Abstract
The present essay analyses Athenian finances during the fourth century BC, the ‘Age of Demosthenes’, from both the revenue and expenditure points of view. It examines how Athenians practiced the concept of ‘economic democracy’ on matters of public choice, and the sometimes ingenious solutions they adopted for financing public goods such as defense, education and ‘social security’. Ancient Athens, the ‘prototype’ political democracy, was advanced also in matters of public administration, finance and institutions, on which political democracy was based and without their smooth running could not have functioned.
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Notes
The “middle classes”, i.e. craftsmen, builders, stone masons, artisans and people living from agriculture, owning tracts of land that they cultivated themselves (as opposed to the few big aristocratic landowners) served as heavy infantry hoplites. They had to be able to bear the substantial cost of the armour and weapons of heavy infantry. They were about 10.000 strong, i.e. one-third of all male adult citizens. In ancient Athens there was only a small percentage of “labourers” (i.e., non self-employed persons), because the great majority of free persons were self-employed. Non self-employed labour was mainly provided by slaves, although many slaves (those “living apart”), (Cohen 2000) were also self-employed, paying only a part of their incomes to their owners.
Aristotle in the ‘Politics’ (Arist.Pol. 1304 b 19–1305 a 7) points out that the majority decisions of the humble folk (who are the majority in a democracy and in the Assembly) may drive the well-to-do minority into rebellion. Yet, that never became a problem in Athens, showing that the Athenian state had managed to establish a system of, in modern terms, ‘checks and balances’ so that the advantages of democracy even for the well-to-do evidently outweighed the disadvantage of being sometimes in the minority, (Lys. 19.57, Dem. 21.62–3, Hansen 1999), a point elaborated in Kagan (1991), Ober (1989), Karayannis (2007).
According to Karayiannis (2005), in responding to a survey, 56% of Greek entrepreneurs maintained that they committed tax evasion as a purely defensive measure because they felt that they paid taxes that were too high compared to the benefits derived from the state’s various policies. Of course this is almost a “philosophical” question and depends much on the analyst’s “beliefs”. Resistance to taxation has been interpreted also as a “free-rider problem”. In fact, as Ober (2008), Karayannis (2007) and Lyttkens (1994) have argued, direct democracy eliminates in great part the “free rider problem” and the transaction costs of monitoring, etc.
For a more extensive presentation of this, see Halkos-Kyriazis (2006) and the references given there.
Modern authors, starting with North (1981) with his emphasis on customs and norms, stress the importance of the “fundamental values” of societies for economic behaviour and thus, economic performance. That the specific “values” mentioned in the text were taught to Athenian youth, we have evidence from the writings of ancient historians (Herodotus, Thucydides, Xenofon, etc.), philosophers (Plato and Aristotle, mainly) and orators (Demosthenes, Isocrates, Lysias, etc.) (Karayannis 2007).
The value of non-material motivation in organisations and employer–employee relations have been underlined by economists such as Simon (1991) “Pride in work and organizational loyalty are widespread phenomena in organizations”. Athenians who undertook liturgies also took pride in their achievement and showed intense loyalty to their city.
For a general historical background see A.W. Pickard-Cambridge (1978).
1 talent = 60 minae = 6,000 drachmae = 36,000 obols, when the average daily earnings of a free labourer or slave at the time were one and a half to two drachmae.
For an analysis of the economic effects of the shipbuilding programme and the transformation of Athenian society it brought with it, see Kyriazis-Zouboulakis (2004).
We have, of course, no statistics as to the extent and profits of trade, but Herodotus provides a very interesting example from the days before the Persian invasions. Koleos, a Samian ship owner and captain, undertook for the first time the difficult and dangerous voyage for trade with today’s Spain, then known as ‘Tartessos’, or the ‘gates of Hercules’. Koleos’ profit from this voyage was the unheard of sum of one talent, at a time when the cost of building a trireme warship was one talent. A merchant ship would presumably cost much less. During the fourth century, as will be analysed further on, we have clear evidence that the wealthiest Athenians were no longer the landowners, but the merchants, bankers and entrepreneurs, all of whom benefited from trade and the position of Athens as the main sea power and ‘industrial nation’ in the Mediterranean.
As mentioned in the text, during the fourth century, the wealthiest Athenians were no longer the landowners, but the ‘enterpreneurs’. We know by name 30 bankers (Cohen 1997), some of them citizens, some meteques. Prominent among them was Passion who started as a slave and ended his life as an Athenian citizen. He owned also a factory, which yielded a profit of one talent per year (Dem. 36.48, 59.2). Cephalus, a Syracusan resident in Athens owned a factory employing 100 men (Lys. 12.19). We know also some captains and shipowners like Diodotus and Diogeiton. Diodotus left a fortune of 13 and 2/3 talents (5 on cash deposits, 7 and 2/3 on nautical loans, none in land!). (Lys. 32.4, 6, 15, 25. Diphilos, a mining concessionaire, had a property amounting to an astonishing 160 talents, more than the state’s annual income had been before the mid-fourth century. (Plut. Mor. 8430). The brothers Lysias and Polemarchus owned a shield factory employing 120 men. (Lys. 12.19). The father of the orator Demosthenes owned two factories, one of which produced knives and employed 32 slaves, while the other produced beds, employing 20 slaves. His total fortune was 15 talents (Dem. 27.9–11). As to the question concerning the voluntary or not acceptance of the burden of liturgies, the interpretation of modern scholars differs (for relatively opposite views see Lyttkens (1994) and Karayannis (2007), Ober (1989, 2008), Ober and Manville (2003) with Cohen (1997) taking a middle view). As I mention in the text, the fact that wealthy Athenians did not ‘secede’, even though they had the opportunity, while rich foreigners chose to settle permanently in Athens, seems to indicate that liturgies, while certainly expensive, where not deemed to be so prohibitive as to induce wealthy people to leave Athens. It seems that according to their rational calculations, wealthy people evaluated that the benefits provided by the Athenian state outweighed the burdens imposed on them. Although there have been some examples of legal procedures (mainly for fraud against the state) in Athens, the cases we know are not linked to political issues or persons, as opposed to what we know of democratic Rome. There, vicious legal prosecution of political enemies in the Senate was standard practice. Athens did not have a permanent aristocratic legal body as the Senate and further, was not characterised by civil strife, as was the case during the whole of Roman Republican history. During the age of Athenian democracy (starting with Solon in the 560’s until 322 BC, i.e. 240 years, these were two attempted coup d’ états (both failures) to overthrow democracy (Cylon’s in the mid-sixth century and in 407 BC during the Peloponnesian War) and one short lived oligarchy (404–403 BC) imposed by the victorious Spartans. During the Roman Republican period from the fourth century to its abolition in 31 BC there were the two civil wars of the Gracchi, Marius—Sylla, the Caesars—Pompeius, Brutus—Marc Anthony’s, Octavius—Marc Anthony’s civil wars and their mass political murders.
By the time of Aristotle, when he was writing ‘Athenaion Politeia’ the pay was one drachma per day for attendance at the Assembly and one and a half for the ‘main’ Assembly which lasted longer (ekklesia Kyria). Under the assumption that only the first 6.000 participants (quorum) were paid and the number of days per year that the Assembly was meeting, Hansen (1999) arrives at the sum of 45 talents. Using similar assumptions, he arrives at the amounts quoted for the Council and the Courts.
They had to own property of less than 300 drachmae.
The maximum is calculated by taking into account the estimate of the population of Athens at the time, which was about 30.000 adult male citizens, plus about 20.000 meteques (foreign free residents) who were also liable to military service (Hansen 1999). 100 ships would require 20.000 crewmen, or about 40% of the available total adult population, which is clearly sustainable only for short periods of maximum effort.
My calculation shows that Demosthenes’ cost estimate for his permanent mobile force of 92 talents per year is rather low, unless of course he envisaged a kind of ‘half-pay’ for the crews of the ships when not actually in overseas service, which of course is not clear in his proposal. If not, accepting full payment for a year (365 days) instead of only for the campaign season, would mean that each ship cost almost 110.000 drachmae per year, i.e. 18 talents, and only ten ships would require 180 talents, double the sum estimated by the orator.
As, for example, an anonymous referee, and Tollison (1982).
The tradition of voluntary liturgies revived during modern times in Greece, the best-known example being the donation of funds by Greece’s then richest entrepreneur, Averoff, to build a battle cruiser bearing his name. The ship “Averoff” was commissioned in 1911, served as Greece’s flagship during the two Balkan and the two World Wars, and is now preserved as a museum.
For a history of ‘participative’ democracy within liberal democracy, see Macpherson 1977.
An example of this is the referenda undertaken in some European Union states concerning the new European Constitution.
References
Ancient Authors
Aeschines, ‘Speeches’, in particular ‘Against Timarchus’, ‘Against Ktesiphon’ (Aesch.).
Andocides ‘On the mysteries’ (Andoc.).
Aristoteles ‘Athenaion Politeia’ (Arist., Ath. Pol.).
Aristoteles ‘Politica’ (Arist. Pol.).
Demosthenes ‘Speeches’, in particular ‘On the False Embassy’, ‘Against Midias’, ‘Against Timokrates’, ‘Against Macartatus’, ‘Against Aristocrates’, ‘Against Polycles’, ‘For Phormio’, ‘Against Neaera’, ‘Against Aphobus’, ‘First Phillipic’, ‘Against Lacritus’, (Dem.).
Harpocration ‘Lexikon’ (Harp.).
Lysias ‘Speeches’ in particular ‘On the Property of Aristophanes’, ‘Against the Treasury’, ‘Against Eratoshthenes’, ‘For Polystratus’, ‘Against Diogiton’, ‘For the Invalid’ (Lys.). Plutarchus, ‘Moralia’ (Plut. Mor.).
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A first draft of this essay was presented at a lecture at the Economics Department, Center for Leadership, Exeter University, November 22nd, 2007.
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Kyriazis, N. Financing the Athenian state: public choice in the age of Demosthenes. Eur J Law Econ 27, 109–127 (2009). https://doi.org/10.1007/s10657-008-9081-7
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DOI: https://doi.org/10.1007/s10657-008-9081-7