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04 Jun 2023

What is Ancient Economy?

Ancient Economy – It is evident that agriculture and livestock were the great economic activities of the Ancient Age. However, trade was done through barter. To do this, they traded production surpluses, although coins later appeared, which would give a great boost to trade. Also, the development of trade greatly influenced advances in agriculture and crafts. Well, these advances allowed a greater supply of goods for barter.

To better understand what type of economy was in the Ancient Age, we are going to explain what economic activity was like in its most important civilizations.

Ancient Economy: Egypt and Mesopotamia

The lands between the Tigris and Euphrates rivers constitute what is called “Mesopotamia”, where cities like Babylon arose. In this territory, city-states proliferated that relied on the production of neighbouring areas. These city-states would end up uniting to form true empires.

As agriculture was the main source of wealth, the floods constituted a threat to the well-being of the inhabitants of Mesopotamia. Therefore, they got down to work channelling the water and creating irrigation techniques. The wealth generated by agriculture was complemented by livestock and hunting, while mining had a smaller weight in the economy.

Thanks to the income provided by agriculture, it was possible to support the kings and priests. Temples and royal palaces were the great nerve centre of the economy. As for the management of taxes, the scribes accounted for the taxes collected. Furthermore, the king had to manage the economy, playing a key role in the distribution of labour, while he had to decide how the income obtained was used.

Later, and due to its particular location between two rivers, trade would flourish in Mesopotamia. Thanks to this, coins emerged as a means of payment and loans would appear.

Ancient Economy: Egypt

The economic organization of Ancient Egypt was very similar to that of Mesopotamia since both civilizations had arisen along the rivers. Agriculture and livestock were the basis of their economy. However, in the stages of the year when the land did not have to be cultivated, the labour force was used in the construction of large works and infrastructures, such as canals, pyramids and temples.

The pharaoh, considered a god, held control of the land, determining what work each one should perform and what their resources would be.

Given a large amount of desert land in Egypt, the Egyptians were forced to trade to provide themselves with scarce raw materials such as iron and wood. On the other hand, from the lands of Nubia, they would obtain precious metals such as gold, silver and also copper. Now, the development of coins was somewhat late if we compare it with other civilizations.

Ancient Economy: Greece and Rome

Greece was made up of a series of city-states that, on numerous occasions, rival each other. Thus, Aetolia was a region focused on grazing, while Thessaly, the Peloponnese and Boeotia were mainly dedicated to livestock and wheat production. On the contrary, the famous city-states of Athens, Sparta and Corinth were important centres of trade and crafts. Thanks to trade, they were supplied with slave labour and raw materials such as wheat and wood. In fact, the agora or market was the centre of the economic life of the Greek cities. And it is that, in the agora, transactions were closed and deposits were made.

A notable development of crafts took place in the cities, with artisans being distributed in neighbourhoods, according to their activity: potters, metallurgists and craftsmen specialized in furniture. Parallel to the advances in craftsmanship, there was an outstanding development in mining.

The Greeks reached the Italian peninsula and left some customs that the Romans inherited. Crafts, agriculture and trade were a direct legacy of Ancient Greece. Thus, the expansion of Rome would be accompanied by the growth of trade that would contribute to reinforcing the economic power of Roman civilization.

The conquests of Rome increased their wealth, because, with each territory that fell into their power, they appropriated new lands, cattle and slaves. Furthermore, the conquered had to confer their gold and silver to Rome. Even the mines, quarries, shipyards and agricultural properties were confiscated by Rome.

Meanwhile, the Roman nobility, enjoying the benefits of the surplus of their agricultural production, had sumptuous villas in which the slaves worked the land. And it is that, in Rome, owning land was synonymous with wealth.

The economic ideas of Plato and Aristotle

Solon’s constitution, in the 6th century BC, already contained some ideas that dealt with the economy, with which it was a matter of seeking an adaptation between political institutions and merchants. For example, enslaving debtors was prohibited; the mechanism of government was also modified by dividing free citizens into four classes, according to the property they owned. But it was Plato who first attempted to systematically expound the principles of the ideal society. His economic ideas were exposed in La República and in Las Leyes, in which he basically explained the division of labour. For him, the multiple human needs generated the division of labour, from which the city originated. The natural process led to the formation of the trade from this specialization and from there, a ruling class, on whom the imposition of rigorous standards of economic conduct depended. The State centralized property and, as such, administered it.

His disciple Of him Aristotle was the first economic analyst because he had a deep understanding of the principles on which his own society was based. This allowed him to lay the foundations of economics as a science and pose the economic problems that all subsequent thinkers have studied. His ideas stemmed from the analysis of the ideal state, in which he opposed the Platonic principle of property in common. For Aristotle, individuals were more interested in private property, so it was necessary to put it to intelligent use, which should be administered by the State.

For Aristotle, economics was divided into two parts: economics proper, which was the science of domestic administration; and the science of sourcing, the art of procurement. The latter allowed him to analyze the circulation of the economy, which allowed the satisfaction of the needs of the home.
Likewise, he developed a theory of money, not only as a symbol for exchange purposes but as an art of accumulation. For him, money acts in the economic process as a means of exchange to acquire goods that satisfied needs, but he also recognized money capital, which led men to the desire for unlimited accumulation. These postulates greatly influenced later economic theorists.

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