Chapter IV Xenophon
Xenophon was a man of affairs, whose interests touched the practical life of the world on many sides, as is evidenced by the broad scope of his extant works. He was also, however, a pupil of Socrates. In his economic thought, therefore, he vacillates between the positive interest of the practical economist and the negative criticism of the Socratics.375 On the whole, his practical bent dominates, and is especially exhibited in his essay on the Revenues of Athens,376 as also in the fact that he was the first writer to produce a work devoted entirely to economics.377 The spirit of the moral philosopher, on the other hand, is prominent wherever the influence of Socrates is felt, as in the first chapters of the Economicus and in the Memorabilia. When the Socratic ideal dominates, he, in common with other Greek thinkers, confuses economics with ethics, and private with public economy.378 He makes the science of economy deal with the management of private estates,379 and believes with Plato and Ruskin that the same qualities are necessary for the successful handling of the affairs of either house or state.380
Value
Xenophon insists strongly on utility or serviceableness as a necessary quality of property (χρήματα, κτήματα). By this, however, he means primarily, not potential utility in the object, but ability of the owner to use rightly.381 Even exchangeability does not insure value in anything, unless the seller can use to advantage that which he receives in return.382 This idea of value is true enough from the ethical standpoint, and should not be left out of account, as is being recognized by modern economists. But to attempt to build a theory of economic value on such a basis, as Ruskin does,383 would result in hopeless confusion. Value is not merely an individual and moral, but also a social and economic, fact.
A hint of exchange value is given in the implied classification of goods as usable or salable.384 But there is no discrimination between useful things in the economic and uneconomic sense. In the Revenues, on the other hand, when free from Socratic influence, Xenophon makes a positive contribution to the theory of value. He observes that the exchange value of goods varies with supply and demand, and that this law is, in a sense, self-regulative by the fact that workmen tend to enter other fields of activity whenever any industry becomes unprofitable through an oversupply of its products.385
Wealth
The double standpoint of Xenophon is well illustrated in his doctrine of wealth. On the one hand, he values it highly, and tries to deduce practical rules for its increase and enjoyment.386 On the other hand, like Socrates and Plato, he makes derogatory comparisons between economic and spiritual wealth.387 As in the case of value, he offers no clear definition of economic wealth (κτῆσις). It is defined indiscriminately as “whatever is useful to life,” and “useful” is “everything that anyone knows how to use.”388 But, as seen above, this is a purely subjective notion, and is only one element in economic wealth.389 He also defines it (χρήματα) as “the excess of goods over needs,” making it a merely relative term:390 but here again the thought is ethical rather than economic, an attempt to teach the somewhat ascetic principle that a man’s riches are measured by the paucity of his wants.391 The hostile or indifferent attitude to wealth is also assumed in the comparison of it with so-called mental wealth and wisdom392 and in the implication that it involves many cares.393 The idea so prominent in Plato, however, that the acquisition or expenditure of great wealth is not consistent with justice, is not emphasized by Xenophon. He calls that man happiest who has best succeeded in just acquisition, and who uses his wealth in the best manner.394
Production
The Greeks had no specific word for production, as we have, since industry, though well developed, was not a dominant feature of Greek life, and economics had not become a separate science. The word ἐργασία, meaning “labor” or “business,” served the purpose. The term was used of productive labor,395 of building or manufacturing,396 of work in raw materials,397 most commonly of agriculture,398 of industries in general,399 of the trades, commerce, or other business for money-making,400 and of a guild of laborers.401 The term ἡ ποιητικὴ τέχνη, “the productive art,” which approaches more nearly to a specific, technical expression, was also used.402 Thus, though there is no clear-cut term for production, the statement of Zimmern403 that the Greeks had no better word for “business” than ἀσχολία, “lack of leisure,” is hardly warranted.
Xenophon was far more interested than Plato or Aristotle in the problem of practical production. His shrewd discussion of agriculture, and his urgent appeal to Athens to increase her revenues by systematic exploitation of the mines, and by the encouragement of industry and commerce, reveal a mind awake to economic advantage. Though at times he seems almost to make war and agriculture the only true means of production, it is evident that he has a live interest in all means of acquisition.404 Toward the theory of production, however, his contribution is not large. In the Economics, he recognizes the importance of labor and natural resources in production, and in the Revenues, he sees the necessity of capital.405 But naturally, like Aristotle and the southern planter, he confuses capital with labor, in the person of the slave.406 The fable of the dog and the sheep reveals a knowledge of the machinery of production, and some insight into the proper relation between the employer and the laborer.407 Xenophon’s distinct contribution to future economic thought, however, consists in his appreciation of the fact that economic production has its definite limits; that the same ratio of profits cannot be increased indefinitely by the constant addition of more labor and capital, but that these must be proportioned to the greatest possible return.408 To be sure, he does not appreciate the scientific significance of the principle. His purpose is rather to emphasize the danger of overproduction, and he even fails to grasp the necessary application of this danger to the silver mines. However, as the enunciator of the principle, he may be called the forerunner of the doctrine of diminishing returns.
As seen above, special emphasis was laid by Xenophon upon natural resources as an element in production, both in land and in the mines. His great interest in and eulogy of agriculture as the basal industry, upon which all other sources of wealth depend,409 have caused him to be classed with the physiocrats of modern time but such an interpretation is hardly warranted. Without doubt, agriculture is, in his opinion, the supremely honorable occupation. It shares with war the right to be placed above all other vocations.410 It permits the maximum of leisure and physical development, and is not unworthy of the personal attention of a prince.411 It is the most pleasant, most productive,, most dignified, of callings; the best exercise for the athlete, the finest school for education in patriotism and justice, and it offers the greatest opportunity for the exercise of hospitality to men and reverence to gods.412 Indeed, it is the first of all occupations for an honorable and high-minded man to choose.413 Here we have the highest eulogy of agriculture in Greek literature. It is in essence a sound statement, and offers a needed message for today.
Though Xenophon recognized the practical importance of capital in industrial enterprises,414 he developed no theory of it in his writings. He appreciated, however, the value of being able to keep a surplus.415 The term ἀφορμή, as used by him of the provision of raw material for weaving, probably signified nothing more than it would have done to any Athenian business man of his time.416 The word originally meant a “starting-point,” especially in war.417 Later, it signified the “means” or “resources” with which one begins a project,418 especially in business. It was an easy step from this general business use to the meaning, “financial capital” of a banker.419 Other terms for capital were ἐνεργά, used of interest-bearing capital in antithesis to ἀργά, of goods merely for use;420 κάρπιμα, “goods that yield a produce,” as opposed to ἀπολαυστικά, “goods to be enjoyed,”421 which is suggestive of Mill’s422 definition, “that part of his possessions... which he designs to employ in carrying on fresh production,” and of his two kinds of capital, “circulating” and “fixed”; ποιητικά, “things for further production,” as opposed to πρακτικά, “things merely for use”;423 κεφάλαιος, of capital as opposed to interest or income.424 The term ἔρανος, also, since it came to mean a “contribution of money,” was often used of a loan, and therefore approached the signification of “money capital.”425
Xenophon is considerably more favorable to labor and the industrial life than are the other Socratics. He quotes Socrates with apparent approval, that to do something well is well-being, while he who does nothing well is neither good for anything nor beloved of God.426 Work is far better than idleness. It produces more happiness, makes the laborer more temperate and just, and is the sine qua non for the independent life.427 This is a strong plea for industry, and is especially significant, since it refers primarily, to manufacture rather than to agriculture. The reference, however, is to women workers, whose loss of leisure would not be an injury to the state. Each person is encouraged to provide for himself, and to do his work in the best possible manner,428 and the maxim of Epicharmus, “For labor, the gods sell all goods to us,” is heartily approved.429 All the foregoing passages are Hesiodic in their insistence upon the value of industry.430 But apart from his evident acceptance of the doctrine of Socrates, as quoted above, Xenophon exhibits a positive interest in labor. His attitude toward the advancement of industry and commerce is thoroughly modern, except that he does not contemplate the employment of free citizen labor.431 He emphasizes labor almost as strongly as natural resources as an important factor in production. He believes also that industrial thrift and prosperity are the best means of realizing a more quiet and orderly state.432
Even the practical Xenophon, however, is not free from the moral-aristocratic prejudice against mechanical arts (βαναυσικαί) for the better class of citizens. He admits that they are justly spoken against, and held in ill-repute, since they tend to weaken the laborer both in body and in soul.433 The artisans have no leisure to give either to their friends or to the state, and in a warlike state the citizens cannot be thus employed.434 The artisan is also servile because of his ignorance of the higher moral sentiments (τὰ καλὰ καὶ ἀγαθὰ καὶ δίκαια).435 All this sounds like Plato, but Xenophon differs, in that he is in no wise opposed to the unlimited development of industry and commerce, provided the drudgery of it may be done by non-citizens.
The principle of the division of labor is clearly stated by him, but here again he differs from Plato in that his prime interest is practical and economic rather than moral. He presents it as the reason why royal dishes are superior in flavor to others, and makes the acute observation that the division of labor is not so fully applied in the small city, because there are not enough consumers to support a man in one trade. In the large city, on the other hand, the consumers are so numerous that even the trades themselves are divided and subdivided. Thus much greater skill is developed, and better results realized, for he who spends his time in work of the narrowest compass (βραχυτάτῳ) must accomplish this in the best manner.436 He does not specify the advantages of the division of labor to industry, except that it results in greater skill, but he reveals especial insight in stating so clearly the relation of the market to the development of the principle.437 In this, he is the forerunner of Adam Smith, who observes that a minute division of trades cannot exist except in the larger cities, especially in coast and river towns.438 The assertion of Haney,439 that the Greeks referred only to a “simple separation of employments,” is certainly unwarranted in the light of this passage, for Xenophon expressly distinguishes here the simple from the more complex subdivision. He says that some are employed on men’s shoes, others on women’s; some do the sewing (νευρορραφῶν), others do the cutting (σχίζων), and that the same also is true in the manufacture of clothing.440 This passage is also an evidence that the development of industry in fourth-century Athens must have been extensive. Xenophon also, like Plato, observed the fact that the diversity in the natures of men is the basis for the division of labor,441 though he did not follow him in his doctrine that men and women should have the same work.442
Unlike Plato, the idealist, Xenophon, the practical man of affairs, takes the institution of slavery for granted, seemingly unconscious of any ethical or economic problems involved.443 However, as a matter of common-sense, he advises that slaves be treated with consideration. He would give them a proper degree of liberty,444 and arouse them to do their best445 by a fair system of rewards and punishments. In the case of those slaves who hold positions of trust, he advises that their affections should be won by kindly treatment, and even by making them sharers in the prosperity of the household.446 Slavery is, of course, a condition most irksome to the free-born. The unfortunate Eutheros would almost prefer starvation.447
Money
In his treatise on the Revenues of Athens, Xenophon shows some appreciation of the theory of money. He appears to take for granted that money must have intrinsic value. At least, he understands that silver is a commodity whose value is affected by its use as such, as well as by its employment for currency.448 He also apprehends the value of a silver currency for international commerce.449 His naïvely enthusiastic argument for the indefinite increase of the stock of silver, however, is suggestive of the mercantile fallacy, which identified money with wealth.450 But perhaps he is merely using for practical purposes of argument the fact that the Athenians were accustomed to look upon silver as the metal for fixed and constant value.451 In any event, he sees that the increase of silver must be attended by a corresponding increase in business activity, if its value is not to depreciate,452 and he cannot be accused of the error of the mercantilists, that a country is impoverished by the export of money.453 He must also have understood clearly the importance of stability of value in a currency, since he deems it necessary to show that the increased output of silver will not decrease its value, and that silver is the least changeable of the monetary metals.454 Despite his enthusiasm for his thesis, which causes him to exaggerate the stability of silver, he does not fail to grasp the direct effect of supply and demand upon it,455 just as upon gold456 and other commodities.457 He shows also some understanding of the quantitative theory of the relation between gold and silver.458 It need hardly be added that, in strong contrast to Plato, his attitude toward the precious metals, especially silver, is very favorable.459
Exchange
Xenophon presents no theory of exchange,460 though he is frankly interested in the advance of commerce and trade. In his opinion, the greater their development, the better it is for the city of Athens.461 He is full of practical suggestions to stimulate commercial activity.462 So assured is he of the prime importance of extensive commerce to a nation, that, in the spirit of modern commercialism, he insists upon the necessity of peace for its sake.463 To his mind, increased trade means not only material advantage, but social and political as well, in that greater prosperity, more labor, and a better distribution will mean greater satisfaction, and hence less danger of revolution in the state.464 He entertains none of the prejudice of the other Socratics against the money-makers’ art, a fact which may well be a warning against the too ready acceptance of their attitude as the usual verdict of the Athenian citizens.465 In his practical suggestions for the development of commerce there is a hint of the protective principle. He advises that certain advantages be granted to shipowners so as to induce them to increase their shipping.466 But the purpose is not to limit the advantage to Athenian merchantmen, nor to restrict import trade. It is rather the opposite. He would enrich the city by tribute on both imports and exports, imposed for sumptuary and revenue purposes,467 and would also develop a public merchant-marine for rent to merchants, as a further source of income.468
Population
In antithesis to Plato and Aristotle, the problem of population has no difficulties for Xenophon. He does not deem it advisable to set a limit on the population of the state. On the contrary, he conceives it as one of the advantages of his plan in the Revenues, that thereby the city would become very populous, and thus land about the mines would soon be as valuable as that in the city itself.469
Distribution
Xenophon is far less concerned about the problem of distribution than Plato. He has no suggestions as to wages, profits, or prices, no ideal state where an equitable distribution shall be realized, no yearnings after equality, or complaints against the evils of extreme wealth or poverty. Like Plato, he would avoid civic discord in the state,470 but by the increase of production and exchange rather than by their limitation. In Socrates’ parable of the dog and the sheep, he presents a suggestion of a theory of profits, but his plea is for the employer instead of the laborer. The right of the former to share in the profits of the business is based on his service as overseer of the work, and as protector of the workmen.471
Our author does not definitely reveal his attitude toward the poorer masses, but it seems probable that he had little interest in them, except in so far as their condition might affect the fortunes of the state. He was, of course, opposed to giving them full political rights,472 and would probably have preferred a system such as that in Plato’s Laws, where all free citizens have sufficient income so that they can give their time largely to the state, and where all laborers are slaves. He did not think of suggesting that the poorer citizens work in the mines, or even that aliens do so, but suggested rather that each citizen have the income from three state slaves.473
While Xenophon is not usually considered among the socialists of Greece, he approaches perhaps even nearer than Plato to one phase of modern socialism. Like Plato, he opposes the extreme individualism of the political and private life of his day.474 He also reveals the Greek feeling of the social obligation of private property.475 Again, as do Plato and modern socialists, he magnifies the power of law to transform economic or social conditions.476 But in advocating the modern doctrine of the socialization of industry, with an economic, and not a moral or political, motive, he has advanced beyond either Plato or Aristotle, and approaches modern socialism.477 As seen above, however, his economic motive is not interest in the welfare of the masses, for by his scheme they would all be slaves. He desires only to abolish poverty among the citizens.478 He would have the state become entrepreneur, not merely in one, but in many branches of industry. State merchant shipping,479 public ownership of slaves,480 public exploitation of the mines,481 public buildings near the mines, for rental to strangers,482 are all in his plan. The rich must finance the scheme, but their profit will be 18, 36, or even 200 per cent.483 Companies are to be organized so as to obviate individual risk.484 Thus will poverty be no more, plenty for all will reign, and there will be an era of prosperity and security for the state.485
His thesis is, in a word, that what private capital can accomplish for the enrichment of itself alone, state capital can accomplish to better advantage for the enrichment of the whole citizenship,486 a doctrine which strikes a truly modern socialistic note.