The Forgotten Art of Managing the Economy


Economics is also assumed to have originated with the great British Economists of the 19th century, such as David Ricardo; whereas the truth is that it has been practised since human beings first began to live in communities. Then, if it was written about it would have been under the guise of writing about the domestic economy, such as the Classical Greek philosophers Aristotle and Xenophon. Since all manufacture and agriculture was conducted as a family business it was correctly regarded as a topic that should be addressed to householders.  Pliny one of the great Roman scientists  wrote about the management of slaves and as the Roman agriculture and manufacture was undertaken by a slave labour force, this should be regarded as a text on economics. There is a probably apocryphal saying attributed to Aristotle who complained that as an economist people kept asking him how to become millionaires, when they would never consult him in his role as a botanist on how to achieve eternal life. Aristotle if he said this was making the all too familiar complaint of all economists that people have to high an expectation of what there subject can do.
Perhaps the best known account of the early practice of economics is the story of Joseph and the Pharaoh’s dream in Genesis. Joseph was asked to interpret the strange dream of the Pharaoh in which he had dreamt that he first saw seven health cows grazing contentedly, whose grazing was interrupted by seven gaunt and ugly cows. These thin cows then eat the fat cows, and the dream continued in a similar manner. Joseph correctly interpreted the dream to mean that there would be seven years of plenty followed by seven years of famine. He then constructed warehouses in which he stored the surplus grain from the good years from which to distribute surplus grain from the good years to the people in the years of famine. There is evidence that societies such as Ancient Egypt did store grain in this way. Economics for people constantly be threatened by famine  and other natural disasters economics was a practical science whose good practise was necessary for the their survival. If economics had remained a subject of domestic or household economy and not become a subject of high theory some of the recent disasters of mismanagement of the economy would have been avoided. 
There is another historical comparison that is informative. In classical Rome the development of the slave economy led to the impoverishment of the majority of the people, as the small traders and farmers were undercut by the large slave owning farms and manufacturers. The most unfortunate of which had to sell themselves and their families as slaves to survive.  This created a large number of discontented people and Rome was torn apart by social friction. The aristocrats in trying to contain the anger of the plebs (people), resorted to repressive measures but these alone were not sufficient. The only viable solution was ‘bread and circuses’.  The Roman Emperors imported corn from the conquered African provinces which they distributed free to the Roman populace. They also organised festivals and circuses to distract and entertain the people. When the system worked well Rome was peaceful, when it broke down there were riots. 
What the rulers of these societies realised what that the economy was too important to be left unregulated. If the Roman emperors had not intervened to control the corn supply, Roman society  would have been riven by constant food riots and would inevitably it collapsed as a consequence. Securing the food supply meant the Roman Emperors had a secure base from which to embark on a campaign of world conquest. However the understanding that an unregulated economy can be a threat to the social order has been forgotten by contemporary Western governments. These governments put the needs of the economy above those of the people. Neo-liberal economic theory teaches that the unregulated free market is the best social mechanism for maximising the welfare of the people. Therefore when the market is visibly failing, for example the housing market in the UK the only policy offered by the government ‘is to do nothing’ and wait for the market to find a solution, which it does not. What policy there is towards the housing market is mere tinkering at the edges, finding some funds to make it easier for first time buyers is no solution to the housing crisis. 

It is surprising for a government so obsessed with economics, one that is constantly obsessing over the size often the government debt, that it misunderstands the need of manage the economy for the common good. If Joseph has not intervened in the grain market the supply of grain in the time of famine not only would their have been a shortage of gain, but what grain there was would have been in the hands of the grain merchants. These people given the worldwide shortage of gran would have maximised their profits by selling what grain they had to the highest bidder, leaving the poor hungry Egyptians to starve. Something similar happened in Ireland in 1845/6 when the potato harvest failed and millions of the Irish were threatened with starvation. Instead of the the  Irish grain merchants distributing their grain to the starving Irish, they exported it  for a high price to foreign buyers. Consequently thousands if not millions of Irish starved to death. The Great Irish famine would never have been the catastrophe it was if the government had intervened effectively to help the starving Irish, similarly today the housing crisis would not exist or at leat greatly ameliorated if the government intervened to correct the failures in the housing market. Unfortunately as with the British government of 1845/6 it does not believe that it is its role to intervene in the markets when they fail. The 11 million Britons that live in private rented accommodation, much of it inadequate will only grow in number with a government of ‘do nothings’. Unlike the Pharaoh they are indifferent to the suffering of these people.


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