Greek Philosopher Xenophon and His Economics Theory

Ancient Greek philosopher Xenophon is considered by many to be the first economist. His book Ways and Means (Πόροι ἢ περὶ Προσόδων or On Revenues) is a concise 4th-century BC budgetary plan proposal for Athens.

Born an Athenian aristocrat around 430 BC, Xenophon was a philosopher and contemporary of Socrates. He was also a historian, author, and brilliant military strategist. Xenophon was a student of Socrates and brought to life the great philosopher’s character in his books Memorabilia (Απομνημονεύματα) and Apologia.

Xenophon’s Symposium covers roughly the same ground as Plato’s dialog of the same name, although it focuses more on wit than the philosophy of love.

As a military commander, Xenophon was part of the famous Greek hoplite mercenary army, the “Ten Thousand,” hired by the Persian prince Cyrus the Younger, then satrap of Lydia. Cyrus wanted to seize the throne of his elder brother, the great king Artaxerxes II of Persia and used foreign mercenaries.

The Greek mercenaries defeated the royal Persian army at the Battle of Cunaxa, but Cyrus was killed in action, leaving the Greek mercenaries stranded in the heart of Persian Mesopotamia without an employer. The Greeks elected Xenophon as one of their commanders. He led them out of the Persian empire and back home. Afterward, Xenophon provided a detailed account of the celebrated return in his book Anabasis.

While in company with the mercenaries, Xenophon met several Spartans in the ranks and became familiar with their way of life, war tactics, and ideals. Hence, upon his return in 399 BC, he joined the Spartan campaigns against the Persians in Asia Minor. In the course of these campaigns, Xenophon became an intimate friend of Spartan King Agesilaus II. Upon his return to Greece in 394 BC, he fought alongside the Spartans against his Athenian homeland in the Corinthian War.

As expected, he was exiled from Athens and forced to live in Sparta for many years. Xenophon’s extensive familiarity with Sparta is captured in his reflections on the Spartan King Agesilaus in Polity. Therein, he discusses the laws, institutions, and education of Spartan citizens. In 386 BC, he moved to the Spartan town of Scillus. From there, he was expelled in 371 BC and moved to Corinth. When Athens repealed his exile, Xenophon chose to remain in Corinth until his death around 355 BC.

From author to economist

When his life was close to its end, Xenophon wrote a treatise addressed to his homeland, Athens. At the time, the city was in decline. It went bankrupt as a result of the wars it waged and the long political turmoil.

Even though he lived in exile, Ways and Means is a proposal on how the city can generate proceeds to boost its economy. It is a thoroughly thought-out budgetary program considered pioneering by later economists. In its six chapters, Xenophon appears as a deep thinker, well-versed in economic policy.

In chapter one, the Athenian thinker lists all the natural qualities of the land of Attica. This includes its superb sunny climate, plentiful rich soil, mountain forests surrounding Athens, and rivers running through the city. Furthermore, there are the stone mines of Mount Penteli and the silver mines of Lavrion. This abundance of natural resources can generate plentiful income. Moreover, Athens’ location is an ideal point for trade, both by land and sea. It is also isolated from barbarians.

In chapter two, Xenophon suggests Athens should invite migrants (metics, μέτοικους) to increase the number of those working in agriculture and mining. This would boost the production of goods. Newcomers would be obligated to pay taxes, thus also increasing public revenue. As metics, they could also serve in the army so the city would not have to pay mercenaries. The metics would be given citizen rights and even land. They would be happy to serve for the privilege.

In chapter three, Xenophon explains the reasons why Athens could be a great commercial center and therefore increase revenue through exports, sales, rent, and customs. He states that trading through Athens would be the best and most secure for traders, especially because Athens’ currency, the famous tetradrachmon, was used across regions in Greece. He proposes that perks, such as front-row seats in theaters, be given to traders. More importantly, he mentions the construction of a public merchant fleet and loan ships to merchants.

In chapter four, the Athenian philosopher proposes improvements in the silver mine operation. With proper, well-organized operation, the revenue from the silver mine campaign would increase substantially. He reasons that an increase in the workforce of the silver mining industry would bring large amounts of wealth, whereas increasing work power in agriculture would simply result in a plateau of work efficiency.

Thus, he states that Athens should open up their mining industry to foreigners as well as citizens. He also points out that the demand for silver is endless as extensive trade would open new markets. He proposes the public ownership of slaves. Revenue could be gained by loaning them out to private entrepreneurs.

In chapter five, Xenophon insinuates the importance of peace to obtain the full economic advantages of the state. Athens had been involved in many wars that were costly in lives and money. He suggests instating a board of peace, which would increase the state’s attractiveness to guests from other states. Xenophon argues that Athens during periods of peace is the most attractive location to all types of visitors and therefore should not attempt to control other states by force. Xenophon supposes that Athens would gain the support of other parts of Greece if the city acted as an enforcer of peace.

In chapter six, Xenophon concludes his essay by reminding the Athenian council about the wonders that the changes he proposed would bring to Athens. He entices the populace by suggesting impressive festivals and athletic events that would bring revenue to the state and put the city on the map for entertainment. The revenue, inflow of visitors, and cultural exchange would improve the quality of citizens’ lives. He finally suggests that the council send a delegation to Delphi to ask the Oracle if the gods believe his suggestions were worthwhile ones and asks that they give their blessings.

Modern view of Ways and Means

According to professor of political science Gregory A. McBrayer, Ph. D, in Ways and Means, Xenophon “proposes a plan that will orient Athens toward commercial, rather than military, imperialism, by redirecting Athenian ambition for honor in conquest, to honor in commercial affairs.” It is a proposal that Athens can regain its status as a progressive, strong economy, an economic power rather than a military power. This is why Xenophon insists that “silver will never lose its value,” and believes that “it will never run out.” The latter is a myth, of course, McBrayer argues, but it is a noble lie meant to convince the council that they should think seriously about the “economic power” he suggests.

Athens had become dependent on the taxes and functions of metics even though they were second-class citizens. Xenophon’s proposition to construct projects to house metics and attract more was radical for his time. Equally radical was his idea of pulling foreigners out of the hoplite fighting lines and allowing them to take part in the cavalry, a position reserved for the aristocracy.

Silver mining is central to Xenophon’s political economy. Mining required mass slave labor. He even proposed that Athens acquire “public slaves” to generate revenue by loaning them out. He believed that the more slaves worked in the mines, the better off Athenians would be economically. It is an outdated notion that has been, naturally, criticized by modern economists and scholars.

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Other academics see the pioneering ideas of Xenophon as the birth of growth ideology in Classical Athens. It was a society in the process of economic and cultural blooming, as sociologist and political scientist Jack Goldstone wrote. The Xenophon proposals that Athens followed brought population growth, an increase in per capita income, urbanization, cultural intermingling, and international trade.