1. The First Philosopher-Economists: the Greeks (continued)

0:005. Plato's Right-Wing Collectivist Utopia Plato's search for a hierarchical collectivist utopia found its classic expression in his most famous and influential work, The Republic. There, and later in The Laws, Plato sets forth the outline of his ideal city-state, one in which right oligarchic rule is maintained by Philosopher Kings and their Philosophic Colleagues, thus supposedly ensuring rule by the best and wisest in the community. Underneath the philosophers in the coercive hierarchy are the guardians, the soldiers, whose role is to aggress against other cities and lands, and to defend their polis from external aggression.

0:54With them are to be the body of the people, the despised producers, laborers, peasants and merchants who produce the material goods on which the lordly philosophers and guardians are to live. These three broad classes are supposed to reflect a shaky and pernicious leap, if there ever was one. The proper rule over the soul in each human being. To Plato, each human being is divided into three parts, one that craves, one that fights, and one that thinks, and the proper hierarchy of rule within each soul is supposed to be reason first, fighting next, and finally, and the lowest, grubby desire.

1:44The two ruling classes, the thinkers and the guardians that really count, are, in Plato's is an ideal state to be forced to live under pure communism. There is to be no private property whatsoever among the elite. All things are to be owned communally, including women and children. The elite are to be forced to live together and share common meals. Since money and private possessions, according to the aristocrat Plato, only corrupt virtue, They are to be denied to the upper classes. Marriage partners among the elite are to be selected strictly by the state, which is supposed to proceed according to the scientific breeding already known in animal husbandry.

2:34If any of the philosophers or guardians find themselves unhappy about this arrangement, they will have to learn that their personal happiness means nothing compared to the happiness of the Polis as a Whole, a rather murky concept at best. In fact, those who are not seduced by Plato's theory of the essential reality of ideas will not believe that there is such a real living entity as a polis. Instead, the city-state or community consists only of living, choosing individuals. To keep the elite and the subject masses in line, Plato instructs the philosopher-rulers to spread the noble lie that they themselves are descended from the gods, whereas the other classes are of inferior heritage.

3:30Freedom of speech or of inquiry was, as one might expect, anathema to Plato. The arts are frowned on, and the life of the citizens was to be policed to suppress any and many dangerous thoughts or ideas that might come to the surface. Remarkably, in the very course of setting forth his classic apologia for totalitarianism, Plato contributed to genuine economic science by being the first to expound and analyze the importance of the division of labor in society. Since his social philosophy was founded on a necessary separation between classes, Plato went on to demonstrate that such specialization is grounded in basic human nature, in particular its diversity and inequality.

4:23Plato has Socrates say in the Republic that specialization arises because we are not all alike. There are many diversities of natures among us, which are adapted to different occupations. Since men produce different things, the goods are naturally traded for each other, so that specialization necessarily gives rise to exchange. Plato also points out that this division of labor increases the production of all the goods. Plato saw no problem, however, in morally ranking the various occupations, with philosophy, of course, ranking highest and labor or trade being sorted and ignoble.

5:10The use of gold and silver as money greatly accelerated with the invention of coinage in Lydia in the early seventh century B.C. and coined money quickly spread to Greece. In keeping with his distaste for money-making, trade and private property, Plato was perhaps the first theorist to denounce the use of gold and silver as money. He also disliked gold and silver precisely because they served as international currencies accepted by all peoples. Since these Precious metals are universally accepted and exist apart from the imprimatur of government. Gold and silver constitute a potential threat to economic and moral regulation of the polis by the rulers.

6:02Plato called for a government fiat currency, heavy fines on the importation of gold from outside the city-state, and the exclusion from citizenship of all traders and workers One of the hallmarks of an ordered utopia sought by Plato is that to remain ordered and controlled it must be kept relatively static. And that means little or no change, innovation or economic growth. Plato anticipated some present-day intellectuals in frowning on economic growth and for similar reasons. Notably, fear of collapse of the domination of the state by the ruling elite.

6:50Particularly difficult in trying to freeze a static society is the problem of population growth. Quite consistently, therefore, Plato called for freezing the size of the population of the city-state, keeping the number of its citizens limited to 5,000 agricultural landlord families. 6. Xenophon on Household Management A disciple and contemporary of Plato was the Athenian-landed aristocrat and army general Xenophon, 430 to 354 BC. Xenophon's economic writings were scattered throughout such works as an account of the education of a Persian prince, a treatise on how to increase government Revenue and a book on economics in the sense of thoughts on the technology of household and farm management.

7:51Most of Xenophon's adumbrations were the usual Hellenic scorn for labor and trade and admiration for agriculture and the military arts, coupled with a call for a massive increase in government operations and interventions in the economy. These included improving the port of Athens, building markets and inns, establishing a governmental merchant fleet, and greatly expanding the number of government-owned slaves. Interspersed in this role of commonplace bromides, however, were some interesting insights into economic matters. In the course of his treatise on household management, Xenophon pointed out that wealth should be defined as a resource that a person can use and knows how to use.

8:43In this way, something that an owner has neither the ability nor the knowledge to use cannot really constitute part of his wealth. Another insight was Xenophon's anticipation of Adam Smith's famous dictum that the extent The extent of the division of labor in society is necessarily limited by the extent of the market for the products. Thus, in an important addition to Plato's insights on the division of labor, written twenty years after the Republic, Xenophon says that, in small towns, the same workman makes chairs and doors and plows and tables, and often the same artisan builds houses.

9:29Whereas in the large cities, many people have demands to make upon each branch of industry, and therefore one trade alone, and very often even less than a whole trade, is enough to support a man. In large cities, we find one man making men's boots only, and another, women's only. One man lives by cutting out garments, another by fitting together the pieces. Elsewhere, Xenophon outlines the important concept of general equilibrium as a dynamic tendency of the market economy. Thus, he states that when there are too many copper smiths, copper becomes cheap and the smiths go bankrupt and turn to other activities, as would happen in agriculture or any other Industry. He also sees clearly that an increase in the supply of a commodity causes a fall in its price.

10:327. Aristotle. Private Property and Money. The views of the great philosopher Aristotle are particularly important because the entire structure of his thought had an enormous and and even dominant influence on the economic and social thought of the high and late Middle Ages, which considered itself Aristotelian. Although Aristotle in the Greek tradition scorned money-making and was scarcely a partisan of laissez-faire, he set forth a trenchant argument in favor of private property. Perhaps influenced by the private property arguments of Democritus, Aristotle delivered a cogent attack on the communism of the ruling class called for by Plato.

11:24He denounced Plato's goal of the perfect unity of the state through communism by pointing out that such extreme unity runs against the diversity of mankind, and against the reciprocal Aristotle then delivered a point-by-point contrast of private as against communal property. First, private property is more highly productive and will therefore lead to progress. Goods owned in common by a large number of people will receive little attention, since First people will mainly consult their own self-interest and will neglect all duty they can fob off onto others.

12:12In contrast, people will devote the greatest interest and care to their own property. Second, one of Plato's arguments for communal property is that it is conducive to social peace, since no one will be envious of or try to grab the property of another. Aristotle retorted that communal property would lead to continuing and intense conflict, since each will complain that he has worked harder and obtained less than others who have done little and taken more from the common store. Furthermore, not all crimes or revolutions, declared Aristotle, are powered by economic motives.

12:58As Aristotle trenchantly put it, men do not become tyrants in order that they may not suffer cold. Third, private property is clearly implanted in man's nature. His love of self, of money, and of property are tied together in a natural love of exclusive ownership. Fourth, Aristotle, a great observer of past and present, pointed out that private property had existed always and everywhere. To impose communal property on society would be to disregard the record of human experience and to leap into the new and untried. Abolishing private property would probably create more problems than it would solve.

13:48Finally, Aristotle wove together his economic and moral theories by providing the brilliant insight that only private property furnishes people with the opportunity to act morally, for example, to practice the virtues of benevolence and philanthropy. The compulsion of communal property would destroy that opportunity. While Aristotle was critical of money-making, he still opposed any limitation, such as Plato had advocated, on an individual's accumulation of private property. Instead, education should teach people voluntarily to curb their rampant desires, and thus lead them to limit their own accumulations of wealth.

14:38Despite his cogent defense of private property and opposition to coerced limits on wealth, the aristocrat Aristotle was fully as scornful of labor and trade as his predecessors. Unfortunately, Aristotle stored up trouble for later centuries by coining a fallacious, proto-Galbraithian distinction between natural needs, which should be satisfied, and unnatural wants, which are limitless and should be abandoned. There is no plausible argument to show why, as Aristotle believes, the desires filled by subsistence labor or barter are natural, whereas those satisfied by far more productive money exchanges are artificial, unnatural and therefore reprehensible.

15:32Activities for monetary gain are simply denounced as immoral and unnatural, specifically such activities as retail trade, commerce, transportation and the hiring of labor. Aristotle had a particular animus toward retail trade, which of course directly serves the consumer and which he would have liked to eliminate completely. Aristotle is scarcely consistent in his economic lucabrations, for although monetary exchange is condemned as immoral and unnatural, he also praises such a network of exchanges as holding the city together through mutual and reciprocal give and take.

16:19The confusion in Aristotle's thought between the analytic and the moral is also shown in his discussion of money. On the one hand he sees that the growth of money greatly facilitated production and exchange. He sees also that money, the medium of exchange, represents general demand and holds all goods together. Also money eliminates the grave problem of double coincidence of wants, where each trader will have to desire the other man's goods directly. Now each person can sell goods for money. Furthermore, money serves as a store of values to be used for purchases in the future. Aristotle, however, created great trouble for the future by morally condemning the lending of money at interest as unnatural. Since money cannot be used directly and is employed only to facilitate exchanges, it is barren and cannot itself increase wealth. Therefore the charging of interest, which Aristotle incorrectly thought to imply a direct productivity of money, was strongly condemned as contrary to nature.

17:43Aristotle would have done better to avoid such hasty moral condemnation and to try to figure out why interest is, in fact, universally paid. Might there not be something natural, after all, about a rate of interest? And if he had discovered the economic reason for the charging and the paying of interest, Perhaps Aristotle would have understood why such charges are moral and not unnatural. Aristotle, like Plato, was hostile to economic growth and favored a static society, all of which fits with his opposition to money-making and the accumulation of wealth. The insight of old Hesiod into the economic problem as the allocation of scarce means for for the Satisfying of Alternative Wants was virtually ignored by both Plato and Aristotle, who instead counseled the virtue of scaling down one's desires to fit whatever means were available.

18:528. Aristotle Exchange and Value Aristotle's difficult but influential discussion of exchange suffered grievously from his Aristotle's persistent tendency to confuse analysis with instant moral judgment. As in the case of charging interest, Aristotle did not remain content to complete a study of why exchanges take place in real life before leaping in with moral pronouncements. In analyzing exchanges, Aristotle declares that these mutually beneficial transactions imply a proportional reciprocity, but it is characteristically ambivalent in Aristotle whether all exchanges are by nature marked by reciprocity, or whether only proportionately reciprocal exchanges are truly just.

19:52And of course, Aristotle was never one to raise the question, why do people voluntarily In the same way, why should people voluntarily pay interest charges if they are really unjust? To muddle matters further, Aristotle, under the influence of the Pythagorean number mystics, introduced obscure and obfuscating mathematical terms into what could have been a straightforward analysis. The only dubious benefit of this contribution was to give many happy hours to historians of economic thought, attempting to read sophisticated modern analysis into Aristotle.

20:39This problem has been aggravated by an unfortunate tendency among historians of thought to regard great thinkers of the past as necessarily consistent and coherent. That of course is a grievous historiographic error. However great they may have been, any thinkers can slip into error and inconsistency, and even write gibberish on occasion. Many historians of thought do not seem able to recognize that simple fact. Aristotle's famous discussion of reciprocity in exchange in Book 5 of his Nicomachean Ethics is a prime example of descent into gibberish. Aristotle talks of a builder exchanging a house for the shoes produced by a shoemaker.

21:30He then writes, the number of shoes exchanged for a house must therefore correspond to the ratio of builder to shoemaker. For if this be not so, there will be no exchange and no intercourse. A. How can there possibly be a ratio of builder to shoemaker, much less an equating of that ratio to shoes, houses? In what units can men like builders and shoemakers be expressed? The correct answer is that there is no meaning, and that this particular exercise should be may be dismissed as an unfortunate example of Pythagorean quantifrenia, and yet various distinguished historians have read tortured constructions of this passage to make Aristotle appear to be a forerunner of the labor theory of value of W. Stanley Jevons or of Alfred Marshall.

22:33The labor theory is read into the unsupportable assumption that Aristotle must have meant labor hours put in by the builder or shoemaker, while Joseph Sudeck somehow sees here the respective skills of these producers, skills which are then measured by their products. Sudeck eventually emerges with Aristotle as an ancestor of Jevons. In the face of all this elaborate wild goose chase, it is a pleasure to see the verdict of Gibberish supported by the economic historian of ancient Greece, Moses I. Finley, and by the distinguished Aristotelian scholar H. H. Joachim, who has the courage to write, How exactly the values of the producers are to be determined, and what the ratio between them can mean, is, I must confess, in the end, unintelligible to me.

23:34Another grave fallacy in the same paragraph in the Ethics did incalculable damage to future centuries of economic thought. There Aristotle says that in order for an exchange, any exchange, a just exchange, to take place, the diverse goods and services must be equated, a phrase Aristotle emphasizes several times. It is this necessary equation that led Aristotle to bring in the mathematics and the equal signs. His reasoning was that for A and B to exchange two products, the value of both products must be equal, otherwise an exchange would not take place.

24:22The diverse goods being exchanged for one another must be made equal because only things of Equal Value will be traded. The Aristotelian concept of equal value in exchange is just plain wrong, as the Austrian School was to point out in the late 19th century. If A trades shoes for sacks of wheat owned by B, A does so because he prefers the wheat to the shoes, while B's preferences are precisely the opposite. If an exchange takes place, this implies not an equality of values, but rather a reverse inequality of values in the two parties making the exchange.

25:11If I buy a newspaper for 30 cents, I do so because I prefer the acquisition of the newspaper to keeping the 30 cents, whereas the newsagent prefers getting the money to keeping the newspaper. This double inequality of subjective valuations sets the necessary precondition for any exchange. If the equation of ratio of builder to laborer is best forgotten, other parts of Aristotle's analysis have been seen by some historians as predating parts of the economics of the Austrian School. Aristotle clearly states that money represents human need or demand, which provides the motivation for exchange and which holds all things together.

26:02Demand is governed by the use value or desirability of a good. Aristotle follows Democritus in pointing out that after the quantity of a good reaches a a certain limit, after there is too much, the use value will plummet and become worthless. But Aristotle goes beyond Democritus in pointing out the other side of the coin, that when a good becomes scarcer, it will become subjectively more useful or valuable. He states in the rhetoric that what is rare is a greater good than what is plentiful. Thus, gold is a better thing than iron, though less useful. These statements provide an intimation of the correct influence of different levels of supply on the value of a good, and at least a hint of the later fully formed Austrian marginal utility theory of value and its solution of the paradox of value.

27:06These are interesting allusions and suggestions, but a few fragmentary sentences scattered throughout different books hardly constitute a fully-fledged precursor of the Austrian School. But a more interesting harbinger of Austrianism has only come to the attention of historians in recent years, the groundwork for the Austrian theory of marginal productivity, the process as by which the value of final products is imputed to the means or factors of production. In his little-known work, The Topics, as well as in his later Rhetoric, Aristotle engaged in a philosophical analysis of the relationship between human ends and the means by which people pursue them.

27:56These means or instruments of production necessarily derive their value from the final products It's Useful to Man, the Instruments of Action. The greater the desirability or subjective value of a good, the greater the desirability or value of the means to arrive at that product. More important, Aristotle introduces the marginal element into this imputation by arguing that if the acquisition or addition of a good A to an already desirable good C creates a more desirable result than the addition of good B, then A is more highly valued than B. Or, as Aristotle put it, judge by means of an addition, and see if the addition of A to the same thing as B makes the whole more desirable than the addition of B. Aristotle also introduces an even more specifically pre-Austrian or pre-Boehm-Bawerkian concept by stressing the differential value of the loss, rather than the addition of a good.

29:11Good A will be more valuable than B if the loss of A is considered to be worse than the loss of B. As Aristotle clearly phrased it, that is, the greater good whose contrary is the greater evil, and whose loss affects us more. Aristotle also took note of the importance of the complementarity of economic factors A saw, he pointed out, is more valuable than a sickle in the art of carpentry, but it is not more valuable everywhere and in all pursuits. He also pointed out that a good with many potential uses will be more desirable or valuable than a good with only one use.

30:04Critics of the economic importance of Aristotle's analysis charge that with the exception of the saw and sickle passage, Aristotle made no economic application of his broad philosophical treatment of imputation. But this charge misses the crucial Austrian point, made with particular force and elaboration by the 20th century Austrian economist Ludwig von Mises. But economic theory is but a part, a subset, of a broader praxeological analysis of human action. By analyzing the logical implications of the employment of means to the pursuit of ends in all human action, Aristotle brilliantly began to lay the groundwork for the Austrian and The Theory of Imputation and Marginal Productivity over two millennia later 9.

31:03The Collapse after Aristotle. It is remarkable that the great burst of economic thinking in the ancient world covered only two centuries, the 5th and the 4th BC, and only in one country, Greece. The rest of the ancient world, and even Greece before and after these centuries, was essentially a desert of economic thought. Nothing of substance came out of the great ancient civilizations in Mesopotamia and India, and very little except political thought in the many centuries-long civilization of China. Remarkably, little or no economic thought emerged out of those civilizations, even though Although the economic institutions—trade, credit, mining, crafts, etc.—were often far advanced, and even more so than in Greece.

32:00Here is an important indication that, contrary to Marxists and other economic determinists, economic thought and ideas do not simply emerge as a reflex of the development of economic institutions. There is no way that historians of thought can ever completely penetrate the mysteries of creativity in the human soul, and thus completely explain this relatively brief flowering of human thought. But it is surely no accident that it was the Greek philosophers who provided us with the first fragments of systematic economic theory. For philosophy, too, was virtually non-existent in the rest of the ancient world, or before this era in Greece.

32:50The essence of philosophic thought is that it penetrates the ad hoc vagaries of day-to-day life in order to arrive at truths that transcend the daily accidents of time and place. Theory arrives at truths about the world and about human life that are absolute, universal and eternal, at least while the world and humanity last. It arrives, in short, at a system of natural laws. But economic analysis is a subset of such investigation, because genuine economic theory can only advance beyond shifting day-to-day events by penetrating truths about human action which are absolute, unchanging and eternal, which are unaffected by changes of time and place.

33:45Economic thought, at least correct economic thought, is itself a subset of natural laws in its own branch of investigation. If we remember the snatches of economic thought contributed by the Greeks, Hesiod on scarcity, Democritus on subjective value and utility, the influence of supply and demand on value and on time preference, Plato and Xenophon on the division of labor, Plato on the functions of money, Aristotle on supply and demand, money, exchange and the imputation of value from Ends to Means. We see that all of these men were focusing on the logical implications of a few broadly empirical axioms of human life, the existence of human action, the eternal pursuit of goals by employing scarce means, the diversity and inequality among men.

34:48These axioms are certainly empirical, but they are so broad and pervasive that they They apply to all of human life, at any time and place. Once articulated and set forth, they impel assent to their truth by a shock of recognition. Once articulated, they become evident to the human mind. Since these axioms are then established as certain and apodictic, the processes of logic, themselves, universal and apodictic and transcending time and place, can be used to arrive at absolutely true conclusions. While this method of reasoning, of philosophy and of economics, is both empirical, being derived from the world, and true, it runs against the grain of modern philosophies of science.

35:44In modern positivism or neo-positivism, for example, evidence is much narrower, fleeting and open to change. In much of modern economics, using the positivist method, empirical evidence is a conjuries of isolated and narrow economic events, each of which is conceived as homogeneous bits Evidence of Information Supposedly Used to Test to Confirm or Refute Economic Hypotheses. These bits, like laboratory experiments, are supposed to result in evidence to test a theory. Modern positivism is unequipped to understand or handle a system of analysis, whether classical Theoretical Greek philosophy or economic theory grounded on deductions from fundamental axioms so broadly empirical as to be virtually self-evident, evident to the self, once they are articulated.

36:48Positivism fails to understand that the results of laboratory experiments are only evidence Because they too make evident to the scientists, or to others who follow the experiments, that is, make evident to the self, facts or truths not evident before. The deductive processes of logic and mathematics do the same thing. They compel assent by making things evident to people, which were not evident before. Economic theory, which we have named as praxeological theory, is another way by which truths are made evident to the human mind.

37:33Even politics, which some scoff at as not purely or strictly economics, impinges heavily on economic thought. Politics is, of course, an aspect of human action, and much of it has a crucial impact on economic life. All natural law truths about economic aspects of politics may be and have been arrived at, and cannot be neglected in a study of the development of economic thought. When Democritus and Aristotle defended a regime of private property, and Aristotle demolished Plato's portrayal of an ideal communism, they were engaging in important economic analysis in the process of the nature and consequences of alternative systems of control and ownership of property.

38:28Aristotle was the culmination of ancient economic thought, as he was of classical philosophy. Economic theorizing collapsed after the death of Aristotle, and later Hellenistic and Roman epochs were virtually devoid of economic thought. Again, it is impossible to explain fully the disappearance of economic thought, but surely one reason must have been the disintegration of the once proud Greek polis after the time of Aristotle. The Greek city-states were subjected to conquest and disintegration beginning with the empire of Alexander the Great during the life of his former mentor, Aristotle. Eventually, Greece, much diminished in wealth and economic prosperity, became absorbed by the Roman Empire.

39:22Small wonder, then, that the only references to economic affairs should be councils of despair, with various Greek philosophers futilely urging their followers to solve the problem of aggravated scarcity by drastically curbing their wants and desires. In short, if you're miserable and poverty-stricken, accept your lot as man's inevitable fate, and try to want no more than you have. This council of hopelessness and despair was preached by Diogenes 412-323 B.C., the founder of the School of Cynics, and by Epicurus 343-270 B.C., the founder of the Epicureans.

40:10Diogenes and the cynics pursued this culture of poverty to such length as to adopt the name and the life of dogs. Diogenes himself made his home in a barrel. Consistent with his outlook, Diogenes denounced the hero Prometheus, who in Greek myth stole the gift of fire from the gods and thus made possible innovation, the growth of human knowledge, of the Progress of Mankind. Prometheus, wrote Diogenes, was properly punished by the gods for this fateful deed. As Bertrand Russell summed up, Aristotle is the last Greek philosopher who faces the world cheerfully. After him, all have, in one form or another, a philosophy of retreat. The world is bad, let us learn to be independent of it. External goods are precarious, they are the gift of fortune, not the reward of our own efforts.

41:13The most interesting and influential school of Greek philosophers after Aristotle was the Stoics, founded by Zeno of Clitium circa 336 to 264 BC, who appeared about the year In the 18th century, the Stoics began teaching at a painted porch, Stoa Poichile, after which he and his followers were called Stoics. While the Stoics began as an offshoot of cynicism preaching the quenching of desire for worldly goods, it took on a new and more optimistic note with Stoicism's second great founder, Chrysippus 281-208 B.C.

42:01Whereas Diogenes had preached that the love of money was the root of all evil, Chrysippus countered with the quip that the wise man will turn three somersaults for an adequate fee. Chrysippus was also sound on the inherent inequality and diversity of man. Nothing, he pointed out, can prevent some seats in the theater from being better than others. But the most important contribution of Stoic thought was in ethical, political and legal philosophy. For it was the Stoics who first developed and systematized, especially in the legal sphere, the concept and the philosophy of natural law. It was precisely because Plato and Aristotle were circumscribed politically by the Greek polis that their moral and legal philosophy became closely intertwined with the Greek city-state.

43:00For the Socratic, the city-state, not the individual, was the locus of human virtue. But the destruction or subjugation of the Greek polis after Aristotle freed the thought of the Stoics from its admixture with politics. The Stoics were therefore free to use their reason to set forth a doctrine of natural law focusing not on the polis, but on each individual, and not on each state, but on all states everywhere. In short, in the hands of the Stoics, natural law became absolute and universal, transcending political barriers or fleeting limitations of time and place.

43:48Law and ethics, the principles of justice, became transcultural and transnational, applying to all human beings everywhere. And since every man possesses the faculty of reason, he can employ right reason to understand the truths of the natural law. The important implication for politics is that the natural law, the just and proper moral law discovered by man's right reason, can and should be used to engage in a moral The Stoics were undoubtedly aided in arriving at their cosmopolitan disregard for the narrow interests of the polis by the fact that most of them were Easterners.

44:52Zeno, the founder, described as tall, gaunt and swarthy, came from Clitium on the island of Cyprus. Many, including Chrysippus, came from Tarsus in Cilicia on the Asia Minor mainland near Syria. Later Greek Stoics were centered in Rhodes, an island off Asia Minor. Stoicism lasted 500 years and its most important influence was transmitted from Greece to Rome. The later Stoics, during the first two centuries after the birth of Christ, were Roman rather than Greek. The great transmitter of Stoic ideas from Greece to Rome was the famous Roman statesman, jurist and orator, by Marcus Tullius Cicero, 106 to 43 BC Following Cicero, Stoic natural law doctrines heavily influenced the Roman jurists of the 2nd and 3rd centuries A.D., and thus helped shape the great structures of Roman law which became pervasive in Western civilization.

46:08Cicero's influence was assured by his lucid and sparkling style, and by the fact that he was the first Stoic to write in Latin, the language of Roman law, and of all thinkers and writers in the West, down to the end of the 17th century. Moreover, Cicero's and other Latin writings have been far better preserved than the fragmentary remains we have from the Greeks. Cicero's writings were heavily influenced by the Greek Stoic leader, the aristocratic Panetius of Rhodes, circa 185-110 BC, and as a young man, he traveled there to study with his follower, Poseidonius of Rhodes, 135-51 BC, the greatest Stoic of his age.

47:00There is no better way to sum up Cicero's stoic natural law philosophy than by quoting what one of his followers called his almost divine words. Paraphrasing and developing the definition and insight of Chrysippus, Cicero wrote, There is a true law, right reason, agreeable to nature, known to all men, constant and is eternal, which calls to duty by its precepts, deters from evil by its prohibition. This law cannot be departed from without guilt. Nor is there one law at Rome and another at Athens, one thing now and another afterward.

47:46But the same law, unchanging and eternal, binds all races of man and all times. There is one common, as it were, master and ruler, God, the author, promulgator and mover of this law. Whoever does not obey it departs from his true self, contends the nature of man and inflicts upon himself the greatest penalties. Cicero also contributed to Western thought a great anti-statist parable which resounded through the centuries, a parable that revealed the nature of rulers of state as nothing more than pirates writ large.

48:31Cicero told the story of a pirate who was dragged into the court of Alexander the Great. When Alexander denounced him for piracy and brigandage, and asked the pirate what impulse had led him to make the sea unsafe with his one little ship, the pirate trenchantly replied, The same impulse which has led you, Alexander, to make the whole world unsafe. But despite their important contributions to moral and legal philosophy, neither the Stoics nor other Romans contributed anything else of significance to economic thought. Roman law, however, heavily influenced and pervaded later legal developments in the West.

49:18One private law elaborated, for the first time in the West, the idea of property rights as absolute, with each owner having the right to use his property as he saw fit. From this stemmed the right to make contracts freely, with contracts interpreted as transfers of titles to property. Some Roman jurists declared that property rights were required by the The Natural Law. The Romans also founded the Law Merchant, and Roman law strongly influenced the common law of the English-speaking countries and the civil law of the continent of Europe. 10.

50:04Taoism in Ancient China The only other body of ancient thought worth mentioning is the schools of political philosophy in ancient China. So remarkable for its insights, ancient Chinese thought had virtually no impact outside the isolated Chinese empire in later centuries, and so will be dealt with only briefly. The three main schools of political thought, the Legalists, the Daoists and the Confucians, were established from the 6th to the 4th centuries B.C. Roughly the legalists, the latest of the three broad schools, simply believed in maximal power to the state, and advised rulers how to increase that power.

50:53The Daoists were the world's first libertarians, who believed in virtually no interference by the state in economy or society, and the Confucians were middle of the roaders on this critical issue. The towering figure of Confucius, 551 to 479 BC, whose name was actually Chu-Chung-Ni, was an erudite man from an impoverished but aristocratic family of the fallen Yin dynasty, who became grand marshal of the state of Song. In practice, though far more idealistic, Confucian thought differed little from the legalists, Since Confucianism was largely dedicated to installing an educated, philosophically-minded bureaucracy to rule in China.

51:45By far the most interesting of the Chinese political philosophers were the Daoists, founded by the immensely important but shadowy figure of Lao Tzu. Little is known about Lao Tzu's life, but he was apparently a contemporary and personal Social Acquaintance of Confucius. Like the latter, he came originally from the state of Sung and was a descendant of lower aristocracy of the Yen dynasty. Both men lived in a time of turmoil, wars and statism, but each reacted very differently. For Lao Tzu worked out the view that the individual and his happiness was the key unit of society. If social institutions hampered the individual's flowering and his happiness, then those institutions should be reduced or abolished altogether.

52:39To the individualist Lao Tzu, government, with its laws and regulations more numerous than the hairs of an ox, was a vicious oppressor of the individual, and more to be feared than fierce tigers. Government, in some, must be limited to the smallest possible minimum. Inaction became the watchword for Lao Tzu, since only inaction of government can permit the individual to flourish and achieve happiness. Any intervention by government, he declared, would be counterproductive and would lead to confusion and turmoil. The first political economist to discern the systemic effects of government intervention, Lao Tzu, after referring to the common experience of mankind, came to his penetrating conclusion.

53:33The more artificial taboos and restrictions there are in the world, the more the people are impoverished. The more that laws and regulations are given prominence, the more thieves and robbers there will be. The worst of government interventions, according to Lao Tzu, was heavy taxation and war. The people hunger because their superiors consume an excess in taxation. And, where armies have been stationed, thorns and brambles grow. After a great war, harsh years of famine are sure to follow. The wisest course is to keep the government simple and inactive. For then, the world stabilizes itself.

54:23As Lao Tzu put it, therefore the sage says, I take no action, yet the people transform themselves. I favor quiescence, and the people right themselves. I take no action, and the people enrich themselves. Deeply pessimistic and seeing no hope for a mass movement to correct oppressive government, Lao Tzu counseled the now familiar Daoist path of withdrawal, retreat and limitation of one's desires. Two centuries later, Lao Tzu's great follower, Chuang Tzu, 369 to circa 286 B.C. built on the master's ideas of laissez-faire to push them to their logical conclusion, individualist anarchism.

55:15The influential Chuang Tzu, a great stylist who wrote in allegorical parables, was therefore the first anarchist in the history of human thought. The highly learned Chuang Tzu was a native of the state of Meng, now probably in Honan province, and also descended from the old aristocracy. A minor official in his native state, Chuang Tzu's fame spread far and wide throughout of China, so much so that King Wei of the Chu Kingdom sent an emissary to Chuang Tzu bearing great gifts and urging him to become the king's chief minister of state. Chuang Tzu's scornful rejection of the king's offer is one of the great declarations in history on the evils underlying the trappings of state power and the contrasting virtues of the private life.

56:12A thousand ounces of gold is indeed a great reward, and the office of chief minister is truly an elevated position. But have you, sir, not seen the sacrificial ox awaiting the sacrifices at the royal shrine of state? It is well cared for and fed for a few years, comparison with rich brocades, so that it will be ready to be led into the great temple. At that moment, even though it would gladly change places with any solitary pig, can it do so? So quick, and be off with you. Don't sully me. I would rather roam and idle about in a muddy ditch at my own amusement than to be put under the restraints that the ruler would impose.

56:59I will never take any official service, and thereby I will be free to satisfy my own purposes. Chuang Tzu reiterated and embellished Lao Tzu's devotion to laissez-faire and opposition to state rule. There has been such a thing as letting mankind alone. There has never been such a thing as governing mankind with success. Chuang Tzu was also the first to work out the idea of spontaneous order, independently discovered by Proudhon in the 19th century and developed by F. A. von Hayek of the Austrian School in the 20th. Thus, Zhuangzhu.

57:46Good order results spontaneously when things are let alone. But while people in their natural freedom can run their lives very well by themselves, But rules and edicts distort that nature into an artificial procrustian bed. As Chuang Tzu wrote, the common people have a constant nature. They spin and are clothed, till and are fed. It is what may be called their natural freedom. These people of natural freedom were born and died themselves, suffered from no restrictions

58:55Do not need governing. In fact, it should not be governed. Chuang Tzu, moreover, was perhaps the first theorist to see the state as a brigand writ large. A petty thief is put in jail. A great brigand becomes a ruler of a state. Thus the only difference between state rulers and out-and-out robber chieftains is the size of their depredations. This theme of ruler as robber was to be repeated, as we have seen, by Cicero, and later by Christian thinkers in the Middle Ages, though, of course, these were arrived at independently. Taoist thought flourished for several centuries, culminating in the most determinedly anarchistic thinker, Pao Ching Yen, who lived in the early fourth century AD, and about whose life nothing is known.

59:53Elaborating on Chuang Tzu, Pao contrasted the idyllic ways of ancient times that had had no rulers and no government, with the misery inflicted by the rulers of the current age. In the earliest days, wrote Pao, there were no rulers and no officials. People dug wells and drank, tilled fields and ate. When the sun rose, they went to work, and when it set, they rested. Placidly going their ways with no encumbrances, they grandly achieved their own fulfillment. In the stateless age, there was no warfare and no disorder. Where knights and hosts could not be assembled, there was no warfare afield.

1:00:40Ideas of using power for advantage had not yet burgeoned. Disaster and disorder did not occur. Walls and spears were not used. City walls and moats were not built. People munched their food and disported themselves. They were carefree and contented. Into this idol of peace and contentment, wrote Pao Qingyan, there came the violence and deceit instituted by the State. The history of government is the history of violence, of the strong plundering the weak. Wicked tyrants engage in orgies of violence. Being rulers, they could give free reign to all desires. Furthermore, the government's institutionalization of violence meant that the petty disorders of daily life would be greatly intensified and expanded on a much larger scale. As Powell put it, disputes among the ordinary people are merely are only trivial matters. For what scope of consequences can a contest of strength between ordinary fellows generate? They have no spreading lands to arouse avarice, they wield no authority through which they can advance their struggle, their power is not such that they can assemble

1:02:03mass followings, and they command no awe that might quell such gatherings by their opponents. How can they compare with the display of the royal anger which can deploy armies and move battalions, making people who hold no enmities attack states that have done no wrong? To the common charge that he has overlooked good and benevolent rulers, Powell replied that the government itself is a violent exploitation of the weak by the strong. The system itself is the problem, and the object of government is not to benefit the people but to control and plunder them. There is no ruler who can compare in virtue with a condition of non-rule.

1:02:54Pao Cheng-yen also engaged in a masterful study in political psychology by pointing out that the very existence of institutionalized violence by the state generates imitative and Violence Among the People. In a happy and stateless world, declared Pau, the people would naturally turn to thoughts of good order, and not be interested in plundering their neighbors. But rulers oppress and loot the people, and make them toil without rest, and rest away things from them endlessly. In that way, theft and banditry are stimulated among the unhappy people, and arms and armor intended to pacify the public are stolen by bandits to intensify their plunder.

1:03:43All these things are brought about because there are rulers. The common idea, concluded Pao, that strong government is needed to combat disorders among the people, commits the serious error of confusing cause and effect. The only Chinese with notable views in the more strictly economic realm was the distinguished second century B.C. historian Su Ma Qian, 145 to circa 90 B.C. Qian was an advocate of laissez-faire and pointed out that minimal government made for abundance of food and clothing, as did the abstinence of government from competing with with Private Enterprise.

1:04:30This was similar to the Taoist view, but Qian, a worldly and sophisticated man, dismissed the idea that people could solve the economic problem by reducing desires to a minimum. People, Qian maintained, preferred the best and most attainable goods and services, as well as ease and comfort. Man are therefore habitual seekers after wealth. Since Chien thought very little of the idea of limiting one's desires, he was impelled far more than the Daoists to investigate and analyze free market activities. He therefore saw that specialization and the division of labor on the market produced goods and services in an orderly fashion.

1:05:20Each man has only to be left to utilize his own abilities and exert his strength to obtain what he wishes. When each person works away at his own occupation and delights in his own business, then, like water flowing downward, goods will naturally flow ceaselessly, day and night, without being summoned, and the people will produce commodities without having been asked. To Qian, this was the natural outcome of the free market. Does this not ally with reason? Is it not a natural result? Furthermore, prices are regulated on the market, since excessively cheap or dear prices tend to correct themselves and reach a proper level.

1:06:11But if the free market is self-regulating, asked Qian perceptively, what need is there Care for Government Directives, Mobilizations of Labor, or Periodic Assemblies. What need indeed? Su Ma Qian also set forth the function of entrepreneurship on the market. The entrepreneur accumulates wealth and functions by anticipating conditions, that is, forecasting and acting accordingly. In short, he keeps a sharp eye out for the opportunities of the times. Finally, Qian was one of the world's first monetary theorists. He pointed out that increased quantity and a debased quality of coinage by government depreciates the value of money and makes prices rise.

1:07:04And he saw, too, that government inherently tended to engage in this sort of inflation and debasement.