[A-List] Fw: Karl Polanyi

[Michael Hudson]

Here¹s a recent review I wrote. Please do NOT circulate, as it¹s not yet
published.
    Michael Hudson


Economic Models of the Ancient Near East

Clancier, Ph., F. Joannès, P. Rouillard and A. Tenu, eds., Autour de
Polanyi: Vocabulaires, théories et modalities des échanges, a colloquium
held in Nanterre, June 12-14, 2004. (Paris, De Boccard, 2005).
Manning, J. G., and Ian Morris, eds., The Ancient Economy: Evidence and
Models (Stanford University Press, 2005).
 
            Both these books seek to go beyond the view popularized by Karl
Polanyi and Moses Finley, that the economies of the ancient Near East and
classical antiquity were so different from today¹s market capitalism as to
represent a set of pre-modern stages. The first stage was anthropological
gift exchange. Examples are found in Greece from Homeric times through the
classical period. The second, ³redistribution² stage actually is documented
earlier, in the Bronze Age Near East with its palaces or temples
administering prices and allocating resources.

            Most of the twenty contributors to Autour de Polanyi reject his
tendency to treat his three modes of exchange as an evolutionary sequence,
and its implication that economies belong to one or another mode. There is
general recognition that all economies are mixed, with gift exchange (mainly
within families) and redistribution (primarily within the public sector)
co-existing with the third mode of exchange ­ private gain-seeking. The
Ancient Economy goes further, and is more ambitious than Autour de Polani.
Its title reflects its intent to replace Finley¹s 1973 book by the same
name, and its topic is what is required to create a more realistic and
complex economic model of the dynamics at work from Mesopotamia through
Greece and Rome, viewing the Near East and Mediterranean as a complex whole.

            Both volumes describe how ideology has shaped modern economic
views of antiquity. In a political twist on Polanyi, the idea that the
ancient Near East was a distinct stage ­ rather than the matrix in which
commercial practices first developed ­ has opened the way for an ideological
³clash of civilizations² between East and West. Fanned by Cold War
antipathies regarding the relative virtues of private and public sectors,
free-market vs. regulated pricing, this clash has been retrojected back to
antiquity to suggest an inherent economic divide.

            The essays in the Polanyi volume range from the Near East (seven
essays) to Greece (six essays) and Pre-Columbian America (two essays).
Jean-Michel Servet finds that some of Polanyi¹s ideas have stood up much
better than others. Today¹s understanding involves many more variables than
merely modes of exchange, and Polanyi is now viewed as a way station, not as
a terminus. Bresson finds it artificial to draw a categorical line between
pre-capitalist economies and market economies, as if the former lacked
market structures. Among the methodological papers, Jerome Maucourant warns
against treating ³trucking² and gain seeking as a pseudo-historical origin
myth in which market exchange appears inherently individualistic. The
question is, what is needed to provide a realistic analysis?

            In her introduction, Polanyi¹s daughter, Kari Levitt, explains
that his socialist politics inspired him to seek an alternative to
capitalism, which he identified with the cruel price-making markets that
drove Britain¹s poor into factory towns and led the world into the Great
Depression of the 1930s. He idealized pre-capitalist societies as having had
socially embedded exchange systems that made them categorically different
from capitalism, rather than (as Alain Bresson puts it) having at least
embryonic market exchange. The group of classicists, Assyriologists and
anthropologists Polanyi organized at Columbia in the McCarthy period of the
1950s included Moses Finley, whose political views obliged him to emigrate
to England.

            Economic orthodoxy at the time viewed antiquity with an
anachronistic mythology that money and prices emerged out of individuals
haggling as they bartered goods for precious metals. Polanyi¹s focus on how
markets were embedded in deeper social structures provided a perspective
that recognized the role of temples, palaces and legal institutions.
Assyriologists pointed to the catalytic role of temples and palaces, while
classicists found common denominators with anthropologists. But Polanyi for
his part shied from acknowledging how the basic elements of market exchange
emerged already in Mesopotamia by 2000 BC. These two volumes recognize that
there was entrepreneurial behavior in the ancient Near East, initially
emerging within the temple and palace bureaucracies prior to its westward
diffusion. 

            Polanyi¹s student Anne Chapman describes how Polanyi intended
his tripartite sequence of exchange systems ­ reciprocity (gift exchange),
redistribution and market exchange ­ to replace Marx¹s three stages of how
labor was exploited, from ancient slavery and usury to feudal serfdom, and
then to wage labor under capitalism. Rejecting the desirability of free
markets, Polanyi advocated humanistic socialism to administer prices and
incomes. This view isolated his followers from mainstream economists, who
already were dropping history from the academic curriculum.

            Bertrand Lafont provides a capsule review of Assyriologists who
supported or criticized Polanyi¹s approach. The most notable progress has
been to understand how ³mixed² the Near Eastern, Greek and Roman economies
all were. Johannes Renger finds that redistribution remains helpful as a
take-off point to study Mesopotamia¹s large institutions, and notes that
defining the term ³market² to exclude institutional contexts reduces
arguments against Polanyi to an exercise in playing with words. However, he
adds that in any event he finds no markets attested in the cuneiform record.

            And yet it seems remarkable to think that Babylonia could have
functioned without a market, and that retail markets did not emerge until
Greek food sellers began to follow armies around. Cécile Michel cites the
now familiar example of Assyrian traders working for profit on their own
account in Asia Minor. Marcelo Rede likewise sees Larsa¹s merchants as
dealing at the margin where prices were more flexible, while also dealing on
standardized terms with the palace. Discussing Egyptian trade with Ugarit in
the 11th century, Caroline Sauvage points out how blurred the public/private
dichotomy is. Michael Jursa suggests that Neo-Babylonian market trading
occurred in the street-market sooks where sellers set up stalls. Mario
Liverani makes a similar point in The Ancient Economy. While Mesopotamian
temples and palaces supplied traders with textiles and metalwork at fixed
prices, ³the merchants¹ activity once they left the palace was completely
different: they could freely trade, playing on the different prices of the
various items in various countries, even using their money in financial
activities (such as loans) in the time span at their disposal, and making
the maximum possible personal profit.²

            Turning to the Neo-Babylonian period in the Polanyi volume,
Laetitia Graslin-Thomé and Christel Vivel apply the Austrian theory of
risk-taking to the Murashu family, who made their profit by buying crops
cheaply on the land and selling at higher prices in the city. Their
innovation lay in pre-paying for the harvest, providing credit to enable the
crops to be harvested and for payment of taxes or user fees in ways that
Polanyi¹s theoretical schema did not acknowledge. The authors add that
unlike modern entrepreneurs, administrators in the large institutions did
not personally take risks or profit from their bureaucratic activities. It
might be pointed out, however, that Old Babylonian archives of ³merchants²
have been unearthed mainly in temple or palace precincts, and their private
dealings are thoroughly intermixed with their administration within the
bureaucracy. The way to gain wealth evidently was to work in the catalytic
public institutions where gain seeking was socially condoned most readily.

            I doubt that these articles will provide much new for most
Assyriologists. Nor will Alain Testart¹s rejection of Polanyi¹s definition
of redistribution on the idiosyncratic ground that rather than being
characterized by quid pro quo, it should be limited to discretionary ³free
gifts² on the part of the giver. This would make the concept of
redistribution inapplicable to Mesopotamia, where the first objective of
administered prices was to co-measure values in a single set of accounts.
Traders associated with the region¹s temples and palaces brought the
practices of account keeping, weights and measures, interest-bearing debt
and basic contractual arrangements to the Mediterranean and other regions.

            In line with Marcel Mauss¹s The Gift (1925), which promoted an
anthropological view that interest charges evolved out of gift exchange,
Polanyi viewed Greek and Roman trade and credit practices as evolving
autonomously in a ³reciprocity² economy, as if the West¹s commercial history
were not anchored in the Near East. However, Manning and Morris point out
that Finley broke from Polanyi precisely over the fact that Greece and Rome
were not such extreme examples of primitive subsistence economies as Polanyi
believed.

            In the Polanyi volume, Catherine Perlès points out that much
Neolithic trade in Greece was in materials produced locally, suggesting an
archaic reciprocity system that served to bind participants together much
like the Trobriand Island kula trade. But the remaining papers reflect the
now common reaction against Finley¹s over-emphasis on archaic survivals.
Évelyne Scheid-Tissinier finds that his World of Odyssus focused on gift
exchange without recognizing the degree to which high-status individuals
engaged in commerce. It was not trade as such that was held in contempt, but
the cheating and trickery that have plagued petty retail dealing throughout
the ages. It seems not to have been looked down upon when chieftains or
aristocrats did it.

            Raymond Descat points out that Athenian trade was restricted to
the public agora in order to enforce laws regarding fair dealing, above all
Solon¹s law preventing Athenian debtors from being sold into slavery. He
adds that the famous comments by Herodotus that Polanyi emphasized ­ that
Persia had no markets, and Cyrus¹s derogatory remark about Greece being what
Napoleon two thousand years later would call ³a nation of shopkeepers² ­
failed to reflect the fact that the Persians indeed had market exchange of
one form or another.

            The textbook idea of ³free markets² is responsible for much of
the confusion, by being as mythical and non-historical as the notion that
administered prices are incompatible with capitalism and market exchange in
today¹s world of administered prices by public utilities, monopoly price
fixing and cost-plus military contracts. It seems logical enough that prices
had to be administered before they could start fluctuating freely in
response to shifts in supply and demand. Prices as such required
standardized weights, measures and monetary metal of uniform quality;
otherwise, how were commodities and their prices to be denominated?
Mesopotamia¹s large institutions administered the first documented prices,
initially to allocate their own internal resource flows and standardize
their bulk trade. These prices needed to be stable for forward planning
purposes. But Polanyi treated administered pricing independently from the
system by which temples and palaces consigned goods to merchants at
interest, how mercantile contracts involved debt and equity arrangements,
and how interest charges spread to tax liabilities owed by cultivators on
the land.

            Christophe Pébarthe suggests that rather than Aristotle
³discovering² the economy as Polanyi wrote, his motivation was similar to
that of Polanyi himself, compiling constitutions from different cities to
show how broad a range of alternatives existed to the oligarchy that was
emerging in Athens. I find it curious that Polanyi¹s followers have not paid
more attention to this political dimension, especially to Sparta¹s Lycurgan
reforms, their undoing, the political crisis culminating in the attempt by
its two kings, Agis and Cleomenes, to cancel the citizenry¹s debts, and the
victory of Rome¹s oligarchy whose creditor-oriented law of possession broke
down the customary economic protection of cultivators. First in Sparta and
then in Rome (according to Livy and Plutarch, and modern historians such as
Arnold Toynbee) creditors used interest-bearing debt as a lever to
appropriate public land as well as family self-support plots, reducing
unprecedented numbers of citizens to bondage. Yet the impact of debt and
finance on the distribution of property, personal liberty and fiscal balance
remain the most neglected economic dimensions of antiquity.

            What ended up stifling Roman growth was the concentration of
property ownership, not trade and commodity pricing. When Pliny the Elder
complained that silver and gold were the great curses of humanity, he was
referring not to their role in facilitating exchange but to the fact that
usury reduced much of Rome¹s population to bondage and enabled its oligarchy
to monopolize the land. However, the Near East treated bondservants and
slaves much more leniently than did Rome, and avoided the debt polarization
to which later antiquity fell prey. A self-sufficient body of
citizen-cultivators was maintained by liberating bondservants and restoring
land to families that had lost it under conditions of economic duress.
Neither volume under review addresses this important difference, or the
distinction between market exchange and the way in which societies treated
debt. In Autour Polanyi, Chapman¹s treatment of the ³triad of trade, money
and markets² does not address how the exponential growth of debt and savings
destabilize property relations. Parise and Descat likewise deal with money
as a civic phenomenon embedded in local politics without mentioning the
rural usury that polarized property distribution over the course of
antiquity. Renger discusses the supply of money in passing, but not debt and
interest charges. Rede, notes that the Ibni-Amurrum archive touches on the
effect of Hammurabi¹s misharum debt annulments on Larsa, but does not pursue
the debt dimension.

            One would think that the role of finance in the Great Depression
would have led Polanyi to pursue the financial and property dimensions of
economic history. But he identified ³market exchange² with modern
capitalism, which he saw as a system of market pricing without taking into
account property, debt and finance. He also did not note the contrast
between public and private sectors regarding administered pricing and
flexible market pricing. Yet at its Mesopotamian origins, interest charges
appear at the interface between the public institutions (the temples and
palaces) and ³merchants,² who operated simultaneously in both a public and
private context. The major creditors were the large institutions, followed
by their officials acting in their own interest. What appeared to Polanyi at
first sight to be a taxonomy of different types of economy thus turns out to
be a distinction between different kinds of market pricing within
Mesopotamia¹s ³mixed economy.² Central authority appeared as the major
creditor, followed by its officials and agents, including tax collectors.

            The palace for its part acted to prevent debt from tear society
apart by creditors foreclosing on the land of insolvent debtors. It thus was
the palace that played the role that most economists today assign to the
private sector: preserving economic freedom for its citizens, a liberty that
subsequently was lost in ³the West,² that is, in classical Greece and Rome.
Yet today¹s view of a ³clash of civilizations² attributes the birth of
freedom and economic liberty to the Mediterranean lands, not to the earlier
Near East where the earliest bicameral political bodies and modern economic
practices are found, along with the phenomena that inspired the motto Ex
oriente lux.

            Descat warns against viewing antiquity in terms of a clash
between ³two civilizations.² Polanyi¹s failure to see how all economies are
mixed had the potential to be transformed into a Cold War contrast between
centrally administered Oriental despotisms and ³market² economies. As Morris
and Manning explain in their introduction to The Ancient Economy, the study
of the Near East has long been segregated from that of Greece and Rome as if
they belonged to two distinct continua. The first modern catalyst to
analyzing the ancient Mediterranean world as an integral unit was spurred by
Fernand Braudel¹s La Mediterranée et le monde méditerranéen à l¹époque de
Philippe II (1949), followed by the contributions of Martin West (in
mythology), Walter Burckert (religion), and Martin Bernal. Braudel¹s book
finally was translated into English in 1972, but even today, attempts to
integrate the early Near Eastern takeoff with Mediterranean development
remain ³radically under-theorized and methodologically impoverished.² This
is due in part to ³the unusual rigidity of institutional structures in both
the classical and biblical branches of ancient Mediterranean scholarship.²
Classicists are trained mainly in philology, while most Egyptologists and
Assyriologists have focused more on literary, religious and philological
issues than economic ones.

            More seriously, a political agenda has been at work to promote a
³divided-Mediterranean model² whose genesis Morris and Manning trace back to
1917 when ³Woodrow Wilson¹s administration asked leading colleges across the
United States to design classes that would justify the war effort.² The
result emphasized classical Athenian democracy, as America represented its
side in the war ­ as it has done down through today¹s post-Cold War period ­
as a fight for democracy. Quoting David Gress¹s From Plato to NATO (1998),
they write: ³The Cold War gave new relevance to liberal histories of Western
civilization. The University of Chicago redesigned its interwar program in
the 1940s, promoting a ŒGreek-centered model [that] define[d] the West as an
ahistorical set of great ideas migrating, unsullied by history and passion,
from Plato to NATO.¹²

            In place of ³the long-established practice of drawing a line
through the map of the ancient Mediterranean world, with Greco-Roman
societies on one side of it and Egypt and the Near East on the other,² most
of the essays in The Ancient Economy seek to extend the analysis of the
economic origins of modern civilization beyond the Mediterranean to include
the Near East. They criticize the artificial distinction between economies
based on ³markets² (which turn out to be regulated by power elites) and
societies with stronger public sectors, which turn out to provide key
infrastructure and economic regulation promoting commercial enterprise and
wealth. 

            The volume is divided into four parts: the Near East; classical
Greece; Egypt under the Ptolemies and Rome; and the late Roman Empire. Each
discipline seems to have its own distinct methodology. Morris and Manning
realize that a viable interdisciplinary model will take many years to
develop. Matters are complicated by the fact that modern economics has its
blind spots in the most important dimensions of ancient life, focusing as
narrowly as Polanyi on markets for goods and services to the exclusion of
property and debt relationships.

            With regard to the ancient Near East, Liverani believes that the
comparative anthropological approach of Polanyi and others from the 1960s
through 1980s still has something to offer with regard to how cultural forms
shape economic behavior. Peter Bedford goes in the opposite direction,
claiming that the Chicago School¹s free-market ³rational actor² theory helps
explain ancient land tenure. He does not explain how rational economies
ended up concentrating land ownership and plunging the Roman Empire into
what would seem to be an irrational Dark Age. Nor does he address Liverani¹s
concerns by asking what made Romanesque rationality so much narrower than
that of Near Eastern society, which preserved a land-tenured citizenry. An
economic sociologist, Mark Granovetter, urges a more historically realistic
and complex model, criticizing both Polanyi and the ³rational choice²
approaches as both being too one-sided.

            Arguing ³against the general trend in archaeological theory
toward culturalism² and its focus on institutional structures, Morris would
prefer to quantify broad quantitative trends in population, output and
standards of living. Manning finds it a virtue for economic models to start
with broad, testable theoretical propositions and then to seek evidence.
Where meaningful quantitative evidence is weak, John Davies suggests using
diagrammatic relationships to describe trade patterns and economic
structures.

            The book¹s only economist, Takeshi Amemiya, points out that his
discipline finds it irrational for people to seek status or love rather than
profit ­ but people do indeed often choose such non-economic objectives.
³Irrational is a loaded word that has been used by whoever wanted to silence
the heretics.² He doubts that mathematically sophisticated models can give
meaningful results to explain the course of ancient society, not least
because each society was so diverse.

            The problem is that economic models have narrowed rather than
widened their scope since Polanyi¹s death in 1964, becoming more abstract
and deductive than historical. As its logic has become more ³free-market²
oriented, its models have dismissed contextual phenomena ­ even
environmental pollution, debt and the concentration of property ownership ­
as ³externalities,² that is, phenomena that lie outside its models. The
effect is to blame all instances of market failure on ³exogenous² factors.
There seems to be no room to analyze how the ancient Near East handled debt
problems differently from classical Greece and Rome in a way that preserved
liberty more widely.

            The two Egyptian articles focus on the Ptolemic period. Manning
finds it essential to look for continuities from earlier pharaonic periods,
stressing the relative autonomy of local power. Criticizing Finley¹s attempt
to isolate Egyptian practice, Roger Bagnall urges that Egyptian history be
incorporated into a view of Mediterranean development as a whole.

            Turning to Rome, Bruce Hitchner argues that ³most, if not all,
of the conditions were in place for real economic growth to have occurred in
the Roman Empire between the later first century BC and the early third
century AD.² Describing the Empire as ³an early and successful example of
globalization,² the most prosperous economy known prior to 18th-century
Europe, he notes that this shows that capitalism is not a precondition for
economic growth. However, ³Roman law provided that which was essential for
investment and engagement in productive activities: contract enforcement and
relative security of assets.² These assets included slaves, and much wealth
that was stripped from Asia Minor and other regions. Amazingly, Hitchner
concludes: ³It does not matter, and is in any case irrelevant, that this
growth was not the same as that achieved in the modern age or that it did
not last.² But I believe that  this is precisely what matters. Hitchner
blames Rome¹s fiscal collapse on the need to divert taxes to maintain an
army, not on its oligarchic culture. To shy away from contrasting the fall
of Rome with the Near East¹s long resistance to economic polarization is to
avoid discussing politics, and specifically the debt laws to which Rome¹s
own historians Livy, Plutarch and Sallust pointed.

            Richard Saller helps broaden the approach by describing how
Finley and Rostovtzeff were more multisided than usually is recognized.
Despite technological growth and prosperity at the top, for instance,
Rostovtzeff acknowledged that ³much of the urban population remained
underemployed and at bare subsistence (as in Third World economies today).²
Mortality ³remained appallingly high and life expectancies very low. . . .
Education and training outside the household were the privilege of the elite
few,² and the literary education given to the rich was of little help in
raising productivity. So Rome failed in the develop human capital ­ a
product of the culture and institutions to which Finley pointed. Conversely,
Saller cites Finley¹s own recognition of the powerful influence of foreign
trade and markets.

            At the conclusion of The Ancient Economy, Avner Grief notes that
Rome provided the legal tradition that based the Western world¹s progress on
³property rights and freedom.² But the point that Finley made was that the
property rights of creditors and slave owners ended up reducing a quarter of
Rome¹s population to bondage. If monetary collapse leading to serfdom was
the legacy, what do modern economic success models leave out of account?

            The question posed is, what in fact makes the West ³Western²? Is
it democracy? Private enterprise? The mythology of an East-West divide based
on markets and property rights has discouraged analysis of how early
civilization¹s money and standardized pricing, interest-bearing credit and
business contractual formalities were developed in the temples and palaces
of Sumer and Babylonia. In light of the priority of these large
institutions, Greece and Rome appear not as a fresh beginning but as a
transplanting of Near Eastern practices into the smaller and more
³privatized² context of local chieftains and ³big-men.² The classical
oligarchies were ³free² of the public overrides that had sought to maintain
a land-tenured citizen army ­ and shifted to mercenary armies manned by
citizens driven off their land and disenfranchised by usury.

            The basic contrast with the Near East was not the mode of
pricing but the way in which credit and debt dynamics were handled.
Classical antiquity lacked the clean slates found in the Near East, which
experienced as much warfare as did Rome but maintained a free citizen army
and more widespread liberty than Greece and Rome after their oligarchies
triumphed. In the ³West,² creditor rights trumped the ³security of property²
and drove citizens off the land.

            The idea that economies are dominated either by the public or
private sectors ­ and hence are either centralized and redistributive or
³market oriented²­ evolved into something not intended by Polanyi and his
followers: a contrast between an idealized free-market West and a
pre-Western civilization akin to Oriental Despotism, as if the West does not
have administered prices and the Ancient Orient had no markets. This
juxtaposition is now evolving beyond the Cold War attack on Communism¹s
planned economies to become a war against economies not deemed to be in the
Western neoliberal camp.

            So extreme a contrast can be maintained only by being highly
selective of the data being considered, and by excluding the dimension most
seriously lacking in today¹s economic theory ­ the financial dimension,
above all as regards the relationship between the debt overhead and ³real²
production and consumption. Rome¹s creditor-oriented law of property shaped
the West¹s financial system. Mohammed tried to reform it, as did early
Christianity. When it comes to success in subordinating the dynamics of
interest-bearing debt to the political objective of widespread property
ownership and a self-sufficient citizenry, the Near East succeeded much
longer than the classical Greek and Roman oligarchies that were the pivot to
modern Western Europe and the world it colonized.

            At issue is what is mainly responsible for determining the
course of economic evolution. Both volumes note Douglass North¹s theory that
economic institutions win out by minimizing ³transactions costs.² Davies
points to the tendency for this logic to become circular by implying that
our world has evolved in ways that must be the most efficient in cutting
such costs. ³To use it as a peg for a covertly prescriptivist attitude
toward cost cutting is plainly no more helpful than to attempt to trace
through time, from the standpoint of Now, an asymptotically falling curve of
reduction in such costs.² Rather, one should ask, ³What institutions,
practices, and values comprised the environmental framework within which
economic activity took place?² Saller points out that one should look at
blockages as well as catalysts, for it is domestic economic blockages that
destroyed the imperial Roman economy, in contrast to the external military
pressures that swept the Near East and Aegean around 1200 BC.

            The modern ³economic² view of how economies operate efficiently
is thus highly ideological, casting its value judgment on the East-West
contrast by sidestepping issues such as dependency and liberty, debt levels
and land tenure dismissed as ³liberal humanistic² in character. Morris and
Manning point out that liberal humanistic historians have little to say
about quantitative performance in terms of ³total output, output per capita,
and the distribution of income of the society.² But modern ³market
economics² excludes bankruptcy, crises, depressions and asset stripping as
³externalities.² Nothing is said in these two books (or in the writings of
most economists today, for that matter) about the classical economic concern
with whether income was earned or unearned as in rentier overhead. There is
little discussion of property prices or debt. It seems that as economies
have become more polarized, they have become more ³efficient² at cutting the
³cost² imposed by egalitarianism. So we are back in the realm of ideological
views of antiquity. Coinage, debt, ³security of property² (including
slaves!) all cut transactions costs. This is supposed to explain the
emergence of monetary coinage.

            Renger and Bresson also criticize North¹s reasoning that the
market (supposedly any market) works efficiently to minimize transactions
costs. The inference is that modern markets must be the most efficient at
minimizing ³transaction costs² to have won out in the economic struggle for
existence. But markets going back to Babylonian times tend to work on
credit, and the economy¹s debt overhead imposes interest charges and
penalties for default. This calls for a ³contextual² political and
institutional response to debt bondage, dependency, slavery and serfdom in
classical antiquity.

            Some small points: The Polanyi volume has no bibliography and is
replete with typographical errors. Renger¹s article repeatedly misspells
Piero Sraffa as ³Scraffa.² Even more striking, Sraffa¹s book on the
production of commodities from commodities is treated as if this provided a
kind of input-output analysis to view economies. But as the editor of David
Ricardo¹s collected writings, Sraffa was well aware of the principle of
economic rent reflecting the difference between market price and intrinsic
cost value (reducible ultimately to labor). Ricardo took food as the basic
subsistence wage for English labor. Rising or falling food costs determined
the amount of groundrent landlords could obtain ­ a rent that the classical
economists described as a ³free lunch² and wanted to tax away. Sraffa¹s
input-output analysis did not imply a non-market economy. It was an
economist¹s way of abstracting the ³real² economy to adjust for fluctuations
in prices and rents and focusing on land prices. As Ricardo warned, rising
rents ­ prices charged in excess of technologically necessary production
costs ­ threatened to bring growth to a halt.

            But land tenure and rent is a lacuna in Polanyi¹s theorizing.
What could be more important in contrasting the ancient Near Eastern, Greek
and Roman economies than their property relations? The topic is discussed
more in the new Ancient Economy, but there is no linkage to the fact that
land transfers initially occurred largely by creditors foreclosing. The
³market² spoken of is for goods, not self-support land or other property.
Debt was the main lever privatizing the land and impoverishing much of the
population. It would seem to follow that property ownership patterns and
debt dynamics should be in the forefront of macroeconomic measures tracing 
the development of ancient economies over time, contrasting them both from 
each other and from modern economies.

            What remains of the influence of Polanyi and Finley is greater 
attention paid to the institutional property and financial context within 
which enterprise evolved, and the shifting political balance between 
oligarchies and government power. What is needed is a theory of how the 
entire economy works, including its political and social environment. Yet 
today¹s academic curriculum has less room for these concerns than there was 
in Polanyi¹s day. Failure to recognize that ³externalities² are pushing 
economies further out of balance, and that all economies are ³mixed,² runs 
the danger of drawing a schematic profile not only of the ancient Near East 
but of modern economies as well. 

5,069 words
  
P.5 (I don¹t know what this means. Did I miss some context?)
In Autour Polanyi, Rede notes that the Ibni-Amurrum archive touches on the 
effect of Hammurabi¹s misharum debt annulments on Larsa.
  
P. 8 (A typo) 
So Rome failed in the develop human capital ­
  
P. 10 (I guess you mean property as debt instruments rather than as real 
estate?)
Coinage, debt, "security of property" (including slaves?) all cut 
transactions costs.
  
P.11 (I find the highlighted phrase obscure.)
Failure to recognize that "externalities" are pushing economies further out 
of balance, and that all economies are "mixed," runs the danger of drawing a 
schematic profile not only of the ancient Near East but of modern economies 
as well.




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