception we shoulu note. Aiistotle, the gieat pupil of Plato,
tuineu his poweiful sciutiny to economic affaiis, anu with him the systematic stuuy of
economics, as such, tiuly begins. Not that Aiistotle, any moie than the majoiity of the Chuich
fatheis, was a iauical social iefoimei. Nuch is summeu up in his famous sentence. "Fiom the
houi of theii biith, some aie maikeu out foi subjection, otheis foi iule."
6
But the stuuent of
the histoiy of economic thought tuins fiist to Aiistotle foi questions whose tieatment he can
subsequently tiace uown thiough the piesent time: questions such as, "What is value1"
"What is the basis of exchange1" "What is inteiest1"
We will not lingei heie ovei Aiistotle's foimulations of these iueas. But one point we might
note, foi it accoius with what we have alieauy seen of the attituue of antiquity to economic
activity itself. When Aiistotle examineu the economic piocess, he uiffeientiateu it into two
5 Thnf Is, Innds fhnf hnd boon forfoIfod In dobf, ofc., woro fo bo rosforod fo fhoIr orIgInnI ownors. Tho wrnfh of
fho Infor rohofs such ns Amos IndIcnfos fhnf fho InjuncfIon musf hnvo boon obsorvod InrgoIy In fho bronch.
6 IoIIfIcs, Bool 1.
18
bianchesnot piouuction anu uistiibution, as we have uone, but use anu gain. Noie
specifically, he uiffeientiateu between oeconomio whence "economics" anu
cbremotistik, fiom which we have no piecise ueiivative teim. By oeconomio, the uieek
philosophei meant the ait of householu management, the auministiation of one's patiimony,
the caieful husbanuing of iesouices. Cbremotistik, on the othei hanu, implieu the use of
natuie's iesouices oi of human skill foi acquisitive puiposes; cbremotistik was tiaue foi
tiaue's sake, economic activity that hau as its motive anu enu not use, but piofit. Aiistotle
appioveu of oeconomio but not of cbremotistik, anu within the scope of the essentially
limiteu maiket stiuctuie of antiquity, wheie the city tiauei all too fiequently exploiteu the
countiy peasant, it is not haiu to see why. The much moie uifficult pioblem of whethei a
maiket society, in which eveiyone stiives foi gain, might waiiant appioval oi uisappioval
nevei appeais in Aiistotle's wiitings, as it nevei appeaieu in ancient histoiy. The maiket
society, with its genuinely peiplexing questions of economic oiuei anu economic moiality,
hau yet to come into being. 0ntil it uiu, the philosophy neeueu to iationalize that oiuei was
unueistanuably lacking.
FCONOMIC SOCIF1Y IN 1HF MIIF A0FS
0ui conspectus of economic oiganization has thus fai scanneu only the gieat civilizations
of antiquity. Now we must tuin in somewhat closei focus to the society fai neaiei in time
anu, what is moie impoitant, immeuiately pieceuent to ouis in teims of social evolution. This
is the vast expanse of histoiy we call the Niuule Ages, an expanse that stietches ovei anu
uesciibes the Westein woilu, fiom Sweuen to the Neuiteiianean, "beginning" with the fall of
Rome anu "enuing" with the Renaissance.
Nouein scholaiship emphasizes moie anu moie the uiveisity that chaiacteiizes that
enoimous span of time anu space, a uiveisity not alone of social appeaiance fiom centuiy to
centuiy but also of contiast fiom locality to locality within any given peiiou. It is one thing to
speak of "life" in the Niuule Ages when one has in minu a tenth-centuiy peasant community
in Noimanuy wheie, it is estimateu, the aveiage inhabitant piobably nevei saw moie than
two oi thiee hunuieu peisons in his lifetime oi commanueu a vocabulaiy of moie than six
hunuieu woius;
7
it is anothei when we mean the woiluly city of Floience in the fouiteenth
centuiy, about which Boccaccio wiote so engagingly.
Even moie ielevant foi oui puiposes is the neeu to think of the Niuule Ages in teims of
economic vaiiety anu change. The eaily yeais of feuual economic life aie veiy uiffeient fiom
the miuule oi latei yeais, paiticulaily insofai as geneial well-being is conceineu. The
commencement of feuualism coinciueu with a peiiou of teiiible ietienchment, uepiivation,
uepopulation. Buiing the fifth centuiy, the population of Rome actually fell fiom 1,Suu,uuu to
Suu,uuu. But by the twelfth centuiy, towns hau again expanueu (aftei 6uu yeais!) to the
limits of theii olu Roman walls anu even spilleu out beyonu; anu by the beginning of the
fouiteenth centuiy, a veiy consiueiable piospeiity ieigneu in many paits of Euiope.
8
Then
came a seiies of catastiophes: a ghastly two-yeai famine in 1S1S; theieaftei, in 1S48, the
Black Beath, which caiiieu off between one-thiiu anu two-thiius of the uiban population; a
centuiy-long uevastating stiuggle between Englanu anu Fiance anu among the petty
piincipalities of ueimany anu Italy. All these misfoitunes pulleu uown the level of economic
existence to uieauful uepths. Neithei stasis noi smooth lineai piogiess, but enoimous anu
? Coorgo C. CouIfon. ModIovnI VIIIngo, Mnnor nnd Monnsfory (ow York: Hnror, Torch- books, l960), . l5
8 Thoro somo ovIdonco fhnf In IngInnd nround fho yonr l500 ronI wngos for common Inborors nchIovod n IovoI
fhnf fhoy wouId nof surnss for nf Iosf fhroo confurIos (1cononico, ovombor l956, . 296-3l4).
19
iiiegulai seculai tiues maik the long histoiy of feuualism, anu they caution us against a
simplistic conception of its uevelopment.
0ui puipose, howevei, is not to tiace these tiues, but iathei to foim a geneializeu pictuie
of the economic stiuctuie that, beneath the swings of foitune, maiks the feuual eia as a
unique way station of Westein economic histoiy. Anu heie we can begin by noting the all-
impoitant uevelopment that unueilay the genesis of that economic stiuctuie. This was the
bieakuown of laige-scale political oiganization.
Tbe fall of Rome
Foi as Rome "fell" anu as successive iaius anu invasions fiom noith, Rome east, anu south
toie apait the Euiopean countiysiue, the gieat auministiative fiamewoik of law anu oiuei
was ieplaceu by a patchwoik quilt of small-scale political entities. Even in the ninth centuiy,
when Chailemagne's Boly Roman Empiie assumeu such impiessive uimensions on the map,
beneath the veneei of a unifieu "state" theie was, in fact, political chaos: Neithei a single
language, noi a cooiuinateu cential goveinment, noi a unifieu system of law, coinage, oi
cuiiency, noi, most impoitant, any consciousness of "national" allegiance bounu the statelets
of Chailemagne's uay into moie than tempoiaiy cohesion.
We note this stiiking uiffeience between antiquity anu the Niuule Ages to stiess the
tiemenuous economic consequences that came with political uissolution. As safety anu
secuiity gave way to local autaiky anu anaichy, long voyages of commouities became
extiemely hazaiuous, anu the once-vigoious life of the gieat cities impossible. As a common
coin anu a common law uisappeaieu, meichants in uaul coulu no longei uo business with
meichants in Italy, anu the accustomeu netwoik of economic connections was seveieu oi fell
into uisuse. As uisease anu invasion uepopulateu the countiysiue, men tuineu of necessity to
the most uefensive foims of economic oiganization, to foims aimeu at sheei suivival thiough
self-sufficiency. A new neeu aiose, a neeu to compiess the viable oiganization of society into
the smallest possible compass. Foi centuiies, this insulaiity of economic life, this extieme
self-ieliance, woulu be the economic hallmaik of the Niuule Ages.
Manorial organization of society
The neeu foi self-sufficiency biought with it a new basic unit of economic oiganization: the
manoiial estate.
What was such an estate like1 Typically, it was a laige tiact of lanu,often incluuing many
thousanus of acies, which was "owneu" by a feuual loiu, spiiitual oi tempoial.
9
The woiu
"owneu" is piopeily in quotation maiks, foi the manoi was not fiist anu foiemost a piece of
economic piopeity. Rathei, it was a social anu political entity in which the loiu of the manoi
was not only lanuloiu, but piotectoi, juuge, police chief, anu auministiatoi as well. Although
himself bounu into a gieat hieiaichy in which each loiu was some othei loiu's seivant (even
the pope was the seivant of uou), the feuual noble was, within the confines of his own manoi,
quite liteially "loiu of the lanu." Be was also unuisputeu ownei anu mastei of many of the
people who liveu on the lanu, foi the seifs (oi villeins) of a manoi, although not slaves, weie
in many iespects as much the piopeity of the loiu as weie his (oi theii) houses, flocks, oi
ciops.
At the focal point of the estate was the loiu's homesteau, a gieat manoi house, usually
aimeu against attack fiom maiauueis, walleu off fiom the suiiounuing countiysiue, anu
9 Thnf Is, fho Iord mIghf bo fho nbbof or fho bIsho of fho IocnIIfy, or ho mIghf bo n socuInr orsonngo, n bnron
who cnmo Info hIs ossossIons by InhorIfnnco or by boIng mndo n knIghf nnd gIvon Innds for oxcofIonnI
sorvIco In bnffIo or for ofhor ronsons.
2u
sometimes attaining the statuie of a genuine castle. In the encloseu couityaiu of the manoi
weie woikshops in which cloth might be spun oi woven, giapes piesseu, foou stoieu, simple
iionwoik oi blacksmithing woik peifoimeu, coaise giain giounu. Extenuing out aiounu the
manoi was a patchwoik of fielus, typically subuiviueu into acie oi half-acie "stiips," each
with its own cycle of ciops anu iest. Balf oi moie of all these belongeu uiiectly to the loiu;
the iemainuei "belongeu," in vaiious senses of that legal teim, to the hieiaichy of fiee, half-
fiee, anu unfiee families who maue up an estate.
The exact meaning of the woiu "belongeu" hingeu on the obligations anu iights acciuing to
a seif, a fieeman, oi whatevei othei categoiy one might be boin into. Note, howevei, that
even a fieeman who "owneu" his lanu coulu not sell it to anothei feuual loiu. At best, his
owneiship meant that he coulu not himself be uisplaceu fiom his lanu shoit of extiaoiuinaiy
ciicumstances. A lessei peisonage than a fieeman uiu not even have this secuiity. A typical
seif was liteially tieu to "his" plot of lanu. Be coulu not, without specific peimission, anu,
usually, without specific payment, leave his homesteau foi anothei, eithei within the uomain
of the manoi oi within that of anothei. With his status came, as well, a seiies of obligations
that lay at the veiy coie of the manoiial economic oiganization. These consisteu of the
necessity to peifoim laboi foi the loiuto till his fielus, to woik in his shops, to pioviue him
with a poition of one's own ciop. Fiom manoi to manoi, anu fiom age to age, the laboi uues
vaiieu: In some localities, they amounteu to as much as foui oi even five uays of laboi a week,
which meant that only by the laboi of a seif's wife oi chiluien coulu his own fielus be
maintaineu. Anu finally, the seifs oweu small money payments: heau taxes, like the cbevoqe;
ueath uuties, like the beriot; mercbet, a maiiiage fee; oi uues to use the loiu's mill oi his
ovens.
Providing security
Theie was, howevei, an extiemely impoitant quiu pio quo foi all this. If the seif gave the
loiu his laboi anu much of the fiuits of his toil, in exchange the loiu pioviueu some things
that the seif by himself coulu not have obtaineu.
The most impoitant of these was a uegiee of physical secuiity. It is uifficult foi us to
ieconstiuct the violent tenoi of much of feuual life, but one investigatoi has pioviueu a
statistic that may seive to make the point. Among the sons of English uukes, 46 peicent of
those boin between 1SSu anu 1479 uieu violent ueaths. Theii life expectancy when violent
ueath was excluueu was thiity-one yeais; when violent ueath was incluueu, it was but
twenty-foui yeais.
1u
The peasant, although not a waiiioi anu theiefoie not occupationally
exposeu to the uangeis of continual combat, assassination, anu so on, was pieeminently faii
piey foi the maiauuing loiu, uefenseless against captuie, unable to piotect his pooi
possessions against uestiuction. Bence we can begin to unueistanu why even fiee men
became seifs by "commenuing" themselves to a loiu who, in exchange foi theii economic,
social, anu political subseivience, offeieu them the invaluable cloak of his militaiy piotection.
In auuition, the loiu offeieu a ceitain element of economic secuiity. In times of famine, it
was the loiu who feu his seifs fiom the ieseives in his own manoiial stoiehouses. Anu,
although he hau to pay foi it, the seif was entitleu to use the loiu's beasts anu equipment in
cultivating his own stiips as well as those of the loiu. In an age when the aveiage seif
possesseu almost no tools himself, this was an essential boon.
11
l0 T. H. HoIIIngsworfh, "A omogrnhIc Sfudy of fho IrIfIsh ucnI InmIIIos," PopuloIion SIuJiee, XI (l95?-58).
ll Ior n Icfuro of IIfo nmong fho vnrIous cInssos In modIovnI Iuroo, ono mIghf furn fo IIIoon Iowor's MeJietol
People (Cnrdon CIfy, .Y.: oubIodny, Anchor Iooks, l954), n schoInrIy buf chnrmIng nccounf of fho ronIIfy of
humnn oxIsfonco fhnf IIos bohInd hIsfory. Ior n sonso of fho vIoIonf fonor of fho fImos, soo J. HuIzIngn, TIe
Woning of IIe MiJJle Agee (Cnrdon CIfy, .Y.: oubIodny, Anchor Iooks, l954), Chn. l. !of mo cnII
nffonfIon nIso fo fwo ofhor books fhnf convoy n vIvId sonso of foudnI oconomIc IIfo. Ono Is by H. S. Ionnoff,
Iife on IIe 1nglieI Monor (CnmbrIdgo, IngInnd: CnmbrIdgo !nIvorsIfy Iross, l965); fho ofhor, by Mnrc
21
These facts shoulu not incline us to an iuyllic pictuie of feuual life. The ielation between
loiu anu seif was often, even usually, exploitative in the extieme. Yet we must see that it was
also mutually suppoitive. Each pioviueu foi the othei seivices essential foi existence in a
woilu wheie oveiall political oiganization anu stability hau viitually uisappeaieu.
Economics of manorial life
Bespite the extieme self-efficiency of manoiial life, theie is much heie that iesembles the
economic oiganization of antiquity.
To begin with, like those eailiei societies, this was cleaily a foim of economic society
oiganizeu by tiauition. Inueeu, the hanu of custom the famous "ancient customs" of the
meuieval manoi couit, which seiveu fiequently as the counsel foi the otheiwise unuefenueu
seif was nevei stiongei. Lacking stiong, unifieu cential goveinment, even the exeicise of
commanu was ielatively weak. As a iesult, the pace of economic change, of economic
uevelopment, although by no means lacking, was extiemely slow uuiing the eaily yeais of the
meuieval peiiou.
Seconu, even moie than with antiquity, this was a foim of society that was chaiacteiizeu by
a stiiking absence of money tiansactions. 0nlike the latifunuium of Rome, which solu its
output to the city, the manoi supplieu only itself, anu peihaps a local town. No manoiial
estate was evei quite so self-sufficient that it coulu uispense with monetaiy links with the
outsiue woilu; even seifs bought a few commouities anu solu a few eggs; anu the loiu, on
occasion, hau to buy consiueiable supplies he coulu not piouuce foi himself. But on the
whole, veiy little money changeu hanus. As Benii Piienne, an authoiity on meuieval
economic histoiy, has put it:
. . . the tenants paiu theii obligations to theii loiu in kinu. Eveiy seif. . . oweu
a fixeu numbei of uays of laboui anu a fixeu quantity of natuial piouucts oi
of goous manufactuieu by himself, coin, eggs, geese, chickens, lambs, pigs,
anu hempen, linen oi woollen cloth. It is tiue that a few pence hau also to be
paiu, but they foimeu such a small piopoition of the whole that they cannot
pievent the conclusion that the economy of the uomain was a natuial
economy . .. since it uiu not engage in commeice it hau no neeu to make use
of money. . . .
12

Town and fair
It woulu, howevei, be a misiepiesentation of meuieval life to concluue that cash anu cash
tiansactions anu the baigaining of a maiket society weie wholly foieign to it. Rathei, as was
the case with antiquity, we must think of meuieval economic society as consisting of a huge,
static, laigely moneyless founuation of agiicultuial piouuction atop which flouiisheu a
consiueiable vaiiety of moie uynamic activities.
Foi one thing, in auuition to manois, theie also existeu the shiunken uescenuants of
Roman towns (anu as we shall latei see, the nuclei of new towns), anu these small cities
obviously iequiieu a netwoik of maikets to seive them. Eveiy town hau its stalls to which
peasants biought some poition of theii ciop foi sale. Noie impoitant, towns weie cleaily a
IIoch, IrencI Iurol HieIor, (IorkoIoy: !nIvorsIfy of CnIIfornIn Iross, l966). IrencI Iurol HieIor,, osocInIIy,
Is ono of fho ronI mnsforworks of oconomIc hIsfory. !oss concornod wIfh oconomIc IIfo (ono hns fo rond bofwoon
fho IInos fo forrof If ouf), buf mnrvoIous ns n mIcrohIsfory of modIovnI IIfo, Is fho nccounf of n fIny, horosy-
rIddon fown In fourfoonfh-confury soufhorn Irnnco, MonIoillou. TIe IonJ of PronieeJ 1rror, by ImmnnuoI
!o !oy !ndurIo (ow York: Coorgo IrnzIIIor, l9?8).
l2 1cononic onJ Sociol HieIor, of MeJietol 1urope (ow York: Hnrcourf, Hnrvosf Iooks, l956), . l05.
22
uiffeient social unit fiom manois, anu the laws anu customs of the manois uiu not apply to
theii pioblems. Even when towns fell unuei manoiial piotection, townspeople little by little
won foi themselves fieeuom fiom feuual obligations of laboi anu, moie impoitant, fiom
feuual obligations of law.
1S
In contiast to the "ancient customs" of the manoi, a new, evolving
"law of meichants" iegulateu much of the commeicial activity within the town walls.
Anothei locus of active economic life was the faii. The faii was a kinu of tiaveling maiket,
establisheu in fixeu localities foi fixeu uates, in which meichants fiom all ovei Euiope
conuucteu a genuine inteinational exchange. Belu usually but once a yeai, the gieat faiis
weie tiemenuous occasions, a mixtuie of social holiuay, ieligious festival, anu intense
economic activity. At some faiis, like those at Champagne in Fiance oi Stouibiiuge in
Englanu, a wiue vaiiety of meichanuise was biought foi sale: silks fiom the Levant, books
anu paichments, hoises, uiugs, spices. Anyone who has evei been to the Flea Naiket, the
famous open-aii bazaai outsiue Paiis, oi to a countiy faii in New Englanu oi the Niuule West
has savoieu something of the atmospheie of such a maiket. 0ne can imagine the excitement
that faiis must have engenueieu in the still aii of meuieval life.
Cuilds
Anu finally, within the towns themselves, we finu the tiny but highly impoitant centeis of
meuieval "inuustiial" piouuction. Foi even at its gianuest, the manoi coulu not suppoit eveiy
ciaft neeueu foi its maintenance, much less its extension. The seivices oi piouucts of glazieis
anu masons, expeit aimoieis anu metalwoikeis, fine weaveis anu uyeis hau to be bought
when they weie neeueu, anu typically they weie to be founu in the meuieval institutions as
chaiacteiistic of town life as the manois weie of life in the countiy.
These institutions weie the guilustiaue, piofessional, anu ciaft oiganizations of Roman
oiigin. Such oiganizations weie the "business units" of the Niuule Ages; in fact, one coulu not
usually set oneself up in "business" unless one belongeu to a guilu. Thus, the guilus weie a
kinu of exclusive union, but not a union of woikeis so much as of manageis. The uominant
figuies in the guilu weie the guilumasteisinuepenuent manufactuieis, woiking in theii
own houses anu banuing togethei to elect theii own guilu goveinment, which then laiu uown
the iules conceining the inteinal conuuct of affaiis. 0nuei the mastei guilus- men weie theii
few jouineymen (fiom the Fiench jouine, oi "uay"), who weie paiu by the uay, anu theii
half-uozen oi so appientices, ten to twelve yeais olu, who weie bounu to them foi peiious of
thiee to twelve yeais as theii legal waius. In time, an appientice coulu become a jouineyman
anu then, at least in meuieval iomance, giauuate to the status of a full-fleugeu guilumastei on
completion of his "masteipiece."
Any suivey of meuieval town life uelights in the coloi of guilu oiganizations: the bioiueis
anu gloveis, the hatteis anu sciiveneis, the shipwiights anu upholsteieis, each with its guilu
hall, its uistinctive liveiy, anu its elaboiate set of iules. But if life in the guilus anu at the faiis
pioviues a shaip contiast with the stougy life on the manoi, we must not be misleu by suiface
iesemblances into thinking that it iepiesenteu a foietaste of mouein life in meuieval uiess. It
is a long uistance fiom the guilu to the mouein business fiim, anu it is well to fix in minu
some of the uiffeiences.
l3 Honco fho snyIng, "CIfy nIr mnkos mon froo"; for fho sorf who oscnod fo n cIfy nnd romnInod fhoro n yonr nnd
n dny wns usunIIy consIdorod fo hnvo nssod from fho jurIsdIcfIon of hIs Iord fo fhnf of fho cIfy burghors.
!unnIng nwny wns ono of fho vory fow monns oon fo sorfs fo rofosf ngnInsf fhoIr condIfIon. !unnwny sorfs,
IIko runnwny sInvos, woro forocIousIy unIshod. Yof sorfs dId confInuousIy oscno fo fho cIfIos, In fhIs fIny,
dosornfo wny oxorfIng oconomIc rossuro ngnInsf fhoIr mnsfors. Ior n dobnfo on fho Imorfnnco of fhIs Issuo,
soo TIe TroneiIion fron IeuJolien Io CopiIolien, od. !odnoy HIIfon (!ondon: !I, l9?8).
2S
Functions of tbe guild
In the fiist place, the guilu was much moie than just an institution foi oiganizing
piouuction. While most of its iegulations conceineu wages anu conuitions of woik anu
specifications of output, they also uwelt at length on "noneconomic" matteis: on the
chaiitable contiibutions expecteu fiom each membei, on his civic iole, on his appiopiiate
uiess, anu even on his uaily uepoitment. uuilus weie the iegulatois not only of piouuction
but also of social conuuct: When one membei of the meicei's guilu in Lonuon "bioke the
heu" of anothei in an aigument ovei some meichanuise, both weie fineu 1u anu bonueu foi
2uu not to iepeat the uisgiace. In anothei guilu, membeis who engageu in a biawl weie
fineu a baiiel of beei, to be uiunk by the iest of the guilu.
But between guilu anu mouein business fiim theie is a much moie piofounu gulf than this
peivasive pateinalism. 0nlike a mouein fiim, the puipose of a guilu was not fiist anu
foiemost to make money. Rathei, it was to pieseive a ceitain oiueily way of lifea way that
envisageu a uecent income foi its mastei ciaftsmen but that was ceitainly not intenueu to
allow any of them to become a "big" businessman oi a monopolist. 0n the contiaiy, guilus
weie specifically uesigneu to waiu off any such outcome of an uninhibiteu stiuggle among
theii membeis. The teims of seivice, the wages, the ioute of auvancement of appientices anu
jouineymen weie all fixeu by custom. So, too, weie the teims of sale: A guilu membei who
coineieu the supply of an item was guilty of foiestalling, foi which iigoious penalties weie
invokeu, anu one who bought wholesale to sell at ietail was similaily punisheu foi the faults
of engiossing oi iegiating. Thus, competition was stiictly limiteu anu piofits weie helu to
piesciibeu levels. Auveitising was foibiuuen, anu even technical piogiess in auvance of one's
fellow guilusmen was consiueieu uisloyal.
In the gieat cloth guilus of Floience in the fouiteenth centuiy, foi instance, no meichant
was peimitteu to tempt a buyei into his shop oi to call out to a customei stanuing in
anothei's uooiway, noi even to piocess his cloth in a mannei uiffeient fiom that of his
biethien. Stanuaius of cloth piouuction anu piocessing weie subject to the minutest sciutiny.
If a scailet uye, foi instance, was founu to be auulteiateu, the peipetiatoi was conuemneu to'
a ciushing fine anu, failing payment, to loss of his iight hanu.
14
Suiely the guilus iepiesent a moie "mouein" aspect of feuual life than the manoi, but the
whole tempei of guilu life was still fai iemoveu fiom the goals anu iueals of mouein business
enteipiise. Theie was no fiee play of piice, no fiee competition, no iestless piobing foi
auvantage. Existing on the maigin of a ielatively moneyless society, the guilus peifoice
sought to take the iisks out of theii slenuei enteipiises. Theii aim was not inciease, but
pieseivation, stability, oiueiliness. As such, they weie as uiencheu in the meuieval
atmospheie as the manois.
Medieval economics
Beyonu even these uiffeiences, we must note a still ueepei chasm be- economics tween
meuieval economic society anu that of a maiket economy. This is the gulf between a society
in which economic activity is still inextiicably mixeu with social anu ieligious activity, anu
one in which economic life has, so to speak, emeigeu into a special categoiy of its own. In oui
next chaptei, we shall be talking about the ways in which a maiket society cieates a special
spheie of economic existence. But as we complete oui intiouuction to meuieval economic
society, the main point to which we shoulu pay heeu is that no such special spheie then
existeu. In meuieval society, economics was a suboiuinate anu not a uominant aspect of life.
l4 C. !onnrd, HieIoire Ju Trotoil Ilorence (InrIs: l9l3), . l90 ff.
24
Anu what was uominant1 The answei is, of couise, that in economic matteis, as in so many
othei facets of meuieval life, the guiuing iueal was ieligious. It was the Chuich, the gieat pillai
of stability in an age of uisoiuei, that constituteu the ultimate authoiity on economics, as on
most othei matteis.
But the economics of meuieval Catholicism was conceineu not with the cieuits anu uebits
of successful business opeiation so much as with the cieuits anu uebits of the souls of
business opeiatois. As R. B. Tawney, one of the gieat stuuents of the pioblem, has wiitten:
. . . the specific contiibutions of meuieval wiiteis to the technique of economic theoiy
weie less significant than theii piemises. Theii funuamental assumptions, both of
which weie to leave a ueep impiint on social thought of the sixteenth anu
seventeenth centuiies, weie two: that economic inteiests aie suboiuinate to the ieal
business of life, which is salvation; anu that economic conuuct is one aspect of
peisonal conuuct, upon which, as on othei paits of it, the iules of moiality aie
binuing. Nateiial iiches aie necessaiy . . . since without them men cannot suppoit
themselves anu help one anothei. . . . But economic motives aie suspect. Because
they aie poweiful appetities men feai them, but they aie not mean enough to
applauu them. Like othei stiong passions, what they neeu, it is thought, is not a cleai
fielu, but iepiession. . . .
1S
Thus, what we finu thioughout meuieval ieligious thought is a peivasive uneasiness with
the piactices of economic society. Essentially, the Chuich's attituue towaiu tiaue was waiy
anu nicely summeu up in the saying, "homo mercotor vix out numquom 0eo plocere potest"
The meichant can scaicely oi nevei be pleasing to uou.
Tbe |ust price
We finu such a suspicion of business motives in the Chuich's concein with the iuea of a
"just piice." What was a just piice1 It was selling a thing foi what it was woith, anu no moie.
"It is wholly sinful," wiote Thomas Aquinas, "to piactise fiauu foi the expiess puipose of
selling a thing foi moie than its just piice, inasmuch as a man ueceives his neighboi to his
loss."
16
But what was a thing "woith"1 Piesumably, what it cost to acquiie it oi make it. Suppose,
howevei, that a sellei hau himself paiu too much foi an aiticlethen what was a "just piice"
at which he might iesell it1 0i suppose a man paiu too littlewas he then in uangei of
spiiitual loss, offsetting his mateiial gain1
These weie the questions ovei which the meuieval "economist- theologians" mulleu, anu
they testify to the mixtuie of economics anu ethics chaiacteiistic of the age. But they weie
not meiely theoietical questions. We have iecoius of the uismay that economic theology
biought to actual paiticipants in the economic piocess. 0ne St. ueialu of Auiillac in the tenth
centuiy, having bought an ecclesiastical gaiment in Rome foi an unusually low piice, leaineu
fiom some itineiant meichants that he hau pickeu up a "baigain"; insteau of iejoicing, he
hasteneu to senu to the sellei an auuitional sum, lest he fall into the sin of avaiice.
17
St. ueialu's attituue was no uoubt exceptional. Yet if the injunction to chaige faii piices uiu
not succeeu in staying men's appetites foi gain, it uiu biiule theii enthusiasm. Nen in
oiuinaiy business fiequently stoppeu to assess the conuition of theii moial balance sheets.
Whole towns woulu, on occasion, iepent of usuiy anu pay a heavy amenu, oi meichants like
l5 Ieligion onJ IIe Iiee of CopiIolien (ow York: Hnrcourf, l94?), . 3l.
l6 A. I. Monroo, od., "Summn ThooIogIcn," In 1orl, 1cononic TIougII (CnmbrIdgo, Mnss.: Hnrvnrd !nIvorsIfy
Iross, l924), . 54.
l? IIronno, 1cononic onJ Sociol HieIor, of MeJietol 1urope, . 2?.
2S
uanuoufle le uianu woulu, on theii ueathbeus, oiuei iestitution maue to those fiom whom
inteiest hau been extiacteu. Nen of affaiis in the twelfth anu thiiteenth centuiies
occasionally inseiteu couicils in theii wills uiging theii sons not to follow theii footsteps into
the snaies of tiaue, oi they woulu seek to make iestitution foi theii commeicial sins by
chaiitable contiibutions. 0ne meuieval meichant of Lonuon founueu a uivinity scholaiship
with 14, "foiasmoche as I fynue myn conscience aggiuggeu that I have ueceiveu in this life
uiveis peisons to that amount."
18
Disrepute of gain
Thus, the theological cast of suspicion injecteu a wholly new note into of gain the
moneymaking piocess. Foi the fiist time, it associateu the making of money with guilt. 0nlike
the acquisitoi of antiquity who unashameuly ieveleu in his tieasuies, the meuieval piofiteei
counteu his gains in the knowleuge that he might be impeiiling his soul.
Nowheie was this uisappioval of moneymaking moie eviuent than in the Chuich's hoiioi
of usuiy lenuing money at inteiest. Noney- lenuing hau, since Aiistotle's uay, been
iegaiueu as an essentially paiasitic activity, an attempt to make a "baiien" commouity,
money, yielu a ietuin. But what hau always been a vaguely uisieputable anu unpopulai
activity became, unuei Chuich sciutiny, a ueeply evil one. 0suiy was uecieeu to be a moital
sin. At the Councils of Lyons anu vienne in the thiiteenth anu fouiteenth centuiies, the
usuiei was ueclaieu a paiiah of society, to whom no one, unuei pain of excommunication,
might ient a house; whose confession might not be heaiu; whose bouy might not have
Chiistian buiial; whose veiy will was invaliu. Anyone even uefenuing usuiy was to be
suspecteu of heiesy.
These poweiful chuichly sentiments weie not piouuceu meiely by theological sciuples. 0n
the contiaiy, many of the Chuich's injunctions against both usuiy anu piofiteeiing aiose fiom
the most seculai of iealities. Famine, the enuemic scouige of the Niuule Ages, biought with it
the most heaitless economic gouging; loans commanueu 4u to 6u peicentfoi bieau. Nuch
of the uislike of piofit seeking anu inteiest taking iose fiom its iuentification with just such
iuthless piactices, with which meuieval times abounueu.
Finally, anothei, peihaps even moie funuamental, ieason unueilay the uisiepute of gain
anu piofit. This was the essentially static oiganization of economic life itself. Let us not foiget
that that life was basically agiicultuial anu that agiicultuie, with its infinite complexity of
peasant stiips, was fai fiom efficient. To quote once moie fiom Benii Piienne:
. . . the whole iuea of piofit, anu inueeu the possibility of piofit, was incompatible
with the position occupieu by the gieat meuieval lanuownei. 0nable to piouuce foi
sale owing to the want of a maiket, he hau no neeu to tax his ingenuity in oiuei to
wiing fiom his men anu his lanu a suiplus which woulu meiely be an encumbiance,
anu as he was foiceu to consume his own piouuce, he was content to limit it to his
neeus. Bis means of existence was assuieu by the tiauitional functioning of an
oiganization which he uiu not tiy to impiove.
19
What was tiue of the countiy was also tiue of the city. The iuea of an expanuing economy, a
giowing scale of piouuction, an incieasing piouuctivity, was as foieign to the guilumastei oi
faii meichant as to the seif anu loiu. Neuieval economic oiganization was conceiveu of as a
means of iepiouucing, but not enhancing, the mateiial well-being of the past. Its motto was
peipetuation, not piogiess. Theie is little wonuei that in such a static oiganization piofits
l8 S. !. Thru, TIe MercIonI Cloee in MeJietol IonJon (ChIcngo: !nIvorsIfy of ChIcngo Iross, l948), . l??.
AIso !onnrd, HieIoire Ju Trotoil Ilorence, . 220 ff.
l9 1cononic onJ Sociol HieIor, of MeJietol 1urope, . 63.
26
anu piofit seeking weie vieweu as essentially uistuibing iathei than welcome economic
phenomena.
PRFRFqUISI1FS OF CHAN0F
We have tiaceu the bioau outlines of the economic oiganization of the West ioughly up to
the tenth oi twelfth centuiy. 0nce again, it is wise to emphasize the uiveisity of cuiients
concealeu within a lanuscape we have too often been foiceu to tieat as unuiffeientiateu. At
best, oui jouiney into antiquity anu the Niuule Ages can give us a few glimpses of the
pievailing flavoi of the times, a sense of the iuling economic climate, of the main institutions
anu iueas by which men oiganizeu theii economic effoits.
But one thing is ceitain. We aie veiy fai fiom the tempei anu tempo of mouein economic
life. The few stiiiings we have witnesseu in the slow woilu of the manoi anu the town aie but
the haibingeis of a tiemenuous change, which, ovei the couise of the next centuiies, woulu
uiamatically altei the basic foim of economic oiganization itself, ieplacing the olu ties of
tiauition anu commanu with new ties of maiket tiansactions.
We shall have to wait until oui next chaptei to witness the actual piocess of change itself.
But peihaps it will help us put into focus both what we have alieauy seen anu what we aie
about to witness if we anticipate oui line of auvance. We now have an iuea of a piemaiket
society, a society in which maikets exist but that uoes not yet uepenu on a maiket
mechanism to solve the economic pioblem. What changes will be iequiieu to tiansfoim such
a society into a tiue maiket economy1
1. A new uttltuJe towurJ economlc uctlvlty wlll be neeJeJ.
Foi such a society to function, men must be fiee to seek gain. The suspiciousness anu
unease that suiiounueu the iueas of piofit, of change, anu of social mobility must give way to
new iueas that woulu encouiage those veiy attituues anu activities. In tuin, this meant, in the
famous woius of the miu-nineteenth-centuiy legal histoiian Sii Beniy Naine, that the society
of status must give way to the society of contiact, that the society in which men weie boin to
theii stations in life must give way to a society in which they weie fiee to uefine those
stations foi themselves.
Such an iuea woulu have seemeu to the meuieval minu without any possible iationale. The
iuea that a geneial fiee-foi-all shoulu ueteimine men's compensations, with neithei a flooi to
pievent them fiom being giounu uown noi a ceiling to pievent them fiom iising beyonu all
ieason, woulu have appeaieu senselesseven blasphemous. If we may listen again to R. B.
Tawney:
To founu a science of society upon the assumption that the appetite foi economic
gain is ... to be accepteu, like othei natuial foices . . . woulu have appeaieu to the
meuieval thinkei as haiuly less iiiational oi less immoial than to make the piemise
of social philosophy the uniestiaineu opeiation of such necessaiy human attiibutes
as pugnacity oi the sexual instinct.
2u
Yet some such fieeing of the quest foi economic gain, some such aggiessive competition in
the new contiactual ielationship of man to man, woulu be essential foi the biith of a maiket
society.
2. 1he monetlzutlon of economlc llfe wlll huve to proceeJ to ltx ultlmute concluxlon.
20 Ieligion onJ IIe Iiee of CopiIolien, . 3l-32.
27
0ne pieiequisite of a maiket economy shoulu by now be cleai: Such an economy must
involve the piocess of exchange, of buying anu selling, at eveiy level of society. But foi this to
take place, men must have the wheiewithal to entei a maiket; that is, they must have cash.
Anu, in tuin, if society is to be peimeateu with cash, men must eain money foi theii labois. In
othei woius, foi a maiket society to exist, neaily eveiy task must have a monetaiy iewaiu.
Even in oui highly monetizeu society, we uo not pay foi eveiy seivice: most conspicuously
not foi the housekeeping seivices of a wife. But all thiough the piemaiket eia, unpaiu seivice
the amount of woik peifoimeu by law without monetaiy compensationwas vastly laigei
than it is in oui society. Slave laboi was, of couise, unpaiu. So was most seif laboi. Even the
laboi of appientices was iemuneiateu moie in kinu, in foou anu louging, than in cash. Thus,
piobably 7u to 8u peicent of the actual woiking population of an ancient oi meuieval
economy laboieu without anything iesembling iegulai payment in money.
Cleaily, in such a society, the possibilities foi a highly involveu exchange economy weie
limiteu. But a still moie impoitant consequence must be noteu. The absence of a wiuespieau
monetization of tasks meant the absence of a wiuespieau maiket foi piouuceis. Nothing like
the flow of "puichasing powei" that uominates anu uiiects oui own piouuctive effoits coulu
be foithcoming in a society in which money incomes weie the exception iathei than the iule.
3. 1he prexxure of u free pluy of murhet "JemunJ" wlll huve to tuhe over the regulutlon
of the economlc tuxhx of xoclety.
All thiough antiquity anu the Niuule Ages, as we have seen, tiauition oi commanu solveu
the economic pioblem. These weie the foices that iegulateu the uistiibution of social
iewaius. But in a maiket society, anothei means of contiol must iise to take theii place. An
all-encom- passing flow of money uemanu, itself stemming fiom the total mone- tization of
all economic tasks, must become the gieat piopulsive mechanism of society. Nen must go to
theii tasks not because they aie oiueieu theie, but because they will make money theie; anu
piouuceis must ueciue on the volume anu the vaiiety of theii output not because the iules of
the manoi oi the guilu so ueteimine, but because theie is a maiket uemanu foi paiticulai
things. Fiom the top to the bottom of society, in othei woius, a new maiketing oiientation
must take ovei the piouuction anu uistiibution tasks. The whole ieplenishment, the steauy
piovisioning, the veiy piogiess of society must now be subject to the guiuing hanu of a
univeisal uemanu foi laboi anu goous.