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Routledge Handbook of the History of Global Economic Thought

Editor(s):Barnett, Vincent
Reviewer(s):McCann, Charles R. Jr.

Published by EH.Net (October 2018)

Vincent Barnett, editor, Routledge Handbook of the History of Global Economic Thought. London: Routledge, 2015. ix + 348 pp. $255 (hardcover), ISBN: 978-0-415-50849-0.

Reviewed by Charles R. McCann, Jr., Department of Economics, University of Pittsburgh.

This volume, viewed by the editor as a Cosmoconomy or Economographia, is but a “modest attempt to map the global contour-lines of economic ideas” — modest, that is, with respect to Ptolemy’s Cosmographia, itself “an early attempt to delineate the world’s physical geography” (p. 1). The editor freely admits to a lack of comprehensiveness, instead opting for “a condensed introductory overview and regionally coordinated analytical account of a significant number of national/regional traditions in economics . . . that will facilitate comparisons across nations and between historical eras” (p. 1).

In addition to Barnett’s Introduction and Conclusion, there are twenty-eight substantive chapters surveying the progress of economic thought as it developed in more than forty countries and regions. The volume is divided into five parts: Europe, the Americas, the Middle East, Africa, and the Asia-Pacific. Coverage includes not merely individual countries, but as well entire regions and even cultural groups, such as Spanish-speaking South America, Arab-Islamic Economics, North Africa (included among the Middle-Eastern countries), West Africa, Southern Africa, and the Asian Tigers.

Given the scope of the coverage, and the different approaches employed, it is not surprising that the quality and tone of each is uneven. The chapters are, for the most part, approximately ten pages or less in length, with two notable exceptions, these being the chapter on the United States (John King, 27 pages) and the one on England (Roger Middleton, 21 pages). It seems rather obvious why each would require more extensive coverage. Given the material and the manner of its presentation, it seems best to comment briefly on each chapter.

The United Kingdom is represented in the first three substantive chapters – England (Middleton), Scotland (Alexander Dow and Sheila Dow), and Ireland (Renee Prendergast). This is perhaps understandable, as their cultural and intellectual environments differed and to a somewhat great extent. Middleton, having noted the difficulty in identifying an “English” economics as distinct from a “British” variant, nonetheless defined “English economics” as “that produced by ‘English economists,’ with these defined as those working (at least for a major part of their career) in England which, in turn, encompasses Wales and Ireland (Northern Ireland from 1923)” (p. 17). Notably, however, this excludes Scotland, which, as Dow and Dow explain, became, with the development of an Enlightenment philosophy that “combined reason and evidence within a theory of human nature,” itself the product of a uniquely Scottish cultural and social milieu, the catalyst for the emergence of classical political economy (p. 38). As to Ireland, Prendergast informs us that, while Ireland may have produced economic theorists of great renown, nonetheless “there was nothing specifically Irish about their contribution.” Their recognition may be in the “models” they employed, “designed to facilitate an understanding of the real economy,” inspiring an awareness “of both specific institutional features, and the dangers of general maxims” (p. 56).

With respect to the development of economic thought on the continent, we have chapters on Italy (Pier Luigi Porta), Greece (Michalis Psalidopoulos), Spain and Portugal (José Luis Cardoso and Luis Perdices de Blas), Germany (Erik Grimmer-Solem), Sweden (Lars Magnusson), and Russia and Ukraine (Francois Allisson). Curiously, there are no chapters on the development of French or Austrian economic thought! The Italian Enlightenment is “the greatest contribution of Italian culture to the development of a common European tradition of civil rights and enlightened governance,” distinct from its French and Scottish counterparts “in its attention to the interplay between legislation and moral sentiments, civic culture and economic development, fiscal technique, and social structure” (p. 60). Significantly, the core of Italian economic thought lies in the civil tradition, “the product of a special blend of lay and religious motives, which stems from the re-discovery . . . of antiquity or the pre-Christian world” (p. 58). This focus continued through the nineteenth century. The presentation of the Greek tradition is somewhat disappointing, as its primary focus is on the period from 1830 to the present, thus omitting what should have been a fascinating discussion of the development of the ancient roots of modern economic thought. By contrast, Cardoso and Perdices de Blas set the stage for a review of the development of Spanish and Portuguese economics beginning in the sixteenth century with the works of the Scholastics, the contributions of which “were some of the side effects of their musings on the spiritual salvation of human beings in all their activities, especially those related with dangerous trading activities completely divorced from the honorable, virtuous life in the countryside” (p. 78). Sadly, note the authors, Spanish economists in the eighteenth century in particular, while cognizant of European contributions, nonetheless produced little in the area of economic theory, “showing a noticeable preference for studies on applied economics” (p. 81).

The chapter on the development of economic thought in Germany focuses primarily on the nineteenth and twentieth centuries, with the occasional nod to the eighteenth, due perhaps to the fact that Germany as a unified nation-state was formed only in 1871. Of significance is the influence it was to have in the United States and Japan, where the transfer of German ideals were implanted in the universities and ultimately became the foundation for the emergence of the American welfare state. Sweden is something of a late-comer if one employs the metric of “printed works,” which date only from the early eighteenth century; prior to this, Swedish economics “was defined in its Aristotelian meaning as an Art of Household Management” (p. 96). English, French, and German, and later Austrian, influences are particularly noticeable in early Swedish economic thought into the early twentieth century, when an identifiable Swedish School emerged. Finally, economic thought in Russia and the Ukraine, combined here due to the common history, did not really come into their own until the nineteenth century; again, the seventeenth and eighteenth centuries saw the publication of legal, political, and religious texts presenting economic ideas.

Part II, the Americas, is comprised of six chapters – the United States of America (J. E. King), Canada (Robin Neill), Mexico and Central America (Richard Weiner), the Caribbean (Mark Figueroa), Spanish-speaking South America (Veronica Montecinos), and Brazil (Patrice Franko). While American economic thought may be said to antedate independence from Britain, King’s primary focus is on the development of economic thought from the early nineteenth through the twentieth century. The story has been told numerous times, but the presentation is nonetheless quite compelling. Canadian economic thought is inextricably entwined with that of the United States, with Canadian economists having held important posts in American universities. The chapter on Mexico and Central America focuses primarily on Mexico, noting the influence of outside forces on the development of economic thought until the twentieth century, when there came into being a Mexican variant, rooted in culture and history (p. 145). The Caribbean economies suffered greatly from colonial administrations; the approaches to economics in these societies vary greatly, from Keynesian to Marxist, focusing primarily on issues of development and administration. Economic thought in Spanish-speaking South America developed in a highly-politicized atmosphere, with the influence of the Catholic Church assuming a prominent role. Finally, Brazilian economics tends to pragmatism, with approaches tuned to the needs of the times.

Part III, the Middle East, contains five chapters — Turkey and the Turkic linguistic zone (Eyüp Özveren), Israel (Yuval Yonay and Arie Krampf), Arab-Islamic economics (S. M. Ghazanfar), Persia/Iran (Hamid Hosseini), and North Africa (Hamed El-Said). The chapter of Turkish economics is more an excursion into economic history than the history of economic thought, as much of Turkish economics was absorbed from outside. In Israel, Don Patinkin and the “Patinkin boys” assume a starring role in the Americanization of an “Israeli economics” (pp. 194-97). The Arab-Islamic and Persian/Iranian contributions are taken to have roots in the seventh and eighth centuries with the writings of Arab and Islamic scholars; indeed, many of these scholars were producing important, if neglected, works during the European Dark Ages! Finally, the history of the economics of North Africa — Algeria, Egypt, Libya, Morocco, Tunisia, and Sudan — “suggests that the impact of economic ideas as pure theory has (at least in the short-run) been limited,” with economic policies “often generated by factors outside the economics profession” (p. 238).

Part IV, Africa, includes three chapters — West Africa (Gareth Austin and Gerardo Serra), Southern Africa (Tidings P. Ndhlovu and Nene Ernest Khalema), and Angola and Mozambique (Steven Kyle). African economics in general is a development of and reaction to colonialism and dependence on western European ideals. In West Africa, competition developed between those who advocated the assimilation of Western economic ideas and those who advocated an indigenous West African model, and, following independence from colonial rule, there emerged a sort of pan-African model, incorporating elements of Leninist socialism (pp. 246-47) and the identification of backwardness with dependency (p. 250). In southern Africa, colonialism “imprisoned the African ways of understanding commerce, utilising indigenous economic ideas, traditions, beliefs and ideologies” (p. 266). In Angola and Mozambique the Marxist ideology that came to dominate following the collapse of Portuguese colonial rule “is virtually indistinguishable from general justifications for authoritarian extractive regimes of any political stripe,” and so the post-independence ideologies “are in many ways simply extensions of the old colonial regimes under new management” (p. 270).

Part V covers, in five chapters, the Asia-Pacific Region — Australia and New Zealand (William Coleman), China (Zagros Madjd-Sadjadi), Southeast Asia (Cassey Lee and Thee Kian Wie), the Asian Tigers (Takashi Kanatsu), and India (Balakrishnan Chandrasekaran). Again it is curious that no chapter appears on the development of Japanese economic thought. Coleman begins with the assertion that “any story of economic thought in Australia and New Zealand will necessarily tell of the attempt to plant and cultivate in uncleared ground the long developed vine of older societies” (p. 281), and concludes with the observation that “there is no Australia in economics any longer. Australian economics is at an end” (p. 290). With respect to China, it is culture and religion more than anything else that influenced the development of economic thought, with Confucianism and Taoism, legalism and Maoism, at various times competing for dominance (p. 295). Indonesia and Malaysia, representative, we are told, of Southeast Asia, developed under Dutch and British rule, respectively, and so there emerged “no singular or identifiable school of thought in these countries.” Such writings on economic matters as there were centered problems of “reconstruction and development,” and a concern with ethnic conflict (p. 312). The Asian Tigers — Hong Kong, Singapore, South Korea, and Taiwan — to varying degrees relied on state-directed development, with the government working in concert with the private sector to achieve high levels of industrial growth. Finally, culture has been a dominating influence in Indian economic thought, which is seen as being “based fundamentally on the liberty and freedom of individuals within the ambit of the family system” (p. 323). Chandrasekaran argues that any commitment to a unique, indigenous economics was abandoned after independence, with academic economics focusing on Marxism and neoclassicism (p. 374).

This is indeed an interesting project, one that by its nature requires a great degree of selection as to the material to be included. One may point to flaws in the coverage — obvious choices excluded, unusual ones given treatment; the choice is quite idiosyncratic. Yet in many of the offerings there is much to find that should provoke more extensive study.


Charles R. McCann, Jr. is a Research Associate at the University of Pittsburgh, and the author of Individualism and the Social Order and Order and Control in American Social Thought, both published by Routledge, and, with Mark Perlman, the two-volume Pillars of Economic Understanding (University of Michigan Press), among other publications.

Copyright (c) 2018 by EH.Net. All rights reserved. This work may be copied for non-profit educational uses if proper credit is given to the author and the list. For other permission, please contact the EH.Net Administrator ( Published by EH.Net (October 2018). All EH.Net reviews are archived at

Subject(s):History of Economic Thought; Methodology
Geographic Area(s):General, International, or Comparative
Time Period(s):General or Comparative

Reckoning with Markets: Moral Reflection in Economics

Author(s):Halteman, James
Noell, Edd
Reviewer(s):Hammond, J. Daniel

Published by EH.Net (July 2012)

James Halteman and Edd Noell, Reckoning with Markets: Moral Reflection in Economics. New York: Oxford University Press, 2012. xvi + 218 pp. $35 (hardcover), ISBN: 978-0-19-976370-2.

Reviewed for EH.Net by J. Daniel Hammond, Department of Economics, Wake Forest University.

Reckoning with Markets provides an overview of moral reflection in the economics literature from classical Greece to the current time. At just under 200 pages the book would seem relatively compact for a survey that covers more than two millennia. But given the paucity of moral reflection since economics became a stand-alone discipline two centuries ago, the book?s length is sufficient to the task at hand.

The target audience is undergraduates and economists who find themselves sharing the authors? uneasiness with the state of economics they encounter in textbooks and in the scholarly literature. What is clear from the outset is that this uneasiness is grounded in the lack of moral reflection in ?mainstream? economics. But what becomes evident as one proceeds through the book is that a second and somewhat separate concern of the authors is with the limitations of rational choice analysis as an explanatory apparatus. Whether this is a separate issue is a question to which I will return after describing the book?s structure and contents.

The book opens with James Halteman recounting his on-the-ground experience in the Soviet Union during the Glasnost period of Mikhail Gorbachev?s government. Halteman learned first-hand that a thriving market economy requires more than markets. There must be a culture that supports commercial relationships, most of which are with people one does not know and cannot effectively monitor. This culture is necessarily moral. To paraphrase Jesus?s parable from Matthew?s Gospel, chapter 13, for markets and social life to flourish the cultural soil must be morally rich rather than thin and rocky.

Halteman draws the implication that economists cannot hope to gain deep understanding of standard economic questions about wealth, poverty, and growth so long as they are restricted to a value-free theoretical apparatus. Markets and social life are bound together by moral ?glue.? Therefore economists need to pay heed to moral standards. Reckoning with Markets introduces economists and their students to the history of moral reflection in economics. The news here since the Middle Ages is not very good. Thus the authors hope to restore moral reflection and dialogue to economics.

The first chapter is set up as a dialogue between economists and philosophers who have written on economics ranging from the ancient world to the modern era including figures such as Aristotle, Aquinas, Smith, Marx, Mill, Bentham, Marshall, Keynes, Hayek, Friedman, and Sen. Each of the figures is given space for a brief comment on morality and economics by way of a quotation from their writings. Seven of the eight chapters that follow this dialogue take the reader into greater historical depth, beginning with the ancients and moving chronologically up to the present. In the final chapter Halteman and Noell provide a sketch of a broader and richer approach to economics than rational choice that they call ?sociopolitical economy.? At the end of each chapter is a highlighted idea from the subject of the chapter, along with a set of questions for reflection and discussion.

In chapter 2, ?Moral Reflection in the Ancient Mediterranean World,? we encounter ideas from Aristotle, along with Plato, Hesiod, the Stoics, and the Old and New Testaments. Telos, the final cause or that which a part of nature or a person?s design points to, is prominent in this discussion. Considerations of virtue, justice, and happiness proceed from this reference point. Humans find happiness through the practice of the virtues and by living as they were designed to live. For the ancients what we think of as economics was generally subsumed in moral philosophy. There was not economics without moral reflection.

Chapter 3 moves on to the Scholastics, principally Thomas Aquinas, who brought the philosophy of Aristotle into dialogue with Christian doctrine. Here again we find a rich vein of moral reasoning coupled with ?positive economics.? The Scholastics used three categories in their analysis of economic transactions: (1) high virtue where an act serves its natural purpose (telos) and where net benefits are equal, (2) adiaphora, matters of indifference where transactions are neither virtuous nor sinful, and (3) unnatural and sinful transactions born of greed and without reciprocal benefits. The Scholastics? philosophical/theological approach to economics was oriented toward practical concerns, like the economics of today. But this likeness is with a vast difference. The Scholastics? practical concern was not, for example, to find the revenue maximizing tax rate or the welfare maximizing number of firms in an industry, but to get souls fit for heaven. A confessor would need to know under what circumstances a confessing merchant might be culpable before God for increasing his prices. Halteman and Noell aptly bring out the danger that moderns reading the Scholastics might miss much of what their economic analysis was actually about. “When viewed through a modern lens with the concept of natural purpose (or telos) filtered out and where sinful economic transactions seem irrelevant in voluntary markets, it is easy to collapse all three categories into one value-free notion of supply and demand. It is then a short step to the argument that the Scholastic writers were really talking about a ?neutral? market price all along, which discounts or overlooks the context of their work and the moral content of their analysis” (p. 51).

In chapter 4 we come to ?Adam Smith and the Prospects for Moral Reflection in Enlightenment Thinking.? This is the turning point in the story. Although the chapter title is without a question mark, I take it to be something of a question, for the authors understand Smith as conflicted. This conflict is not the ?Adam Smith problem,? i.e., reconciling the moral philosopher of The Theory of Moral Sentiments with the economist of The Wealth of Nations, but rather the conflict between the natural law of Smith?s teacher Francis Hutcheson and the skepticism of his friend David Hume. The chapter gives more attention to Theory of Moral Sentiments than to Wealth of Nations. Halteman and Noell see Smith as a transitional figure between the ancient and medieval vision of the natural world and human life fraught with meaning and purpose and the mechanistic vision of modern science. Smith sought to maintain a concern with the virtues and moral life, but to do so largely outside the framework of Christian doctrine, relying instead on Stoic philosophy. In this manner Smith was typical of the Enlightenment desire to strip Christian doctrine away from classical Greek and Roman philosophy, discarding the doctrine and retaining the philosophy, thus undoing much of what the Scholastics had done.

In chapter 5, ?The Secularization of Political Economy,? we encounter other classical and early neo-classical economists. Some, unlike Smith, had no moral philosophy counterpart for their economics. They tended to perceive the economy as naturalistic and deterministic. In Marx?s scientific materialism, as with Bentham, Mill, and Jevons?s utilitarianism, we encounter new types of moral reflection but on the whole less of it than with the Scholastics and Smith.

Chapter 6 concerns moral reflection in the work of three heterodox economists, Marx, Veblen, and Hayek. The three are presented as bucking the trend toward value-free mechanistic economics, albeit in their own distinct ways. The case of Marx is the least clear of the three, for as Halteman and Noell point out, Marx?s philosophy of history with its historical laws of motion was both materialistic and deterministic. The highlighted discussion in this chapter is ?Can a materialist produce a moral critique of capitalism?? Halteman and Noell?s answer is no. They argue that Marx reached outside his system for Christian language to make his moral critique. Veblen, influenced by the German historicists, was opposed to deductive rational choice methods. For Halteman and Noell he qualifies as an economist who instilled a moral element in his economics primarily by his rejection of the narrow homo economicus view of human nature. The authors find Hayek interesting for shying away from explicit moral reflection despite having written on the origins of moral norms.

Chapter 7, ?On Methods and Morals,? is the authors? critique of the dominance of egoistic rational choice as the predominant approach in contemporary economics. This makes economics less social and less human than it should be. Chapter 8 surveys ways in which economics is being broadened beyond rational choice by New Institutionalists, Austrians, and others doing research on happiness, cooperative behavior, economic psychology, and neuroeconomics.

In chapter 9 Halteman and Noell provide an outline for reform of economics as ?sociopolitical economy.? Their vision cuts directly against the imperialism of rational choice methodology, where the motivation of self-interest that predominates in the impersonal marketplace is used for analysis of behavior in the social settings of neighborhood, church, and family. In these settings not every action is an exchange. Real people make actual sacrifices out of mutual respect and love. Halteman and Noell do not want to abandon the rational choice maximization assumption where its use is appropriate, but they do think economists should move away from exclusive reliance on it for analysis of behavior in all settings. They recognize that their approach would make analysis less tidy (we might say that the queen of the social sciences would look less like herself and more like sociology) but they expect rewards in enhancement of the explanatory power of actual human behavior and greater opportunity for moral reflection. Basically what Halteman and Noell call for is an economics that is grounded in The Wealth of Nations and The Theory of Moral Sentiments.

As I suggested, there are two concerns evident in the book. The historical survey of moral reflection in economics clearly shows a decline in moral reflection, and is intended to stimulate dialogue about morals and markets. But the history also shows that the decline in moral reflection has paralleled the development of modern ?scientific? methods in economics. These methods of rational choice with mathematics as the language of analysis require high levels of abstraction, both from institutions and the complexities of human beliefs and behavior. The thinning of the human anthropology in economic analysis is of concern to the authors for its effects on positive economics as well as for its effects on normative economics. That is to say, Halteman and Noell are interested in both scientific reform and moral reform.

The authors are moderately optimistic about the prospects for moral reflection in some of the newer research programs discussed in chapter 8 such as the New Institutionalism and economic psychology. And on the whole their reading of Adam Smith is positive with respect to the potential for moderns to use Smith as a source for reflection on morals and markets. I am afraid that I do not fully share their optimism. My reading of their historical survey is that there has been a longer and steeper decline in moral reflection in economics than they detect. The decline may have begun with Adam Smith. It appears to me that a substantial portion of what they present as moral reflection in economics from Smith on is not in any deep sense moral reflection. Moreover, the new research programs in which they find potential for moral reflection may depart from rational choice methods, but they do not escape the bonds of value-free science. For example work on the economics of cooperation and economic psychology may account for the fact that people make decisions that are morally constrained. But this is not the same as reflection and evaluation of the moral standards themselves. Neuroeconomics and evolutionary psychology are materialistically reductionist, hardly rich soil for moral reflection.

The seeds of materialistic reductionism can be seen in Adam Smith. Halteman and Noell interpret Smith as ?downplaying anything that looks like religious moral restraint? on behavior (p. 58). Regarding what Smith considered the springs of human behavior they quote Joseph Cropsey.[1] “[N]ature provides man with imperfect perceptions of the tangible world, with the inevitable result that he can reason only imperfectly concerning the nature of things or what they really are. The faculty of reason leans upon an aid which was prepared by nature to assist not reason but appetite, specifically the appetite for life as such; and as a result, useful knowledge but not real knowledge is the most that man can aspire to” (p. 59).

The view here is that behavior is motivated by the appetites and passions. Moral restraint is provided by three behavior screens: sympathy, the impartial spectator, and the all-seeing judge. Smith sees sympathy as not being rational, but built-in and involuntary. The back-stop for sympathy is the impartial spectator. This ability to step outside of oneself into an impartial and well-informed spectator is something humans have as part of their nature, but Smith is agnostic about whether the spectator is real or imagined. The third screen, the all-seeing judge, is the highest. There is mention by Smith of the common belief in an afterlife, and therefore in eternal happiness or damnation. But the important matter is not the veracity of this belief, but its effects on behavior. That is, Christian theism contributes to the common good, whether the Christian God exists or not. Moreover, in place of Christian doctrine Smith drew on Stoic pantheism. Halteman and Noell summarize the grounds of Smith?s moral philosophy thusly: “Smith?s ability to connect the developmental organic qualities of the Stoic view of the world with the mechanistic ordered approach of the eighteenth-century Enlightenment era provided a broad base on which he built his views. The notion of moral progress in Stoicism, when blended with the Enlightenment ideas of moral precepts, led Smith to his three-level approach to the moral socializing of behavior. The ability to exercise sympathy and appropriate the impartial spectator and, if need be, the final judge of our conduct can be seen as a marriage of Stoic moral development and the secular virtue concepts of David Hume” (pp. 74-75).

What is missing from here on through the utilitarians, behaviorists, to the economic psychologists and neuroeconomists, and the other human studies in the modern academy? In two words: Imago Dei. If not created in the image of God, man is left as nothing more than a clever animal. Clever animals do not engage in moral reflection.

1. Joseph Cropsey (2001), Polity and Economy: An Interpretation of the Principles of Adam Smith. South Bend, IN: St. Augustine?s Press.

J. Daniel Hammond is Hultquist Family Professor, Department of Economics, Wake Forest University ( He is coeditor with Steven G. Medema and John D. Singleton of Chicago Price Theory, Edward Elgar Publishing, forthcoming.

Copyright (c) 2012 by EH.Net. All rights reserved. This work may be copied for non-profit educational uses if proper credit is given to the author and the list. For other permission, please contact the EH.Net Administrator ( Published by EH.Net (July 2012). All EH.Net reviews are archived at

Subject(s):History of Economic Thought; Methodology
Geographic Area(s):General, International, or Comparative
Time Period(s):General or Comparative

The Illusion of Free Markets: Punishment and the Myth of Natural Order

Author(s):Harcourt, Bernard E.
Reviewer(s):D'Amico, Daniel J.

Published by EH.NET (April 2011)

Bernard E. Harcourt, The Illusion of Free Markets: Punishment and the Myth of Natural Order. Cambridge, MA: Harvard University Press, 2011. 328 pp. $30 (hardcover), ISBN: 978-0-674-05726-5.

Reviewed for EH.Net by Daniel J. D’Amico, Department of Economics, Loyola University (New Orleans).

The Illusion of Free Markets is a fascinating attempt to understand public policy. There are both effective and ineffective responses to social problems. Human welfare requires interpreting complex social phenomena and affecting social change. To be fooled by an illusion is to be guided by a bad map.

Neoclassical models of political economy distinguish between markets and governments. Markets are presumed efficient when producing and allocating resources, but in some institutional environments, where property rights are poorly defined and information asymmetric, said to fail. Governments are presumed necessary and sufficient to solve market failures. Society suffers when either problem is misdiagnosed and/or either solution incorrectly prescribed. Bernard Harcourt thinks markets have been overrated. Histories of penology and economic thought help correct this.

The market versus government dichotomy dates to the classical school, when economists thought in terms of natural law. Markets were called natural because the price system is self-adjusting and socially coordinative. Neither shortages nor surpluses persist because prices change on the margin. Self-interest guides social welfare “as if by an invisible hand.” While economists favor markets because they produce and distribute tangible wealth, Harcourt is concerned that they under account social costs. In particular, natural law has supposedly borne complex consequences upon American criminal justice.

Markets were heavily regulated during the time of the classical school. Detailed codes of conduct governed all manner of commercial trade. Harcourt observes that Adam Smith and other classicals used the term ?policing? to refer to both commercial and criminal regulations. Harcourt prefers Foucault’s focus upon discipline over economists’ hard dichotomy. Historically, both markets and governments regulated behavior. Both were backed by physical punishments. The market was as disciplinarian as the state.

Harcourt is concerned, and rightly so, with features of American criminal justice. It appears racially biased, excessively severe and uniquely modern. He argues that these are the theoretical consequences of applied natural law. His historical narrative suggests that as the commercial realm was deregulated, disciplinary resources were directed into the penal sphere. Markets were presumed to be self-regulating, which drove a conceptual schism between lawful market behaviors and unnatural criminal actions. Theorists underrecognize the costs of social change invoked by deregulation because they presume the market natural. Today’s penal excesses are the presumed result of a growing network of anonymous contracts. Harcourt’s message: the notion that markets are free from coercion is an illusion, both yesterday and today. Privatization and deregulation are insufficient policy solutions to mass incarceration.

Harcourt’s comments are a welcome update to neoclassical orthodoxy, which has failed to give an explanation or policy reaction to mass incarceration. If one looks — as Foucault would suggest –? at different enforcement techniques (physical punishment versus torts and fines) used within the different legal spheres (criminal versus civil); or if one looks at the historical specialization of those techniques across those legal spheres, one notices the world is a very different place than it used to be.

Today the market versus government distinction parallels the civil and criminal law. Contract enforcements are maintained by the civil law. Criminal laws are enforced by incarceration. These separate legal spheres were not always distinct, nor were their enforcement resources specialized. Originally there was no criminal law. Physical punishments, such as arrest and jailing, facilitated market exchanges and resolved civil disputes; afterwards a separate criminal law developed. Then physical punishments became more reserved to enforce against crime.

Harcourt argues the doctrine of natural law ushered this process, and led to problematic criminal justice outcomes. Alternatively, Foucault’s historical perspective compliments an Austrian and Public Choice framework of political economy. Neither markets nor governments should be presumed to resolve each other’s failures. The efficient-market hypothesis and traditional public goods theory both risk misguidance by illusion. Enforcement technology is an important focus in so far as it affects the production and distribution of knowledge and incentives.

Austrian political economy emphasizes the distribution of economic knowledge throughout society. Governments differ from markets in how they produce and distribute economic knowledge — who, what, how, when and where to make and distribute goods. Public Choice political economy emphasizes the incentives that affect rational choice. Bureaucracies produce systematically different incentives than do for-profit markets.

An Austro-Public Choice political economy insists upon the behavioral assumptions applied to governments and markets being symmetrical. Neither market nor government decision-makers are perfectly informed nor perfectly incentivized to accomplish goals. The subsidy and administration of criminal punishments yesterday and today appear not to be an exception.

Harcourt interprets history as a slight against the characterization of commerce as non-coercive. Foucault says markets are disciplinary. Though not emphasized by Harcourt, the inverse also seems true. The history of physical punishments within the market sphere weakens the characterization of governments as particularly necessary for optimal criminal punishment. Presuming criminal punishment a public good may be just as illusionary.

When markets wielded physical punishments they appeared constrained from excess by the self-interests of disputants. Conflicts among traders were self-sorted for profit seekers. Punitive threats made compliance with financial and service court rulings more appealing. Contract violators were inclined to settle and civil plaintiffs sought tangible compensation for loss.

Contemporary criminal justice problems coincide with expanded market economies and decentralized government in the market sphere. An Austro-Public Choice perspective must reference how changes in knowledge and incentives yield such outcomes. On net federal government has grown, as has its role within the criminal justice system in conjunction with mass incarceration’s disconcerting results.

Physical punishment has become relegated to the enforcement of criminal law. Though contrary to Harcourt’s narrative, driven by the segregationist logic of natural law, this can be seen as driven by the self-interests of market and government actors. While market traders sought low cost and quantitatively predictable methods to resolve conflict, government capitalized as the monopoly provider of physical enforcements.

Today’s greater quantities of physical enforcement are not deployed to enforce civil contracts or tort compliance. Drug and immigration violators occupy most new prison space, unlikely prohibited by contract law. Rather than necessary and sufficient, democracy has proven ineffective to correct the racial, generational, gender, and substance-abuse disproportionality of criminal sentencing. Policy makers have little incentive to change such policies and ordinary citizens lack the necessary knowledge to implement institutional reform.

Daniel J. D’Amico is the author of “The Prison in Economics: Private and Public Incarceration in Ancient Greece,” in Public Choice. He is currently engaged in a long-term research project focused upon the political economy of mass incarceration.

Copyright (c) 2011 by EH.Net. All rights reserved. This work may be copied for non-profit educational uses if proper credit is given to the author and the list. For other permission, please contact the EH.Net Administrator ( Published by EH.Net (April 2011). All EH.Net reviews are archived at

Subject(s):Government, Law and Regulation, Public Finance
History of Economic Thought; Methodology
Markets and Institutions
Geographic Area(s):General, International, or Comparative
Time Period(s):General or Comparative

The Cambridge Economic History of the Greco-Roman World

Author(s):Scheidel, Walter
Morris, Ian
Saller, Richard P.
Reviewer(s):Temin, Peter

Published by EH.NET (May 2009)

Walter Scheidel, Ian Morris and Richard P. Saller, editors, The Cambridge Economic History of the Greco-Roman World. Cambridge: Cambridge University Press, 2008. xiv + 942 pp. $225 (hardcover), ISBN: 978-0-521-78053-7.

Reviewed for EH.NET by Peter Temin, Department of Economics, MIT.

This fine book extends the Cambridge Economic History of Europe back to the ancient world. It is written by many distinguished scholars of ancient history, and it should be the standard reference to find an overview of economic conditions and progress in ancient Greece and Rome. The fifty-page bibliography itself is an invaluable source for any economic historian looking into this period. In the words of the first editor, the book demonstrates that ?the demographic and economic developments of the Greco-Roman period were part of a wider upward trajectory of undulating growth and contraction that extended into the medieval and early modern periods of European history? (p. 86).

At close to one thousand pages, only the most interested of economic historians will read through this book. Part I of the book, however, gives a 150 page introduction to the subject that can be read profitably by all economic historians. The essays cover ecology (by Sallares), demography (Scheidel), households and gender (Saller), law and economic institutions (Frier and Kehoe), and technology (Schneider). They reveal that Douglass North has replaced Moses Finley as the agenda setter for ancient historians. The essays therefore frequently cite the New Institutional Economics (NIE) and are far more accessible to modern economic historians than previous efforts to summarize ancient economic history.

If the interested reader of this review wants more information about the Early Roman Empire, the period of peak ancient prosperity, I recommend the essays on consumption by Jongman, on the state by LoCascio, and on Egypt by Rathbone. Jongman marshals the scarce evidence that Roman prosperity extended down to ordinary people in an essay more typical of a monograph than a Cambridge economic history. LoCascio summarizes what we know about economic aspects of the early imperial state, from maintaining the currency to financing the army. Rathbone presents Roman Egypt as a fully monetized economy based on private property and extensive credit. Rathbone?s conclusion (p, 719) summarizes the themes of the volume as a whole: ?The main stimulus to economic development in Roman Egypt came from the Roman creation of a peaceful and open Mediterranean market, and the boom in demand caused by empire-wide urbanization.? He echoes Jongman?s conclusion that mass demand, ?not just elite profligacy,? drove the wheat trade and economic expansion.

Morley, discussing distribution in the early Roman Empire, reproduces (p. 577) an ancient quote about products flowing into the city of Rome: ?… merchandise of gold, and silver, and precious stone, and pearls, and fine linen, and purple, and silk, and scarlet … and wine and oil, and fine flour, and wheat, and cattle, and sheep; and merchandise of horses and chariots and slaves; and souls of men.? This echoes Keynes? famous quote (John Maynard Keynes, The Economic Consequences of the Peace (London: Macmillan, 1919), 11) about London before the Great War, although the ancient source talked of a small elite, while Keynes described a growing middle class: ?The inhabitant of London could order by telephone, sipping his morning tea in bed, the various products of the whole earth, in such quantities as he might see fit.? Morley (p, 582) refers to ?fierce competition among merchants,? confirming the prevailing view in these essays of market activity in the early Roman Empire.

Part II of the book traces the themes of the volume in the Iron Age. It is like squeezing blood from a stone; we are limited by the sparse information that comes down to us before the classical period began. Part III treats Classical Greece, and Part VI describes the Early Roman Empire. There is enough information about these topics that the editors could impose a tri-partite strategy on them. There are chapters on production, distribution and consumption. The Roman part contains an added chapter on the government. Each of these chapters summarizes the existing literature and often takes a strong position on the resulting picture.

The remaining parts deal with Hellenistic states, the Roman Republic and regional development in the Roman Empire. The organization here is either chronological or geographical. There is not enough information to generate separate chapters on the triad of production, distribution and consumption, but each chapter tends to follow that organization. A final chapter makes the transition to late antiquity, echoing the editor?s comment quoted above by noting that recent scholarship largely has replaced the fall of the Roman Empire in favor of a transition to the economies described in other volumes of the Cambridge Economic History of Europe. The final essay however focuses on a perceived crisis of the third century, which does not make a full transition to medieval times. Giardina describes the introduction of a new institution, colonatus, in the fourth century containing coloni, who were not slaves, but tied to the land. The ?deterministic vision? that this legal innovation laid the ground for serfdom, however, is rejected.

Peter Temin is the author of ?A Market Economy in the Early Roman Empire,? Journal of Roman Studies (2001); ?Money and Prices in the Early Roman Empire? (with David Kessler), in William V. Harris, editor, The Monetary Systems of the Greeks and Romans (2008); and ?Financial intermediation in 1st-century AD Rome and 18th-century England? (with Dominic Rathbone), in Koen Verboven, editor, Banks, Loans and Financial Archives in the Ancient World (forthcoming).

Subject(s):Economywide Country Studies and Comparative History
Geographic Area(s):Middle East
Time Period(s):Ancient

Trade in Classical Antiquity

Author(s):Morley, Neville
Reviewer(s):Temin, Peter

Published by EH.NET (June 2008)

Neville Morley, Trade in Classical Antiquity. Cambridge: Cambridge University Press, 2007. xiv + 118 pp. $30 (paperback), ISBN: 978-0-521-63416-8.

Reviewed for EH.NET by Peter Temin, Department of Economics, MIT.

This book is one of Cambridge University Press’s series of Key Themes in Ancient History. These brief books are designed to introduce various topics of ancient history to graduate students and interested laypeople alike. They presuppose little professional knowledge of the topic and provide an overview of the state of knowledge. The books have single authors, and they express the opinions of the authors more than a typical text.

Morley is a distinguished ancient historian, and this book fits the general pattern. It provides a summary view of trade in the ancient world, but the average economic historian needs a reader’s guide to extract this information. The problem is that Morley feels obliged to introduce his book with two chapters on methodology that easily will put off the non-ancient historian. In his words, “The aim of this book is not to offer a chronological history of the development of trade and commerce or to draw up lists of the goods that were traded between regions, but to identify the different structures ? physical, social, ideological ? that shaped the distribution of goods and the practices of exchange across the ancient world” (p. 15).

My advice to readers of this review is to skip the first two chapters and start reading at Chapter 3. The rest of the book will repay a careful read. Morley argues in Chapter 3 that the distinction between luxuries and necessities is culturally determined. You cannot decide which is which without knowing the culture of the trading people. Since ancient peoples of whom we know lived above biological subsistence, part of their consumption was devoted to culturally-determined goods, that is, goods that established their place in the local hierarchy. Chapter 4 is devoted to the institutions of trade, revealing the impact that Doug North has had on ancient history. This material is covered also in Kessler and Temin (2007), which apparently was not visible to Morley.

Morley confronts the morality of traders in Chapter 5. He argues that most ancient traders and office holders were law abiding in the modern sense. Just as today most contracts are honored without the intervention of a court, so Morley says ancient people dealt with each other on a trusting basis. Since law enforcement is expensive, this is a very important point, and Morley raises but does not answer the question of where this morality comes from. Perhaps that should be the topic of another book in this series. In the sixth and final chapter, Morley assesses the extent of what he calls “ancient globalization.”

One problem for the modern economic historian is Morley’s practice of hopping back and forth between Classical Greece and Republican Rome. These two venues were separated by time and ? more importantly ? scale. In modern terms, Athens was a small open economy, while Rome was the largest economy in the ancient world. Small and large countries differ even today, and we might infer that there were differences then too. This question does not appear to have occurred to Morley.

Another problem is Morley’s ambivalent attitude toward globalization. On the one hand, he says, “Farmers were never wholly isolated from society or wholly divorced from the market” (p. 45). On the other hand, he argues in Chapter 6 that globalization was severely limited by poor technology in transportation and information transmission. Morley does not appear to have a way to resolve this issue. Fortunately, two recent papers help to resolve this puzzle. Both papers were the outcomes of Harvard senior theses in economics.

Geraghty (2007) argues that the extension of Roman trade across the Mediterranean led Roman farmers to shift out of wheat into wine and truck farming for the neighboring city of Rome. This paper complements and extends Morley’s analysis of Roman farming in his 1996 book. Kessler and Temin (2008) show that Roman trade was so extensive that there was a single monetary system and a single wheat market across the whole Mediterranean Sea. Wheat prices were highest in the center of consumption, the city of Rome, and fell with the distance from Rome. While Morley’s new book is a worthy addition to the Key Themes series, I recommend that readers of this review start with the articles I have mentioned here and continue on to Morley if they want more evidence.


Geraghty, Ryan M., “The Impact of Globalization in the Roman Empire, 200 BC – AD 100,” Journal of Economic History 67 (December 2007): 1036-61.

Kessler, David, and Peter Temin, “The Organization of the Grain Trade in the Early Roman Empire,” Economic History Review 60 (May 2007): 313-32.

Kessler, David, and Peter Temin, “Money and Prices in the Early Roman Empire” in William V. Harris, editor, The Monetary Systems of the Greeks and Romans (Oxford: Oxford University Press, 2008): 137-59.

Morley, Neville, Metropolis and Hinterland: The City of Rome and the Italian Economy, 200 BC – AD 200 (Cambridge: Cambridge University Press, 1996).

Recent articles by Peter Temin include “The Economy of the Early Roman Empire,” Journal of Economic Perspectives (2006); “Interest Rate Restrictions in a Natural Experiment: Loan Allocation and the Change in the Usury Laws in 1714″ (with Joachim Voth), Economic Journal, forthcoming; and “The German Crisis of 1931: Evidence and Tradition,” Cliometrica, forthcoming.

Subject(s):International and Domestic Trade and Relations
Geographic Area(s):Middle East
Time Period(s):Ancient

The Victory of Reason: How Christianity Led to Freedom, Capitalism, and Western Success

Author(s):Stark, Rodney
Reviewer(s):Jones, Eric

Published by EH.NET (March 2006)

Rodney Stark, The Victory of Reason: How Christianity Led to Freedom, Capitalism, and Western Success. New York: Random House, 2005. xvi + 281 pp. $26 (cloth), ISBN: 1-4000-6228-4.

Reviewed for EH.NET by Eric Jones, Melbourne Business School and University of Exeter.

Rodney Stark is a sociologist and historian of religion at Baylor University whose work I have much admired, especially The Rise of Christianity. He writes in a direct, no-nonsense way, perhaps as a result of an earlier career in journalism. His new book is a mono-causal explanation of the Rise of the West, a histoire a these written with passion in order to attribute the whole process to Christian rationality. It aims to dispose of other interpretations in the belief that they do not take religion into account (news to those of us raised on the Protestant Ethic, though Stark denies this is the proper religious explanation) and that some of the factors commonly mentioned are really part of what needs to be explained (surely Europe’s geography cannot fall into this category?)

A strong focus makes a book cohere. The particular line here is a variant of cultural explanation and suffers from the standard problem of the cultural as well as the mono-causal approach — of being too sure from the outset which is the cart and which is the horse. The advantage of assuming that Christian thought is the horse while the economy is the cart permits the historical material to be neatly organized. Its disadvantage is that, though it would not be fair to say Stark pays the alternative no attention at all, this gets short shrift. The possibility that economic change reacted back on religious thought and continually modified it is not fully worked out.

This, then, is a volume attempting to explain a great economic and political phenomenon that is not written by an economic historian, which is for better and for worse. For better: the prose is not intrinsically off-putting to non-specialists. Stark amuses with utterances such as ‘adapting the term [capitalism] for serious analysis is a bit like trying to make a social science concept out of “reactionary pig”‘ (p. 55). Yet a lack of familiarity with recent writing on economic history is for the worse. Sins of omission usually matter less than those of commission but in this case lead to excessive claims that the author is inventing the wheel. An example is the assertion that others have rarely taken Europe’s geography into account. Moreover the religious writings that Stark relies on suffer the usual difficulty of being hard to connect with the grubby details of everyday economic life, and in fact are not systematically connected here.

Much of the text is a fairly familiar account of European history, on which I have no space or need to comment. The narrative runs on to consider the relative performance of North and South America, because the publisher wanted to have it included. This is a pity because after all what one is seeing is just the working out of two hypertrophies of European societies in different settings. The space might have been better used to expand the rather brief sections on Ancient Greece, Islam and China, which are employed, very properly but not in detail, as ‘controls’ on the rise of Christendom.

The analytical core of the book is the argument that Christianity, and among religious and philosophical systems Christianity alone, chose the path of reason, which sufficiently accounts for economic growth and democracy in the West. Everything good, progressive and innovative is Christian and everything else is at best ineffective. At least the book is not politically correct! But what is really shown, amidst the wealth of learning we have come to expect from anyone who tackles such broad themes (and where Stark is certainly no slouch) is something different. It is that Christianity is highly adaptive, not least (in my view, though not in Stark’s) because it is so prone to schism and hence offers space for dissent.

Christianity may well have been much more adaptive than Confucianism or the Greek or Islamic religions, a trait that cannot have harmed Europe’s development. This is not, however, the same as showing that Christian attitudes were, to coin what seems the apposite phrase, fons et origo. People were engaging in capitalistic activity before the church came round to rationalizing it. Stark emphasizes the point. He repeatedly insists that economic change came very early and most definitely within Roman Catholicism. Medieval monks and nuns, he quotes Randall Collins as saying, ‘”had the Protestant ethic without Protestantism.”‘

The author does recognize that the relative primacy of religious thought and economic action is an issue but he condemns economic historians for arguing, post-Weber, that capitalism gave birth to the Protestant ethic rather than vice versa. Yet of his five authorities, four predate 1935 and the other is dated 1961. They were merely showing, he says, that the Reformation arose out of the bourgeois ferment of the sixteenth century. He demonstrates instead that economic activity had already produced a Puritanical backlash around Milan as early as the twelfth century. This was the minority movement of ascetics called the Humiliati who, reacting against their own material success, adopted a Puritan lifestyle within Roman Catholicism. Puritan culture was a response not a cause. This is credible but scarcely consistent with a ‘culture first’ thesis. As Stark says when he turns to Latin America, religion is always embedded in society.

Stark admits only one satisfactory survey of the Protestant upsurge in Latin America. This shows that committed Roman Catholics are scarcely distinguishable from Protestants in economic and political attitudes. But if it demonstrates that one sect creates no more economic advantage than the other, it still does not show that religion as a whole is the prime source of economic advantage: it shows only that the economically purposeful are more attracted to collective religious expression than are less successful people. The Rise of the West continues to resist single-factor explanations.

Eric Jones is Professorial Fellow at Melbourne Business School and Visiting Professor at University of Exeter. He is author of The European Miracle (Cambridge University Press, third edition, 2003) and Cultures Merging: A Historical and Economic Critique of Culture (Princeton University Press, 2006).

Subject(s):Social and Cultural History, including Race, Ethnicity and Gender
Geographic Area(s):North America
Time Period(s):General or Comparative

The History of Foreign Exchange

Author(s):Einzig, Paul
Reviewer(s):Officer, Lawrence H.

Published by EH.NET (January 2006)

Classic Reviews in Economic History

Paul Einzig, The History of Foreign Exchange. London: Macmillan, 1962. xvi + 319 pp. (second edition, 1970, xxi + 362 pp.)

Review Essay by Lawrence H. Officer, Department of Economics, University of Illinois at Chicago.

The History of Foreign Exchange: A Provocative Classic

Paul Einzig (1897-1973) was both a financial journalist and an author of scholarly works. (A brief, excellent biography of Einzig is Tether, 1986.) Einzig was a prolific writer in both the popular press and academic realms. For two decades, he contributed a regular, ?Lombard Street,? column for the Financial News (London). Later, he provided a weekly column in the Commercial and Financial Chronicle (New York). Because of his popular writings, academic economists have a tendency to discount Einzig?s contributions to economics as a discipline. This reviewer feels compelled to refute that tendency.

Using a strict definition of ?book? — excluding pamphlets, revised editions, works with similar titles, translations from English into other languages, volumes written solely in a non-English language, reports to governments or commissions, working papers, works that are in only a handful of libraries, and unpublished manuscripts — this reviewer counted carefully (from the WorldCat database) that Einzig was the author of fifty-seven different books — a phenomenal number. Of this total, one is Einzig?s autobiography and at most a half-dozen could be construed as political treatises (judging by title). This leaves fifty volumes as primarily economic in content. No doubt, some of these volumes were written in haste and some are not particularly technical. On the other side, Einzig?s books contain only his own writings; not one is an edited volume.

It is instructive to count also the number of books produced by the seven other authors of 2006 Classic Reviews series. Allowing for edited as well as authored volumes (but excluding works edited by others, and to which the author of interest merely contributed one or more chapters), the number of books attributed to each of the eight authors is listed below.

Number of Books Attributed to Author


Source: WorldCat. See text.

Certainly, Einzig?s total number of books is phenomenal in comparison to any of the other authors. In fact, incredibly, Einzig?s number of books exceeds even the total number of the other seven authors. True, the table is purely quantitative, not qualitative, in nature. And, true, unlike the other authors Einzig was strictly a writer by profession. Nevertheless, by any standard, Einzig was a prolific book author indeed.

Further, Einzig published articles in professional economics journals, even though he was not an academic economist. The JSTOR database lists nineteen articles authored by Einzig — eighteen in the Economic Journal and one in the Journal of Finance. These numbers are exclusive of book reviews; JSTOR lists twelve by Einzig, of which six are in the Economic Journal and one in the Economic History Review.

The point of the above discussion is that, although Einzig was neither an academic professor nor a government economist, he should be taken seriously as an astute observer of contemporary economic events, as an applied-economic theoretician, and as an economic historian. One of his best books in the first category is International Gold Movements (1929, 1931) — invaluable to historians of the interwar gold standard. His best work in the second category is The Theory of Forward Exchange (1937), still useful to researchers of interest-rate parity. Among other virtues, that book contains an excellent discussion of selection of variables to test the theory, as well as data still used in scholarly studies. In the third category, paramount is The History of Foreign Exchange, the anatomy (including publication history) of which is shown in Table 2.

Anatomy of The History of Foreign Exchange

St. Martin?s Press

St. Martin?s Press


Listing edition in catalogue. Source: WorldCat.

a Reprint, with alterations.

b Japanese translation, by Asao Ono and Shunzo Muraoka.

Einzig states, in the preface to the first edition of the History, that his purpose is to produce ?a single book … that would cover the entire history of Foreign Exchange in all its main aspects from its origins to our days? (p. xi in the second edition — all references in this review are to that edition). He remarks that nobody before had produced such a treatise. It is fair to say that neither has anybody since done so. There have been many books on the entire history of money as such, rather than of foreign exchange, and a variety of books on foreign exchange for particular currencies over a lengthy period of time or for a variety of currencies over a particular era — but no one other than Einzig has produced a history of the foreign-exchange characteristic of currencies for purportedly all currencies (of interest) and for all eras. From probable international bills of exchange in Babylonia (twenty-first century B.C.), to U.S. borrowing in the Eurodollar market (late 1960s), Einzig succeeds admirably in conveying the flavor of foreign exchange.

To cover systematically experience of such breadth, Einzig divides his book into chronologically based sections, as shown in Table 2. Part I deals with the Ancient Period (primarily Greece and Rome, though also earlier civilizations), Part II the Medieval Period, Part III the Early Modern Period (sixteenth to eighteenth centuries), Part IV the Nineteenth Century (to World War I), Part V 1914-1960, and Part VI (added in the second edition) the 1960s. To provide breadth systematically for each of these six eras, Einzig instills discipline on his research and writing by dividing each Part into four chapters: (1) foreign-exchange markets and practices, (2) exchange rates, including crises and trends, (3) foreign-exchange theory, and (4) exchange-rate policy. This schema greatly enhances the value of the volume as a reference work. Part I includes an introductory chapter, on the origins of foreign exchange; and the book includes a general introduction and a general conclusion (the latter largely rewritten in the second edition).

Each chapter in Parts I-V (but not Part VI) contains endnotes, which are purely bibliographical. There is also an excellent bibliographical essay, termed ?a selected bibliography? — and, in the second edition, this bibliography is extended to incorporate the 1960s. Again the book is presented excellently as a reference volume. This characteristic is helped by a good ?index of names,? but the subject index could have been more extensive.

The author?s ambitious and unique goal, the tremendous research effort (aided by the author?s proficiency in several languages), and the systematic presentation of the research results all make The History of Foreign Exchange a classic in economic history. The caliber of the journals that reviewed the History is indicative of that judgment. Of the five top general journals in economics 1960s vintage (American Economic Review, Economic Journal, Journal of Political Economy, Quarterly Journal of Economics, and Review of Economics and Statistics), the three that reviewed books (the first three stated) did in fact review the History. Two of the top three journals in economic history at the time (Journal of Economic History, and Economic History Review) reviewed the book. It is not surprising that the third, Explorations in Entrepreneurial History (the predecessor of Explorations in Economic History), did not review the History, because of the then-narrow orientation of the journal. (As for the Journal of European Economic History, it did not commence publication until 1972.) Among major economics journals that engaged in book reviews, only Kyklos elected not to review the History. On the other side, American Historical Review, perhaps the top general-history journal, did conduct a review.

These reviews, together with several others in outlets not specializing in history, are listed and summarized in Table 3. The caliber of some reviewers is unusually high: the economic historians J. R. T. Hughes, L. S. Pressnell, and Raymond de Roover; and the international-economics specialist Arthur I. Bloomfield. Most reviewers had very positive things to say about the History; but they did not withhold criticism.

Reviews of The History of Foreign Exchange

Note: All reviews are of the first edition, except the 1971 Choice review.

The most negative evaluation is that of L. S. Pressnell, whose positive assessments are few, and even these are negative assessments in disguise. Einzig did not hesitate to respond to reviewers? criticisms that he viewed as unfair or based on incorrect facts. He had written a rejoinder to a review of his Primitive Money (1949), this review appearing in the anthropological journal Man. The editor of the journal published Einzig?s (1949) rejoinder in condensed form, and, incredibly, wrote a reply to Einzig?s rejoinder (rather than having the reviewer reply)!

Einzig responded to Pressnell?s criticisms, in the preface to the second edition of the History, stating, quite correctly, that Pressnell?s review ?amounted to little more than a list of attacks, wasting very little time or space on trying to justify, explain or illustrate his criticisms? (p. viii). Einzig gleefully, and again correctly, castigates Pressnell for associating paper credit with inflation/deflation in Ancient Rome, whereas in fact there was no paper money and inflation took the form of coinage debasement. Einzig then writes:

Long-suffering authors have seldom the opportunity to answer their critics, which is a pity because, by drawing attention to flagrant instances of ill-informed criticisms such as the one denounced above, they might be able to raise the standard of criticism. Being a hard-hitting critic myself it is not for me to object to being hit hard — provided my critic knows what he is talking about.

In fairness to Einzig, he did meet the criticism of some reviewers that ?the chapters dealing with modern developments were ?too sketchy?? (p. vii), by producing a second edition with the addition of Part VI. However, Einzig disagreed with the criticism that ?the chapters dealing with earlier periods were unnecessarily long,? and therefore did not condense these chapters (or otherwise alter them substantively) in the second edition. The present reviewer agrees with this decision; for the existing literature on foreign exchange is heavily oriented to recent periods. Einzig?s work on earlier periods fills a definite void.

Turning to this reviewer?s impressions of the History, consider each Part in order. For the Ancient Period, there is lack of everything: data, writings on theory, definitive information about markets and about rationales for policy. Einzig acknowledges that he has ?to make bricks with very little straw? (p. 7). There is much conjecture on Einzig?s part, albeit his presentation generally makes sense. He shows knowledge of both the classical literature and modern treatises on these times, and does as much as he can with snippets of information.

Einzig?s definition of a true foreign-exchange transaction (involving coins of both domestic and foreign parties) is acceptance by tale rather than by weight. He suggests that this first occurred in the fifth or sixth century B.C. As for the use of bills of exchange in foreign-exchange transactions, Einzig speculates that this could have arisen even earlier. There is discussion of depreciation and debasement of coinage, including the observation that the debasement of Roman coins had the effect of India ceasing to accept them. Einzig emphasizes that foreign trade was inflexible and, in particular, inelastic with respect to the exchange rate. He notes that exchange-rate information for this era is not only scarce but also complicated, due to the existence of trimetallism (three monetary metals: copper, silver, gold) and symmetallism (electrum: gold/silver alloyed coins).

Einzig is careful not to overstate the role of foreign exchange in theory and policy. Debasement of coinage in Rome was generally done to finance budget deficits rather than to correct balance-of-payments deficits. The same is true for Greek devaluations and debasements. The purchasing-power-parity (PPP) theory of exchange rates cannot be discerned in Ancient writing. The reason given again is the inelasticity of foreign trade, with tremendous differences in prices of goods across countries (due to both high transport costs and high profit margins). On the other side, exchange control was the policy of Sparta and of Egypt (under Ptolemaic and Roman rule), with Plato the intellectual champion of such a policy. Exchange control existed in the Roman Empire in connection with the accumulation of exchange as tribute to be transferred to Rome.

Considering the Medieval Period, Einzig observes that ?manual exchange? (exchange of domestic for foreign coin) began to give way to bills of exchange in an evolutionary process. He makes much of the fact that international bills (because they involved exchange risk) were a means of circumventing the anti-usury laws of the Church. He is impressed with medieval foreign-exchange theorizing, which arose in the context of whether exchange rates concealed interest, and discerns a variety of theories (or harbingers of theories) of exchange-rate determination in the Scholastic writings: demand and supply, exchange risk, cost-of-production, money-supply, balance-of-payments, and PPP. Exchange control over bills was less strict and less pervasive than over coins, because the Church required freedom of transferring funds emanating from Papal collections.

For the Early Modern Period (sixteenth-eighteenth centuries), Einzig provides a good discussion of the gradual transition from medieval to modern practices. He notes that Thomas Gresham (of ?Gresham?s Law? fame) made the first known computation of a specie point (the English gold-import point from Flanders) in 1558. Einzig outlines the history of the British, French, Dutch, German, Spanish, Swedish and Russian exchange rates (each relative to other currencies) during this period. The Early Modern Period witnessed the first true exchange-rate theorizing, meaning ?a deliberate analysis of cause and effects of Foreign Exchange movements and the role of Foreign Exchange in the economic system? (p. 138). Salamancan (Spanish) writers of the sixteenth and seventeenth centuries are credited with the money-supply theory and the purchasing-power theory of the exchange rate; but (as Einzig states) it is unclear whether they meant the entire money supply (coinage) in circulation or the supply merely in the foreign-exchange market for the purchase of foreign bills. The Salamancans did not develop the balance-of-payments (or trade-balance) theory of the exchange rate; this was done by English writers, such as Gresham and Mun.

The Malynes-Misselden-Mun controversy is judged to be ?one of the most important controversies in the history of Foreign Exchange theory? (p. 142); but only one page is devoted to this controversy. Malynes, who here had a speculation theory of the exchange rate, lost the debate; Mun?s view that the exchange rate and specie flows depended on the trade balance became preeminent. Yet elsewhere Malynes theorized the price specie-flow mechanism, but Einzig does not acknowledge this accomplishment. Nor does Einzig mention that ?Malynes has all the ingredients for the PPP theory and comes ever so close to exhibiting the theory for both fixed and floating rates? (Officer, 1982, p. 258). Schumpeter (1954, p. 737) also judges that ?Purchasing-Power Parity theory, or some rudimentary form of it … can … certainly be attributed to Malynes.?

Regarding policy in the Early Modern Period, Einzig mentions various alternatives to exchange control:

1. A uniform tax on exchange transactions — temporarily imposed in England in 1586, after exchange control was abandoned. Not noted by Einzig, the idea was resurrected (but not implemented) during the period of ?dollar surplus? in the 1960s.

2. Official pegging of exchange rates. This was done by fixing the price of foreign coins in domestic coins. The pegging was adjustable, that is, the price was changed periodically.

3. Official intervention in the foreign-exchange market, for example, by requiring exporters to sell their foreign exchange to the government at unfavorable rates. This is actually a form of exchange control. Creation of an exchange equalization account, that would have enabled intervention similar to the Bretton Woods system and the managed float that followed it, was advocated by Gresham and others, but did not occur.

4. Altering mint parities. This was often done to induce a net inflow of specie, rather than to affect exchange rates as such.

5. Changing or suspending seigniorage on coinage. This affected specie points and therefore the exchange-rate spread. Once seigniorage was abolished (as in England in 1666), this policy lost its mechanism.

Regarding the Nineteenth Century, Einzig writes that ?the advanced paper currency inflation in France during the Revolution and the fluctuation of the inconvertible pound during the period of suspension may be regarded as the first meaningful experience in Foreign Exchange movements under inconvertible paper currency systems? (p. 171). This statement is incorrect on two counts:

First, nothing is said about the experience of China, where paper was invented and paper money first issued. At times, paper money circulated together with coined money, and at times the paper money was inconvertible. It is known that Chinese coins circulated in foreign countries in the fifteenth century and probably earlier (see, for example, Bernholz, 2003, p. 56). There must have been implications for exchange rates, if only for ?manual exchange? (domestic for foreign coin). True, little if any information on such foreign exchange exists. Yet that deficiency did not stop Einzig from making conjectures about foreign exchange in the Ancient Period!

Second, several pages are devoted to the Bank Restriction Period (the inconvertible pound in 1797-1821, also called ?the bullionist period?), in both empirical (exchange value of the pound) and theoretical (bullionist-controversy) aspects. Indeed, Einzig writes: ?the so-called ?bullionist? controversy … was probably the most important Foreign Exchange controversy for all time? (p., 202). However, he makes no reference at all to an earlier ?bullionist period,? the Swedish inconvertible paper currency and floating exchange rate of 1745-1776. China was the first country to introduce paper money; but Sweden was the first to issue banknotes. In fairness to Einzig, the Swedish experience was not generally known until ?rediscovered? by Eagly (1963, 1968, 1971). Nevertheless, Einzig could have incorporated this important experience in the second edition of the History, but he chose not to do so.

This reviewer also takes exception to Einzig?s view that ?technical devices? to discourage the outflow or encourage the inflow of gold were undertaken predominantly by countries (such as France and Germany) other than the three (Britain, the United States, Holland) that ?with really narrow gold points were … on a really effective gold standard? (p. 173). Regarding the latter three countries, Einzig states only that the Bank of England adopted such devices during the Boer War, and mentions nothing about U.S. use of these policies. In fact, both the Bank of England and U.S. Treasury engaged in extensive ?direct manipulation? of gold points for much of the classical gold-standard period (see Clark 1984; Officer 1986, 1996, chapter 9).

For the period 1914-1960, Einzig reports the great change in foreign-exchange policy: from minimal government interference with free foreign-exchange markets over the century since the end of the Napoleonic Wars, to official intervention the rule rather than the exception. Exchange control, which had lapsed into disuse, was resurrected. Correspondingly, PPP theory had been almost entirely forgotten during the century of relative stability of the major exchange rates. Now the theory was restated, with great vigor and dogmatism, by Gustav Cassel. Supported by major economists, such as John Maynard Keynes (who later withdrew his support) and A. C. Pigou, the theory would never again be ignored.

Discussion of the 1960s, reluctantly included by Einzig as an additional part in the second edition of the History, is not particularly impressive, in part because a single decade does not warrant the space given to it in a study stretching over several millennia. Einzig compares the only occasional and isolated foreign-exchange crises of the 1815-1914 century to the multitude of crises decade after decade since. The prevalence of foreign-exchange crises continues to this day!

In his concluding chapter, Einzig predicts that an abandonment of the fixed-rate system of Bretton Woods (which was often discussed in the literature, but had not yet happened at the time of his writing) would only be temporary. ?It would not take very long for most Governments to realise the grave disadvantages of the currency chaos resulting from their ill-advised decisions to de-stabilise their exchanges. Sooner or later they would return to the system of stability, as their forerunners did each time they were forced to abandon it in the past? (p. 348). Einzig expresses that view from the perspective of four thousand years of exchange rates! The creation of the euro — fixed exchange rates par excellence, which replaced multiple national currencies with one supranational currency — provides partial validation of Einzig’s prediction. Time will tell whether the present float, or rather managed float, between the various currencies of the developed world (euro, dollar, yen, pound, etc.) will also be succeeded by a renewed fixity of exchange rates. That event would make Einzig’s prediction impressive indeed. Einzig was well-known as a proponent of fixed as distinct from floating exchange rates; but his prediction that any lapse from fixed rates would only be temporary is a positive statement, not a normative one.

Einzig was well-known as a proponent of fixed as distinct from floating exchange rates; but his prediction that any lapse from fixed rates would only be temporary is a positive statement, not a normative one.

Einzig observes, with disdain, the ?obscurantist presentation? of modern foreign-exchange theory and the widening gap of this theory from foreign-exchange policy. He writes: ?No contribution to Foreign Exchange Theory expressed in terms of mathematical economics has added anything of substance to the subject that could not have been added to it without the use of mathematics? (p. 322). This statement is not quite the same as the more-common view that ?any legitimate theory that is expressed mathematically can also be exposited verbally.? Einzig is consistent, for there is not one mathematical symbol in the History!

If there is any general weakness of the History, it is the absence of tables and charts of exchange rates, mint parities, and specie points. Einzig is aware of this limitation; he writes:

There is everything to be said for compiling continuous series of exchange rates for all the important exchanges in the principal Foreign Exchange markets, at least from the 16th century, but preferably also for the late Medieval Period. The material is there, in public records and business archives. But to make it accessible is a task that only some well-endowed research department could undertake. (p. xii)

It is fair to say that economic historians have performed much work of this nature since the publication of the History.

The History of Foreign Exchange has great limitations as well as great strengths. It is an impressive, but also a controversial and provocative, work. Undoubtedly, though, it deserves to be called a classic.


Bernholz, Peter. Monetary Regimes and Inflation: History, Economic, and Political Relationships. Cheltenham: Edward Elgar, 2003.

Clark, Truman A. ?Violations of the Gold Points, 1890-1908.? Journal of Political Economy 92 (October 1984): 791-823.

Eagly, Robert V. ?Money, Employment and Prices: A Swedish View, 1761.? Quarterly Journal of Economics 77 (November 1963): 626-36.

Eagly, Robert V. ?The Swedish and English Bullionist Controversies.? In Robert V. Eagly, ed., Events, Ideology and Economic Theory. Detroit: Wayne State University Press, 1968: 13-31.

Eagly, Robert V., editor, The Swedish Bullionist Controversy. Philadelphia: American Philosophical Society, 1971.

Einzig, Paul. International Gold Movements. London: Macmillan, first edition, 1929, second edition, 1931.

Einzig, Paul. Primitive Money in Its Ethnological, Historical and Economic Aspects. London: Eyre and Spottiswoode, 1949.

Einzig, Paul. ?Primitive Money: A Rejoinder? (with Editor?s Reply). Man 49 (November 1949): 132.

Einzig, Paul. The Theory of Forward Exchange. London: Macmillan, 1937.

Officer, Lawrence H. ?The Purchasing-Power-Parity Theory of Gerrard de Malynes.? History of Political Economy 14 (Summer 1982): 256-59.

Officer, Lawrence H. ?The Efficiency of the Dollar-Sterling Gold Standard, 1890-1908.? Journal of Political Economy 94 (October 1986): 1038-73.

Officer, Lawrence H. Between the Dollar-Sterling Gold Points: Exchange Rates, Parity, and Market Behavior. Cambridge: Cambridge University Press, 1996.

Schumpeter, Joseph A. A History of Economic Analysis. New York: Oxford University Press, 1954.

Tether, C. Gordon. ?Einzig, Paul.? In Lord Blake and C. S. Nicholls, eds., The Dictionary of National Biography. Oxford: Oxford University Press, 1986.

Lawrence H. Officer is Professor of Economics at the University of Illinois at Chicago and Editor, Special Projects, EH.Net. He is a specialist in international economics and monetary history. His recent journal publications include ?The U.S. Specie Standard, 1792-1932: Some Monetarist Arithmetic,? Explorations in Economic History (2002) and ?The Quantity Theory in New England, 1703-1749: New Data to Analyze an Old

Question,? Explorations in Economic History (2005). Officer is a recurrent contributor to the ?How Much Is That?? section of EH.Net.

Copyright (c) 2006 by EH.Net. All rights reserved. This work may be copied for non-profit educational uses if proper credit is given to the author and the list. For other permission, please contact the EH.Net Administrator (; Telephone: 513-529-2229). Published by EH.Net (January 2006). All EH.Net reviews are archived at

Subject(s):Financial Markets, Financial Institutions, and Monetary History
Geographic Area(s):General, International, or Comparative
Time Period(s):General or Comparative

Economies beyond Agriculture in the Classical World

Author(s):Mattingly, David J.
Salmon, John
Reviewer(s):Engen, Darel

Published by EH.NET (February 2003)


David J. Mattingly and John Salmon, editors, Economies beyond Agriculture in the Classical World. London and New York: Routledge, 2001. xii + 324 pp. $90 (cloth), ISBN: 0-415-21253-7.

Reviewed for EH.NET by Darel Engen, Department of History, California State University, San Marcos.

The economy of the ancient Greco-Roman world is an enigma. Despite over a century of debate, it has eluded all attempts at general characterization. The collection of articles edited by David Mattingly (University of Leicester) and John Salmon (University of Nottingham) entitled, Economies beyond Agriculture in the Classical World, may not resolve the debate, but it will help to propel it into new and fertile territory that at the very least will enhance our understanding of the ancient economy.

In the last quarter century a view most persuasively set out by the influential ancient historian, Moses Finley, has come to be the focal point around which the debate about the nature of the ancient economy has swirled.(1) Finley’s basic thesis is that the ancient economy was not only quantitatively small in scale, with low levels of capital investment, technological development, long-distance trade in non-luxury goods, and industrial specialization, but also qualitatively “primitive,” with social and political factors dominating “economic rationality” in motivating and organizing economic relationships and cities existing primarily as places of consumption, exploiting production carried out largely through agriculture in the countryside. Many recent studies, however, have argued at least for modifications of Finley’s view and Economies contains an excellent collection of several solid examples of this new scholarship.(2)

In particular, the collected articles in Economies examine the significance of the non-agrarian sector in the economies of ancient Greece and Rome and are the result of the Nottingham-Leicester Ancient History Seminar series from 1995 to 1997, entitled, “The Productive Past: Economies beyond Agriculture in the Ancient World.” The articles are grouped into sections concerning a variety of productive activity outside of agriculture and argue both against and in support of the Finley model and from both theoretical and empirical perspectives.

After a concise introduction by the editors that sets out the context of the collection within current scholarship on the ancient economy, the section entitled, “Modelling the ancient economy,” presents articles that discuss the key issue of economic growth. Paul Millet’s article critiques Keith Hopkins’ twenty-year-old arguments for growth in the Roman economy by offering alternative explanations to growth from the evidence cited by Hopkins.(3) Millet’s conclusion is that significant economic growth is likely to have occurred only during the early Roman Empire and was the product of exceptional circumstances, thus making it an aberration from the usual rule of little to no economic growth in the ancient world. On the other hand, the articles of Greg Woolf and David Mattingly et al. both attempt to test theoretical models against archaeological evidence from two specific places in the Roman Empire, Gaul and the city of Leptiminus in North Africa respectively, and conclude that the evidence of productive growth requires at least a modification of the Finley model of the “consumer city.” However, consistent with Millet’s article is the possibility that such a modification is specific to the era of the Roman Empire and is the result of political conditions created by the Empire, rather than free market economics. Jean-Jacques Aubert contributes an article on the management of non-agrarian production, but can conclude only that the indirect nature of the evidence (e.g. we know that management must have existed from the evidence of non-agrarian productive activity) is inadequate to study the economic ramifications of such management.

The section entitled, “Extraction,” concerns such non-agrarian pursuits as mining and quarrying. T.E. Rihll’s examination of the mining and processing of silver in Athens shows that the scale, complexity, and specialization of such activity must be said to constitute an industry. It should be noted, however, that the scale of Athenian mining operations was unique in the Greek world. Although the two articles by Valerie Maxfield and Colin Adams show that Roman stone quarrying in eastern Egypt was conducted on a tremendous scale, it would not and could not have been conducted by anything other than the Roman Imperial government, which alone had the power to conduct such an immense undertaking and did so primarily for political reasons (e.g. to build huge temples and arenas) that flew in the face of any economic rationalism.

Although much of the economic activity surrounding building in ancient Greece also defied economic rationalism, the section entitled, “Construction,” contains articles by John Salmon and J.K. Davies that take a closer look at the significance of building in the Greek economy. Davies’ article examines the epigraphic records containing the accounts for building temples at the sanctuary of Delphi. The records provide evidence for the development of administration, manufacturing skills, infrastructure, contracting, and regional interaction in economic partnerships and transportation of goods. It is especially refreshing that Davies examines the epigraphic evidence, which, in addition to archaeological evidence, may provide a path for us to explore beyond the limits of the old debate about the ancient economy, so bound as it was by theory and literary evidence. Salmon argues for a new method to detect economic growth through a comparison of labor costs for building projects in the Greek world over time. His approach requires some assumptions based on estimates to develop multipliers extrapolated from better to less well documented building projects. Such a method has its weaknesses (see the divergent figures obtained for estimates of the Athenian grain trade), but in the absence of more explicit evidence and given that the statistical sample of Greek public buildings is fairly complete, his method might at least give us a reasonable indication of the economic impact of the Greek building industry.(4) An article by Janet Delaine also attempts to quantify labor requirements for buildings, but this time in the Roman world. She wisely cautions that her methods require assumptions and estimates that really cannot provide us with figures for absolute costs, but argues that such an attempt at quantification can allow for useful comparisons of relative costs. Her study shows that building with concrete was much less labor intensive than doing so with dressed stone and that political factors often took precedent over cost effectiveness in the choice of materials for the monumental buildings of Rome.

The final section on “Textile production” includes articles by Andrew Wilson and J.F. Drinkwater that come to different conclusions for the significance of this activity in the Roman economy. The former argues on the basis of archaeological evidence that textile production in North Africa took place largely outside of its traditional locus in the private household and instead in numerous small workshops that existed together with well-organized cloth markets. Wilson thus suggests that the Finley model of the “consumer city” overgeneralizes what may be a more complex array of “city types,” some being net-consumers, others net-producers, others market centers, and so on. Drinkwater, however, downplays the existence of locally prominent wool manufacturers in northwestern Gaul by comparing them to their much more economically significant counterparts in the medieval era. His conclusion is that what Finley referred to as a “common psychological framework” of primitive economic thinking kept the people and government of Rome from exploiting the economic potential of wool manufacture, minimizing its growth and impact on the economy.

Overall, Economies is a useful collection of scholarship on the subject. It will appeal mostly to specialists in the history of the ancient Greek and Roman economies, but will also be valuable to any economic historians who have some knowledge of the historical context of the Greco-Roman world and the debate about its economy. The collection fits snugly into the growing body of scholarship that has attempted to move beyond the restricting confines of the old debate. The combination of theory and solid evidence, particularly archaeological, but also some epigraphic, is most welcome and several of the contributors are to be commended for their innovative approaches to the subject. It is also refreshing that the articles draw a clear distinction between the economies of the Greek and Roman worlds, something Finley failed to do when he lumped together an area stretching from Spain to Mesopotamia over the course of a millennium into one “ancient economy.” At the same time, however, this leads to one major shortcoming of Economies: those who wish to gain more knowledge of the Greek economy will have to look elsewhere, for the collection is heavily weighted toward analyses of the Roman economy, with only three of the twelve articles being devoted to Greece.

But despite being mostly about the Roman economy, the articles in Economies do reveal some important themes, the most significant of which in the opinion of this reviewer is that we must move beyond the parameters of debate about the nature of the ancient economy as it has been shaped over the last century. With the number of exceptions to the models of both Finley and his detractors growing with each new detailed study of specific aspects of the economy, it is clear that the economy was far too complex and dynamic to be characterized by such broad models. There is now ample evidence that can be drawn on to support either side in the debate. The choice of which side to support depends largely on which sector of the economy one wishes to examine, at what time period, and in what area. Agriculture, manufacturing, trade, and extraction were each unique in scale, organization, and potential for growth and cannot be easily lumped together into one simple picture of the economy overall. Moreover, the economies of Greece and Rome were as different as they were similar. The articles in Economies reveal time and again that early Imperial Rome created the kind of stability over a large area that was conducive to economic growth, but that this was unique in the ancient world. In Greece very different conditions prevailed and even within Greece, it is impossible to generalize about such divergent city-states as Athens, Sparta, Thebes, and Corinth.

Finley was right about one thing: the ancient economy was in many ways more different from ours than it was similar. But the increasing number of exceptions to his model, such as those put forth by several studies in Economies, show that Finley’s model, though useful in its general conception, grossly oversimplifies the complexity and dynamism of the economies of ancient Greece and Rome. Thus, with each new study of specific sectors of the Greek and Roman economies we will eventually obtain a much more nuanced and accurate picture. David Mattingly, John Salmon, and the authors of the articles in Economies beyond Agriculture in the Classical World have made a useful and important contribution to this effort.


1. Finley 1985.

2. Scheidel and Von Reden 2002 collect several key articles written over the last twenty years on the subject. See also Engen 2001, Parkins and Smith 1998, Morris 1994, Harris 1993, Cohen 1992, and Burke 1992.

3. Hopkins 1978 and 1980.

4. See Garnsey 1985 and 1988 and Whitby 1998 for two very different estimates for Athens’ grain production.

Works Cited:

Burke, Edmund M. 1992. “The Economy of Athens in the Classical Era: Some Adjustments to the Primitivist Model.” Transactions of the American Philological Association 122: 199-226.

Cohen, Edward E. 1992. Athenian Economy and Society: A Banking Perspective. Princeton: Princeton University Press.

Engen, Darel T. 2001. “Trade, Traders, and the Economy of Athens in the Fourth Century B.C.E.” In Prehistory and History: Ethnicity, Class, and Political Economy, ed. by David W. Tandy, 179-202. Montreal: Black Rose.

Finley, Moses I. 1985. The Ancient Economy. Second edition. Berkeley and Los Angeles: University of California. (Now available in an “Updated Edition” with a foreword by Ian Morris. Berkeley and Los Angeles 1999).

Garnsey, Peter. 1985. “Grain for Athens.” In Crux: Essays in Greek History Presented to G.E.M. de Ste. Croix on His 75th Birthday, ed. by Paul Cartledge and F.D. Harvey, 62-75. Exeter: Imprint Academic.

Garnsey, Peter. 1988. Famine and Food Supply in the Greco-Roman World. Cambridge: Cambridge University Press.

Harris, W.V., ed. 1993. The Inscribed Economy. Ann Arbor: Journal of Roman Archaeology, Supplementary Series 6.

Hopkins, Keith. 1978. “Economic Growth and Towns in Classical Antiquity.” In Towns in Societies: Essays in Economic History and Historical Sociology, ed. by P. Abrams and E.A. Wrigley, 35-77. Cambridge: Cambridge University Press.

Hopkins, Keith. 1980. “Taxes and Trade in the Roman Empire, 200 BC-AD 400.” Journal of Roman Studies 70: 101-125.

Morris, Ian. 1994. “The Ancient Economy Twenty Years after The Ancient Economy. Classical Philology 89: 351-366.

Parkins, Helen and Smith, Christopher. 1998. Trade, Traders, and the Ancient City. London and New York: Routledge.

Scheidel, Walter and Von Reden, Sitta. 2002. The Ancient Economy: Recent Approaches . London and New York: Routledge.

Whitby, Michael. 1998. “The Grain Trade of Athens in the Fourth Century.” In Trade, Traders, and the Ancient City, ed. by Helen Parkins and Christopher Smith, 102-128. London and New York: Routledge.

Darel Engen is an Assistant Professor at California State University, San Marcos. He has published articles on the ancient Greek economy, including “Trade, Traders, and the Economy of Athens in the Fourth Century B.C.E.,” in D.W. Tandy, ed., Prehistory and History: Ethnicity, Class, and Political Economy (Montreal 2001) 179-202 and “Ancient Greenbacks: Athenian Owls, the Law of Nikophon, and the Greek Economy” in J.R. Fears and E. Zarrow, eds., Coinage, Politics, and Ideology in the Ancient World (forthcoming). He is currently working on a book, tentatively entitled, Honor and Profit: Athenian Trade Policy and the Economy and Society of Greece, 415-307 B.C.E.

Subject(s):Markets and Institutions
Geographic Area(s):Europe
Time Period(s):Ancient

Banking and Business in the Roman World

Author(s):Andreau, Jean
Reviewer(s):Tandy, David

Published by EH.NET (January 2001)


Jean Andreau, Banking and Business in the Roman World. Cambridge and New York: Cambridge University Press, 1999. xix + 176 pp. $59.95 (cloth), ISBN 0-521-38031-6; $22.95 (paperback) 0-521-38932-1.

Reviewed for EH.NET by David Tandy, Department of Classics, University of Tennessee.

This book is not an economic history in the strictest sense. The nature of the evidence for Roman financial practices, both in its paucity and its frequent ambiguity, prevents analysis of the type economic historians of more recent times can make. What Jean Andreau, Directeur d’Etudes at the Ecole des Hautes Etudes en Sciences Sociales and fellow of Churchill College, Cambridge, does very effectively is analyze, not without chronological awareness, the institutions within which Romans of several classes worked their financial arrangements over the course of about 600 years, from the arrival in Rome of the first professional bankers in the 310s BC until the end of the Principate in 284 AD. This book is the first study of banking and financial activities in general that covers this entire period. Part of the reason for the book’s success is its emphasis on institutions.

A couple of other points at the start: This volume was invited to be part of the Key Themes in Ancient History series edited by Paul Cartledge and Peter Garnsey; this means, among other things, that the book is designed “for students and teachers of Classics and Ancient History, but also for those engaged in related disciplines.” The book is thus accessible by design, and that accessibility is enhanced by the work of the translator Janet Lloyd, than whom there is no more respected translator of French texts on antiquity into English.

Because it is one of the book’s most admirable virtues, I will say this up front: Andreau is preternaturally generous in the presentation of interpretations with which he disagrees. Those who find his approach to evidence frustrating will be very few, for all viewpoints are generously represented.

In the first sentence of chapter 1, Andreau defines banking and business: “All operations involving money on its own, independent of trade, which consists of transactions involving merchandise” (p. 1). The book succeeds in this promise. From the start he is eager to make clear the important distinction between elite money persons and professionals, a distinction to which he will return repeatedly. He also briefly discusses his own relationship to the modernist-primitivist debate, revealing a pro-Weber, pro-Finley inclination, but emphasizing that he prefers a qualitative-quantitative distinction. Thus, his approach will be “centred on the evolution of financial operations, professions, and enterprises” (p. 7).

Chapter 2 takes up the financial activities of elites, who routinely loaned money at interest. These men were called feneratores, and are easily distinguishable from professional bankers, the argentarii. The elites were not subject to regulation; the professionals were. Feneratores loaned out their own money and others’, the risks being carried by the suppliers of the cash; argentarii, by contrast, loaned out their own money and others’, but carried the risk themselves, because they were essentially deposit banks. The chapter outlines elite financial activity and concludes that their activity encouraged monetization, that it encouraged commercialization and circulation of patrimonies, and that it provided credit for those in need of money.

Chapter 3 is a survey of banks and bankers. These professionals (argentarii) offered many services, including a great deal of auction credit work, but as the Roman jurists saw things, “what characterized a bank was the twofold service that it provided: receiving deposits and advancing credit” (p. 39).

Chapter 4 covers other types of financiers, among them the “entrepreneurs,” usurers, and those involved in the risky business of maritime loans. He concludes with a very interesting discussion of mobility from one category to another. Recalling the mutual exclusivity of the professionals and the elites, Andreau notes that frequently professionals would devolve their businesses to their freedmen and pass the wealth on to a son, who could then, through that wealth, join the ranks of the elites, but would not be a banker. In fact, Andreau can conclude that “an heir to an argentarius would, as a matter of course, not himself practice his father’s profession” (p. 61).

Chapter 5 reviews the evidence for financial dependents in the Roman world. Chapter 6 offers a glimpse of the Murecine tablets from Pompeii, which indicate the full range of the financial activities of the Sulpicii family of the city of Puteoli, recording all sorts of transactions dating from 26 to 61 AD. Chapter 7 discusses the once mysterious tesserae nummulariae, small bone or ivory rods that had names and abbreviated messages written on them. For centuries historians believed the tesserae had been worn by gladiators on a chain or cord around their necks. Refining the arguments of Rudolf Herzog, Andreau argues that the tesserae were markers affixed to sacks of coins that attested that the coins had been properly assayed and by whom. Many different types of moneyhandlers were capable of such assaying, and Andreau goes through all the possibilities.

For those readers who prefer to view economic activities and economic history mostly in terms of quantifiable and modern numbers, chapter 8, “The Interest Rate,” finally brings some meat to Andreau’s survey. Legislation was frequently enacted to limit interest-bearing loans. For example, the lex Cornelia Pompeia of 88 BC limited interest to either 12 percent (one ounce per pound times 12 months) or 8-1/3 percent (1/12 per annum). But in 51 BC, the Senate established the limit at 12 percent, indicating that the former legislation was no longer working. This limit, even later, in the Empire, was rarely exceeded, but when it happened, the recorded rates are not 15 to 18 percent, but 24, 38, and even 60 percent per annum.

Chapter 10, on the role of the State in finances, offers two useful if difficult observations: (i) Romans were aware of the system of financial relations that functioned autonomously, and also knew that if they broke down they needed to be fixed; (ii) Roman authorities in no period reveal even a vague awareness of the monetary needs of their economy, of their society.

Chapter 11 discusses how although the Roman State did not loan money, Emperors did. Hence there was no concept of public debt. Chapter 12 discusses the difficulties involved in dealing with quantities and quantitative developments, and offers a set of observations about changes in types of players and institutions. For example, documents indicate a total disappearance of bankers after the first century AD.

In the final chapter 12 Andreau concludes the volume with a most enlightening discussion of the modernist-primitivist debate that thus frames the book. There follows a succinct four-page bibliographical essay, a substantial bibliography, and an index of brief but sufficient compass.

With Banking and Business in the Roman World Andreau, who is working on a comprehensive history of banking from antiquity through the medieval period, has given us an excellent, wieldy introduction to the financial activities of the Roman Republic and the first three hundred years of the Empire. He emphasizes the structures within which the activities take place because of the nature of our evidence. Substantivists will especially appreciate Andreau’s approach, but I repeat that Andreau’s exceptional openness and generosity toward divergent points of view leaves something, or rather everything, for everyone. Economic historians of all periods and of all dispositions will reap benefit from this survey of the practices of the ancient Romans. There is no current competition in any language for this instant standard, and given the price of the paperback, every serious economic or social historian should buy it.

David Tandy’s most recent book is Warriors into Traders: The Power of the Market in Early Greece (University of California Press, 1997).

Subject(s):Financial Markets, Financial Institutions, and Monetary History
Geographic Area(s):Europe
Time Period(s):Ancient

The History of Consumer Credit: Doctrines and Practices

Author(s):Gelpi, Rosa-Maria
Julien-Labruyère, François Ju
Reviewer(s):Calder, Lendol G.

Published by EH.NET (August 2000)

Rosa-Maria Gelpi and Fran?ois Julien-Labruy?re, The History of Consumer

Credit: Doctrines and Practices. Translated by Mn Liam Gavin. New York: St.

Martin’s Press, 2000. xx + 190 pp. $59.95 (hardbound), ISBN 0-312-22415-X.

Reviewed for EH.NET by Lendol G. Calder, Department of History, Augustana

College, Rock Island, IL.

Is credit good for us? Dante didn’t think so. In his Inferno, we find usurers

consigned to the seventh circle of hell, doomed to “roam round and round” among

their fellow inmates, the blasphemers, murderers, sodomites, and others who

practiced violence against God and nature. Dante doesn’t say so, but he leaves

us free to speculate that moneylenders continue to practice their trade in

hell, lending money at interest to the damned. If so, it would make Visa’s

claim to be “everywhere you want to be” seem a little too modest! But enough of

this credit bashing, plead the authors of this little volume on the history of

consumer credit. According to Rosa-Maria Gelpi and Fran?ois Julien-Labruy?re,

credit is too often made to be a scapegoat during times of social and economic

crises, so that even today when we look more kindly on credit than Dante,

consumer credit continues to be blamed for everything from business recessions

to personal bankruptcies to society’s moral degeneracy. It’s enormously unfair,

argue Gelpi and Julien-Labruy?re, who invite us to accompany them on a “stroll

through history” that will reveal just how good credit really is for us. As

“the cornerstone” of economic growth (p. 84), as “one of the greatest promoters

of social mobility” (p. 171), and as the “single greatest factor of social

integration” (p. 95), they conclude that consumer credit is one of the most

reliable indicators of advanced civilization, if not an important cause of it.

But if all this is true, why has consumer credit had to battle so hard and so

long against a shameful stigma of wastefulness and wrongdoing to achieve a

moral and economic legitimacy? Gelpi and Julien-Labruy?re present their history

as a search for the origins of the cloud of bad feeling that surround this most

crucial institution of modern consumer societies. The crux of their argument is

that present day attitudes about credit-attitudes rarely stated as propositions

but that operate instead as a “mute yet active unconscious”-are outmoded and

debilitating “hangovers” from an earlier era in the history of western

societies, an era when social practices were inspired by theology and ethics

rather than by the economy of free markets, as they increasingly are today. In

other words, consumer credit struggles against a massive case of “cultural

lag.” The volume’s subtitle-“Doctrines and Practices”-neatly summarizes the

tale told in this book. Through the sixteenth century and beyond, legions of

shortsighted theologians and philosophers tried to strangle credit in the noose

of religious dogma, with the end result that credit was “more or less forbidden

but more or less practiced because more or less necessary” (p. 95). But since

the Reformation and Enlightenment, and primarily through the shining example of

the Americans, religious doctrine has been replaced by economic practice as our

fundamental social gyroscope, so that lending and borrowing are increasingly

viewed more properly as economic concepts, free of unnecessary moral baggage.

Today, in societies where economic “practice” is given primacy over moral and

religious “doctrines,” a bright future is being built on the basis of economic

growth, responsible household budgeting and greater “self-actualization”

through credit-financed consumption.

If all this sounds like a textbook case of the “Whig interpretation of

history,” well, it is, though of a refined and smartly written sort. Both

authors are high-ranking officers for Cetelem, the French personal finance

company that over the last five decades has worked to modernize European

household credit on an American model (Gelpi is also Professor of Economics at

the Free University of Lille). Given their day jobs, the authors’ spirited

defense of consumer credit is hardly surprising. Of the criticism of credit

there is no end, which means that Gelpi and Julien-Labruy?re are following a

well-worn path blazed in the United States in the 1930s by the economist Morris

Neifeld, who worked as a credit analyst for Beneficial. Neifeld, whose

Personal Finance Comes of Age (1939) resembles the work under review

here, labored tirelessly though his writings to elevate the status of his

profession. But in terms of eloquence and wit, The History of Consumer

Credit sets a new standard for defenses of consumer credit.

Still, glorifying the present at the expense of the past has its costs, and

they are manifest here. The biggest problem is that the authors never really

succeed in helping us to understand why so many otherwise smart people-from

Aristotle to Ezra Pound-opposed on principle the lending of money at interest,

or why their ideas resonated so long in the public mind. Consider the treatment

given to John Calvin, himself an innovator when it came to new thinking about

credit: “[Calvin’s] work consisted in giving a new faith to the classes who,

through their social skills, were destined to dominate the future. This

supposes a relatively advanced economic organization, and Calvin built his

moral system on such an organization” (p. 50). A page later, we are told, “For

Calvin, the only good deed was worldly success” (p. 51). Reductiveness on this

scale is not easy; one has to work hard at it. When every person and system of

belief is viewed through the narrow lens of what is good for the development of

credit, when economic progress and “social integration” into the wonders of

consumerism are the only ends that count, it becomes impossible to understand

what all the fuss over usury was really about.

If the history is whiggish, it is also mostly recycled, at least through the

first eight chapters. Gelpi and Julien-Labruy?re begin their story in

Mesopotamia, where the Code of Hammurabi (1792-1750 BC) established the first

known law defining and regulating usury. Moving briskly on, they describe the

business of credit in ancient Greece, the Roman Empire, Gothic Catalonia (where

we see the first documented case of a European pawnbroker, 1000 AD), medieval

Italy (which established the first public pawnshops, known as monts-de-pi?t?s,

in the fifteenth century), northern Europe at the time of the Reformation, and

the United States, whose experience is “central” to the history of consumer

credit because, beginning in the nineteenth century, it “offered to build the

future” on the installment plan. Based on standard secondary sources, this part

of the story involves a familiar cast of villains and heroes. Among those who

come off looking particularly stupid or close-minded is Aristotle, who,

declaring money to be sterile, decried interest as being a revolt against

nature (silly old Aristotle, who “has only value judgments to offer when it

comes to economics” (p. 8). Other villains in this tale include the Hebrews,

the first people to condemn interest-bearing loans; the Church Fathers,

especially Saint Basil, who began more than 1000 years of a total ban on

interest by the Church; Charlemagne, who declared the first secular bans on

usury; Dante, of course; the Inquisition at the time of the Councils of Lyon

(1274) and Vienne (1312); and Catholic Europe after the Reformation, which

doomed southern Europe to centuries of economic decadence, thereby offering “a

lesson in how to fail to modernize an economy, while retaining one’s guilt

feelings!” (p. 66)

Opposed to this deadwood are the heroes of modern credit, men who were smart

enough to see through Aristotle and brave enough to relativize the Scriptural

prohibitions against interest, recognizing that a new type of economy was

coming into being where wealth was created, not just plundered or commandeered.

These include Scholastic theologians such as Thomas Aquinas, the Reformers

Luther and Calvin, and greatest of all, Enlightenment champions of reason and

liberty such as Jeremy Bentham and Anne Robert Jacques Turgot. Lengthy

quotations from the latter two figures are included in the text, as Gelpi and

Julien-Labruy?re recommend that all who are interested in contemporary debates

over consumer credit can do no better than to read Bentham’s Defense of

Usury (1787) and Turgot’s Memoir (1770), which will persuade

clear-thinking persons that the strict regulation of credit markets hurt the

poor most of all while making criminals of everyone else.

Beyond the assertive and lively prose (which is marred in this English edition

by a poor job of copy editing that allows too many misspellings and missing

words), the strength of this book lies in the final two chapters. It is only

recently that consumer credit has begun to receive from historians the

attention it deserves. Part of the reason for this is that credit is a commerce

deeply cloaked in confidentiality (as Gelpi and Julien-Labruy?re point out,

until recently the guiding principle of public relations for lenders was “to

live happily you must live in secret”). What Gelpi and Julien-Labruy?re bring

to the history of consumer credit is valuable insiders’ knowledge about the

credit business in Europe over the last hundred years. Much of this information

is interesting and new. For example, I was surprised to learn just how closely

the European development of consumer credit has mirrored the history of credit

in the United States, though with significant time lags between countries.

Great Britain passed its first laws affecting consumer credit in the late

nineteenth century, while Italy only did so in 1992!

This book seems to have been written primarily to influence the opinions of

European policymakers in Brussels, who the authors would like to see taking a

hands off approach to credit markets so governments can treat the causes of

economic woes (e.g., high taxes, low investment) rather than mere symptoms

(e.g., overindebtedness). This is a defensible wish, but there are risks

involved when looking for a usable past, risks the authors seem unaware of.

When packaged with facile claims such as this-“A healthy morality always

coincides with commercial wisdom” (p. 55)-or with shaky historical claims such

as this-“The history of consumer credit in the United States is almost entirely

free of historic influences” (p. 119)-some readers will find even the credible

claims in this book rather suspect.

Lendol Calder, author of Financing the American Dream: A Cultural History

of Consumer Credit (Princeton University Press, 1999) is assistant

professor of history at Augustana College and a Carnegie Scholar with the

Carnegie Academy for the Scholarship of Teaching and Learning.

Subject(s):Household, Family and Consumer History
Geographic Area(s):General, International, or Comparative
Time Period(s):General or Comparative