Ποιειν Και Πραττειν - create and do

Mediterranean Economic Thought and Atlantic Economics by. Louis Baeck

The etymological roots of the terms 'economy' and 'economist' are Greek. In ancient Greek, however, words like oikonomia, oikonomike and oikonomos were only used in the cultivated language of treatises, like for example, in Xenophon's Oikonomikos, where they stood for keeping of the household or the management of an estate. In everyday language on economic matters and financial dealings, the term 'chrematismos' was commonly used. The ancient Greeks had simply no word that stands for 'economy' and for 'economics' in the sense that we, modern people, use it today. The discourse on the general functioning of the economy, in a formalized way and more so of its intrinsic laws, is a development of modern times.

In 1621 a French manufacturer and pamphleteer by the name of Antoine de Montchretien, published a book on the problems of the material wealth of the nation, with as title 'Traite d'Economie Politique'. The label struck the imagination of his fellow mercantilists who used it freely. They generalized the label 'political economy' in the European languages. In later times, when the formal and scientific analysis of the economy came into ascendance, the term political economy was replaced by the more neutral term 'economics'. Nowadays, the term political economy is only used by authors who wish to underline the social and political dimension of economics.

From halfway through the nineteenth century until the Second World War, the history of economic thought had formed an important part of the curriculum for young economists. It played a significant role in the teaching of economics to student audiences as well as to the interested public at large. Keynes, Schumpeter and Hayek, three of the most influential economists of the 1930s, wrote extensively on topics of doctrinal history. Up to the 1930s, the history of thought represented an important part of the research program in the faculties of economics. In the immediate post-war period, however, these programs suffered a decline.

When asked for the date of birth of their science most economists hesitate. Some would mention the mercantilists and others the natural law philosophers of the seventeenth century. The mercantilists secularized economics by emancipating it from religious norms and moral standards. They paved the way for the methodological individualism of microeconomics.

Other contemporary economists would indicate as their forefathers the Enlightenment philosophers of the eighteenth century in Scotland and on the continent, with Adam Smith as their godfather. They legitimated the idea of the minimal state, the material self-interest of the individual, as well as rising importance of the commercial society and its market laws. Many who take micro-economics as the hard core of their science, would give preference to the neo-classical triad consisting of Walras-Menger-Marshall. Under the impulse of this triad the economic calculus was highly formalized and mathematized, while the techniques based on methodological individualism and atomised welfare preferences were integrated in a system of general equilibrium.

When asked for the origin of their science a great deal of economists would not care at all. In their view the predecessors of today's economic theory and more so its prehistory ought to be considered as quaint, by-passed, and thus irrelevant for our contemporary understanding the economic system and for its practical problem-solving. To them the study of the archaeology of economics is a luxury without intellectual benefit, since ancient authors represent the underdeveloped stage of the discipline. One should not waste precious time and energy with the reading of past theories. Only the mainstream 'orthodoxy' and its novelties are worthwhile. The intellectually narrow view of the mainstream economists today is that the history of economic thought only spells wrong opinions of dead men. This view is clearly an off-spring of our western prejudice that no other time but ours can possibly teach us anything fundamental about man and human society. This questionable stance may be well suited to buttress the superiority of the contemporary state of the art. It is not an ideal starting point for an impartial test of its scientific and practical relevance.

The pre-modern tradition of economic thought perceived the economy as embedded in a complex web of social and political institutions, regulated by religious and ethical norms. In this societal and cultural context, the articulation and development of an holistic approach was, from the conceptual point of view, more relevant than the specialized single-focus approach of modern times. At the end of the nineteenth century, economics emerged as an autonomous, specialized and formal framework of thought. Its paradigmatic focus and axiomatic principles were completely emancipated from non-economic constraints. A great number of today's economists would argue that economics became the queen of the social sciences just by completely disentangling its scientific core from the afore-mentioned social and moral determinants.

A large consensus between social scientists has it that 'modernity' initiated a qualitative break between the cultural roots of our past and our present. This cultural divide caused also a paradigmatic divide in the history of economic thought. Consequently, a problem arises for the epochal labels to be used by historians. For references to the period prior to modernity, the use of prefixes like 'pre-classical' and 'before Adam Smith' are very common. Intentionally or not intentionally, such labels convey the idea that modernity posits the universal norm for all times. This may be so in the Western part of the world for the relatively short period of time following the period of Enlightenment. In order to identify the more remote past, such derivative prefixes are evidently not the most adequate markers. A good label ought to cast light on the proper identity of the subject under analysis. Since we choose to study the ancient doctrines in their own right and from their proper perspective, the label 'Mediterranean' seemed to be a well suited metaphor.

Indeed, the genesis and the later flourishing of our Western world views and conceptual roots are to be found in the successive civilisations of the Mediterranean. They initiated the tradition of conceiving society as an orderly cosmos, regulated by myth, religion, ethics and politics. In the worldview of our Mediterranean past, the material sphere and the things that we call economic, played only a subordinate role. As a consequence, a systematic articulation of thought on the material organisation of life was slow to develop. In the Mesopotamian, Egyptian, Persian, Minoan, Mycenean, Phoenician and Syrian civilisations hardly any theory evolved which merits the name of economic thought. This theoretical void stands in stark contrast with their capacity to organise the complex estates of kingly courts and temples, with the practice of banking and of long distance trade, and with the considerable amount of empirical evidence on all these activities that survived in the literature.

In these complex societies, however, some sort of political ordering and moral legitimating was required to keep the excesses of the powerful and the wealthy in bounds against the weak and the poor. In the oldest civilisations of the Mediterranean, the registered economic comments - on the terms of trade, on monetary media of exchange, on interest and usury, on debt slavery, on banking and accounting - are entwined with religious and moral messages and with the codices of law. Their scriptures aimed at legitimating stability and order in the cosmos and in society. The basic theme was how to stave off chaos by a stable and just social order. Their compact world view did not permit the aspectual differentiation which we, moderns, take for granted.

The gradual differentiation of the ancient world view into separate domains like religion, philosophy, ethics and political science is due to the intellectual revolution of Greek thinkers. The Sophist movement gave the first impetus to which the Socratic philosophers reacted with a restorative synthesis. The Sophists were the first intellectuals in history to confer moral and social responsibility to the material organisation of society, to the economy and to the people engaged in it. Socrates, on the contrary absorbed the ascetic bent of the Pythagorean movement and set the pace for a philosophical counter-reaction. Plato, in particular, was the leading prophet of the counter-reformation against Sophism and against its economic ideology in particular. His disciple Aristotle re-opened the spectrum of intellectual interest and rediscovered the economy. His pioneering try in the conceptualisation of processes like the social and economic development of the city-state, of trade and barter, and of money-making, was of the utmost quality to be found in antiquity. After Aristotle's quantum jump, a long period of intellectual disinterest in economics followed.

The philosophers and intellectuals of the Roman Empire and also the early Church Fathers, with the exception of the Stoics, viewed the economy as a morally questionable domain of activity, which was left over to people of lower status. As a consequence, economic thought was kept in a low key. With the unfolding of the second millennium of our era, the three religions of the book - Judaism, Christianity and Islam - took over the moral lead in the intellectual revival of interest in economic matters. In varying degrees all three absorbed elements of oriental wisdom, Roman law and Greek philosophy. In the beginning of our second millennium this combination produced a scholastic tradition which came to bloom, first in the Islamic culture, in this followed by the Latin West.

Islam was the last religion of Antiquity. When the Arabs moved eastward they came into contact with the ancient culture of Persia. In this cultural contact an economic literature of an exceptional quality emerged. The major preoccupation of the later scholastic scriptures, however, was the moral and religious demarcation between licit and illicit economic practices. As a sideline of this intellectual endeavour, some of their great masters discovered how the economy functions in reality. Gradually they got a better insight into its intrinsic laws. On the basis of rediscovery and actualization of Roman law in the university Bologna and the rise of humanism, a secular literature on the regulation of the economy evolved as a rival of the scholastic scriptures.

With the advent of modern times, the search for new ideas spilled over the bounds set by tradition. The ascendancy of the Spanish empire and its conquest of the New World created new theoretical and practical problems which required fresh and adequate theological and moral legitimations. The intensification of international trade, the dislocation of the regional economies under the supranational pressure of the empire and the development of world-wide financial markets, were intellectual challenges for the rejuvenated scholastic school of Salamanca. This second blooming of Latin scholasticism in the intellectual centre of the empire met the challenge in a brilliant display of intellectual and moral capacity.

The malfunctioning of the Habsburg empire as a supranational economic space, its military aggressiveness against France and the Turk, its religious wars against the Dutch Federation and the German princes, overtaxed and exhausted its resources. The invention of the printing press amplified the capacity of treatise writing and pamphleteering. The Spanish and Portuguese literature of the seventeenth century arbitristas offered for the first time in history a concentrated intellectual effort to formulate theories and guidelines for the economic development of nations. After this last big push, the Mediterranean tradition went into decline and the Atlantic world view of modernity took over the intellectual lead. The lands of Islam, from their side, had already passed their cultural and intellectual peak in the fifteenth century.

With the subsequent decline of the Habsburg empire at the end of its 'Golden Age', the historical phasing out and the dwarfing of the Mediterranean zone set in. After four millennia of hegemony in the material as well as in the intellectual field, the Mediterranean civilisations had lost their spell and loosened their grip on history. The new nations of the north, especially England and Holland, entered the scene. After an intense struggle with the Spanish empire they took over the initiative in colonisation and in world trade. The industrial revolution that followed, with in its wake the international expansion of capitalism, was also the work of these new Atlantic nations. In the intellectual field the Enlightenment represented a radical push towards the secularisation of thought and its differentiation in separate disciplines. The flourishing of an autonomous branch of scientific economics was one of its results.

The use of the label 'Mediterranean' to different cultures over a span of time stretching from the Sumerian beginnings to the School of Salamanca, may appear to be a questionable imagery. The modelling of thought, and thus also of economic thought, are essentially cultural constructs. As constructs of culture they are modelled in different ways. From the perspective of economic thought, however, these different Mediterranean cultures bear a family resemblance in a number of qualitative characteristics. Their kinship structure is clearly recognisable in the subordination of things economic to higher norms, in the insistence on the checks and balances to contain the accumulation drive, in the holistic and organist conception of society, in the moral legitimating of the hierarchical societal order, and in the preference for stability over change.

The second point needing some clarification is the use of economic thought in our title. In his monumental study, Schumpeter quoted two criteria to distinguish 'economic thought' from 'economic science'. The latter presupposes a conceptual superstructure and applies special methods and tools in the process of investigation, while the former belongs to the pre-scientific stages. In another locus of his work, however, Schumpeter stated that: 'the history of economic thought starts from the records of the national theocracies of antiquity' to end up proclaiming: 'but the history of economic analysis begins only with the Greeks' (Schumpeter 1979: 52).

The distinction drawn by J.Spengler is more specific: 'economic science may be viewed as a sub-category of economic thought and (is) restricted to models or analogues of market-oriented, price-system-dominated, capitalistic economies peopled by free rather than hierarchical men' (Spengler 1980: 16). Spengler correctly broadens the criteria with his reference to the hierarchical in contrast with the egalitarian structure of society.

This emphasis on hierarchy has been ably expounded on the basis of ample empirical evidence in the work of L. Dumont. After years of intense research on the Indian caste system, the French anthropologist published a study of our Western society. In sharp contrast with its predecessors, modern society proclaims to strive at equality of opportunity for all individuals (Dumont 1966, 1977). According to Dumont, the hierarchical society compensated its structural inequality by world views in which the concepts of order and stability as well as the holistic fibres of society, predominate all other considerations. In the view of Dumont, the genesis of an economic ideology and the conceptualisation of its scientific superstructure were only possible after the rise of individualism followed by the social and political emancipation of the 'homo aequalis'. The interpersonal and the intertemporal utility calculus embodied by the homo economicus, can only come to bloom with the paradigm of modernity, since this celebrates the equality of opportunity. In the footsteps of Spengler and Dumont, we conceive the Mediterranean tradition as a tradition of economic thought, but not of economic science. The rational choice model and the methodological individualism of modern economic science could develop only in the cultural constructs of the Atlantic tradition.

II. The Roots of the Tradition

To the question 'how far have we to reach back to find our roots', the German philosopher K.Jaspars introduced the concept of an 'axial age'. According to the 'axial-age' hypothesis, the period of about five centuries BC witnessed the emergence of a major spiritual, moral and intellectual breakthrough within the orbit of the higher civilisations. In less than two centuries a number of spiritual movements transformed the cultural project in five different zones of higher civilisation. The first movement was animated by the Iranian seer Zarathustra. The second was Hebrew prophetism with Deutero-Isaiah as spiritual prince. In classical Greece a group philosophers broke open unknown intellectual paths. In India, the message of Buddha offered the inspiration for the Upanishad tradition. In China Confucianism and Taoism initiated a novel cultural flourishing.

Karl Jaspars used the term axial age because he conceived its workings as the hinge on which human history has turned. According to his view these new departures in spiritual, moral and intellectual life were cultural benchmarks in the sense that they had an everlasting influence on human history. A great deal of the many cultural and spiritual renaissances the world has known, are in fact novel re-interpretations and revivals of this axial tradition. (1)

The 'axial age' hypothesis challenged the historians of antiquity who, in due time, held a conference on the theme. (2) A more recent edition of a bundle of papers written by specialists in cultural dynamics explored the theme in greater detail (Eisenstadt 1985). As a result of the additional research on the religious, cultural and social dynamics in the first millennium BC, newly labelled as the age of transcendence, some specific aspects of the intellectual history of mankind were clarified. As a consequence, we are better informed on the dynamics of spiritual reforms and social changes of the axial age. The Eisenstadt papers drew the attention to the following points:

  1. The rise of the ethical religions and their gradual rationalisation.
  2. The origin and genesis of a new sense of historical consciousness.
  3. The intellectual exodus out of cosmological compactness and the gradual appearance of specific value spheres: religious, moral, political, philosophic.
  4. The influence of independent and critical elites.


This enriched version of the 'axial age' thesis is more attentive to the cross-fertilisations between the Mediterranean cultures. In order to exemplify this cultural intercourse, the Oriental influences on the development of biblical theology offers a good case. The difference in spiritual and moral values of the post-exilic Deutero-Isaiah in comparison with those of the pre-exilic Isaiah are largely attributed to Babylonian and Persian influences.

The Jaspars thesis has also been challenged by recent research which casted light on the material artefacts of the pre-axial civilisations. If we take into account the achievements in various domains such as the agricultural techniques, the bureaucratic organisations and the religious and moral ideas from Mesopotamia and Egypt on the subsequent Mediterranean cultures, our cultural horizon widens considerably. The civilisations of Mesopotamia created palace and temple complexes of an unparalleled grandeur and pioneered with law codices. The Egyptian wisdom literature produced the first recorded expression of humanism in history. However, in the domain of economic thought they were only precursors, not founders of a tradition.

III. What is in the term 'Tradition'

The moment has come to clarify the last term figuring in our title, namely the concept of tradition. The history of ideas informs us that changes in world views are generally the work of spiritual and intellectual elites who are able to launch a new tradition of thought or to achieve a re-interpretation of an old one. The communication of new ideas by elites is a necessary but not sufficient condition for the genesis of a tradition. As a rule the institutionalisation of the communication process is an important step. A tradition may be called an historical embodiment of institutionalised communication which in the course of time grew into a classical reference (Lambert 1957, Grunebaum 1969, Assman 1987). In the intellectual history of mankind, the concept of 'tradition' represents a process of an organised and enduring influence. As a rule, the historical florescence of an intellectual tradition requires the following stages: thematization, textualization, institutionalisation and canonisation or canonicity.

1. The first step is the process of thematization. This is a condensation of elite communication aroused by changes in the historical perspective, by a rupture in collective experience, by technical improvements or scientific discoveries, by social disruption, by economic crisis, by environmental and ecological degradation. New thematizations are generally elicited and become manifest in the wake of a crisis mood generated by shocks in historical consciousness.

Thematization can also be the result of an erosion or a breakdown of the censorship by the ruling power and by the cultural establishment so that new horizons open up. New and intensive thematization produces a quantum jump in elite communication by which the formerly unspoken, latent or implicit cultural and intellectual novelties break out in the open. According to the sociology of cultural dynamics, the issue-building of thematization, is highly correlated with the Zeitgeist or with new trends in historical awareness.

An example of thematization in pre-axial times is the new interpretation of maat, the Egyptian principle of cosmic order and justice. This new interpretation was expounded by the scribal schools after the social upheaval that caused the transition from the Old Kingdom to the Intermediate Period. In ancient Greece, the crisis of the city-state in the fourth century BC, provoked an intense wave of treatise writing by pamphleteers and philosophers. One of the major themes of the Islamic as well as Catholic Scholastics, was their ambition to harmonise faith with rational thought and to refine the concepts of theology in the wake of a revival of Aristotle's philosophy. This adaptation of a theological tradition to rational premises formed also the first step in the development of scholastic economic thought.

The pamphleteering of the Spanish arbitristas represented another interesting case of new thematization in an age of crisis. As a consequence of dynastic felicity and military conquest, the Habsburg empire had coalesced in the course of one generation into a common market composed of very unevenly developed regional economies. In their numerous treatises, the arbitristas dramatised in chorus the plight of Castile, its imperial centre. Indeed, this political centre of the empire, was economically underdeveloped. The central theme of the treatises challenged the idea of imperial coherence and emphasised the need of regional and national development.

In periods of intense problem awareness new themes flourish which render the old time explanations obsolete.

2. Cultural and intellectual system-building, however, cannot thrive on oral communication alone. The codification process is the second step of tradition building. In order to meet the test of historical impact, the results of thematization need to be put down in written form. The codification may also be called the process of textualization. Lost texts rarely lead to the founding of a tradition. The most important publications of the Sophists were lost. Their ideas are only known to us by an indirect way; the most important being the writings of Isocrates, Xenophon and Plato. Some of the tradition-founding texts have been assembled by disciples after the death of the master. A great deal of Aristotle's important texts were published after his death on the basis of lecture notes. The messages of Jesus have been written down in a collection of gospels, by authors who lived one or two generations after his death. When several manuscripts are extant with divergent versions, the interpretation of the various texts of a tradition invites to an almost unending stream of exegesis.

3. Fundamental themes put in manuscript, even those written in beautiful prose like Plato's dialogues, rarely develop into a tradition without the supplementary process of institutionalisation. The degree of social and intellectual dependence of the theorising elites from the establishment in power was a crucial factor in tradition building. In Pharanonic Egypt the scribal schools were staffed by elites submissive to the central power of the state. The Pharaoh was the only incarnation of the cosmic and social order. A change in the world view or in the intellectual tradition could only arrive concomitant with a social revolution, or after an invasion by a foreign power. As a consequence the Egyptian scribes eschewed the formulation of personal views and of polemics in general.

Hebrew culture and religion, on the contrary, permitted the development of a spiritual and moral opposition against the earthly powers. It postulated the submission not only of ordinary people but also of the king and his officialdom to the will Yahweh. The absolute freedom of Yahweh represented an ultimate check against the possible abuse of the earthly powers as well as against human short- comings of the people. The thematization of ethical radicalism by the Hebrew prophets who profiled themselves as spokesmen of Yahweh, had not been possible without a margin of elite independence from the earthly power structure. However, this freedom of the prophets was not without limits, since Amos was told that Israel and its court could not bear his radical social criticism.

Tradition-building was facilitated and became more solid with the creation of institutions functioning as transmission belts. The School of Isocrates, Plato's Academy and Aristotle's Lyceum were examples of institutionalised propagation of texts and treatises. In the lands of Islam the madrashas were important law schools and scholastic centres by which the different schools of thought propagated their texts. In a similar vein, the schools of the monastic orders and the medieval universities, played a crucial role in the institutionalisation of themes.

Normally, the institutionalisation of themes requires a great deal of energy spent on painful exegesis and on actualisation of by-passed concepts. The reworking of a tradition, codified in commentaries of classic texts, took form already in antiquity. In some cases this exegetic and interpretative effort developed into an autonomous tradition in its own right, overshadowing or distorting the themes of the original. When this exegetic performance generates a 'back-to-the-roots' movement, a revival may set in to regain the primeval purity of the tradition. The history of economic thought is replete with such revivals.

4. The process of canonisation is the fourth and last phase that completes the building of a tradition. Canonicity is a selective process aiming at institutional theme-bundling and text-stabilisation. Canonisation is not a monopoly of church authorities. Ideological movements like Marxism and others have practised the process of canonicity as well. In the scholastic tradition of the Latin West, some of Aristotle's works, with the inclusion of his scriptures on economic issues, were regarded as one of the most respected theoretical references. The pre-axial tradition of Mesopotamia and Egypt have had less direct impact on later traditions because their elites were less successful in the canonisation process. Being submissive to and in compliance with the authorities in power, they took the existing order for granted and failed to develop an independent conceptual framework. However, the breakthrough of the Greek system builders would not have been possible without the achievements of the pre-axial predecessors of Mesopotamia and Egypt. Their world views were the first cultural constructs for a just social and economic order.

IV. The Revival of the Mediterranean Tradition

In several European and American research centres a renewal of interest in the study of past economic doctrines is noticeable. On the European continent new associations have recently been set up. They organise symposia and conferences with as theme the history of economics. In some centres of the Islamic culture, the renewed intellectual interest in its own classical tradition forms part of the fundamentalist revival. Also new is the fact that researchers study the past doctrines, even the most ancient ones, not only out of historical interest. Much rather they are valued as sources of inspiration in the attempts to conceptualise and solve actual problems for which the conventional wisdom of mainstream economics offers no ready answer. An example of this doctrinal retraditonalization is the revival of interest in the relationship between economics and ethics. This is not the place to canvass in minute detail the renewal of interest in past doctrines in general, but a brief discourse on the revival of the Mediterranean tradition in economic thought seems appropriate. The rapid changes we go through constitute an influential factor in this. In geopolitical terms, the post-war period has been identified as a period of ideological bipolarism in which the superpowers achieved a high degree of societal order and political discipline within their sphere of influence. Since the end of the 1940s the development process of nations was conceived as an effort to replicate everywhere the models of the hegemonic leader of the West (the United States) or of the Soviet Union. An intense wave of westernization and of sovietization set in, with the nations of the Third World as a peripheral zone, where at times, conflicts of interest between the superpowers were fought. Since the 1980s the superpowers gradually lost their grip on events. With the relative erosion of the hegemonic discipline, the dynamics of history produced an unexpected wave of ethnocultural reassertion and turbulence. The Islamic culture was the first to rediscover its classic tradition of thought, but others followed in this reawakening.

In the West, the Mediterranean heritage of economic thought never died out completely. Notwithstanding the triumph of the Atlantic tradition it generated notable revivals. The first assault against the deductive abstractions of Ricardian economics appeared in the first quarter of the nineteenth century. Its leading author was Simonde de Sismondi, a prolific writer and militant for different causes. Sismondi rejected the abstract Ricardian model building, which he dismissed as a science of hedonistic calculus, but he praised Adam Smith for his empirical approach. Sismondi was an economist of Mediterranean flavour, a fighter for social reform and an inspirator of the German Historical School.

In reaction to the abstract, micro-economic models of the neo-classical revolution, the German Historical School held a brief for a more comprehensive approach. At the end of the nineteenth century, Gustav Schmoller as mentor of the younger branch of the school, influenced a whole generation of German social scientists with his historico-ethical approach. His rejection of the abstract analysis resulted in a synthetic approach with great attention to minute empirical detail. The proclaimed ambition was the understanding of the historically anchored and socially determined matrix in which the economic agents behave. Schmoller's method was truly interdisciplinary in the sense that it was attentive to all the relevant factors of economic action, and not only to its economic logic. The value of its research findings resided not so much in the slender analysis it offered, but rather in the empirical information it contained.

The most brilliant representative of the school, Max Weber, developed the Verstehende Methode on a more theoretical basis. He concentrated his research on the different cultural constructs of economic thought, on the moral motivations that move the economic agents and on the value systems of the past. By his systematic entwining of the value judgements (Wertbeziehung) of the actors with the historical-cultural roots, Weber was a pioneer of economic sociology. In his masterful comparison of the traditional value systems with those of 'modernity', the reader senses that Weber was stirred by deep emotional feelings of nostalgia.

With a pang of disappointment Weber illustrated the ambivalent nature of modernity. Indeed, in Western civilisation, a pattern of culture had evolved whose technical, scientific and economic superiority was disputed by very few people. And yet the time was long past that modern man believed in rationality and in its scientific off-springs as the superior path, leading to the discovery of human fulfilment, of the true art, of real happiness and of the true God. Science had become a narrow and specialist activity. As such it had become the motor of a development, whose sense and whose overall rationality that same science was unable to explain.

Max Weber indicated the sore spot when he wrote with a sharp pen of the disenchantment (Entzauberung) emerging in the wake of modernisation. True, modernisation engendered material prosperity, but it had also banned the poetry and mystery from life. It had eroded the traditional value orientations and was, as yet, unsuccessful to create a relevant tradition to face the uncertainties of the future. According to Weber, our scientific world and thus the economic profession, created too many 'Fachmenschen ohne Geist', that is specialists without imagination, and 'Genussmenschen ohne Herz' or hedonists without feeling. This sounds as a moral critique of modernity and of its misdevelopment, in true Mediterranean tradition. (3)

Of special interest is the debate between representatives of the Historical School and historians of antiquity like E. Meyer and J. Beloch, since it has been taken up by the economic anthropologists of our time. The historian K. Buecher and his disciples of the Historical School, maintained that the value orientations and the institutional matrix of the ancient economy were qualitatively different from those of modernity. For an adequate understanding of its functioning, these value systems had to be evaluated by a relevant criteriology, this is by a methodology that would take into consideration this cultural divide. The classicists who had adhered to Meyer's group argued that the economic life of Athens in the fourth century BC made no difference to that of modernity. For them the Greeks were already moderns as far as economic motives are concerned. There was no use of a special method aimed at understanding the different mentality, since in Meyer's view the Mediterranean culture should, methodologically speaking, not be separated from modernity.

In the 1930s, K. Polanyi, an Hungarian economic sociologist, who by his studies in Germany became familiar with the debate, opted for the primitivist-thesis of K. Buecher. After his emigration to the United States, he animated an interdisciplinary team of historians, anthropologists and economists. Its research publications influence up to this day the study of ancient economic history (Polanyi 1944, 1957). Briefly stated, Polanyi's thesis may be summarised as follows:

  1. 1. The economic relations, especially the exchange relations, of the primitive societies and ancient civilisations can be classified under three broad headings: reciprocal, redistributive and commercial.
    • In the early primitive societies and in those studied by anthropologists today, the reciprocal type predominates. Their economy and its exchange relations are deeply 'embedded' in the overall system of religious, cultural and social relations.
    • The redistributive type is characteristic of the ancient economies of the Near East, where the political and religious establishment, like the royal court and the temples, controlled and gathered the products of peasants and craftsmen to redistributed these to their dependants. The mobilising power of the redistributive system aims at the optimalization of surplus of the subsistence economy for distribution to administrative staff and craftsman engaged in court and temple service.
    • The commercial type is characterised by the trade and exchange relations in a market economy.
  2. The predominance of the commercial type dates from the breakthrough of modernity in Europe. Under the impulses of a mercantilist bourgeoisie the economy was gradually 'disembedded' from its socialfabric and the economic value orientations were emancipated from the religious and ethical context.
    This resulted in a development model where economic considerations tend to dominate all other value orientations.
  3. The pragmatic and methodological framework of modern economics is of no use in the study of primitive or ancient economies, since their market relations were underdeveloped. The approach of the anthropologists may provide more valuable keys for the study of ancient economies.

Even the most critical scholars who have serious reserves on the details, admit that the research findings of Polanyi's group have shed new light on the study of ancient economic history as well as on the history of economic thought. The movement animated by Polanyi represented a revival of the Historical School, enriched by the field work findings of contemporary anthropologists.

The nineteenth century movement of Russian populism which lives a revival since Gorbachev's perestroika is another interesting case. Since the time tsar Peter the Great, Russia had been torn by ambivalent attitudes towards modernisation and Europeanization. From the outset, Russian intellectuals perceived their culture and their religion as the better child of Christian Orthodox Byzantium. While Latin Europe since the middle ages had chosen the path of rationalisation, modernisation and secularisation, Russia like the other cultures rooted in the Christian orthodox religion, kept to the social bounds and to the values of the Mediterranean tradition.

After the aborted try of Peter the Great, Catherine the Great opened her court to the ideas of the Enlightenment and encouraged the intellectual members of the Russian establishment to study and travel in Western Europe. The shocking radicalism of the French Revolution and the invasion of holy Russia by Napoleon, cooled off the admiration for the West in the circles of the Slav intelligentsia. In the second half of the nineteenth century, when industrialisation came in its take-off, the Russian intellectuals interested in philosophy, art and literature, split up into two opposing camps: the slavophiles or the narodniki and the zapadniki or westernizers (Berdiaiev 1970, Walicki 1975).

The slavophiles idealised the Russian village and equated westernization with capitalist industrialisation and thus with increasing penetration of Russia by European materialist ideas and values. From the beginning, this fundamentalist ideology had a messianistic and nationalistic flavour. The great writer and social minded aristocrat, Leo Tolstoy, wrote in the 1860s his great novel War and Peace, to celebrate the victory of the fatherland against Napoleon's armies and their revolutionary ideas of the Enlightenment. The slavophiles were staunch defenders of the Christian, Orthodox tradition of the pre-Enlightenment world. They put a wall against its rationalism and secularism. They were a sort of romantic socialists, who lived in the firm belief that their community-oriented development was superior to western individualism and capitalism.

The narodniki with an economic bent, were well aware that industrialisation was necessary for Russian development. At least to keep foreign military powers at bay. The leaders of this movement separated themselves from the cultural slavophiles, and they transformed their movement into an anti-urban populist party in defence of the peasantry. This positive attitude for economic development got more adherents after the defeat of the Russian fleet by Japan (1905). Even thereafter the claim was made that Russian industry had to be less destructive for the peasantry and for the local artisans. In the early twentieth century the socio-economic minded narodniki evolved into a populist movement. The populists were severely attacked by the upcoming radical socialists and Marxists. And after the great proletarian revolution, they lost their grip on events (Van Regemorter 1985). They lived on as an undercurrent that re-emerged in the wake of Gorbachev's reforms.

In the mainstream textbooks on economic development and also in the studies on the history of economic thought, the analyses produced by the slavophile movement have been neglected. Its major proponents professed an economic humanism whose main objective consisted in keeping the powerful influences of Westernization and Capitalism at bay. Its most important economic thinkers and pamphleteers of the Tsarist period, like Chernyshevsky, Flerovsky, Vorontsov and Danielson, as well as the influential agrarian economist Chayanov of the Communist period, were more or less ignored by the development literature of the Western scientific establishment (Chayanov 1966). (4)

Chayanov's penetrating analysis of the socio-cultural dialectics between economic motives and economic calculus, as well as his study of the kulak, was rejected by the scientific approach of the communist planners. In the 1960's Chayanov's writings have influenced African populist regimes, like, for example Nyerere's ujamaa movement and other co-operative organisations in the Third World.

V. The reading of Ancient Texts

From a methodological point of view the textbooks on the history of economic thought offer a variety of perspectives. Indeed, the doctrines of the past can be ordered according to different criteria. The retrospective approach has a certain appeal to contemporary historians of thought because it sheds light on the question 'how and when' the authors of the past discovered what we modern economists consider to be the postulates of our science. The retrospective approach is also the most common one (Gislain 1991, Servet 1991).

The retrospective approach is characteristic of the scientific absolutism of modern economics, since the contemporary state of the arts is deemed to be the absolute norm by which all past scriptures ought to be evaluated. Evaluation requires standards of judgement and in the absolutist approach these standards are

For the practitioners of this approach a major problem may arise when there exists, as it happens to be the case, disagreement over some basic axioms amongst themselves. Since long ago economists have split up in rival schools: Neo-classical, Keynesian, Monetarist, Institutionalist, Marxist, etc.. According to the ideological vistas and the scientific method characteristic of the school to whom the author belongs, the past theories will be seen through a different prism.

Differences of perspective, however, occur even amongst economists of the same school. Although they came both from the neo-classical tradition, Schumpeter and Hayek produced rather different writings on the history of economic thought. Schumpeter opted for the Lausanne vintage, with as norm Walras's general equilibrium, while Hayek wrote his historical discourses with a definite Austrian accent. These two distinctive currents of neo-classicism resulted in a rather different history of economic thought. On the basis of the retrospective perspective, every 'school' produces its own version on doctrinal history. This is in contradiction with the claim of absolutism cherished by the retrospective method.

An alternative approach is proclaimed by the adherents to historical relativism. On the basis of this principle, past doctrines are situated in the context in which they originated. Pure relativism rests on the premise that there are no trans-historical universals. Ideas and doctrines are only historical-concrete time-products with an ephemeral and limited life-span. Moreover, the relativistic approach splits up in two different schools. One school takes the material infrastructure of a given period of reference, the other prefers to focus the attention on the ideological superstructure. The French philosopher Michel Foucault proceeded along these lines in his search for the archaeology of the social sciences in general and in economics in particular (Foucault 1966, 1969). According to this author, the ideas and doctrines pertaining to a particular segment of society like economics, are interlocked in the intellectual climate of the time, or with its episteme. For Foucault, the term episteme stands for the epistemological ideal-type of an epoch.

K. Pribam's textbook on the history of economic thought is also a clear application of the episteme-approach. It is interesting to note that already in his title, Pribam signals this particularity, by using the label economic 'reasoning' rather than economic thought. In a short introductory note he defines his position:

"The struggle over the fundamental aspects of economic analysis is due to factors outside the scope of economics strictly speaking. The ultimate causes of that struggle are found in conflicting currents of thought which have determined the development of methods of reasoning in all fields of intellectual, social, political and moral activities of the Western Hemisphere." (Pribam 1983: XLIX).

The dismissal of a genetic filiation between the thought of different epochs is another important characteristic of historical relativism. It also rejects the idea of the gradual accumulation of knowledge by the succeeding generations. Dasgupta who is an adherent of the epochal view, proclaims the extreme thesis that the data of the real world, analysed and conceptualised by economists are changing so often and so fast, that any comparison over time is an almost impossible undertaking. He ends up his argument with the following statement: "In economics old theories do not die. And they do not die not because one is built on the other, but because one is independent from the other" (Dasgupta 1985: 2).

Up to a point, changes in world view as well as shifts in the value system develop in a dialectic way with revivals and renaissance's inspired by canonised traditions of the past. Consequently, the social scientist may in some cases feel himself nearer to an episteme from an epoch of the remote past rather than to an axiom of the immediate preceding period. The very idea of revival confirms the view that a revolution or a change in tradition may at times be the result of a mere renaissance of an ancient one. This brings the authors of ancient cultural and intellectual traditions nearer to us. It also means that they have an everlasting impact.

The history of thought is of interest for the social sciences for still other reasons. Indeed, the social scientist does not enjoy the privilege of the natural scientist who can organise a great number of experiments in his laboratory in order to test his hypothesis. The empirical material for testing in the social sciences is more difficult to get. A number of phenomena manifest a low frequency of occurrence. And most of the time they take place in different circumstances. An historical search that leads us to our remote past offers the possibility to study the dialectics between the real world and its conceptualisation in a multiplicity of different material circumstances, and socio-cultural contexts. The more remote the period upstream in time, and the farther the move from the epistemological tradition of the own epoch, the richer the harvest may be.

The historian of economic thought who crosses the border of the cultural and epistemological divide between the Atlantic and the Mediterranean tradition profits from a wider horizon and a broader vista. He is confronted with a more representative historical sample of the interactions between reality, human action and the structuring of conceptual superstructures. The reading of ancient texts is like exploring foreign lands with different cultures. The difference in the conceptual language creates a sort of estrangement and at the other side opens new horizons. The gains in intellectual insight will be higher the more we depart from our contemporary standards in the study of ancient thought (Bubner 1992: 12). (5)

The cross-cultural reading of economic thought sharpens the critical sense about our own constructs which are mostly taken for granted. In a similar vein of opinion, Todd Lowry (1987:5) states: "Our methodology and our notions of what is important, our paradigms and our research programs, keep changing from generation to generation, both in evolutionary and revolutionary transitions. This would lead us to believe that the study of the history of economic thought is one of the best possible antidotes for intellectual ossification".

The correct way of reading ancient texts is to approach these concepts and theories from the perspectives of their own episteme. It requires the understanding of that time's conceptual compactness. Almost all the economic scriptures of antiquity are relatively small parts of texts and treatises which were written for very different purposes. In Pharaonic Egypt the few comments relating to the economy are to be found in the wisdom literature. Aristotle, the most prominent economic commentator of Antiquity writes about economic topics in his two major treatises of practical philosophy: in Politics and in Nicomachean Ethics. With the scholastic authors, the economic commentaries were part of moral theology and of canonical law. In the Islamic tradition, the scriptures of different law schools and the hisbah literature were very important sources.

VI. Economic Humanism: A New Theme

Since the advent of modern times the goal of material well-being has moved centre stage. In the second half of our century economic growth has become a central societal goal not only in the West but also in the former communist countries and in the new nations of the Third World. The transnationalization of manufacturing firms and of the financial markets produced forceful integrative impulses. The acquisitive motive and the growth ethos transformed the world in a global market place. Economics became an attractive subject of study for many students and the economist became the allocation engineer of means and resources in a growing number of institutions.

And yet, in the 1970s, when the prestige of the economic profession was at its zenith, a crisis mentality developed which sparked off a wave of criticism voiced by some of the most distinguished economists. The critical mood rekindled the interest of economists in methodological and epistemological problems. An often formulated objection was that the logic of economics had been reduced to sheer instrumental rationality. A definition of economics, which figures in most introductory handbooks, underlines this instrumental reductionism. In the common handbook definition, economics is a science which studies human behaviour as a relationship between a given hierarchy of ends and scarce means which have alternative uses.

A discourse in which the evaluation of the ends predominates, like the Mediterranean tradition, was deemed unscientific. In modern economics the allocative logic of means became chapter and verse of the discipline, while the debate on the ends was evacuated. Modern economics opted for a neutral code of valuation with mathematics as its lingua franca and choose applied statistics as its empirical handmaiden. The principle of non-evaluation of the ends and of concentration on the allocation of means became the inherent characteristics of modern economic calculus.

Some branches of economics were more affected than others by the crisis mood, but development economics was one of the first to succumb to it. In a provocative essay, the well-known development specialist A. Hirschman stated that "much of the zest and hope that characterised the work in this area of the 1950s and 1960s is no longer present" (Hirschman 1982: 373). With special reference to outspoken western ethnocentrism of development economics, H. Bruton uttered the following statement: "with only limited exceptions, in both the literature and in practice, the development has come to mean a replication of the models imported from the West...the equalisation of development with westernization impeded the construction of an authentic development theory" (Bruton 1985: 1102).

In the lands of Islam the critical mood rests on a fundamentalist revival of its own historical tradition. The fact that Western development economics neglected the episteme of Islamic culture became chapter and verse of fundamentalist literature. The preceding process of cultural colonisation by Western specialists was denounced as intellectual 'bedouinization'. With a better knowledge of Islamic social and economic thought, a great number of blunders could have been avoided in many development projects. For development economics in general, a comprehensive historical survey of economic thought offers a mine of multicultural information and inspiration.

The critical mood aroused a renewed interest of the philosophically inclined economists in methodological and epistemological questions. In this field of study, decisions concerning 'value' and not only of 'allocative strategy', together with problems of 'sense' and not only of 'empirical facts' have priority. In Europe and in the United States the renewed interest in the historical-concrete notion of ethics and social responsibility responds to this need (Sen 1987).

This interest for the ethical dimension in economics goes hand in hand with the rehabilitation of the Aristotelian practical philosophy. Two decades ago this rehabilitation was signalled by a collection of essays published by a group of German scholars (Riedel, Vol. I, 1972 and Vol. II, 1974). Now it has spread to different faculties of philosophy and of social sciences in other countries as well. In political philosophy a similar movement was animated by scholars like L. Strauss, E. Voegelin, H. Arendt and J. Rawls.

More recently, the Italian political philosopher E. Berti published a general survey of the ongoing research, in co-operation with colleagues from Germany, France, Italy and the United States (Berti 1988, 1989). Its scope is not so much an antiquarian back fall to pre-modernity, for this would mean a loss of some fundamental acquisitions of modernity. The survey contests the mathematical abstract basis of modern social and economic science and opts for a rehabilitation of the historical concrete notion of ethos. This new thematization of today's practical philosophy is an intellectual cross-fertilisation that brings ethics back in the social sciences, and thus in economics, where it belongs.


  1. "Von dem, was damals geschaffen und gedacht wurde, lebt die Menschheit bis heute. In jedem ihrer neuen Aufschwuenge kehrt sie erinnernd zu jener Achsenzeit zurueck, laesst sich von dorther neu entzuenden." (Jaspars 1949: 17)
  2. The papers written by participants are published with as title: 'Wisdom, Revelation and Doubt: Perspectives on the 1st Millennium BC', Daedalus, 1975, vol. 104, pp. 1 - 17.
  3. For a comment on Max Weber's importance in the post-modernist debate, we refer the reader to W. Hennis (1987).
  4. In 1925 A. Chayanov wrote, in Russian, his Theory of the Peasant Economy. This important work had to wait forty years to be translated in a European language.
    our own. In his widely-used handbook, Mark Blaug, in the most explicit way, posits that his standards are those of modern economic theory (Blaug 1985: 1).
  5. In his essay on the utility of ancient philosophy today, R. Bubner formulates this as follows: "wenn es darum geht das Staunen neu zu lernen, dann bietet historische Kenntnis ein nahezu unerschoepfliches Reservoir nuetzlicher Verfremdung", in R. Bubner (1992:12).



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