Skip to Content

Category Archives: Economics

The rise and fall of the Delian League
By Mónica Correa, Contributing Writer, Classical Wisdom The Delian League, or Confederacy of Delos, was the name used for the
Read more.
Nothing More Demoralizing
By Ben Potter and Van Bryan “Money…there’s nothing in the world so demoralizing as money.” So says the 5th-century Greek
Read more.
The Golden Rule
By Ben Potter All that glitters may not be gold, but that hasn’t stopped the shiny yellow stuff from being
Read more.
Inflating an Empire
By Ben Potter Imagine a world where Europe is united under a common banner, has shared interests, open markets and…
Read more.
The root of the root of all evil?
By Ben Potter When we talk about money in the ancient world, we are talking about coins… or at the
Read more.
The Delian Default
By Joel Bowman “Change is the only constant,” observed the pre-Socratic philosopher, Heraclitus, more than two and a half millennia
Read more.

The rise and fall of the Delian League

by September 19, 2018

By Mónica Correa, Contributing Writer, Classical Wisdom
The Delian League, or Confederacy of Delos, was the name used for the confederation of Greek states under the ‘leadership’ of Athens. According to some records, it lasted from the end of the Persian War, circa 478 BC, until the end of the Peloponnesian War in the year 404 BC.
As described in the statutes, power was originally distributed equally. Indeed, according to Thucydides, each state in the league had an equal vote . However from the beginning, the ‘unofficial’ leader of the Delian League was Athens.
Decree of tribute

Fragment of the Athenian Decree concerning the issue of tribute

The original headquarters were at Delos, but they were later moved to Athens…a transition that meant more than just a change of location.
Purpose and splendor
The Delian League started as a military alliance against Persia. Around 200 city-states, including Eretria, Mykonos, Athos and Byzantium, joined the alliance by the mid-fifth century BC for the same reason. They wanted protection by the Athenians, who controlled the naval yards, thus turning them into the only ones who could fight against Persia.
Some say that the Athenian politician and military man, Themistocles, is the real father of the Delian League, because it was under his reign that the development of the Athenian navy made the League possible.


Historians such as the aforementioned Thucydides kept record of the actions taken by the Delian League; some of them are expressed in their constitution:

• It was decided which cities were to provide money and which were to provide ships
• The first payment (tribute) was 460 talents (today 57 lb.)
• Delos was to serve as treasury
• The assembly of the League met in the Temple at Delos

Over time some of these constitutional provisions changed and, perhaps not surprisingly, this led to other problems.
For instance, the League survived financially by tributes or taxes… and yet not all of this money stayed within the League. A considerable amount of the taxes paid by the members eventually flowed to Athens alone. Indeed, this ‘income’ allowed Pericles, a Greek statesman, orator and general of Athens, to start building the Parthenon on the Acropolis… and other major ‘public’ works.
It is at this time that we can see that the League was turning from an alliance to an empire.

Famous ancient Greek structure, the Parthenon at night. Andreas Kontokanis/ Flickr

Internal wars
Unlike the Peloponnesian League, within the Delian League, wars between members were prohibited. In fact, the Athenians later kicked out some of their allies on the pretext that they carried on wars against each other.
Naxos, the first member who tried to leave the League, stopped paying tribute so they were considered as enemies to Athens and the alliance. They were subsequently attacked by Athens and forced to remain as members.

Map of Athenian Empire

To turn away from the Delian League meant to turn towards the side of the Persians. Nethertheless, some city-states allied with the Persians in the early fifth century BC, during the Persian Invasion.
The way Athens handled the revolts led to the independence of city-states who stopped sending their men, money and ships to Athens.
The beginning of the end
After 30 years of reign, the main accomplishment of the Delian League was the Peace of Callias, named after Callias II, an ancient Greek politician. It was a treaty established around 449 BC between the Delian League and Persia that ended the Greco-Persian Wars.
After this, one may be forgiven in thinking that the League should disolve… however, this did not happen. Instead, the Athenian Empire (454-404 BC) started its reign by moving the treasury of the Delian League from Delos to Athens.
For the Second Athenian Confederacy (378-7 BC), a revival of the Delian League, the enemy was Sparta. It was created as a protection against Spartan aggression. It was a maritime self-defense league led by Athens. The Delian League was finally broken up by the capture of Athens by Sparta in 404 BC.
Even today for some historians, it is not clear if becoming an empire was the original intention of Athens, or if it was an idea that developed as they gained the power and confidence of their allies. However, there’s no doubt that this empire led to many conquests for the occidental world.

Nothing More Demoralizing

by October 21, 2016

By Ben Potter and Van Bryan
“Money…there’s nothing in the world so demoralizing as money.”
So says the 5th-century Greek playwright, Sophocles.
Now, dear reader, we’re a student of the classics. We believe that an understanding and appreciation for the literature and history of antiquity can lend us perspective. The classics teach us to think critically, ponder more thoughtfully the questions of our humanity.
That being said, we always wished that the ancient Athenian had elaborated on his claim of monetary demoralization.
What about money is demoralizing?

Is it a deficiency of money that demoralizes man?
Or perhaps an excess? Is money the root of all evil? Or is evil the root of all money?

We don’t know. We’re being Socratic and merely asking questions. We’ve only ever claimed to know nothing, and not once have we failed to live up to that standard.
Lucky for us, greater minds than ours have pondered questions of coinage. The ancient Greek philosopher, Aristotle, of the 4th century BC, had one such mind.
Perhaps our ancient forefather can lend perspective on this subject, and answer for us an age-old question: what exactly is money?
What is money?
Ancient Greece was a time of firsts for the Western World.
First democratic government? Yep.
First masterpieces in literature? Check.
First academic university? Double check. Plato AND Aristotle founded schools in the classical age.
It’s unsurprising then that the ancient Greeks were also responsible for minting some of the first coins in the Western world.
Perhaps even more unsurprising is that this was almost immediately followed by the first embezzlement scandal and an ancient version of the military-industrial complex.
See…we really are influenced by the Greeks.

Ancient Greek Tetradrachm

Note: New subscribers to our monthly subscription can recieve their own classical gold tetradrachm for free. Learn more here.
The ancient Greek drachma enjoyed popular usage starting in the Archaic Age of Greece (around 600 BC) right up until the Roman Empire. Ancient coins were originally minted from electrum, a naturally occurring alloy, but over time gold and silver became the preferred metals.
The rising economic influence of the Greeks during the 5th century meant that the ancient drachma was widely accepted across the known world. Ancient coins have been found in Egypt, Rome, and Syria. They even reached as far as the western dwelling Celts.
But all of this so far is just nickel and dime stuff. Practice your best chin stroking, now we get philosophical.
Aristotle, a man who is often regarded as one of the most prolific and influential philosophers of the Western world, had a few ideas on money.
Unlike his predecessor and teacher, Plato, Aristotle felt no need to justify the existence of money. Being the practical guy that he was, Aristotle considered the necessity of money to be self-evident.
When the inhabitants of one country became more dependent on those of another, and they imported what they needed, and exported what they had too much of, money necessarily came into use.
And not to mention, Aristotle says somewhat patronizingly, …
The various necessaries of life are not easily carried about!
Importantly, Aristotle did not claim that money was wealth. Rather, money represented wealth.
How can that be wealth of which a man may have a great abundance and yet perish with hunger, like Midas in the fable, whose insatiable prayer turned everything that was set before him into gold?
Money, to Aristotle, represents olives in the orchard, vases from the potter, wine from the vineyard. Money wasn’t wealth, but it could measure wealth.
Fair enough, we’ve talked about what money is not. What, then, is money?
Well, Aristotle says that money should ideally be five things…
    1. Durable – it must survive the trials and tribulations of daily life, i.e. of being carried around in people’s pockets, purses, or even in the mouths of the newly deceased.
    1. Portable – a small item should be of a high value.
    1. Divisible – breaking a coin, either figuratively or literally, should not affect its relative value.
    1. Fungible – mutually exchangeable i.e. it doesn’t matter which particular coin you have as long as you have one.
  1. Intrinsically valuable – the coin’s material should be a worthwhile commodity (mint coins from gold not concrete).
Ignoring this 5th principle, history tells us, is what can be particularly disastrous.
The Crisis of the 3rd Century
At the outset of the Roman Empire, starting in 27 BC, the preferred Roman currency was the silver denarius. Rome’s first Emperor, Augustus, minted coins that were 95% silver.
Ah, but what good idea couldn’t be improved with a little monetary manipulation?
Ancient Roman Denarius depicting Titus
The coinage was debased over the centuries; so much so that by 268 AD, there was just under .5% silver in the denarius.When questioned about the devaluation of the currency, Emperor Caracalla (who ruled from 198 to 217 AD) held up his sword and declared…
Not to worry. So long as we have these (gesturing to the sword), we shall not run short of money.
How do you like that for a monetary policy?!
Even non-economists can probably guess what happened next. Hyperinflation ran rampant in the Empire. Prices during this period rose as much as 1000%. This is often referred to as “the crisis of the 3rd century”.
Over the next fifty years, 26 different men would claim the seat of power, often through military force. As for Emperor Carcalla-in 217 AD his own soldiers stabbed him to death when the Emperor stopped to take a leak.
History really is fascinating…
Perhaps the madness is best summed up by the 18th century historian Edward Gibbon, when he commented that the great wonder of the Roman Empire was not that it fell, but rather that it lasted as long as it did!
Nothing More Demoralizing?
Aristotle’s ideas have been used throughout the ages in order to justify or denigrate various economic policies and innovations; from fiat printing to the most recent phenomenon of crypto-currencies.
By now we’re feeling Socratic again. Are Aristotle’s ideas on money outdated or, perhaps worse, standing in the way of progress? Or are we, like the Romans, teeing off for our own crisis of the third century?
Over the centuries the great teacher has been proven wrong (he contended that flies had four legs and that women had fewer teeth than men). So, at times, society was only able to progress once it had rejected Aristotle’s assertions. Do his ideas on sound money fall into this category of outdated philosophical fodder?
Again, we have no answers… Perhaps that’s the most demoralizing thought of all.

The Golden Rule

by March 6, 2015

By Ben Potter
All that glitters may not be gold, but that hasn’t stopped the shiny yellow stuff from being relentlessly pursued throughout mankind’s civilized existence. Twinkling goodness aside, gold has the virtue of being malleable, ductile, resistant to tarnishing, abundant, easily extracted and, above all else, useless!
Well, perhaps not totally, but it is arguable that the greatest asset gold has above its metallic competitors is that it is, or I should say was, something almost completely nugatory.
Even though now it can be found in computers, mobile phones and is almost the metal of choice for the scientists at NASA, in the ancient world it had few practical applications. The notable exception being, as it is today, in dentistry.
Gold could not help you cook a meal, build fortifications, hunt, fight, or do anything to advance your society. Perhaps because, not despite of this, together with its aesthetic gleaming, gold became the metal of wealth, royalty, power and currency in civilisations the world over.
But where began our fascination with Au (from the Latin aurum, or ‘shining dawn’)?
Ancient Egyptian Gold
Well, like with so much else in the annals of man, it appears the Egyptians were the first on the scene regarding the accrual and working of gold, having been in the business of jewellery-making since 5000 BC.
These canny Nile-dwellers also worked out how to accurately grade gold, though that knowledge came several millennia later.
The Sumerians of Mesopotamia also were manipulating the precious metal early on, circa 3000 BC, long before the first ‘Greeks’. It wasn’t until the second millennium BC that the Minoans of Crete developed/perfected a range of refined techniques that saw them produce vast amounts of gold jewellery.
Not that Mediterraneans had a monopoly in this respect; the Chavin culture of Peru was expertly working gold from c.1200 BC.
While it’s hard to pinpoint when gold swam into the ken of the ‘true’ Greeks, it was certainly an important part their literary, mythological and material culture.

Priam Treasure

‘Priam’s Treasure’, the haul of gold from the site of the Trojan War (though, contrary to its excavator’s claims, definitely not from that legendary conflict), is a magnificent example of the how gold was worked and revered by the wider Greco world from the third millennium BC.
Within the pages of Homer gold is referred to as something desired by men as a token of wealth (which equated to importance) and as something which naturally reflected the splendour of the immortal gods.
But we need to go further back… Indeed, by the time Homer was penning his epics (c.8th century BC), the blondest and (possibly) most famous of all the Greek myths was already in circulation; Jason and the Golden Fleece.
The Golden Fleece story has become multi-faceted and much analysed with a variety of scholars (both ancient and modern) projecting different interpretations on the tale.
Some say the fleece came from a golden-haired, winged ram, while others prefer the idea that the hide was merely used as a sieve to ‘pan’ for gold.
This is how Strabo referred to the practice in the land of the famous myth, Colchis (modern Georgia):
“gold is carried down by the mountain torrents… the barbarians obtain it by means of perforated troughs and fleecy skins… this is the origin of the myth of the golden fleece”.

At the time of going to press, there are about twenty working theories as to the allegorical significance of the golden fleece story. However, one thing remains clear and constant: gold, even if only metaphorically, has a property of sanctity and deserves our reverence.

Lydian Gold coin
It may seem incompatible that gold could be, at the same time, useless, divine, precious and regal… but yet another incongruous spanner was thrown into the paradoxical works when the Lydians of Asia Minor developed gold coinage circa 700 BC.
Though these early coins were of electrum (a naturally occurring gold/silver alloy), it only took 140 years or so for the Lydians to perfect refining techniques that allowed them to produce (and stamp) purely gold currency.
It was a craze that never went away. For the Greeks and Romans alike, gold became something that was not only used to make great and holy artistic works, like the chryselephantine statue of Zeus at Olympia or the statue of Victory in the Roman Curia, but could also be carried around in the pocket of the average soldier or tradesman.
As gold became more than merely something for the rich to wear and the poor to goggle at, the acquisition of it became of primary importance.

Thus by the end of the Classical Age (323 BC) Greek gold mining spanned from the Pillars of Hercules (representing the almost touching tips of Spain and Morocco), across Egypt, and all the way to Asia Minor.

Greco Roman Ring
The Romans not only went further afield in their search for these incandescent ingots, but, with their renowned cunning, developed new and improved methods of extracting it (e.g. hushing and sluicing).
Indeed, the Second Punic War (best remembered for Hannibal and his elephants) meant that the abundant gold reserves of the Iberian Peninsula were now under direct Roman rule.
Julius Caesar’s campaigns in Gaul and Britain yielded extra sources of gold. Significantly, Claudius’ attempt to finish what Caesar started in Albion as well as Trajan’s incursions into Dacia were both premeditated on the accretion of the imperial gold reserves.
The imperialistic attitude of the Greeks and Romans towards gold may reflect the fact that relatively little of that commodity naturally occurs in either country.
Despite such an abundance of aurum flooding into Rome, it was still of vital importance that the supply could keep up with the demands of a seemingly exponentially increasing empire.

A result of this was that being buried with large amounts of gold was illegal from 450 BC.

Nero Colossus

Also, we may be surprised that a proclaimed chrysophilist and narcissist like Nero, though he found plenty of gold leaf for his Domus Aurea (Golden House), had the 103-foot high colossus representing him as the sun-god Sol made of bronze.
Thus, despite his megalomania and profligacy, there were limits even to the emperor’s access to gold.
There were several indirect benefits to our forefathers’ universal benediction of bullion.
Obviously gold gave us pleasant objects to gawp at, but also having a standardized unit of wealth opened up Chinese and Indian trade to the West in a sustainable and organised way.
What is more, the desire to create rather than simply acquire gold was of such importance that the struggle to achieve that impossible feat is from where we derive the term magnum opus.

Though ancient alchemy’s desire of unlocking the secrets of the philosopher’s stone (that would transform base metals into gold and, perhaps, offer eternal life) proved fruitless, it did lay the foundations upon which all subsequent chemistry was built.

Without this motivating force, it is conceivable modern science could have been held back by centuries.
And, of course, though it had to wait a couple of thousand years, gold has now become a prominent metal in computing, aerospace, healthcare and even glassmaking; all happy offshoots of the metal being so ubiquitous in every society.
Fall of Rome
Though, for classics enthusiasts, it must be acknowledged that gold, or specifically the lack of it, was at the heart of the demise of the Roman Empire.
Emperor after emperor found that swelling the coffers with what the Incas described as ‘the tears of the sun’ in an increasingly chaotic, bloated and unruly empire was beyond the scope of practical politics.
And if an emperor could have been pardoned for grumbling at the thought that reserves of gold were at the heart of merely maintaining the status quo in his faltering realm, he could have been forgiven for failing to enjoy the irony… Rome’s material opulence was a key motivating source behind the sackings of that city in 410 AD and 455 AD (by the Visigoths and Vandals respectively) which brought about her final, whimpering demise in the west and plunged Europe into what later became known as the Dark Ages.

Inflating an Empire

by October 31, 2014

By Ben Potter
Imagine a world where Europe is united under a common banner, has shared interests, open markets and… a single currency. A currency that has such an impact on the continent that it leads to mass inflation and threatens the very existence of the union itself!
Imagine… it’s easy if you try.
Of course we are talking about an event that happened over 1,500 years ago.

You see, it is a widely held belief that the Ancient Romans didn’t merely let their empire fall… they inflated it until it burst.

This is because there were only a few methods by which emperors could raise funds. While finding a convenient traitor and confiscating his lands was a good one, the two most popular ways to do it were: a) expanding the empire and b) debasing the denarius, the preferred Roman currency.

Roman Expansion
While the first was easier said than done, it was still done with aplomb.
The problem was that, after an initial boon to the coffers and a swelling of the slave-class, not every province was an automatic money-spinner. Indeed, some required a great deal of maintenance, both in terms of infrastructure and the military personnel needed to keep the peace.

The best way to deal with these problems? Expand even further of course!

However, the empire reached the height of its imperial power relatively early on, under Trajan in fact (98-117 AD). Thus a great deal of time, effort and, crucially, money was spent maintaining the great straining behemoth.
Therefore, many emperors adopted the notion that debasing the silver denarius was a much simpler and swifter way to swell the treasuries and give an embattled government some pecuniary respite. Though, inevitably, only a brief one.
The advantage was that, though the market would eventually adjust to the devalued coin, the imperial court would have a jump on such information and could spend its heart out accordingly… that’s because their denarius had more purchasing power than anyone else’s. By the time the now weaker currency reached the hands of the common people, its lesser worth had already been revealed.
Coin Clipping
If the emperor was lucky enough to die soon after this devaluation… then he’d be leaving a big mess for his successor. If he had the poor fortune to survive… then he’d have to deal with the fallout himself.

But how much damage could shaving a sliver of silver off the coin actually do?

Well, perhaps not that much, but this was no measly fraction. The denarius in the first century AD had a silver content of above 90%, after 100 years that dropped to 60% and by the time the empire had split into east and west, it was down to a paltry 5%.

But this wasn’t a simple, direct, one-way trajectory… Indeed, the western empire did manage to regain some of its financial bearings before its eventual fall.
One such rebound was due to the economic reforms of Constantine the Great, who used his newfound Christianity as an excuse to melt down offending iconography and re-base the currency in one fell swoop.
However, this was not enough to stop the empire’s collapse. There were other, larger forces at play.
For instance, the army, which many saw as an inevitable expense, was hemorrhaging denarii, not least because of Rome’s ever-increasing reliance on mercenaries. The use of these was a double-edged sword as they were not merely of fickle loyalty, but often broke out in open revolt against their paymasters.
Emperor Commodus
The origin of problems such as this are often traced back to the sinister figure portrayed by Joaquin Phoenix in Gladiator, the emperor Commodus.
Although he did bankrupt the state, he was probably no more culpable than many of his successors. His problem was that his ineptitude came on the back of an era of the ‘5 good emperors’, thus his incompetence looked far more stark by comparison.
That said, his death undeniably marked a period of great instability; thirty different emperors reigned in the 100 years that followed (only 25 single-term presidents could rule in such a time).
Other causes to the western empire’s dissolution have been identified as a lack of cooperation from the eastern empire, diminishing trade routes, a rise in piracy, mass lead poisoning and even Christianity eroding traditional values!

However, none of these could compete with the effect left behind by the Huns.

As they drove into Northern Europe in the 4th century, not only did they make incursions into Roman territory themselves, but they forced numerous Germanic barbarian tribes to flee southwards.
Inevitably, the reason the empire fell was not just because of silver, but iron and steel.
The defeat to the Goths at the battle of Adrianople in 378 AD was not merely a crushing military blow, but one which made the barbarian hordes realize Rome was not all she once was.

The next 70 years saw defeat after defeat as the various tribes chipped away at Rome’s mighty empire.

When the end finally came, it was with a whimper rather than a scream.

The last emperor, Romulus Augustulus, was deposed with such little fuss that it’s rumored his conqueror, Odoacer, may have let him live a quiet retirement rather than put him to the sword.
Thus it could be said that, despite its various problems both financial and otherwise, the Western Roman Empire fell because it had stopped being good at what had made it great in the first place… war.
Or perhaps Rome was just rich, swollen, gouty and infected by its own success. In the words of the pre-eminent historian on the topic, Edward Gibbon:
“The decline of Rome was the natural and inevitable effect of immoderate greatness. Prosperity ripened the principle of decay; the causes of destruction multiplied with the extent of conquest; and as soon as time or accident had removed the artificial supports, the stupendous fabric yielded to the pressure of its own weight.”

The root of the root of all evil?

by October 24, 2014

By Ben Potter
When we talk about money in the ancient world, we are talking about coins… or at the very least, metal.
Now, not surprisingly, the Greek philosophers of the day had plenty to say on this topic… but before we recount at what the likes of Aristotle and Plato thought about coinage, let’s take a look at the precious little discs themselves.
Ancient Coins
The ancient Greek drachma enjoyed ten centuries of popular usage from the Archaic period right up until Roman times. As such, it was not only one of the earliest unified and accepted world currencies, it was also one of the world’s longest serving monetary units.
N.B. The modern Greek drachma (1832 – 2001) can only be thought of as the ‘same’ currency by the most romantic of Hellenophiles.
Greek coinage seems to have originated around 600 BC and was originally made of electrum, a naturally occurring gold/silver alloy… though over time silver became the metal of choice.

A drachma was worth six obols which, though later coins themselves, were originally large metal sticks. An average man could carry six of these valuable stakes in one hand, thus giving etymological rise to the drachma (literally, a fistful).

The increasing commercial and political power of the Greek states meant that the coins were in use all over the Mediterranean basin – from Persia to Carthage to Italy. They even reached as far as the western dwelling Celts.

Despite their ubiquity, drachmae were not universally assumed to have the same value, but instead depended on the reputation of the city in which they were minted.
Charon and Psyche
Nonetheless, these handy coins were undoubtedly an essential part of everyday life. Indeed, they were also needed in the hereafter! It was standard practice to place a coin in the mouth of the deceased, thus enabling them to pay the ferryman, Charon, to convey them into Hades.
However, you may be of the opinion that all of this is just nickel-and-dime stuff. Much more important is: what did the great minds of the age have to say about coinage?
Well, the great student/master double-act, Aristotle and Plato, had clear and distinct thoughts about what a currency should be.

Plato’s ideas about money were like many of his on other topics i.e. largely theoretical, rhetorical and meant to generate intelligent discussion rather than provide a binding dogma for the state to follow.

Well that, and rooted in what critics would describe as socialist principles and what supporters would describe as…. well, socialist principles.

Plato spurned the idea of common money having any value and was therefore against using gold or silver coinage. Instead he preferred some officially recognised, accepted, but intrinsically worthless ‘tokens’ – much like the tickets you win at the fairground, but exchangeable for more than merely huge, stuffed Garfields.
That said, he did think that a standardized Greek currency of actual value could be useful for transactions between governments or traveling citizens… but not compatriots within the same city.
As for Aristotle, he often took a capriciously contrary view to his mentor and this instance was no exception. Though it is commonly accepted, with historical hindsight, that he ‘won’ the day with his ideas about money.
He didn’t do much to justify the necessity of it, but took the more practical approach; i.e. he considered its necessity to be self-evident:

“When the inhabitants of one country became more dependent on those of another, and they imported what they needed, and exported what they had too much of, money necessarily came into use”.

Sometimes even slightly patronisingly so:

“The various necessaries of life are not easily carried about”!

Nonetheless, Aristotle was clear in his distinction between money and wealth:

“How can that be wealth of which a man may have a great abundance and yet perish with hunger, like Midas in the fable, whose insatiable prayer turned everything that was set before him into gold”?


He also considered the key problem therein to be that, whilst a man could have evidently adequate wealth, there seemed to be no limit in the amount of coinage citizens wished to accrue:
“There are two sorts of wealth-getting, as I have said; one is a part of household management, the other is retail trade: the former necessary and honorable, while that which consists in exchange is justly censured; for it is unnatural, and a mode by which men gain from one another”.
However, Aristotle reserved his true contempt for the money-lenders:
“The most hated sort, and with the greatest reason, is usury, which makes a gain out of money itself”.
In addition to all of the above, and unlike Plato, Aristotle was dogmatic about what a currency should be.
He considered that coinage must be:
  1. Durable – it must survive the trials and tribulations of daily life, i.e. of being carried around in people’s pockets, purses, or in the case of obols, in people’s mouths (this was in everyday life, not only for funerals)!
  2. Portable – a small item should be of a high value.
  3. Divisible – breaking a coin, either figuratively or literally, should not affect its relative value.
  4. Fungible – mutually exchangeable i.e. it doesn’t matter which particular coin you have as long as you have one.
  5. Intrinsically valuable – the coin’s material should be a worthwhile commodity.
Whilst largely in concord, it was in the practicalities of this last criterion that Xenophon, a student of Socrates, disagreed with Aristotle.
He considered that the value of silver should be fixed regardless of how much could be procured. Aristotle conceded that it needed to be controlled and not allowed to spiral freely, but must still must be treated as a commodity rather than simply a currency.
Aristotle’s ideas have been used throughout the ages in order to justify or denigrate various economic policies and innovations; from fiat printing to the most recent phenomenon of crypto-currencies.
Fall of Roman Empire
Indeed, ignoring this fifth tenet of Aristotle’s is what some believe helped bring about the hyper-inflation in the latter days of the Roman Empire – a potential source of its inevitable fall.
While poetical sound-bites, like this one from Aristotle’s dramatic predecessor, Sophocles, pleasantly roll off the tongue to make neat, glib maxims:

“Money: There’s nothing in the world so demoralizing as money”.

…and are well backed up by the homespun idealism of Socrates:

“I tell you that virtue is not given by money, but that from virtue comes money and every other good of man, public as well as private”.

…Aristotle was far more practical and prescient. Not only did he outline what a currency should be, but also what a society could become given its absence.

From the lofty ideals embedded in his lengthy prose, Aristotle allows us to infer that he would have rejected any ‘the root of all evil’ tub-thumping out of hand. Indeed he would have considered the exact opposite to be true… that money could help elevate man out of the mire and that the true evil was not the coin itself, but its absence.
He most succinctly and sagely put it thus: “Poverty is the parent of revolution and crime”.
And it is with such pragmatic principles that his ideas have outlasted even the drachma itself.

The Delian Default

by May 23, 2014

By Joel Bowman
“Change is the only constant,” observed the pre-Socratic philosopher, Heraclitus, more than two and a half millennia ago. Clever fellow, that ol’ Ephesian. But even if “no man ever steps in the same river twice,” history does tend to rhyme. The tale of sovereign debt defaults, that tragi-comic play in which Greece has earned a recurring, sometimes starring role, provides a useful example.
Much editorial ink has been spilled describing the current and ongoing economic crisis here in the Hellas. But shirking one’s debt is nothing new for the Greeks.
Map of Delos
Indeed, history’s first recorded “sovereign debt default” occurred not far south of where we sit, on the island of Delos, historical centerpiece of the Cyclades archipelago and mythological birthplace of Apollo. The tiny island produced very little of real world value… thus making it the ideal meeting place for the bloviating congresses of the ancient Delian League.
Leto, mythological daughter of Titans Coeus and Phoebe, beseeched the island while searching for a birthplace for her twins, Artemis and Apollo:
Delos, if you would be willing to be the abode of my son Phoebus Apollo and make him a rich temple -; for no other will touch you, as you will find: and I think you will never be rich in oxen and sheep, nor bear vintage nor yet produce plants abundantly. But if you have the temple of far-shooting Apollo, all men will bring you hecatombs and gather here, and incessant savour of rich sacrifice will always arise, and you will feed those who dwell in you from the hand of strangers; for truly your own soil is not rich.

~ Homeric Hymn to Delian Apollo 51-60

And so it was that, for a time, the Temple flourished… until the wealth residing therein became too alluring for the many hands grabbing at it.

In the years following the end of the Persian Wars, a dozen or so municipalities drew loans from the Temple of Delos, the Delian League capital where the vast treasures of the confederation of the Greek city-states were kept. But in 454 B.C., a few of the debtors came up short on their repayments. These defaults cost the temple dearly. So Pericles relocated the treasury to Athens.

Needless to say, the Hellens’ propensity for borrowing too much and repaying too little would not be bound by mere geography. Nor, it seems, by the passage of time.
The first default of the Modern Era occurred during the Greek War of Independence. As Americans are lately discovering, war can be an expensive business… even for the “winning” team.
And so it was that, while raging to throw off the yoke of Ottoman rule in 1824, the Greeks ran up debts of nearly half a million pounds… to which was added another 1.1 million pounds the following year. As the War of Independence descended into civil war, the loans went unpaid… all the while accruing interest. (It wasn’t until more than half a century later, in 1878, that the Greek government made good on the debt, which by then had reached the sum of roughly 10 million pounds.)
Nevertheless, Greece did win her independence in the year 1832, an occasion she celebrated by promptly incurring still more debts, this time totaling around 60,000,000 francs, to the governments of Britain, France and Russia.
That’s about when a curious historical figure by the name of Otto became King of Greece. Still a minor when gifted the throne, the young Otto found himself in the difficult position of having simultaneously to satisfy his restless constituents on one hand and keep his creditors appeased on the other. No easy task, not even for a great statesman, which, by many accounts, Otto was not. In the words of historian Thomas Gallant, the ruling philhellene was:

“Neither ruthless enough to be feared, nor compassionate enough to be loved, nor competent enough to be respected.”

Payments on the loans ceased in 1843, the same year popular rebellion found its way to the Palace of Athens. Otto’s own story ended in exile and death in the year 1862, 16 years before the loans were eventually repaid and the international capital markets again reopened to the country over which he had once ruled.

The river of time might have changed course and flow, but the waters were the same. As before, lenders and borrowers took to their queer, mutually destructive arrangement like drunks to an ouzo bottle. By 1893, debts having risen to unsustainable levels, the government once again suspended payments on external debt. Five years later, under growing foreign pressure, Greece found herself beholden to a kind of Old School “Austerity Bureau,” bearing the unimaginative title of the International Committee for Greek Debt Management.
Against all natural inclination, the government managed to keep its nose clean until the Great Depression when, in 1932, it joined a queue of other countries in the now-familiar default line. This was to be the longest of the five defaults of the Modern Era and would last until 1964, more than three decades.
All in all, the Greeks have found themselves in default more often than not since becoming an independent state. Economists Reinhart and Rogoff highlighted this ignominious fact in their book, This Time Is Different: Eight Centuries of Financial Folly. Between 1800 and 2008, according to the authors, Greece spent 50.6% of her time either in outright default or rescheduling her debt. (Only Angola, Ecuador and Honduras spent longer in the proverbial poor house.)
But who knows? Maybe this time really is different. Maybe Greece can be brought back to the fold. Or maybe, just maybe, after 24 centuries dedicated to profligacy and financial ruin, lenders and borrowers will prove themselves deaf to the lessons of history once again.
The Delian Default by Joel Bowman first appeared in Free Market Café here: