Abstract
In this paper, we formulate for the first time the Persian–Athenian conflict of the fifth century as a signaling game. A specific approach to path dependence and regime change is presented. Following the successful outcome for Athens, it was transformed into a seapower. This again resulted in the fourth century into an unparalleled change of the Athenian economy, which shows a number of characteristics that makes us call it the first “modern” economy. We analyze the sectorial structure of the Athenian economy, its trade pattern, contribution to employment/GDP, tax system, banking and services and the emergence of new organization forms like private banks, joint-stock companies and offshore services.
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Notes
A pure strategy perfect Bayesian Equilibrium in a signaling game is a pair of strategies M *(t i ) and α *(M i ) and a belief μ(t i ∣M j ) which satisfies all the above requirements (Gibbons 1992). According to if the sender’s strategy is pooling or separating, we call the equilibrium as pooling or separating, respectively.
Plato actually writes: (At Athens) men and women purchased as slaves are no less free than their purchasers. And in the relationships of women to men and of men to women, how much equality through law, and liberty is developing!” The situation of “slaves living apart” (outside their master’s household) illustrate this clearly. They were working independently, more or less as salaried persons or even independent entrepreneurs, paying only a part of their earning to their master’s. (Cohen 2000). Karayannis (2007) underlines the incentives system given to slaves which increased their productivity. The most important was the possibility of being freed, something which happened often in the banking sector, where the trusted slave co-manager of a bank would be given his freedom, and in some cases, at the death of the owner marry his widow and become owner of the bank. The most famous example of this is Passion, who started as a slave and ended his life as the richest Athenian citizen and bank owner during the first half of the fourth century. Of course, conditions among slaves did vary. Slaves working in the silver mines worked in unhealthy conditions and were eager to escape at least during the end of the fifth century, last phase of the Peloponnesian War (we owe this clarification to an anonymous referee). But we still argue that the general conditions for the average slave in Athens were better than anywhere else in the world during that historical period.
The contractors were liable with their private property as a guarantee to receive each a talent (6,000 drachmae) to build a ship. If the ship was not found satisfactory, they were liable to “pay back” the amount or part of it paid, in the beginning as a form of loan to him, by the state. The guarantee for the state, was the contractor’s private property. This is why the richest Athenians were chosen as contractors. The above presupposes a clear definition of property rights.
Women had substantial property rights in other Ancient Greek states like Gortyn on Crete and Sparta. In Athens we know the names of some famous women “entrepreneurs”, like Artemis of Piraeus. She had a flourishing business in building materials (Cohen 1997).
For a detailed analysis of the various government bodies in Athens, see Hansen (1999) and Jones (1966) “Rhetores”, (orators) were the political leaders of Athens, like Pericles, Demosthenes, Hyperides etc. Unlike modern political leaders, they were not part of the administration and were not paid, unless the Assembly of the people decided to reward them specifically for their proposals. They also could receive “gifts” from Athenian allies. According to Hyperides (I.24-25), Demosthenes and Demades had received more than 60 talents each just for decrees in the city and grants of honours to individuals, apart from the (Persian) king’s money and Phillip’s of Macedon. The importance of the orators lies in that they shaped external and internal policy through their proposals of laws which were accepted or rejected by the institutionalized government bodies, Assembly, Council, etc. Generals on the other hand were elected, reflecting the need of specialized skill, which could not be left to chance. The same applied at least during the second half of the fourth century to the so called “tamias epi ton theorikon” who was responsible for the city’s finances, and who can be described as a “minister of finance” but being independent since there was no prime minister. Famous “ministers” were Euboulos and Lykourgos (Kyriazis 2007; Burke 1985).
The Athenians managed to put to sea a fleet of 130 warships in 356–355 BC during the so called “Social War” (History of the Greek Nation 1972). The cost of remunerating the crew was borne by the state, while the upkeep of the ship itself (oars, sails, ropes etc.) was borne by the trierarch. This is clear when considering the evidence of the trierarchy‘s expenditure, estimated at 3,000–6,000 drachmae per year (Gabrielsen 1994). The remuneration of the crew, at one or one and a half drachma per day per man, gives 200–300 drachmae per day and a sum of 48–60,000 drachmae per year, assuming 8 months of service (excluding the winter months), e.g. 8–10 talents. This sum exceeded the financial possibility of any Athenian.
Demosthenes explicitly mentions a talent of silver lent at the fixed interest rate of a drachma per minae (1 talent = 60 minae = 6,000 drachmae = 36,000 obols) i.e. 1% per month and 12% per year. Some modern writers maintain that we should take number given by ancient authors with a caveat. This is true for some cases, as for example the excessive number given by Herodotus for Persian armies and navies. On the other hand Demosthenes and the fourth century writers were particularly well informed on the Athenian economy in which they were living and could not give to their audience, the popular courts or the Assembly, numbers thus they could be open to criticism by other orators, who would try to discredit them. Thus although some of the numbers quoted may not be 100% exact, we believe that they were close enough to reality, to be credible then and now.
Thus, Xenofon was a precursor of Smith in this respect, being the first author to deal with the relation between specialization and productivity. He mentions the example of one shoemaker making men’s and another only women’s shoes and “in some cities one person just stitches the shoes, another cuts the leather and a third puts the parts together. So, by necessity, somebody who deals with a very limited work, does it optimally”.
Satyros, King of Pontos (Hellespont, the Straits of the Dardanelles) sought the return of funds, which had been brought to Athens by the son of an important royal associate who had later fallen into disfavor. The Athenian banking system offered “offshore” services to this client, helping him to place his funds outside the reach of the kingdom of Pontos authority. This led later on to a famous litigation with international and diplomatic repercussions, bringing Athenian relations with Pontos under strain (Isok. 17.3-17.11). This case reminds us of the pressure put today on “tax paradises” states on disclosure, payment of taxes by non-residents and their remittance to the tax authorities of the states of origin etc. This problem has only partially been solved within the EU, through Council Decisions of 2004.
Apollonidés, in this passage, testifies the co-ownership of the vessel in his deposition.
At the time of Pericles, Athens established a colony at Thurioi, in southern Italy, sending presumably as colonists a part of her surplus population.
Other estimates give lower numbers, for example Jones (1966) 20,000 slaves and 124,000 free citizens (men, women, children). We believe this estimate to be too low.
Contemporary Athenians seemed not to know the number of slaves living in Attica. Censuses, even of free citizens and metics were not taken, or if taken, have not survived. We offer here, for the first time as far as we know, an estimate of the Athenian citizens’ population in 482 BC. We know from Herodotus that Athens decided to build 100 triremes during this year, costing 1 talent (6,000 drachmae each, i.e. a total expenditure of 600,000 drachmae. The alternative would have been the distribution on an equal basis of this revenue to all Athenian citizens, which would amount again according to Herodotus to 10 drachmae per citizen. A simple division of the two sums (600,000 total revenue, 10 drachmae per citizen) gives 60,000 as the number of citizens. Owning to the ravages of pestilence and war during the last quarter of the fourth century, the population of Athens was reduced strongly, approaching perhaps 30,000 at the beginning of the fourth century and having possibly increased during this century. The earliest surviving census is that of Demetrius of Phaleron of male citizens and metics, between 317 and 307, ie after the fall of democracy. By then, in order to be classified as a citizen, an Athenian had to have a minimum of property, ie the poorest were disqualified. The census produced 21,000 citizens and 10,000 metics. Contemporary Athenians during the fourth century had a feeling that slaves outnumbered free citizens, a common occurrence in many city-states, with Sparta being the extreme. There, for about 6,000 male citizens, the “helots” (native slaves) must have numbered at least four times that many. They would have been many more at the beginning of the fourth century, before Messene was liberated by Epaminondas the Theban and Messenian helots were freed. Hypereides (Fr. 33) surmised that there were 150,000 adult male slaves at his time, a clear exaggeration.
Density of population for contemporary Greece is about 83.
As mentioned above, modern authors disagree as to the existence of market duties, Hansen for example denying it and Tod supporting it. Metics had to pay a special fee, the “xenikon telos” to set up a stall in the market (Dem. 57.34).
The Athenians understood the too onerous charge put on citizens by trierarchy and they reformed the system by introducing group sharing for each trierarchy, similar to that for “eisphora” (symmoriae).
Attica was probably the most and best-fortified region of Greece. The Long Walls linked the harbour of Piraeus and its fortifications with Athens and the Acropolis. The northern border was guarded by a chain of fortresses, at Porto Germeno, (on the Gulf of Corinth), Phyle, Eleutherai and the harbour of Ramnous opposite Euboiea.
That plays were not concerned only or mainly with religious themes, is made clear if we take into account the following: Aeschylus “Persians” is concerned exclusively with history (i.e. the Persian defeat by the Greeks). The so-called Theban and Mycenean cycles have to do with history and mythology. Many of Euripides and almost all of Aristophanes plays are criticisms of the contemporary political and social situation.
They had to own property of less than 300 drachmae.
The Athenian tax system introduced also other innovative ideas, as for example “antidosis”. Under it, if an Athenian charged with o liturgy thought that another Athenian should be charged with it on equity reasons (being in reality richer than himself, but appearing to be poorer because he was hiding part of his wealth), then he could call the other Athenian before a court and ask him to exchange properties and obligations (liturgies). This was a means countering “tax evasion”. We owe this comment to professor Karagiannis. For a more extensive presentation of the Athenian budget, see Kyriazis (2009).
A similar structure might have existed in the great maritime Phoenician city-states like Tyre and Sidon, for which we lack adequate evidence.
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Acknowledgments
The authors wish to thank one anonymous referee and Professor Jüergen Backhaus for their helpful and constructive comments. Any remaining errors are solely the authors’ responsibility.
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Halkos, G.E., Kyriazis, N.C. The Athenian economy in the age of Demosthenes: path dependence and change. Eur J Law Econ 29, 255–277 (2010). https://doi.org/10.1007/s10657-009-9120-z
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DOI: https://doi.org/10.1007/s10657-009-9120-z