The liberty of a democracy is not safe if the people tolerate the growth of private power to a point where it becomes stronger than the democratic state itself. That in its essence is fascism: ownership of government by an individual, by a group, or any controlling private power.
– Franklin D. Roosevelt
In today’s world, we tend to make a distinction between “public” and “private” property. But to what extent was this distinction made in ancient societies? We know that foraging cultures do not make such distinctions, and it is in such cultures that we have spent most of our existence as a species. So when and how did such concepts emerge? And what were the social relations bound up in this transformation? These are the critical issues taken up in Privatization in the Ancient Near East and Classical World, the first book in the series of five volumes published by Harvard’s Peabody Museum as part of the colloquiums coordinated by the Institute for the Study of Long-Term Economic Trends (ISLET), co-edited by economist Michael Hudson.
While the modern “science” of economics lionizes individual private ownership and alienable private property, seeing such things as “natural” and “primordial,” it appears that these concepts developed relatively recently in history. Ancient cultures had very different ideas about land tenure and usage. The emphasis was on self-sufficiency and social cohesion, rather than maximizing profit or efficiency. Private property was not “absolute” but a social contract between the members of a society.
…French economist Emile de Laveleye[‘s] Primitive Property found ancient attitudes toward property governed by the idea of ensuring for all families the means of self-support on the land: “Whether in Europe, Asia and Africa, alike among the Indians, Slavs and Germans, and even in modern Russia and Java, the soil was the joint property of the tribe, and was subject to periodical distribution among all the families, so that all might live by their labor, as nature has ordained.”…this practice was grounded in the classical ideal of equality as a precondition for liberty and democracy. Ancient lawmakers “had recourse to all kinds of expedients: inalienability of patrimonies, limitations on the right of succession, maintenance of collective ownership as applied to forests and pasturage, public banquets in which all took part…” This primitive egalitarianism was the true “state of nature” in Laveleye’s view, not John Locke’s fantasy of private land ownership stemming from a primordial social contract. Surveying the fields of history and anthropology, Laveleye found private property in land to be a relatively late development, emerging only in Roman times…p.4
It appears that property in the modern sense, immune from communal and public overrides, made its first incursions on royal lands in southern Mesopotamia, followed by subsistence lands that had been rendered redundant by the shrinkage of the landholding community’s member families. This surplus land seems to have passed into the market process as property “sold at the full price” voluntarily rather than as property relinquished under economic duress.
If this is indeed the case, then privatization of subsistence land, alienable irrevocably at the owner’s personal discretion, is not something primordial as social contract advocates have argued, but developed relatively late in history. It is thus necessary to examine how privatization developed in each particular ancient society. How far did each society progress (or fail to progress) toward a Roman-style codification of owner rights? What common denominators emerge as the levers of privatization. pp.7-8
Business began in the public sector
One of the big revelations of this book is that what we think of “business activities” began not by the efforts of individual entrepreneurs or families, but in what might reasonably be called the “public” sector.
Now, an obvious problem here is defining exactly what we mean by “public” and “private.” This is always tricky, especially when dealing with times and cultures very different than our own. Scholars have described Sumeria’s temples not as a “public” sector, but a “communal” sector that was administratively distinct from household activities. The temples were not under the control of any particular clan or household, which allowed them to undertake certain functions which would not have been socially acceptable for solitary individuals:
A generation ago, economic historians such as Mikhail Rostovtzeff and Fritz Heichelheim depicted “the state” as being antithetical to private property. Yet public investment by large institutions was undertaken long before the emergence of a private sector as our modern epoch knows it. Contemporary research by Assyriologists points to the state as the great catalyst of private enterprise. It was Sumerian public institutions that created usufruct-yielding lands and set them corporately apart from the periodically reallocated communal subsistence lands…
Definitions and concepts are of critical importance in tracing these dynamics. Southern Mesopotamia’s communally held land was not part of the public sector, yet neither was it private in the modern individualistic sense of the term. It belonged in principle to the community, and originally it was not freely alienable, for an obvious reason: As long as taxes and a stipulated quota or corvee labor were paid by the community, the appropriation and withdrawal of land by private individuals would have thrown the fiscal and labor burdens onto the community’s remaining members…(p. 36)…the Sumerian economy …embrac[ed]… the communal sector of self-supporting cultivators, the temples functioning as what might call public utilities, and the palaces. Each of these three sectors had its own source of handicraft labor and its own form of land tenure, none of which originally were individualistic or “private” in character.
It was…the public sector that innovated the basic array of institutions needed for profit making enterprise: corporate organization, writing and account-keeping, contracts and their formalities, weights and measure, and interest-bearing debt. However, Sumerian public investment ultimately catalyzed the growth of a private sector which ended up undermining temple and palace control. This was just the opposite of the Chicago School scenario whereby private self-seeking is primordial but repeatedly stifled by state activism and taxation…pp. 43-44
If this public entrepreneurial initiative is difficult for many observers to acknowledge today, it is because the modern world has virtually inverted the relations of Bronze Age enterprise and finance. Profit-making investment is now left almost exclusively to the private sector. But this privatization took thousands of years to achieve. Today’s public sectors no longer are creditors as in Bronze Age times; they are in debt, obliged to levy taxes co cover the cost of their operations rather than relying on their own enterprise. p.39
So we can see that what we call “business” activities began in the public/communal sector, for the public’s benefit, and not through countless individuals making anonymous transactions in “free and open” markets. Such “collective” activities were necessary for larger and more complex societies to form historically, contrary to the libertarian propaganda put forth by modern economics.
As Karl Polanyi pointed out, in most ancient and traditional societies, economic activity was undertaken primarily for subsistence rather than gain—“habitation,” rather than “improvement.” The supposed “natural” instincts to accumulate, hoard, barter, profit and haggle turn out to be not natural at all, but socially determined. Once again, to review:
The outstanding discovery of recent historical and anthropological research is that man’s economy, as a rule, is submerged in his social relationships. He does not act so as to safeguard his individual interest in the possession of material goods; he acts so as to safeguard his social standing, his social claims, his social assets. He values material goods only in so far as they serve this end. Neither the process of production nor that of distribution is linked to specific economic interests attached to the possession of goods; but every single step in that process is geared to a number of social interests which eventually ensure that the required step be taken. These interests will be very different in a small hunting or fishing community from those in a vast despotic society, but in either case the economic system will be run on noneconomic motives.
Indeed, given everything we know about human social relationships in tribal cultures, surplus-producing activities could have *only* began in the public (i.e. communal) sector:
In retrospect, we can see the logic in public enterprise appearing prior to private enterprise. The accumulation of capital requires a sustained generation of economic surpluses. These in turn require forward planning and account-keeping, and hence the design of standard weights and measures for form the basis for pricing and charging interest. In addition, land rent and interest presuppose the creation of contractual formalities and enforcement procedures. This seems to be why private gain-seeking emerged first and foremost at the center of society, in its public entrepreneurial institutions.p. 8
Sumer’s city-temples accumulated unprecedented amounts of capital. Indeed, it was probably only such public institutions that could have placated the adherents of the archaic consumption-based ethic and generated surpluses in socially acceptable ways. Personal self-seekers could not have easily made the breakthrough on their own, for they would have been condemned as greedy…pp. 37-38…Looking back from today’s vantage point, when private enterprise is overwhelmingly dominant, we must ask why private forms of wealth did not take the lead from the outset. The simple explanation is that a private sector in the modern sense of the term did not yet exist in Bronze Age times.
For a deeper answer it is necessary to review the anthropological record and the subsistence basis of most tribal economies. Almost everywhere they have been studied, such communities have displayed little interest in investing wealth to accumulate more wealth. The tendency is to disparage personal wealth accumulation as being impolite, rude or miserly. Furthermore, the tribal communities known to modern anthropologists have little specialized administrative apparatus; their exchange of goods and services is conducted in an informal person-to-person fashion rather than a formally “economic” manner.” …p.45
Sumer’s great contribution to civilization was a complex of innovations that broke through the traditional “anthropological” or “soft” inrerpersonal reciprocity of gift exchange to create the first known economic regime. The Sumerian innovations included bulk trade, standardized (hence, impersonal) money prices and lot sizes, sharecropping rents, wage-ration allotments, interest and contractual forms, and indeed the general system of weights and measures. All these innovations found their initial focus in the city-temples,” which were organized on the basis of a number of economic innovations that have shaped the entire world’s subsequent evolution.
It would not be too much to call these temples history’s first formal business corporations. Organizing an export trade to obtain foreign metals, stone, hardwood and other raw materials not found in the southern alluvium, Sumer’s temples legitimized capital accumulation, that is, the and to build up monetary savings….
The account-keeping for which public bureaucracies have been notorious throughout history often is viewed as a costly overhead, yet it is a precondition for managing costs and budgeting resources to generate a profit. In this respect public accounting helped pave the way for private management to emerge. Without it, private enterprise would have had to start from scratch among the Indo-European speakers who settled the Aegean and Italy… p. 9
This is a direct contradiction to the thesis promoted by libertarians. In their telling, individual “strivers” engaged in entrepreneurial activities from the get-go because our “natural human instinct” is always to maximize our personal gain to the greatest extent possible. Such behavior causes “free” markets to form ex nihilo where value is exchanged. Then, government comes along and taxes away nearly all the surplus from the value-creators to build gargantuan monuments and wage war solely for the benefit of a feckless, parasitical bureaucracy that sponges off the “makers.”
While surpluses were accumulated in the temples and storehouses of the cities, subsistence on the land was much more oriented to providing for the basic daily needs of the household and its members. To this end, the alienability of land was subject to much more restrictions:
It would be anachronistic to call the cultivators who belonged to Sumer’s landed groupings either a “private” or a “public” sector. They were not characterized by private property, for their subsistence land holdings were not theirs to freely sell or pledge for debt, at least not more than temporarily. Inasmuch as citizens held their allotments in exchange for an obligation to serve in the army and provide corvee labor duties, alienability of this land would have meant a loss of their citizenship status and its associated obligations.
To prevent this public loss, communities imposed constraints in the alienation of land…The land was redivided periodically or alienated as some families grew larger, others smaller, and new entrants joined the commune (these groupings often were open in character, (e.g. as the later Irish gelfine). Families held tenure rights to cultivate this land, but were not “free” to transfer it as they chose-or, for that matter, to forfeit it permanently and thereby lose their economic freedom, citizenship rights and consequent obligations to serve in the army and to provide corvee labor.
Land transfers among communal sector families did occur, but traditionally were limited to only temporary duration. The function of the communal land was to support its holders, not to yield a formal economic rent.p. 44…The early documented land sales from commmunal groupings to the palace suggest that such transfers were irrevocable only when the purchasing party was the king. But a widening array of exceptions developed, enabling formal property to emerge…p. 45
It was therefore this dynamic “interplay” between individual households and the communal sector in the cities that led to the explosive growth of the economy of southern Mesopotamia after 4000 BC. These communal “public” institutions are what allowed something resembling a modern economy to be established in the first place.
In today’s world, the government undertaking any business activity at all is considered something that must be avoided at all costs. We’re told that all such activities must be left to the “private sector.” This assumes that the private sector is inherently “efficient,” and the government is always corrupt and wasteful. Under the Market system the government’s sole purpose is to create a “beneficial business climate” for powerful private interests (business owners, CEO’s, stockholders, bankers, etc.) to do as they please, and the Invisible Hand of the Market will sort it all out. The depiction of governments as merely “parasites” on private sector activities is very convenient for those powerful private interests. Keeping governments in constant debt also acts as a constraint on their activities.
It used to be thought that southern Mesopotamia was a “temple state” where everything was owned and centrally planned by temple scribes and priests. Some textbooks still depict it this way. But this is inaccurate. In fact, most economic production took place in the household. Rather than running production directly, the temples used economic planning to collect and redistribute the surpluses throughout the society.
Most writers have emphasized the nature of state control over craft production. There is, however, ample evidence to suggest that craft production also was undertaken in the context of a private market economy…A potter was involved with a staple finance commodity when producing ceramics for the state authority, but he (or she) could and did produce pottery for a market economy, thus involving the production of wealth finance. A single producer could be (and the texts indicate that they indeed were) involved with both public and private domains of production.
…In sum, although the texts suggest large-scale industrial production controlled by the state, the archaeological record suggests that most craft production took place outside the physical context of a centralized state bureaucracy. This is most clearly evident in the case of pottery…One can hardly avoid the conclusion that the distribution of these commodities was not directed by state bureaucrats from centralized warehouses. These everyday essential goods were obtained from private craftsmen who produced them for purchase or barter within a market economy. No doubt, as in the case of potters, they also produced specific quotas for delivery to state institutions…
Mesopotamian texts suggest that craftsmen and farmers, in fact all primary producers, were responsible for providing a specific amount of their products for delivery to a state authority. I believe that the documentary evidence allows for the following interpretation: all primary producers were responsible for delivering to the state a set quota, a specific amount of manufactured product. Thus, the staple and wealth finance in the hands of the state institutions came in the form of specific quotas derived from primary producers. When the primary producer filled his/her/their quota, the remainder of time and labor was their own. This is what the third-millennium texts elaborate upon when discussing the office concerned with the bala, meaning “to turn over.” That which they “turn over” is their quota. The texts clearly indicate that primary producers were responsible for “turning over” their quotas, the balas, to the state.
Redistributive and household methods of production were not, then, distinct “stages” but interwoven with each another from the start. Redistribution was accomplished via a standardized pricing system administered by the temples. Such prices were not set by price-fixing markets; they were instead established by the temples themselves. However, such prices did eventually carry over into the “private” sector over time. It was this establishment of a society-wide pricing mechanism, and standardized units of currency that allowed money and markets to form, and not the spontaneous higgling and haggling of countless anonymous individuals. So we see that once again, it was the activities of centralized institutions that allowed markets to form in the first place.
The city-temples were the central organs through which the Sumerians mediated the economic surplus (P. 42)…Before price-seting markets developed, public institutions were the major vehicle for distributing output at standardized prices. For these large institutions it was natural for prices to be administered, if only as an internal control to check abuses and as a means of keeping accounts in commmon denominators such as silver and barley. Common prices, once established in this way, helped catalyze the development of market exchange, and ultimately price-seeking markets for goods and services that did *not* pass from the the public institutions to the rest of the economy.
…Karl Polanyi’s idea of a “redistributive stage of development” preceding that of market pricing therefore must be superceded by the recognition that public distribution took place largely via the pricing mechanism. Setting such prices was part of the public administration of measures, weights and interest rates (which were among the last prices to be deregulated, precisely because of the visible role of coercion between strong creditors and dependent debtors falling below the break-even level). Such prices were accordingly announded at the outset of many early royal laws, and appear throughout Hammurapi’s laws. p. 296
Alongside these price exchange systems, older means of gift exchange and subsistence production continued to be employed. Thus, the existence of markets (contractus) did not alter the prevailing social relations (status). Market relations were employed by strangers, foreigners, people who had no organic social relations, or between people of vastly different status:
Of course, most output was for self-use, and hence either was unpriced or exchanged at prices which, under normal conditions, followed the lead of the large institutions whose transactions tended to dominate the market (p. 296)…Private household production existed alongside that of the temples, but seems to have been oriented more towards subsistence needs with only marginal production for the market. The products of these households probably were less specialized and luxurious than those produced in the temple and palace workshops… (p. 42)
The impersonal economic formality of public institutions stands in contrast to the customary familial or neighborly informality. Throughout the Bronze Age, gift exchange continued among people of similar rank, while commercial exchange characterized relations among people of different status, or on opposing sides of the public/private divide, or from different communities. Debt obligations of the “anthropological” type among persons of similar status did not bear interest as late as the eranos loan clubs found among Athenian gentlemen, in contrast to loans from the rich to the poor or financial claims by public institutions on the citizenry at large. p. 43
Thus, we can accurately characterize the economy of these ancient Near Eastern societies as a “mixed” economy. One example of the way in which the temple activities interfaced with the broader household economy can be seen in the use of standardized weights and measures, including, as noted above, the price schedules denominated in silver shekels or bushels of barley. Another was the existence of multiple calendar systems: a lunar one for festivals, and a solar one for economic planning:
One example of how public and private modalities can coexist is reflected in Sumer’s elaboration of the calendar from a lunar one governing communal festivals to a solarized public-sector one. Neolithic and even paleolithic communities appear to have based their festivals on lunar rhythms, but lunar months vary in length and hence are unsuitable for allocating standardized rations.
Sumer’s temples and palaces needed to schedule large-scale flows of barley and other commodities on a regular basis, and therefore took the lead in introducing a 360-day public sector calendar composed of twelve equal 30-day months. This public solar calendar was adopted alongside the popular lunar calendar. (A similar dual calendrical system survives today for setting movable feasts such as Christian Easter, the Jewish New Year and Islamic Ramadan.) p. 42…
The 360-day public year left an extra five days to balance out the true solar year, and an eleven-day excess of the solar year over the lunar year. This interregnum–a “time out of time”–became the occasion for the New year festivals that provided the occasions for new rulers to renew the social and economic cosmos by cancelling agrarian debts, freeing debt bondsmen and restoring the status quo ante, above all lands that had been forfeited to creditors. p. 42
Just as public and private calendars coexisted, so did public and private modes of production. Public commerical production stood in contrast to production stood in contrast to production on communal subsistence lands. Likewise, different rates of interest were adopted for the two spheres of economic activity: silver-denominated commercial debts accrued at 1/60th per month, while agrarian barely debts accrued at higher rates, typcially 33-1/3% per year by the end of the third millennium. The result was a dual financial system operating as a bimonetary standard. pp. 42-43
There is a debate to what extent were temples truly “public” institutions, and to what extent were they actually “fronts” for certain powerful families? Were these actually set up as “trusts” for certain powerful families? Where did the public’s interest end and the private interest begin? How much of the temple activities were undertaken under the guise of providing public benefits on the surface, while behind the scenes administrators were really feathering their own nests? We have several examples of leaders abusing their power. We also have accounts of reformers attempting to restore fairness and balance. In some instances, the same leader can be engaged in both activities simultaneously.
Privatization and corruption
Communal activities and the interface between the temples and the households eventually gives rise to a true “private” sector, whose activities expanded over time. Eventually, these communal activities were more-or-less subsumed into private households–the earliest “privatization.” The people who led this trend were those most intimately connected with the redistributive apparatus–the temples and the palaces, and the merchants whose job it was to interface with those institutions (tamkarum). They managed to use their positions to profit from what might be called “business” activities even while maintaining a veneer of public-spiritedness. In contrast to the conventional story, the history of entrepreneurship really begins when these “business” activities are decoupled from their original context and taken over by powerful individuals and households.
Privatization was accompanied by a rollback of the safeguards designed to protect the average person. This did not lead to a release of pent-up entrepreneurial energy from the , but rather oppression as the powerful took advantage of their positions and cut insider deals. Protections against debts were relaxed. Hudson makes an analogy to Russia after the Soviet Union fell, where people in privileged positions took over much of what had formerly been communally owned property and industries and ran them for their own benefit.
It appears to have been military expansion that caused the repurposing of the old redistributive apparatus into centered around tax collection/tribute. The palace ceased to play its former role as a “great provider” and instead became a military/administrative center. As victorious palaces conquered and absorbed surrounding cities and states, they used the bureaucratic apparatus developed in the temples to collect the taxes. Wealth flowed to the top of the social pyramid via conquest, even as the common person lost their lands and independence in such conflicts. In addition, captured lands were often redistributed as personal property to the ruler’s friends and allies in a sort of “spoils system.” This reminds me of a quote I once read about military conquest abroad generally being accompanied by repression at home.
From the early Bronze Age to late classical antiquity, historians can trace society’s economic dynamics (and the economic surplus) becoming more individualistic and free from central oversight. Individualism first emerges, culturally and economically, not from members of the “communal” (non-public) sector, but from palace rulers and their families…Personal property in the modern sense developed originally in the palace sector. It was the ruler’s own property that was the first to be made immune from communal-sector redistribution. Sargon’s dynasty took over the temples to make the flow of surplus a one-sided tribute for vanquished cities to the new capital at Akkad. In this respect military conquest was a major catalyst of privatization. Palace warlords captured what originally had been public institutions, and transformed them into instruments of their personal and economic power. p. 26
The upshot of privatization was economic polarization between creditors and debtors, landlords and tenants, patricians and clients, while the private sector grew richer largely at the expense of the public sector. A major effect of the privatization of subsistence land, for instance, was a change in the economic uses to which the land’s yield was put. Babylonia’s subsistence cultivators had been obliged to provide corvee labor, serve in the army, and pay taxes or other fees to the palace in exchange for holding land. But the new private appropriators kept the land’s usufruct for themselves rather than passing it on as taxes. The debtor’s labor services, crops and, in time, title to his land were taken as interest and, ultimately, forfeited as collateral for debt. This often obliged the remaining commuity members to make up the individual debtor’s fiscal shortfall; otherwise the net yield available to the palace was simply reduced.
A related consequence of privatization was a shift away from growing grains for the self-support of cultivators to more luxury-oriented and capital-intensive cash crops (olive trees and grape vines in the Mediterranean), increasingly on large estates which came to be stocked with slaves by the time of Rome’s great latifundia.p. 35
Hudson identifies four major means of land privatization in the ancient Near East:
1.) One form occurred when Sumerian rulers appropriated communal land and temple estates as their own personal property…this characteristic of individualism is first found in the royal household , from which it diffused downward via the royal bureaucracy to the rest of society.
2.) A second type of privatization occurred when rulers gave property away to their relatives (often as dowries) or companions, or assigned control of these properties (or at least their prebend rents) as tribute to local chieftains…
3.) A related type of privatization occurred as a product of political decentralization, most notably when palace control collapsed. In such crises, royal managers or warlords tended to seize the royal lands and workshops. This occurred as Hammurapi’s Babylonian empire fell apart, and after 1200 BC when Mycenaean Greece fell into a Dark Age.
4.) A fourth type of privatization became the most prevalent: the transfer of communally held lands to creditors or other absentee buyers. Beginning in southern Mesopotamia, subsistence lands were appropriated by individuals from outside the local kinship-based groupings by royal collectors, creditors or merchants through debt foreclosure; outright purchase at distressed prices; or, less frequently, at the “full market price.”
Rather than the heroic view of entrepreneurship promoted by economists, in this view entrepreneurs look more like opportunists, taking over institutions designed to serve the public good for their own purposes.
Privatization comes to the Mediterranean world
As Hudson tells it, the economic planning tools were brought from the temples of the Near East to the palaces of the Aegean world. The palaces of the Minoans and Mycenaeans contained vast storerooms which collected the output of many different households, which was then redistributed. But they did not have interest-bearing debt and loans. Then, after the Bronze Age collapse, the centralized palaces collapse and are seized by private warlords or “big men.” Greek society reconfigured itself along feudal lines. Phoenician merchants brought the concepts of debt and interest payments (along with the alphabet) to the Greeks, but they did not bring along the idea of debt forgiveness and Clean Slates.
This creates two major differences between debt in its original context the its new one 1.) There was less of an communal role played by centralized institutions in the Mediterranean world, and 2.) The rights of creditors were privileged above those of debtors. In the classical world, rather than periodically expunging the debts, such claims were held as sacrosanct! For this reason, the classical world–Greece and Rome–develop into what Hudson calls creditor oligarchies. It is this tradition which we have inherited in the West.
Greek history begins not with Athens and Sparta, but in the western periphery of the Late Bronze Age world, in Mycenae and other Late Bronze Age towns c. 1400-1200 BC. Here, Mesopotamian practices were transmuted into something new as the Mycenaean Greek palaces adopted syllabic record keeping (Linear B), sealing, and large workshop production–but not interest bearing debt…Not only is debt missing, but money too: “Since the palace revenue is presumably derived from feudal dues and from foreign conquest, monetary or other media of exchange do not play any significant part in the records…In lieu of money and the flexibility it affords for an efficient specialization of labor, the Mycenaeans denominated their levies in standardized “bundles” of commodities fixed in proportion. In the Pylos Ma- tablets, for instance, a number of townships are put down for contributions whose mutual proportions of six commodities remain constant at 7:7:2:3:1-1/2:150.
No evidence of debt appears in Greece and Italy until it is introduced by Syrian and Phoenician merchants around the 8th century BC. Without intersectoral debt balances there was little need for rulers to cancel arrears as part of general restorations of order. Thus, the entire character of kingship became less commercially oriented (and less public).pp. 18-19
The fact that centralized public property and traditions of royal oversight were weakest in Greece and Italy probably contributed to the fact that privatization developed most easily in these formerly peripheral regions after palace authority collapsed throughout the Mediterranean and Levant c. 1200 BC in the wake of a general social breakdown and drastic shrinkage of the population and commercial activity. p. 19
Interest-bearing debt became the prime level of classical privatization, enabling wealthy family heads to pry away the land of smallholders. Elected officials in some Greek city-states pledged *not* to cancel the debts or redistribute the land — just the opposite principle of Bronze age rulership. Under these conditions, the protected property was no longer that of the citizenry at large, but the large estates and fortunes of the few. Debt relations became even more polarized in Rome, where wealthy creditors turned what had been communally held subsistence landholdings into latifundia slave plantations. p. 27
With no Clean Slates to cancel the mounting debts, the Law of Cumulative Advantage and Creeping Normalcy are free to do their dirty work unimpeded. The result is a downward spiral of debt repeatedly reducing of much of Classical society to landless debt serfs.
This debt became a major societal problem. Debt serfs could not afford to equip themselves for the army and train. They could not contribute to the commonwealth via taxes. They could not tend to their own land to produce food. They lost voting rights. Debt was hollowing out society. As a result, the relationship of the state to its citizens was transformed. Corvee labor obligations were replaced by hired and slave labor. Civic contributions were replaced with bequests from wealthy individuals. Soldiers were replaced with mercenaries. Democracy was replaced with plutocracy.
As privatization increased, the city-states had to levy taxes in order to hire mercenaries, rather than continuing to provide cultivators with land tenure rights in exchange for military and other labor services. In classical Greece, property taxes paid in coin paid for public work, which was performed mainly by immigrants and other non-citizens, or slaves (a reflection of the demeaning status of public labor throughout antiquity).
The passing of rents, interest and profits into private hands (especially those of the wealthy) led to the taxation of the commons for the benefit of large landowners. This was done in such a way as to aggravate the dispossession process. The state meanwhile reduced its role as public entrepreneur as its functions were taken over by private entrepreneurs…the Roman state increasingly absorbed the costs or “externalities” associated with private wealth-seeking by the richest families (including the cost of defending the land against both domestic civil warfare and foreign enemies). p. 28
With the privatization of land, and the parallel shift of the handicraft export industries into private hands came tax crises. The wealthiest families managed to avoid taxes, while pushing more of their own expenses onto the public budget. Instead of government reforming land tenure or taking over industry and socializing its revenues, economic control passes almost entirely into private hands. For all practical purposes, the wealthiest landowners became “the state” in alliance with barbarian war chieftains who seized land by military force. p.29
The classical world embraced privatization and individual wealth accumulation to a much greater degree than ever before. I find it ironic that Western history is often portrayed as a contrast between the “slavery” and “despotism” of Near Eastern cultures, and the “freedom” and “equality” of the Greek and Roman world. But as we saw, Near Eastern cultures allowed for debt forgiveness and redistribution of land. Classical antiquity, however, drove people into debt bondage, had massive wealth disparities, consolidated productive land into the hands of a few wealthy families, and had massive amounts of slaves working in many critical industries. Is our view of history backwards?
Privatization in Ancient Rome
If the temples of Mesopotamia were the first large-scale businesses enterprises in history, Rome was the first to introduce the innovation known as the corporation – the publicani, or publican societies. Rome manged its expanding empire under a regime of privatization.
During the [Punic] war, the Roman army, which had previously provided its own food and clothing, needed others to provision, arm, and supply it. Since there were few public employees, the Senate turned to private businesses. The need for public contractors became even greater after the war, when Rome required managers, accountants, and tax collectors to operate its captured mines, quarries, forests, grazing meadows, and fisheries. The army, keeping order, had little capacity to manage these new resources. Its forces consisted only of militias raised for particular expeditions. The governors, who served only a year or so, rarely cared enough to build managerial staffs. Their eyes remained firmly fixed on a future in Rome.
The contracts for managing state resources, ultimately extended to providing public supplies and services, including the collection of customs dues and other levies, were auctioned off around the Ides of March, when an official would solicit bids in the Roman Forum. The bidder, known as the manceps, had to provide guarantees of performance, secured with pledged property. A guarantor’s liability passed to his heirs, and title to the pledged property was held under seal in the temple of Mercury.
Many of these contracts were too large, risky, long lasting, and complex for individuals. Nor could individuals or partnerships risk the open-ended financial liabilities that the contracts could entail. Partnerships, which dissolved when any partner died, were also too unreliable. Roman lawyers instead found and adapted an ancient entity, the societas publicani. Publican societies became the first business corporations in Western history.
As public contractors, publican societies could hire employees; own necessary assets like cash, land, buildings, and slaves; and make contracts. Limited liability and perpetual life allowed them to attract the large investments they needed. They profited not only from contracts, but also seized every business opportunity that their large staff and financial power could turn to profit. They supplied and traded with the Roman legions and their soldiers and often dominated local commerce as well.
Their most valuable public contracts were for tax farming: private tax collection…Roman taxes took many forms. Property taxes were the most important, although the Senate, whose members owned a great deal of Italian land, used the spoils of victory over Macedonia to eliminate property taxes in Italy–an exemption they enjoyed for several centuries. There were also border tolls, customs duties, and sales taxes on slaves. Augustus created the inheritance tax for Roman citizens in 6 C.E. Caligula taxed food, lawsuits, porters’ wages, and prostitutes, and his successor Vespasian added -vegetables and public toilets…
Publican societies became so profitable that virtually the entire Roman elite, including senators who were theoretically prohibited from commerce, avidly invested in them. Shares of ownership, called particuiae (“little parts”), were traded in the Forum, making it perhaps the world’s first stock exchange. Equestrians, who faced no bar to active involvement even if they belonged to senatorial families, often sponsored the societies and managed operations…
The government’s relationship to publicans evolved over time in a way that strikingly resembles the evolution of international business by modern corporations. Initially, the government sold territories to the publicans, who like independent distributors ran their own operations and took a large share of the revenues. These deals were often corrupt and costly to the treasury. Later, when a large imperial staff allowed closer supervision, the publicans merely earned a commission on the revenues collected. By the third century C.E. the imperial staff had taken over collections completely and publican societies disappeared. OBMM: 149-151
It was the dispossession of Rome’s peasant farming class via debt, and its replacement with large villas staffed by chattel slaves, which hollowed out Rome’s agrarian economy. The wars with Hannibal had destroyed the Italian countryside, and the distressed farmers had no choice but to sell their land at fire-sale prices. These farms were bought up en masse by wealthy senators, equestrians and patricians. Because the slaves flowing in from every corner of the empire were so cheap to acquire, these large plantations were staffed with them instead of the sturdy yeoman farmers of days past. The property laws were rewritten by the rich to favor their own interests:
During 121-100 BC, Rome’s large landowners destroyed the Gracchi and passed three agrarian laws “favoring the increase of large estates. The first…allowed everyone to sell the portion of land which he received.” This law unblocked the way for impoverished landholders to sell their shares to large state-owners. The new landlords occupied the ager publicus without any firm legal sanction, and were permitted to keep this appropriation by a second Roman law, which left this public land “in the hands of its present holders, a rent being paid by them, the amount of which was to be distributed among the citizens…Finally, the third law abolished even the rent; so that nothing remained of the laws of the Gracchi but a single clause, favorable to the aristocracy, which gave a definite title to the possession of public land.”
The result…was that “A few sumptuous villas, and immense pasturages, replaced the varied cultivation, which had been carried on by small proprietors of Latin Samnite, Etruscan or Campanian origin, and had maintained so many flourishing cities. To maintain the populace of Rome and to support the luxury of the great, it was necessary to pillage the the conquered countries. Praetors, proconsuls, and public [tax] farmers, fell on the provinces like birds of prey, and ruined them to support the idleness of Rome. Economic polarization, having dried up the internal market by reducing cultivators to poverty and dependency, thus became the motive for Roman imperialism to seize from abroad what no longer was being produced at home. This dynamic inspired Pliny to decry that latifundia perdidere Italiam, jam vero et provincias, “Latifundia have ruined Italy.”
Underlying Rome’s economic self-destruction was its property-oriented law. Land ownership was legitimized simply by virtue of possession, regardless of how the land was used or what the social consequences were. This was the ultimate in privatization. Considerations of public interest were set aside, and the status quo was blessed…
It was this replacement of small farms with plantations centered around export crops that drove the rise of markets in importance and the use of money, replacing earlier tribal and village relations. As a consequence, the Roman world was much more market-oriented and monetized than any previous society before:
Roman agribusiness…began with the Second Carthaginian War. As in Greece and Pergamum, war’s slaughter of peasants made it possible. Italian deaths numbered in the hundreds of thousands and even survivors were often absent for seven years or more while Hannibal’s armies ravaged their families and farms. Many peasants lost their land or sold it at distressed prices, and others fared worse, as noted by Sallust: “While the generals and the cliques seized the spoils of war, their soldiers’ parents and children were driven from house and home if they had stronger neighbors.
Just as this calamity for peasants was allowing those who profited from the war-patricians whose estates supplied the city and the army, officers enriched with Carthage’s booty, and sundry war profiteers–to acquire land at fire-sale prices, the market system that had replaced subsistence farming around Rome was making it feasible to generate profits by raising crops for sale. The value of supplying that market would only increase during the republic’s remaining centuries as more and more Romans got their provisions from it: 60-90 percent of Rome’s residents by the end of the republic in 31 B.C.
Patrician eagerness for profit helped drive this commercialization. Rome enjoyed an explosion of wealth as publican societies won huge new contracts to operate the mines, forests, fisheries, and other facilities captured from the Carthaginians in Spain. Newly prosperous landowners, publican shareholders, and military officers flush with Carthaginian booty financed increasingly extravagant displays of luxury. An intense new interest in money took hold while conservatives like the historian Sallust complained that avarice was “the root of all evil. Greed undermined loyalty, honesty and the other virtues. In their place it taught arrogance, cruelty, disregard for the gods and the view that everything was for sale.”
After the war with Hannibal, patricians with access to markets were…keen to make farming pay. They read agricultural manuals, used cultivation methods recommended by Greek science, and invested for productivity…The greatest innovation, however, was to use enslaved farm labor. This became feasible where land acquired in the wake of the war came largely free of peasants, clearing the way to use slaves. Slaves were more productive than peasants. Peasants came with hungry families, set their own work schedules, and produced no more than they had to. They participated only marginally in the cash economy, consuming roughly 60 percent of what they produced, using 20 percent for seed, and paying rent and taxes before they could make the occasional purchase. They stoutly resisted change, and as citizens they could not be easily coerced.
Slaves, on the other hand, did what they were told. They were normally single men fed five pounds of mostly cheap gruel per day. It has been estimated that twenty slaves could be fed on what eight peasants and their families consumed. Moreover, in the decades after the war little or nothing was spent to clothe or house field slaves, who were branded in the face, slept in chicken coops, and normally went chained and naked under the overseer’s whips. Although they quickly died, replacements were cheap. In Italy, the use of slaves even cut the one tax landowners had to pay, a head tax on peasants. According to most historians, the Italian slave population, most of them on farms rapidly grew to what contemporaries estimated at two million by the late republic and remained at that level for centuries afterward.
The most profitable cash crop, according to Pliny the Elder, was animal husbandry. Some of the richest Romans owned vast properties devoted to sheep….agribusiness represented a shift in emphasis among mixed field and orchard crops, nothing like modern monoculture, Farms were very small, including those devoted to agribusiness. This was mainly because cultivation was so slow…. The main difference between the subsistence farms of independent peasants and the agribusiness-oriented villas was the larger proportion of land that villas devoted to cash crops like grapes and olives instead of commodities like grain. Grain accounted for 75 percent of the Roman diet, but even the urban poor spent as much on oil and wine. Accordingly, these were highly profitable.
Villas were complex enterprises. In addition to their farm revenues they could also provide lodging, food, fodder, fresh horses, and draft animals to travelers and exploit resources like woodlots and clay, stone, metal, and salt deposits, their slaves produced bricks; manufactured flour, bread, wool, shoes, and clothing; and repaired carts and tools. Many villas kept fish hatcheries and, near Rome and other large cities, sold flowers, fruits, vegetables, poultry, milk, and more exotic products…With their cash revenues, villas participated fully in the market economy. A patrician might own several villas, visiting them for recreation or to check accounts and consult on strategic issues like the acquisition of neighboring properties. As Columella recommended, a procurator might over see them all and keep track of their iron tools, performing management, accounting, and audit functions much like a modern billionaire’s estate manager, whose role “usually involves overseeing multiple residences…
The combination of private corporate enterprise and the desire for riches and loot from the provinces continued to be a major driver for imperial expansion. But as Rome conquered more and more territories, it brought in less and less value. The people at the top of Roman society, whether businessmen, equestrians, senators, or generals, all entered into self-serving compacts designed to expand the empire, and hence increase their riches. But for average Romans, including the disappearing “middle class” who bore the brunt of taxation, all they got was more poverty and death. Corruption became rampant as self-seeking behavior replaced acting in the public’s welfare. Privatization and corruption spelled the downfall of the empire:
While generating huge profits the publican societies were causing the military considerable grief in the provinces. Publicans aimed to maximize revenues, and the short term of their five-year contracts made exploitation rather than cultivation the method of choice. With revenue a simple measure of success, their agents had to be ruthless or lose their jobs, whatever their personal sympathies. The managers and financiers back in Rome lived far away, like the upper management of multinationals today, and could easily ignore the hardships they imposed. The result was that the publicans “were often dishonest and probably always cruel. In Spain, where powerful tribes remained hostile to Rome, the publicans provoked such frequent rebellions that the Romans called it the horrida et bellicosa provincia (“horrible and warlike province”).
Uprisings were of little concern to publican management so long as the army suppressed them. Normally, then, publicans reaped the benefits of their ruthlessness while largely escaping its costs. The soldiers, on the other hand, were endangered. They also suffered personally from dishonest publican suppliers. In one horrible instance, when Rome was on the brink of destruction by Hannibal it hired publicans to gather and deliver urgently needed provisions for Scipio’s army in Spain where it was desperately trying to cut Hannibal’s supply route. Instead, the patriots bought and sank rotting old ships to simulate a natural loss, sold the provisions on the black market, and claimed compensation for the alleged loss.
Governors had difficulty controlling publicans. Short terms and minuscule staffs made supervision difficult. Moreover, they or their families were often investors. Governors also depended on publican societies. Publican couriers carried their mail, and the societies often provided branch funding governors abroad and collecting reimbursement in Rome. As Cicero wrote to his brother Quintus, the governor of Asia, we oppose [the publicans], we alienate from ourselves and the state an Order which has deserved exceedingly well of us and which has been linked to the state by Our efforts; if on the other hand we comply with them in every case, we shall allow the complete ruin of those for whose welfare and interests we are bound to have regard. Indeed, many governors less scrupulous than Cicero joined the publicans in exploiting the provinces for themselves. So despite enormous military antagonism, the publicans usually had a free hand.p. 160
In Rome, during the decades after defeating Hannibal, the Senate had opposed new military interventions abroad. Fighting in Spain and on the frontiers of Africa kept the militia busy, burdening the Roman citizens who comprised it. The Senate authorized foreign expeditions only reluctantly, and quickly withdrew the army afterward.
Moreover, the conspicuous consumption of the newly rich displeased many upper-class conservatives.
But many were making serious money from their investments in publican societies. Polybius wrote that “there is hardly anyone who is not involved either in the sale of these [public] contracts or in the kind of business to which they give rise. Some buy the contracts in person from the censors; some become partners of the purchasers; others stand surety or pledge their own property on their behalf.
In addition, a military foray against Philip V of Macedonia and Scipio Africanus’s spectacular victory over Hannibal and Antiochus III at Magnesia in 189 B.C.E. revealed the easy pickings available in the Hellenistic kingdoms, just as Xenophon’s Anabasis had earlier whetted Hellenic appetites for Persian conquests. Scipio Africanus, prosecuted for skimming off a portion of the Seleucid booty, took enough to leave senatorial fortunes to each of his daughters. By 171 B.C.E., when Pergamum’s persuasive King Eumenes II advocated a preemptive war against Philip V’s successor Perseus of Macedoma, the Senate’s resistance to imperialism had vanished…
After a surprisingly difficult struggle, Rome prevailed. The legions looted Macedonia’s royal palace, seizing more than six thousand talents of silver from the treasury, and triumphantly sailed the Macedonian royal barge up the Tiber. King Perseus was paraded in chains before a thrilled Roman populace, along with booty officially totaling almost twelve thousand talents. The Senate annexed Macedonia’s royal estates, and publican tax farmers turned the tactics honed in Sicily, Spain, and Carthage to collecting Macedonia’s taxes. The new revenues allowed the Senate to abolish Italian property taxes.
After this, Rome’s colonial empire expanded steadily. Macedonia and later Greece were made provinces, the Seleucid and Ptolemaic rulers became Roman dependents, and in 133, 96, and 74 B.C.E. respectively, Pergamum, Bithynia, and Cyrenaica in North Africa were bequeathed to Rome. Hellenistic city-states sought Roman patrons and lobbied the Senate with bribes and offers of market access in ways now common in Washington and Brussels. pp. 161-162
Roman and Italian businessmen came to command the raw materials and labor forces in virtually every Hellenistic land. The filaments of commerce, linking the personal interests of influential Romans with the Eastern upper classes, rapidly multiplied and strengthened. Romans served as bankers to businessmen, cities, and kings; invested in mortgages, land, ships, and trade; and worked as merchants and farmers as Athens flourished as a cultural tutor to Rome, much as London and Paris were to early twentieth-century America. Romans bought Greek art and became so Hellenized that many contemporaries thought Rome a Greek city.
Despite their love for Greek culture, Romans treated the Hellenistic states with no more consideration than they did the provinces in Spain and Africa. The effect was actually worse, since there was much more to steal or destroy: Deprived under Roman rule of police, welfare, or justice, Hellenistic lands were thrown into chaos, while the Senate blandly ignored pleas for help and intervened only to protect Romans and their aristocratic friends. Some historians even suspect a deliberate indifference, since these conditions generated so many slaves for agribusiness. Hellenes, used to themselves under the limited sovereignty of the Eastern kings” bitterly detested these policies.
They rose up in outrage, and Rome responded in force. In the 146 B.C,E, the legions brutally suppressed uprisings in Macedonia and Greece leaving Corinth so crushed that Cicero found it a heap of ruins seventy’ years later-and finally destroyed Carthage. They plowed the city under, sowed it with salt, and pronounced a curse on anyone who tried to restore it. Its fifty thousand survivors were sold into slavery. p. 162
Provincials were not the only ones to suffer appalling losses…Few Romans apart from governors, certain traders, and publican society investors actually benefited, and Rome’s police actions were so expensive and unrewarding that only Sicily and Asia were profitable provinces. One hundred thousand Roman and Italian men died between 200 and 150 B.C.E., proportional to nearly 3,000,000 deaths in modern America. The survivors gained little, even from their triumphs. The troops who sold 150,000 Epirotes into slavery netted about two weeks’ wage each (16 denarii).
Even the pound of silver that Cato gave his troops in Spain paid only three months’ living expenses, hardly fabulous spoils of war. Upon returning home, Roman veterans continued to find destroyed farms, stolen property, and scattered families. Italians endured even harsher military service and returned to similar losses. But lacking Roman citizenship, they were also denied access to the food, shelter, and employment available in Rome itself.
The most miserable of all were the slaves. The supply of unskilled laborers was so large that their lives were cheap. They were chained, fed starvation wages, whipped to work, and left virtually naked and unsheltered. A slave could be tortured to death on the mere suspicion of misbehavior, while all of an owner’s slaves would be tortured to death if he was murdered. Such treatment drove slaves to desperate revolts. In 135 B.C,E, a Syrian slave styling himself King Eunus of Antioch led two hundred thousand followers in capturing several Sicilian cities and holding off Roman armies for three years. This revolt inspired uprisings at Rome, Athens, and Delos. More followed, along with continuing insurrection in Spain.p. 161-163
While the plebeians fought and died for the “glory of Rome,” in the end, it was really all about the money.
As Hudson tells it, the unrestrained use of debt—devoid of any protections for creditors—eventually hollows out any society and causes it to decline and fall. The reason is quite simple: only independent, self-sufficient people can truly participate in society as equals with a stake in that society’s success and its future. When you reduce the majority of your population to serfs and chattel, then they no longer have any stake in the society. They withdraw support. Society decays and falls apart. People seek other options.
One can’t help but by struck by the parallels with America in the twenty-first century: an impoverished and demoralized population reduced to debt servitude and kept constantly distracted by bread and circuses; ownership of productive assets concentrated in the hands of a tiny, well-connected elite; “achievement” culture; an increasingly “winner take all” society combined with a pervasive “might makes right” mentality; the looting of the public treasury by private contractors aided by rampant political corruption and cronyism; the funneling of taxpayer money into the pockets of well-heeled insiders, increasingly pointless and unprofitable military adventures abroad, tax reductions for the wealthiest members of society and the shifting of tax burdens onto the few remaining productive activities, venal and incompetent leaders surrounding themselves with pomp, gaudy and grandiose architecture; lavish and conspicuous displays of wealth and sybaritic excess; a rigid and hierarchical class system; mass migrations and porous borders; the use of mercenaries and contractors in place of citizen-soldiers; one can even add a changing climate to the mix. One can almost hear the laughing whisper of history from among the dead stones: “Make Rome Great Again!!!”
In his book Are We Rome, Cullen Murphy indicts creeping privatization–the substitution of self-seeking private interests for the public good–as a critical factor in the collapse of the Rome and rise of the subsequent feudal era:
Serious challenges to any society can come from outside forces-environmental catastrophe, foreign invasion. Privatization is fundamentally an internal factor, though it has an impact on the ability to face external threats. [Ramsay MacMullen in his important study Corruption and the Decline of Rome]…asked his question-How does power become powerless–out of dissatisfaction with the many theories put forward to explain Rome’s gradual decline in the West. His answer is privatization–the deflection of public purpose by private interest.
Such deflection of purpose occurs in any number of ways. It occurs whenever official positions are bought and sold. It occurs when people must pay before officials will act, and it occurs if payment also determines how they will act. And it can occur anytime public tasks (the collecting of taxes, the quartering of troops, the management of projects) are lodged in private hands, no matter how honest the intention or efficient the arrangement, because private and public interests tend to diverge over time. Privatization, whether legal or corrupt. It is how the gears of government come to break. In Rome. the consequences were felt in every area of society.pp. 97-99
This is the story MacMullen traces, as throughout the empire a lubricious glaze of venality came to coat every governmental surface. What accounts for the change? No one factor, MacMullen believes, but some combination of many–the sheer growth in the government’ s administrative reach; as a result, the transformation of “public service duty of the curial class into a lifelong career for a larger group; the flight of the elite from public service anyway, because the demands could prove so onerous: the ambiguity of many laws, allowing money to sway judgments; the increasing severity of punishments, which people would pay anything to escape; and the generally poor communications, which among local officials abetted a sense of impunity (“What happens in Bithynia stays in Bithynia”).
A bronze plaque was affixed to a public building in Timgad, in Numidia, a city built as a bastion against the Berbers, which literally provided a recommended price list for payments to ensure the prosecution and success of various kinds of litigation….Time and again imperial decrees throughout the later empire attempt to put a stop to skimming, extortion, and the illicit use of office; or, failing that, to codify what may be permissible. But the emperors are standing athwart the tide, and the imperial pronouncements have a doomed, forlorn, ritual feel to them. Modem newspaper headlines like “Congress Votes New Curbs on Lobbyists” convey something of the same formulaic quality… AWR? pp. 104-105
IN THE END, Rome was heading toward something the Romans couldn’t, by definition, have a term for. But we do: it’s the Middle Ages. The precise definition of “feudalism” is one of those things on which medievalists can’t quite agree-the field is divided into warring fiefdoms- but the historian F. L. Ganshof discerned in feudal society one basic quality: a dispersal of political authority amongst a hierarchy of persons who exercise in their own interest powers normally attributed to the state. Public interest had become private.
This isn’t the place for an extended excursion across a thousand years of Western history. In brief, for many centuries power was wielded in Europe by monarchs and vassals as if it were a form of private property. ‘The levying of taxes, the raising of armies. the meting out of justice-these things were done in e name of the ruler, and the fruits of his administration were enjoyed by those who acknowledged the ruler’s personal lordship. The eventual path away from the Middle Ages was marked by the halting emergence of governments defined by communal interest rather than private prerogative. But sometime in the late twentieth century the arrow began changing direction… AWR? pp. 108-109
The modern logic of privatization
One major point that Hudson makes is that in the ancient world, unlike today, there was no assumption that powerful people acting in their own narrow self-interests would lead to beneficial social outcomes! There was no “logic” of privatization. Rather, it was generally assumed that oligarchies usurping the public purpose was a bad thing and should be avoided if possible. Powerful private interests usurping the public good was associated with immorality and collapse, rather than with progress and efficiency. There was yet no “science” of economics to tell them otherwise:
…nobody in antiquity advanced the idea that private property and personal self-seeking would bring about a more efficient social system than communal property or private property managed unselfishly. Just the opposite: The stoics disparaged private self-seeking. Antiquity produced no Milton Friedman or Margaret Thatcher, nor did an Adam Smith emerge to suggest that an invisible hand would guide personal self-seeking to increase the nation’s wealth. The policy objective was not efficiency, but “straight order” in Babylonia, social equity for the Biblical prophets, and an appeal to the “constitution of the fathers” (patrios politeia) by the Athenian oligarchs and by Cicero’s upholding of patrician Roman values. Creditors were not euphemized as savers performing a public service; they were condemned throughout antiquity as usurers preying on the poor. Nobody suggested that debt-ridden economies might work their way out of debt by saving and investing more. In these respects there were indeed was no doctrine of privatization in antiquity.
Mesopotamian rulers viewed the privatization of enterprise from a different perspective than that of today’s political philosophers. Modern governments are charged with the duty of defending creditor claims against debtors’ rights to their own economic freedom and means of livelihood. But Bronze Age rulers protected debtors against creditors…Mesopotamia’s public institutions coped with this problem of economic inequity and private patronage by countering the arrogance that tended to be inherently associated with wealth. p.53
One result of the modern world emerging out of Rome’s collapse rather than directly from the Mesopotamian upswing is that our legal traditions sanctify debt obligations rather than providing for their cancellation when they grow too heavy. Modern industry is financed with borrowed money via mortgages, bonds, and bank loans. Even our governments are debtors, not creditors as in the Bronze Age. Indeed, in an attempt to service these public debts, governments throughout the world are privatizing natural resources and public utilities long considered to be part of the national patrimony…p. 56
We all know what happened to the Roman empire after is latifundia dynamic ran its course. It declined and fell. Is something similar in store for today’s topheavy debtor economies? Will market forces again become swamped by a new growth in debt overhead? Will a new polarization enable the wealthiest classes once again to free themselves of taxes and other traditional obligations of ownership? Or will history be different this time around? p. 3
Privatization is at the core of the Neoliberal project that has managed the world since the 1980’s. Hollowed-out states act as little more than agencies collecting and funneling taxpayer money to private corporations. Public services in every area of life, from public transportation to health care, are sold off at fire-sale prices or shut down altogether. Politicians sit on the boards of these corporations and have their political campaigns funded by them. Lucrative jobs and lobbying positions await them when they leave Washington. Everything from K-12 schools to basic infrastructure is now under the control of private enterprises acting to maximize profits, rather than in the public’s best interests. It is, in Matt Taibbi’s phrase, a “Griftopia.” Another term might be “kleptocracy.”
Once again, private industry is not taking entrepreneurial risks, but seizing the commons and acting as costly toll-bridges to essential services–in other words, becoming rentiers. Even national defense and incarceration are profit centers for giant mega-corporations, which explains America’s vast carceral state and perpetual wars around the globe (compare to World War Two which was concluded in four years by our central government). We are told every day that the private sector is honest, efficient, and cost-effective, and that the government is corrupt, bloated, inefficient, and wasteful. But, of course, we are given this message by a media which is the property of those very same corporations. Privatization ensures that corrupt and wasteful government becomes a self-fulfilling prophecy (to be fixed by more privatization!)
It appears that private interests diverting resources from the state into their own hands played a large role in the downfall of the Roman Empire. So did reducing entire populations to debt servitude and taking away their dignity and self-reliance. One wonders how far along this trend must go before people realize that the narratives they are being fed by the corporate media and economists are self-serving lies, and decide to rise up and demand a different way of doing things.
Privatization in the Ancient Near East and Classical World. Baruch Levine (Editor), Michael Hudson (Editor). Peabody Museum of Archaeology, 1996.
Are We Rome? Cullen Murphy. Houghton Mifflin Company, 2007.
The Origins of Business, Money, and Markets. Keith Roberts. Columbia University Press, 2011.