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History of Economics Part 1: Ancient Economic Thought

This begins the History of Economics series, where I plan to step through the history of economic thought through the ages. In this piece, we’ll go back to ancient times before the birth of Christ and examine a few key figures.

There is nothing new under the sun, as the Old Testament book of Ecclesiastes says. Some economic themes and principles that are familiar to us today were also discussed in 81 BC China. During the Han dynasty, there was a debate held between the Reformists and the Modernists regarding Emperor Wu’s new policies. These policies included nationalizing the salt and iron trades and imposing a new tax on merchants and industrialists (1). The previous government had been more laissez-faire, or hands off, in their policies, although that term did not exist in 81 BC. This controversy is now known as the Discourses on Salt and Iron. The Reformists argued that the state was oppressing the people with their new policies and that the products produced by the state monopolies were low-quality. Two millennia later, this was again a problem in the Soviet Union, where all of the industry was controlled by the state. In 1987, the LA Times reported that during the year of 1985 there were 5,490 fires in the USSR caused by television sets. Manufactures “blamed the problems on the poor quality of plastics and picture tubes used in the set” (2). The Modernists, who advocated for state control, claimed that the workers employed by industrialists were likely to rebel, that the state could stabilize the prices of important goods, and that working conditions were better in government workshops than in private workshops. Eventually, about 100 years later, the earlier laissez-faire policies returned.

Traveling a bit west to Ancient India, and further back in time to the 3rd century BC, brings us to the work of Chanakya, an Indian polymath of wide-stretched knowledge who authored the treatise titled Arthashastra. The topics discussed in the book include the function of the state, economics, and military strategy (3). As it pertains to economics, Chanakya wrote about the importance of good incentives for agriculture and how taxes should be fair and easy to understand. He also wrote that the jobs people work should be determined by their caste, or social class. In India, the highest caste is the Brahmana varna, which includes teachers, priests, and intellectuals. The second highest is the Kshatriya varna and includes warriors, police, protectors, guardians, and the king. The third is the Vaishya varna and includes merchants, farmers, bankers, and clerks. The lowest caste is the Shudra varna and includes the servants, laborers, and unskilled workers. It is important to note that Chanakya did not invent the caste system, though it is still a part of Indian society today (4).

Let’s go now to Ancient Greece, and explore a tiny slice of a time period in philosophy you may have learned about in school. You have probably heard of Socrates — around 360 BC, one of his students, a philosopher and historian named Xenophon, wrote a Socratic dialogue named Oeconomicus (5). The word “economics'' comes from this term, which means household management. Socratic dialogues are known for their question and answer format, which drives the discussion. In Oeconomicus, Socrates and Critoboulus, the son of Crito (an ancient Greek agriculturist) discuss the meaning of wealth. They say that a possession that is unable to be used is not part of a man’s property. Critoboulus states that a possession which does not benefit, and actually injures a man, is not part of his wealth. In the last two thirds of the dialogue, Socrates explains what Ischomachus, a gentleman-farmer in Athens, said to him about household management. Specifically, how he educated his wife in housekeeping, how they handled slaves, and farming technology. Xenophon also touches on another economic concept – the division of labor – in his work Cyropaedia (which means “The Education of Cyrus,” a Persian emperor) (6). He writes about how in a small town a man does many things, and in large cities a man can focus on one thing. Plato touches on this idea as well in his work Republic, in which he writes that a state needs people practicing different types of trades to provide for everyone’s needs (7).

Aristotle, a student of Plato, also had many important ideas during his time. He said that any evils coming from private property come from human nature being wicked (8). He thought property should be privately owned but able to be used in common, and that it was the legislator’s job to get men to that point of agreement(9). He was also critical of retail trade as it sought to make a profit, and also interest. He said interest is unnatural because it increases on its own and not through any exchange (10). He also wrote about money serving as a common standard for measuring the worth of goods, and that its only purpose is a medium of exchange. By itself, money is worthless.

Many key discussion points in economics and politics today were touched on during the time before Christ. The role of government, taxes, interest, money, are not new concerns. And in search of the economic ideal, Plato and Aristotle are still read today. As we continue to examine the thoughts of more recent economists, I expect we will see some similarities to, and expansions on, the thoughts of these forerunners in modern economic thought.


Curran Martin is a Minnetonka, Minnesota native and currently resides in Madison, Wisconsin. He graduated from the University of Wisconsin-Madison in May of 2019 with a degree in Economics, then spent two years working with a campus ministry, and now works in the insurance industry. Curran enjoys playing outdoor sports, learning about history and politics, and playing board games with friends in his spare time.

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