Thursday, 3 November 2011

OCCUPY CONSTANTINOPLE – Back to the future with Byzantine Economics

“The more powerful should not injure the less powerful, but that everything should be weighed by a just measure...”                        
                                   Prologue to the Byzantine “Book of the Prefect”, 912 AD.

Last week came the news that, at the same time as they have been urging wage restraint by their workers and insisting that the “bloated” public sector needs to be slashed, Britain’s bosses have dug their snouts even deeper into the trough. In the last recessionary year, the Chief Executives of the Top 100 Listed Companies in the UK have been awarded 43% increases in their pay packages, while the next level down of Directors has gained even more – 49% increases on average.

There was much awkward wringing of hands by Government Ministers, embarrassed by the extreme extent and blatant arrogance of these people, many of them funders and supporters of the same Tory regime that has assured the suffering public that “we are all in it together” in facing the economic downturn. But none of them undertook to implement any hard and fast action that might change this utter fest of rapacious greed.

Finally breaking the Church of England’s silence over the demands of the Occupy London protesters, the Archbishop of Canterbury last weekend asked “Are economics too important to be left to economists?”, positing the need for some ethical underpinning of the economic framework – including supporting the so-called Robin Hood tax on financial transactions. And yet, is capitalism capable of delivering such a benign outcome at all? So how do we deal with these people? If not capitalism, then what?

Given that the entire raison d’etre of capitalism – the maximising of profit – inevitably drives this grasping process of exploitation of resources to exhaustion coupled with the excessive accumulation of wealth, the long-term answer can only be through adopting a new economic ideology – one embracing sustainable stewardship of resources and a genuine redistribution of both power and wealth. It is a measure of the success of the capitalist media’s propaganda that socialism remains a dirty word even among many progressives, but that makes the need for new solutions and the potential for a new society no less possible, nor any less imperative.

All economic systems have to accommodate choice and exchange in some way – the central question has to be whether this is determined by wealth measured and expressed by monetary power or by human need identified and agreed by a wider social construct. In this, market mechanisms may have a greater or smaller role to play according to the culture of the society in question – and this has as often as not in human history depended on ethics or morality as much as on cash in hand.

For example, ninth century Byzantium, the eastern successor of the Romans and the most successful state of its time, purposefully adopted an economic ideology based on self-sufficiency and just distribution. The Emperors, driven in part by Orthodox Christian theology and in part by political considerations, adopted a series of laws which held “just exchange” to be at the centre of any market transactions. In particular, policy focused on tackling the rapacious excesses of the dynamoi, the powerful nobility, over the poorer citizenry and especially the peasantry.

And so, in a society that was significantly monetised in its exchange process (as opposed to barter which remained a significant component in other contemporary economies), we find a series of edicts which, among other things, forced the free return of land bought from famine-struck peasants by their exploitative lords for less than half the assessed “just value”. We find laws rendering void any contract where the workman had agreed a rate lower than the “just wage” and in the realm of lending, the rich were forced to charge lower rates of interest than less prosperous lenders. In the capital, Constantinople, craft guilds were established to licence producers in such a way that, while competition was permitted within a particular sector, even the most successful producers in one field could not diversify into others and come to dominate the supply of goods to the consumer. The Prefect of the City regulated the production of key goods to ensure sufficiency of supply to the population, with the Government intervening where this was threatened (especially in terms of staple foods like bread and fish), and to prevent “unreasonable profit” – an established principle in Byzantine law.

The Byzantine Economy  - putting the Just into Justinian?
 Perhaps of greatest contemporary relevance, it was the Byzantines establishment of the practice that, while supply and demand might inevitably affect the costs of producing goods and that Government might be limited in its long-term ability to temper this, it was both possible and indeed a moral imperative that there should be a legal limit on profit margins. Consequently, Patriarch Nicephoros in the ninth century set this as no more than 10% of cost, a figure so low that it would have many a modern venture capitalist choking on his swill.

And yet, in the precarious Medieval world, Byzantium’s adoption of an ethical, redistributive economics worked highly effectively. With a million inhabitants by 1100, Constantinople flourished as the wealthiest city in Europe and the Near East, inevitably incurring the envy and desire of predatory neighbours.

Briefly, it is of note that the effective end of the Byzantine Empire did not come through economic ruin. Rather, the death blows fell through a combination of the violent reassertion of power by the military aristocracy, who rolled back many of the laws during the turbulent late eleventh and twelfth centuries, and then through the sacking of Constantinople in 1204 by the Fourth Crusade, led by the avowedly mercantilist Venetian Republic. Although the Empire lingered on in various forms for a further quarter of a millennium, these two forces – the propertied and the moneyed – between them destroyed what had been one of the most successful and long lived civilisations in the Mediterranean world.

Sustainable and ethical economics, and equitable distribution of wealth, were not new even at the height of Byzantium. Aristotle had written of justice in exchange in 360 BC, Roman law incorporated the concept and the 4th century Church Fathers advocated justice as including material equity. And all accepted the role of the State as the “judge” (Aristotle’s concept) in “restoring equality between those who have much and those who have little, by giving to one what he takes from the other”.

Indeed, for most of humanity’s existence, societies have functioned on the basis of a “steady state economy”, where output expanded slowly and in tiny increments, if at all. Consequently, how resources and material wealth were shared inevitably became a central policy issue. It has only been since the early Renaissance that first long distance trade and then the technological and productive potential of the Industrial Revolution led to the fairly recent capitalist construct that wealth can be skewed horrendously disproportionately, yet everyone can be better off.

Plainly, with so many key raw materials near or past peak production while demand rises inexorably, if this nostrum ever contained any truth at all, it no longer holds. With growth rates now facing long term decline, the capitalist system is morally bankrupt and in the coming decades will be practically bust. Even beyond the current recessionary cycle, resource scarcity looms and the need for an Aristotelian Judge has never been greater – we need to re-embrace an economics where, once again, as one economic history has described tenth century Byzantium, “...individual economic action is limited by the needs of society as a whole.”(as succinct a definition of contemporary ecosocialism as I have seen).

The question for our society and our world is whether we wait for our system of economics to collapse in pain, blood and violence, or whether we take control of our contemporary dynamoi now and begin the transition to a happier, more egalitarian, and sustainable future.

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