Classical Period: Economic Crisis

Sources

Food Supply . During the Classical Period (480-323 b.c.e.), the city-states were primarily centers of consumption, and the first task of their governments was to provide their people with the commodities essential for survival, imported grain being the most important of them. Athens was not the only state in need of foreign grain; several other states in Greece proper and in Ionia also had to rely on regular imports. Insofar as the city-states could be said to have had an economic policy, that policy consisted in ensuring the supply of food and finding the means to pay for it. The solution of these two problems overrode all other economic concerns; in effect, a state’s economic policy was, in reality, based upon imports, and its financial goals consisted in little more than the raising of taxes.

Exports . Because governments considered their people only as consumers and not as producers, they did not devise export policies either. Exports were left entirely to private operators, although sometimes a government forbade foodstuffs from leaving the city-state. In any case cities and states seldom had a surplus of goods to export, and when they did, they could not always sell them. Athens, for instance, could not derive a significant revenue from the export of olive oil, because there were no foreign markets for it: virtually the entire Mediterranean region produced its own olive oil in sufficient quantities to satisfy domestic demand. Athens produced some of the finest decorated pottery, but the market for it was small, and its exports did not generate enough income to balance the cost of imports. In short, the combined revenue from agriculture and manufacture was quite insufficient to cover the cost of imported consumer goods.

Land Transport . A second problem besetting all states was the difficulty and cost of land transport. The chief beasts of burden were the ox, mule, and donkey. Both the cost of feeding the animals and their slow movement on bad roads made land transport far more expensive than water travel. It has been calculated that moving a cargo of grain from one end of the Mediterranean to the other cost less than moving it seventy-five miles on land. A city or town could afford to be supplied with food grown, at most, four to five miles away from it. In times of a bad harvest an inland city, which was not particularly affluent and was without the possibility of water transport, faced starvation since it could not import food from farther away. Only the richest and most powerful cities could afford to move the commodities necessary for life by land. Cities on the coast or on navigable rivers could import much of the necessary grain and did not have to rely on the produce from their own distant hinterland. Easy access to waterways was therefore a precondition for the growth of populations in the cities; their absence perforce limited such growth considerably. The Greeks may have planted colonies on the coasts of the Mediterranean Sea not only to relieve population pressures, but also to have a way of importing grain by sea. A small group of colonists in an exceptionally fertile region could grow large amounts of grain, which could then be shipped to Greece at a relatively small cost.

Other Expenses . Thirdly, Greek states had to pay not only for food: money was required also for defense, the construction of public buildings, and for the salaries of officials. In some states citizens expected handouts of public money. Athens, for example, regularly paid subsidies to its citizens, such as the price of admission to the theater, jurors’ pay, and subventions to attend meetings of the popular assembly. There was also the custom of offering free meals for life at public expense to deserving people. Yet, despite the need to raise and spend money regularly, Greek states had no fiscal policy in the modern sense and no budgets; there was no such thing as a balance sheet listing expenditures and revenues. Nor was there any economic planning or accumulation of reserves. Nevertheless, there were exceptions. Themistocles persuaded the Athenians to accept his plan of spending the revenue from the silver mines at Laurium for the construction of warships instead of distributing it among the citizens. Athens also accumulated a reserve in the fifth century with the help of the resources of her empire.

Raising Revenue . Whatever fiscal policy that existed, was of the crudest kind and was concerned only with raising revenues. Greek states generated most of their income by levying taxes on individuals. Port cities raised revenue from the maritime traffic in their harbors by collecting fees for services to ships and by imposing harbor dues, tolls, and dock charges. Whatever export of agricultural and manufactured goods took place was also taxed; but as such exports were limited, the revenues from them were correspondingly small. Where no farming and manufacturing were carried on, as on some smaller islands, fishing and ferrying were possible sources of revenue. States fortunate enough to have gold or silver mines in their territory relied on a steady source of income until the ore was depleted. A vigorous exchange of goods with other countries might have increased the revenues from taxes levied on business. Yet, the growth of business was limited by the lack of most business practices known to the modern world. There were no financial instruments, and the extension of credit for business purposes was unknown. Loans were a regular practice; however, they were not really a form of credit, but an insurance policy against the great risk of losing ships and cargoes at sea.

Vassals and War Booty . For imperial states tribute from subject and vassal countries was another source of income. Related to the revenue from imperialism was income from the sale of booty captured in war, a method of enriching oneself that was accepted as normal.

Tourism . As a final source of income, at least for those states that attracted visitors, there was always tourism. As a center of learning, literature, and art, Athens in the Classical Period received visitors from abroad, including students at the philosophical schools. The places that hosted major religious festivals, especially those offering athletic and cultural spectacles, also attracted large crowds of visitors. As these festivals took place regularly, the tourist money spent at them was a dependable source of considerable income for the host locality.

Sources

M. M. Austin and P. Vidal-Naquet, Economic and Social History of Ancient Greece: An Introduction, translated by Austin (Berkeley: University of California Press, 1977).

Moses I. Finley, The Ancient Economy (Berkeley: University of California Press, 1973).