by Ober, Josiah
In the course of the fourth century, the Athenian state became more willing to forgive the head tax paid by some noncitizen long-term residents (isoteleia) and to extend the right to own real estate in Attica to noncitizens (enktesis). More rarely, individuals who had been especially helpful to the state were naturalized as full citizens. But probably more important in terms of the incentives of traders were changes in the system of market regulations that tended to lower information asymmetries between buyers and sellers in the Athenian marketplace.
Notable among institutional innovations was the establishment, in the 370s, of public “approvers” of silver coinage. The great popularity of Athenian “owls” as a means of exchange in eastern Mediterranean markets meant that Athenian coinage was widely imitated. Some of the imitations were similar to genuine Athenian coins in weight and purity; others were not. The Athenian approvers were publicly provided market officials charged with detecting counterfeits. Sellers in the market offering goods in exchange for silver could demand that buyers present their coins to the approver as a condition for concluding the sale. “Bad” counterfeits (coins with substandard silver content) were confiscated; “good” counterfeits (correct weight and purity, but minted outside Athens) were returned to the buyer; coins issued by the Athenian mint were “approved”—meaning that their acceptance by the seller was now mandatory. The publicly displayed law governing the approval procedure makes it clear that the service was freely available to all traders in Athenian markets: to citizens, foreigners, and slaves alike.34
In the 340s, the section of the Athenian law code regulating enforcement of contracts for overseas trade was revised in ways that substantially opened access to litigation over contracts and legal dispute resolution to non-Athenians. The reform leveled, at least in principle, the legal playing field between citizens and noncitizens in contract disputes. In the restructured “commercial cases” (dikai emporikai), the procedural rules now limited the legitimate basis of judicial judgment to the question of whether the terms of a written contract had been violated. This reform substantially reduced the discretion of the jurors (Athenian citizens) to judge on the basis of arguments about litigants’ origins, character, or their histories of public generosity or private misbehavior. Moreover, a contract violation case could now be initiated by a noncitizen—certainly by free foreigners and probably by slaves, some of whom worked in banks and engaged in large-scale financial transactions.35
Open access requires that the right to form publicly recognized civil associations be made widely available. As we have seen (ch. 7), classical Athens had a rich infrastructure of civil associations, some of which performed important civic functions. By the later fifth century, and continuing through the fourth century, associations of foreigners in Athens were granted official perpetual charters. These charters provided the foreigners with public land on which they could construct their own sanctuaries and where they were free to practice their religions as they saw fit. An Athenian document from 333 BCE, for example, records a state land grant to a group of Athens-resident merchants from the town of Citium on Cyprus for a sanctuary to be dedicated to Cyprian Aphrodite “just as also the Egyptians have built the sanctuary of Isis.” The mention in the document of the Egyptian Isis sanctuary as a precedent suggests that grants to associations of foreigners were being advertised as standard state policy.36
Open access also applied to ideas, including ideas used to criticize the state. The establishment of philosophical schools—for example, those of Plato, Isocrates, and Aristotle—which included citizens and noncitizens among their memberships—is one example of open access in ideas. It is also a well-documented example of the formation of perpetual nonstate civil associations. The school of the rhetorician Isocrates apparently ended with his death, but the Academy and Lyceum, founded respectively by Plato and Aristotle, had very long histories. These schools were formal organizations, with their own internal bylaws and elected officials. State acceptance of the philosophical schools is especially noteworthy given the highly critical stance toward democracy taken by their founders.37
The net effect of Athenian investment in infrastructure that was likely to be valuable and accessible to residents and visitors to Athens, and institutional innovations opening access and lowering transaction costs, helped to make Athens a relatively more desirable location for Greek and non-Greek traders. While there were other factors involved in Athens’ postimperial revival, for example, the renewed productivity of the silver mines, it seems undeniable that more open access contributed to the growing strength of the Athenian economy.
While it remains impossible to quantify the economic value of Athenian open access, it seems reasonable to postulate that the performance of the Athenian state in the post-Peloponnesian War era would have been substantially worse had the Athenians—counterfactually—moved to restrict access to valuable public institutions and to forbid the establishment of new nonstate civil associations. Moreover, the Aegean economy would in general have fared worse under the counterfactual closed-access order. Brian Rutishauser, an expert in the economic history of the ancient Aegean, notes that the period from 355 (end of the Social War) to 314 (Athenian loss of Delos) was a period of especially vibrant economic activity in the island poleis of the central and northern Aegean. He attributes this in part to their symbiotic relationship, based on mutual economic interests, with Athens and its big and open market.38
Given the limits of our documentation, we can detail the move to more open access only in Athens, and it is probable that open-access institutions were most fully developed there. But at least some market-enhancing institutions best documented at Athens were adopted elsewhere—an inscription from Olbia (i690: size 5) on the north shore of the Black Sea, for example, mandating the use of Olbian coinage in the Olbian market is likely to be adapted from Athenian law.39 We cannot trace the specific mechanisms by which institutions were borrowed, but the idea that opening access could enrich the state was available through literary works that readily circulated through the Greek world.
Xenophon’s mid-fourth century pamphlet, Revenues, argues that Athens should and could enlarge its tax base by making the city more desirable to foreigners, thereby increasing “imports and exports, sales, rents, and customs” (Xenophon Revenues 3.5). Among other measures, Xenophon emphasizes the value of open and fair access to public institutions: He urges that state officials responsible for adjudicating disputes over commercial exchanges be given prizes when they produced especially just and prompt settlements (3.3). Xenophon notes that this remedy would cost nothing beyond “benevolent legislation and regulations” (3.6). But he also recommends substantial state capital investment in infrastructure—in hotels, mercantile halls, an increased stock of available houses, and shops in both Piraeus and in the central city. These “would be an ornament to the state, and at the same time the source of considerable revenue.” They could readily be paid for by loans to the state by individuals, who would, Xenophon assures his reader, be ready to loan funds in light of the state’s reputation for stability (3.12–13). To what extent Xenophon’s proposals were influenced by, or influential upon, actual policy is unknown. But he clearly articulated the relationship between open access, the incentives of foreign traders, and the value of increased trade to the state.
EXPERTISE AND STATE PERFORMANCE
Institutional reforms that served to open access in ways likely to make markets especially desirable to traders were paralleled by reforms that enabled the state to make better use of expertise. As in the case of open access, the trend is best documented at Athens. It is quite likely that Athens was in the forefront of the trend but highly unlikely that Athens was unique. We have seen that military expertise, both at the level of expert generals and at the level of experienced mercenaries, had a substantial effect on the conduct of war in the postimperial era. Xenophon’s manual on how and why to open access in order to stimulate trade and increase indirect tax revenues has its military anal
ogue in his essay on the command of cavalry forces. Another highly literate military expert, Aeneas, nicknamed “the Tactician,” was probably an Arcadian mercenary captain from Stymphalos (i296). Aeneas wrote a number of manuals about various aspects of military operations. His one preserved text, On the Defense of Fortified Positions, shows a deep awareness of the interrelationship between social order and state military security and draws on empirical cases from around the Greek world.40
The fourth century Athenians were certainly well aware of the potential value of military expertise. They employed expert generals (both Athenian citizens and foreigners), hired mercenaries, and developed a formal system, the ephebeia, that employed experts in the military training of young Athenians. By the 330s, if not before, their training included hoplite tactics, projectile weapons, and the operation of catapults. In the fifth century, there had been much overlap between the sets “leading Athenian politicians” and “leading Athenian generals.” In the fourth century, there was much less overlap: Politicians who frequently addressed the assembly were much less likely to serve as generals. With both domestic and foreign policy, and military tactics and strategy becoming specialized fields, each domain was now dominated by experts. Ten Athenian generals were annually elected, as before. But, whereas in the fifth century the duties of individual generals remained unspecified, by the mid-fourth century, several of the generals were elected to serve in specialized roles: A general “for the defense of the countryside” is attested by 357; by the later fourth century, the Aristotelian Ath. Pol. (61.1) attests, in addition, two generals for Piraeus, one for foreign expeditions, and one with responsibility for the financing of the fleet.41
The Athenian general elected to be responsible for fleet finance must have worked closely with other public officials with responsibility for state finance. The Athenians were, by the mid-fourth century, acutely aware of the need for expertise in the domain of money and finance. We have already considered the law of 375, concerning approvers of silver coinage. In this case, as in some others considered in this section, the Athenians literally bought experts: The approvers were salaried public slaves, with connections to the Athenian mint. They clearly were expected to be expert in the identification of real and fake Athenian owls. The high level of expertise that was demanded of them is suggested by the continuing disputes among modern numismatists over the attribution of some owls to Athenian or foreign mints.
In 354, two decades after the approvers law was passed, all Athenian silver coinage was recalled and quickly reminted in a recognizably new format (the “pi-style” owls). The reminting had the double effect of allowing the state a windfall from minting fees and making it much easier, at least for a time, for nonexperts to distinguish between genuine and imitation owls. The drafters of the recall law, like the writers of the approvers law, were acutely sensitive to the concerns of traders in the Athenian market. The recall law, like the law on the approvers, the “grain tax law” of 375, and other fourth century legislation concerning state finance, bears the mark of input by individuals who had become relatively expert in what we would now call transaction cost economics.42
State finances were put on a new footing in the fourth century: The overall state budget was reorganized, so that various spending authorities (Council, assembly, various boards of magistrates) were issued a fixed sum per year, each as a portion (merismos) of the annual budget. Before this time, the budget had been a single pot from which all authorities had dipped as needed. The new merismos system would have allowed those individuals responsible for managing the budget of the different branches of the government to plan ahead, and it eliminated perverse incentives to overspend early in the budget cycle. The system for collecting direct taxes, both eisphora and naval liturgies (the special responsibility of the general in charge of fleet finance), were repeatedly tweaked, in what appears to be an iterative process, drawing on a growing pool of financial expertise. Changes seem to be aimed at finding an optimal position between maximizing compliance and income, and avoiding the necessity of building up an intrusive and costly state bureaucracy.43
In the years after the financial emergency precipitated by the Social War, the Athenians concentrated duties for state-level financial planning and management in a central elective office that, like the generalship, could be held in consecutive years. While we lack many of the details, it seems clear that a series of competent managers, beginning in the late 350s and continuing into the 320s, helped to put Athenian finances on a sound footing, such that annual state income and expenditures were brought into better alignment (table 9.1). The eventual result of successful measures to increase indirect taxes and to collect direct taxes in a way that was relatively fair and not too costly to the state, in the context of good financial management, was that annual state Income and spending increased dramatically. By ca. 335 BCE, state income (reportedly 1,200 talents) seems to have been roughly equal to what it had been in the imperial era a hundred years previously—with the notable difference that fourth century state income was not predicated on big imperial rents. The strong income stream allowed Athens to engage in various high-profile public projects, including civil and military construction and increasing the number of ships available for naval operations.44
The Athenian state’s recognition of the value of experts is particularly evident in the domains of war and finance, but it extended into other domains as well. Some time between 368 and 362 BCE, the chief secretary of the Council of 500, a position that had previously rotated according to the 10-tribe system among the year’s Councilors, was appointed, as a lotteried official, from the general citizen population to serve for an entire year: As Peter Rhodes of the University of Durham points out, this reform was certainly intended to increase efficiency in the conduct of the office, which included the publication of laws and decrees. By the later fourth century, the Council had another secretary, in this case an elected official, who was responsible for reading out documents when called upon to do so at meetings of the Council and the assembly (Pseudo-Aristotle Ath. Pol. 54.5). In the course of the century, a number of other secretaries were added to various administrative bodies; some were citizens (the politician Aeschines began his public career in this way). Others were public slaves. These included the approvers; Nicomachus, a late fifth century archivist of the Athenian laws; and a man named Eukles, who was for some 20 years an assistant to public officials at Eleusis.45
While Athenian government remained predicated on the assumption that many citizen-amateurs could, under the right conditions, make relatively wise decisions on matters of common interest, there appears to be a growing willingness to make use of experienced individuals—citizens and noncitizens alike—whose specialized knowledge could be tapped to make the system more effective. There is no way for us to determine the value added (or lost) by the increased employment of experts by the Athenian state. But in light of the complexity of the tasks undertaken by the state, and the inefficiencies arising from all-amateur government when, for example, an otherwise competent lottery-chosen magistrate was illiterate, it seems reasonable to guess that the addition of a certain number of experienced officials and secretaries, each subject to public scrutiny at the end of every year’s service, pushed in the direction of increased governmental productivity rather than bureaucratic bloat.
To the extent that greater use of experts in government enhanced the capacity of the Athenian government to raise funds and to spend them wisely, government expertise would have promoted Athenian economic flourishing. Annual Athenian state spending in the fourth century was very substantial, probably in the range of 10–15% of Athens’ gross domestic income (GDI). Although that is a substantially lower percentage than is spent by developed modern states, Athens’ level of government spending was probably very high by the standards of most premodern states.46 Substantial government spending that resulted in better security enabled Athenians to plan ahead, as they could not do if they lived in constant fear of invasion or
piracy. State investment in infrastructure (water, roads, harbors, storage facilities), as well as on provision of services such as market officials and the approvers of coins, had positive knock-on effects.
Even with the increase in indirect tax revenues, part of Athenian spending took the form of transfer payments from the rich to poorer Athenians as military pay, state pay for offices, orphan relief, and welfare payments to handicapped citizens—all of which increased in the course of the fourth century. These transfers reduced income inequality and provided a kind of baseline social insurance that allowed non-elite citizens to take somewhat greater risks in the knowledge that there was at least a minimal safety net in the case of individual catastrophe. So long as state spending had the net effect of (1) increasing security, (2) lowering inequality and dampening social conflict without engendering significant levels of moral hazard or triggering elite defection, and (3) enabling individuals to invest more deeply in themselves and their families and thereby building the overall social stock of human capital, it would have promoted economic growth—as well as limiting economic inequality. As noted in chapter 5, getting that balance right was not easy; erring on either side (too much inequality, too much moral hazard) would have dampened economic growth. The Athenian institutional system of the later fourth century was the result of much experimentation, not all of which was successful.47
Athens was obviously in some ways exceptional but also in some ways exemplary of the Greek state’s approach to finance and expertise. The British historian John K. Davies has documented the later adoption of Athenian financial methods by Hellenistic kingdoms.48 It seems likely that emulation of successful Athenian uses of expertise by Greek city-states, combined with independent developments along similar lines, promoted state performance outside Athens and that enhanced state performance was one factor driving the classical efflorescence.
