The Economics Of A Decentralized Economy In Ancient Greece


This is the story about how novel new methods of economic organization helped Greece flourish. The importance of the Greek city states cannot be underestimated. The modern word “politics” is derived from the ancient Greek word for city-state, “polis.” The word Politics literally means into "the things concerning the polis" in Ancient Greek. Free trade markets were the norm, even in cities under oligarchic rule, with a handful of exemptions - most notably the state of Sparta. Built by the people and for the people, the city state stands as the historical pillar of our conception of modern Western liberalism.


The times of classical antiquity were chaotic and savage in Europe. Most of the continent was populated by disorganized barbarian tribes. Locked in perpetual wars, the barbarians had no cities or trade and existed in a state of disarray. It was during this primitive and chaotic time, however, that Western civilization was forged and flourished in the Greek city states.

This is the story about how novel new methods of economic organization helped Greece flourish. 

The Archaic era (700 – 480 BC) was an era of change for the Greek civilization. Following the so called “Greek dark ages,” a period of instability and turmoil, the population recovered and organized politically. This came in the form city-states constituted of citizens, foreign residents, and slaves. The rapid rise in Greece’s population caused many problems, and facing the traditional Malthusian paradox, they realized that the land they had wasn't sufficient to cover their new needs.

One possible solution was war to seize the neighboring land. The greatest example of this case was Sparta. During the last third of the 8th century, the overpopulation of Spartinas in Lakonia, Peloponnese, led Sparta to capture Messinina. The Messinian population was enslaved and Sparta now had doubled its territory. 

But most cases that wasn't enough. So the Greeks attempted an alternative. Using their experience at sea they began to colonize the Mediterranean. Starting in the 8th century BC, and lasting for more than two centuries, the institution of the Greek city state was spread from the Greek mainland to the rest of the Mediterranean: Asia Minor, Cyprus, the Middle East, Southern Italy, Sicily, Sardinia, Corsica and as far as southern France, Spain, and the Black Sea. 

The importance of the Greek city states cannot be underestimated. The modern word “politics” is derived from the ancient Greek word for city-state, “polis.” The word Politics literally means into "the things concerning the polis" in Ancient Greek.

By definition sovereign, a city state (“polis”) was a unique entity. Every city-state had its own laws that defined the rights and obligations of the inhabitants within its borders. Their social status, place in a social class, and economy was a matter of law. Every city imposed its own taxes and regulations. Many gave special liberties and honors to its citizens. The Greek city state was present in every part of daily life. Surprisingly, it did not in the manner of a totalitarian faceless state, but instead fostered the sense of a common community, with shared interests and rituals. 

Free trade markets were the norm, even in cities under oligarchic rule, with a handful of exemptions - Most notably the state of Sparta. Since Sparta was an almost totalitarian and militaristic state, the Spartans rulers avoided trade lest the Spartans be exposed to new ideas. The vast majority of the ancient world however was characterized by decentralized economic exchanges made by individual citizens of each polis. That was what made each polis successful financially. And that was what made its citizens create a unique relation with their cities, a form of citizenship that is has gone extinct in our times. 

Built by the people and for the people, the city state stands as the historical pillar of our conception of modern Western liberalism.


 The city-state was built on three basic pillars, ideas which the citizens and the inhabitants had as an ultimate purpose in their political and social life. 

The first pillar was the idea of Liberty. That meant that the city had to be free, and for that freedom, men had the responsibility to be ready to fight for their independence against other cities. It is interesting to note that all men had to fight for their homeland when needed, but they also had to provide for their own armor. Those who could afford the maintenance costs formed the cavalry. As British Historian Geoffrey Hosking[3] notes on his illustrious work “Epochs of European Civilization: Antiquity to Renaissance,” about ancient Greece: 

“It can be argued that this growth of slavery was what made Greeks particularly conscious of the value of freedom. After all, any Greek farmer might fall into debt and therefore might become a slave, at almost any time... When the Greeks fought together, they fought in order to avoid being enslaved by warfare, to avoid being defeated by those who might take them into slavery. And they also arranged their political institutions so as to remain free men.” 

The second pillar was “autonomy.” Autonomy, is originally a Greek word, which consists of the two words “self ” and “law,” meant that the citizens were actively participating in government, and that they were ruled by laws that they had created themselves. Even in cases of tyranny, the tyrant had the public support most of the times. 

The third pillar was autarky, in the highest possible extent. Autarky exists whenever an entity can survive or continue its activities without external assistance. Autarky, originally a Greek word too, consists of the two words “self ” and “sufficient”. That meant that the city itself ought. That of course could not happened in Greece’s small states, so they focused more on creating a surplus of the goods that they produced.

 It was the third pillar, autarky, which would prove to be the most valuable when it comes to securing the survival of the polis.


The Ancient Greek understanding of self reliance, also known as autarky, differs from many modern conceptions. The polis sought economic freedom and prosperity so that it wouldn’t have to rely at all on neighbors politically. Unlike more modern conceptions of national self reliance, this didn’t preclude trade. Historians observe economic specialization very early in the Greek city states. Each city had to offer something different ranging from agriculture to fishing to mining. Rhodes was known for its wine, and so were Ionia, Lydia, Mendis. Akragas and Athens were famous for their olive oil and Cappadocia for its wool. Later on, cities and ports specialized in services and small industries, encapsulating everything from pottery to banking. This way the need for self sufficiency led to an extended trade network, and a free market among the cities. City states did not depend on other cities in a manner of servitude but traded freely as equals. From the 8th to the 3rd centuries BC, every household or extended family tried to make enough products to survive for a year. They forecasted bad harvests and stocked for the next year and held small pastures. As Aristotle states in “Politics”4 :

“Everyone would agree in praising the territory which is most entirely selfsufficing; and that must be the territory which is all-producing, for to have all things and to want nothing is sufficiency. In size and extent it should be such as may enable the inhabitants to live at once temperately and liberally in the enjoyment of leisure. [...] As to the position of the city, if we could have what we wish, it should be well situated in regard both to sea and land. This then is one principle, that it should be a convenient center for the protection of the whole country: the other is, that it should be suitable for receiving the fruits of the soil, and also for the bringing in of timber and any other products that are easily transported by sea.” 

‍It's important to stress that autarky didn't result to isolationism, and in fact served as an impetus for trade. Every “Polis” consisted of two complementary entities: the city itself, and its mainland. Most of the times the city was the size of a small ordinary town or a village. As professor Arnold Gomme5 claims, Athens at its highest point, reached a total population of 300.000 in 431 BC. In the mainland there were small agricultural settlements, whose numbers decayed in the Hellenistic period. The city and the mainland were almost always near the sea, or at least close to a port, which was vital for trade and safety. The relationship between the city and the mainland was not one of dependence, but most of the times one of cooperation and equality. Exceptions to that rule were the Royal Capital Cities of the Hellenistic times, where serfs or slaves worked almost exclusively in the mainland to provide for the citizens who lived in the Cities and the ports. Polis is the result of many geopolitical components. The decentralized development of the Greek City-States has much to do about the mountainous terrain of Greece and Minor Asia. The great distances and the rough tracks made it impossible to create relations of dependence and control. On the other hand, the sea provided routes for easier and broader trade and at the same time provided easier defense. The Greeks realized that they belonged to one and the same nation. Herodotus states, in his “Histories”6 :

“The kinship of all Greeks in blood and speech, and the shrines of gods and the sacrifices that we have in common, and the likeness of our way of life.” And yet they didn’t form broad political unions, with one centralized power.”


The political organization of each city varied a lot. Some were oligarchies, most notably Sparta. Other tyrannies, like Syracuse. But the great majority was democratic. States imitated Athens, or were forced by her to become Democracies.

At the top of the social pyramid, the citizens formed the core of this society. Despite our modern understanding of the word “citizen,” this class didn’t comprise of women, foreigners or slaves. Non-citizens had no political rights. The state was understood as an organic alliance of citizens who obeyed the laws that they themselves voted for. Democracy was not executed on the behalf of faceless and remote representatives, but instead exercised by the local commoners. The power of the citizens was not only legislative: they also wielded executive powers. Pericles, on his Funeral Oration7 of the dead soldiers of the first war of the Peloponnesian War, says: 

“Our constitution does not copy the laws of neighboring states; we are rather a pattern to others than imitators ourselves. Its administration favors the many instead of the few; this is why it is called a democracy. If we look to the laws, they afford equal justice to all in their private differences; if to social standing, advancement in public life falls to reputation for capacity, class considerations not being allowed to interfere with merit; nor again does poverty bar the way, if a man is able to serve the state[...]. The freedom which we enjoy in our government extends also to our ordinary life. There, far from exercising a jealous surveillance over each other, we do not feel angry with our neighbor for doing what he likes. But all this ease in our private relations does not make us lawless as citizens. Against this fear is our chief safeguard, teaching us to obey the magistrates and the laws, particularly such as regard the protection of the injured, whether they are actually on the law books, or belong to that code which, although unwritten, yet cannot be broken without acknowledged disgrace.”

The same democratic and decentralized principle applied to judicial power. Unlike modern courts which only involve dozens of jurists, courts in ancient Greece evenly spread political power to hundreds of its citizens. In Athens, for example, the courts consisted of hundreds or even thousands of judges. The smallest courts had only about 200 members, and often 500 or 1000. The courts always added an extra citizen so that there were an odd number of votes to avoid ties, usually resulting in 501 or 1001 members.

The scale of popular involvement can be better understood when contrasting the large body of courts and the small pool of available jurors. In Athens, the annual pool of jurors, whose official name was Heliaia, had 6000 members.

Jurors were chosen randomly by lottery, which meant that juries would consist, in theory, of a wide range of members from different social classes. They would decide by voting whether the accused was innocent or not. If the defendant was found guilty, they would vote again to choose a punishment, as proposed by any member of the jury. 

It is worth noting that Socrates was found guilty of both corrupting the minds of the youth of Athens and of impiety, "not believing in the gods of the state." The jury voted in favor of his guilt with 281 votes and 220 against. When Socrates was asked to propose his own punishment, he suggested a wage paid by the government and free dinners for the rest of his life. His sarcasm resulted in his death sentence. The jury voted again, this time with 300 in favor of his death and 201 against it, and Socrates was forced to drink poisonous hemlock, as Plato, his student wrote in his first book, “Apologie.”8 

All other offices within the Athenian state were selected in the same fashion as the jurors (The exception being ten generals who had to be elected by the citizen assembly). 

After the reforms of Solon in 594 BC, anyone from each of the four classes could become a judge. This was meant to make the system much fairer to the poorer members of society, who had previously been excluded in favor of the elitist aristocrats. 

The government of the city state, and civic life created a different relation between the citizen and the state, than the one we have now. The State was not considered to be a faceless institution. Everyone was eager to offer to the Society, because everyone was the society, indeed the Government itself. This form of citizenship in small states was more a form of partnership. 


Despite its political modernity, Greece was afflicted by serious socioeconomic inequalities.

Foreigners were excluded from politics and from any guilds the city had, although they could put pressure on the government as lobbyists. They didn’t have to participate in any assemblies or hold any office, unlike the citizens who were busy attending assemblies and holding offices, foreigners had the time to occupy themselves with financial transactions. Most of them didn't live in Athens, but in Piraeus, near the ports. Later on in the Hellenistic era, more and more citizens begun to participate more actively in trade. 

One could not disregard the existence of the institution of slavery. Slaves were vital functionaries of the economic and political system, and their role varied. Some slaves found themselves working at the bottom of dark mines, while others were house servants and bureaucrats. 

It is also worth noting the case of one slave in particular; whose case shows that there was a small possibility of social mobility. Pasion was a slave with two masters who were bankers. Yet, in exchange for his services, his masters made him a freedman. He then, during the early 4th century invested his salary on trade and then managed to buy the bank from his ex-masters. A few years later, he was granted citizenship as a reward for his service to the city. He died, leaving behind a fortune of 420.000 drachmas, a well respected bank and two factories.


 Archaeology has shown that cultivation and stock-breeding hadn’t evolved much in antiquity. Yet mining evolved rapidly in the Hellenistic times, following the death of Alexander the Great. Land cultivation provided a steady and certain income for both the land owners and the city, through revenues and publicly owned land. 

But some cities didn't have the space for agricultural activities, mines, quarries, or slaves to trade. A great example was Delos. 

Delos was a small rocky island, in the middle of the Aegean Arhipelagos. Yet it managed to achieve great economic success. Its secret lays on the myth that Delos was the place where Apollo and his sister Artemis were born. The Temple was one of the holiest at its times, thus the island was never threatened by pirates. Soon, wealthy people and cities made dedications to the Gods, later on kings of the Hellenistic period joined in, competing against one another. Thus the temple and the city found the much needed capital to invest, in land, in trade and in banking. This small rock, managed to buy land in the nearby islands and lend it back to the inhabitants. They bought ships to trade, and due to the size of the port, they bought shares on private ships. Delos managed to get decorated with theaters, temples, promenades and great houses. By the end of the classic era, Apollo's priests were the biggest private owners in Cyclades.


The Greeks had a very different view of industry than we we do. They thought that every profession that had to do with creating something was considered to be an art. The word “technician” comes to English from Ancient Greek. It derives from the word “texni,” “τέχνη” which means art. To make something be it a sword, a basket, or a table, the Greeks considered it to be a form of art.

In ancient Athens there was a great degree of economic specialization. Many of Athen’s citizens worked in manufacturing workshops, about 10.000 out of the 40.000 citizens, as Alice Burford cites in her book, “Craftsmen in Greek and Roman Society”9 . Slaves were used in workshops for the heavier and more dangerous work. The city rarely intervened in the business of the workshop besides imposing a small tax. There were few economic regulations, and these had to do with urban planning, such as mandating where the workshops could be built. For example, workshops were confined to outside the city walls to prevent fires. The greatest example is the Athenian industrial district southwest of the city towards the port of Piraeus, traces of which stand to this day. The law only recognized individuals, and not corporations. 

The size of the workshops varied a lot. Some consisted of a dozen of slaves, while others employed hundreds of people depending on the type of industrial art practiced. In his speech, “Against Eratosthenis”10, Lysias, a famous speechwriter, mentions that a man called Kefalos had a shield factory with 120 slaves. Demosthenes, the Athenian orator and statesman, in his speech “Against Afobous”11 mentions he had two small factories, one that made knives and had 30 slaves and one that made beds and had 2o slaves. Its interesting, that he mentions the factories as “μικρας τεχνας”, literally “small arts”.


 In the beginning of the classic era, after the end of the Persian wars, more and more aristocracies turned into democracies. Athens, victorious and all-powerful, used the threat of its enormous fleet to coerce cities into becoming democracies. As democracies multiplied in the Greek world, so did the basic personal rights. Individuals now were not afraid of war or the whims of the aristocracy. It was in Athens were for the first time that private property was considered with an entrepreneurial outlook.

The philosopher Xenophon writes his book “Oeconomicus” about rational household management. In this book, he uses the word “economics,” probably one of the first recorded uses of the word. He defined economics as the rules concerning the household. The Greek word “ecos” means “household” and “nomos” means law.

This new outlook on private property is better portrayed by Plutarch in his work “The life of Pericles,”12 the Athenian politician who viewed his property as a business. To quote:

“During all these years he (Pericles) kept himself untainted by corruption, although he was not altogether indifferent to money-making; indeed, the wealth which was legally his by inheritance from his father, [...]he set into such orderly dispensation as he thought was easiest and most exact. This was to sell his annual products all together [...], and then to buy in the market each article as it was needed, and so provide the ways and means of daily life. For this reason he was not liked by his sons when they grew up, nor did their wives find in him a liberal provider, but they murmured at his expenditure for the day merely and under the most exact restrictions, there being no surplus of supplies at all, as in a great house and under generous circumstances, but every outlay and every intake proceeding by count and measure. His agent in securing all this great exactitude was a single servant, Evangelus, who was either gifted by nature or trained by Pericles so as to surpass everybody else in domestic economy.”

Despite the obvious economic benefits brought about by property and entrepreneurship, many ancients remained skeptical of private property. 

They believed that property had a certain corrupting influence, because as they thought, the citizens would spend more time in managing their properties rather than the city's affairs. Gradualy that would lead to the alienation between the citizens and the “polis”. 

Depending on the size of their land, owners produced a surplus of goods which could be exported at a high price. This trend caused many democracies to turn into to oligarchies over time.

 Rhodes stands as a good example. Rhodian wine was very famous, and very expensive. The owners of large parts of land managed to make great fortunes, and using this power, somehow managed to rise to power and abolish democracy.

It may be argued that the legal system in ancient Greece was imperfect and fragmentary. Yet one must bear in mind that for its time it was a fairly functional system. Even though there was room for development, those first steps were taken to the right direction.


The cities and the temples had many utilities which were public property. The main example were the ports and docks of a city. A private constructor built the docks, and the city administered the services. Other examples include the quarries and the mines, which, in the Hellenistic era became property of the king, which cannot be characterized as private or public ether. In the Roman times, all these became imperial property. 

As it concerns forests, some were private, but most of them belonged to the city-states: stone and timber were the basic building materials. Marble was used mostly for public buildings. A case worth mentioning is the silver mines of Laurion in Attica. Extracted from the 14th century BC until the 1st century BC, the mines were in use for 1.300 years. Laurion is in Attica, and was therefore used by Athens. Excavations lead to the conclusion that Laurion was a small industrial settlement. It belonged to the state, and was a major source of income which allowed Athens to create many coins for broad circulation. In the book written by Georgios Apergis „Assessment of the Layrion Minining Lease Records” 13 , is pointed out that the mining excavations were made by rich citizens who had the capital to invest in slaves and tools formed contracts with the city and gained the right to access the workshops and the mine. The work, needed no less than 20.000 people, both slaves and free men - and lots of water and timber. We see, thus, that the state cooperated with the private sector, with many individuals who could afford to be involved. An example was Nikias and his 1.000 slaves, who got paid one drachma for every 6 slaves daily. They earned their part of the profit and the rest belonged to the city. These policies helped minimize the taxation of the general population.


Another public enterprise was war. War didn’t only exist to preserve the independence of the city state, but rather was a pillar of Greek institutions. 

Aristotle remarks in Politics (I,8,12)14 that war is a very profitable activity. Sacking a city, taking more land, capturing mines, or even enslaving entire cities was a common source of revenue. Regardless of whether wars broke out for political or economic reasons, they often proved profitable.

The importance of naval warfare couldn’t be underestimated. Fleets were one of the most expensive endeavors for the Greek city states, one of the most largest expenses being the costs of building and maintaining fleets. Through the centuries, ambitious cities like Samos, Chios, Rhodes, Corinth, Massalia and Syracuse, spent thousands on ships, but no city was more ambitious than Athens. In the 4th century, Athens built more than 400 ships, most of them triremes (τριηρις). The docks in Piraeus costed 6.000.000 drachmas.

Fleets weren’t always a burden, however. Entire regions like Aetolia and Crete relied on piracy as a source of income, even though Philip of Macedon, Alexander's father, prohibited this practice. In order to build its many ships Athens turned to the citizenry. They introduced the institution of “Litourgia”- “Λειτουργία”. Rich citizens had to pay a part of the cost of the ship, and supervise the implementation of the construction. 

Citizens responded positively and gladly, because building ships was considered a high honor. It is estimated that each of the rich citizens annually paid 3.000 dramas, and 6.000 in times of war. Citizens in Athens preferred to be given a “Leitourgia”, a contract work to pay and complete themselves rather than pay taxes. It should be stressed that they were not the owners of their Leitourgia. This institution was one proportionate to taxation and the construction or the service belonged or addressed the city. That could be concluded taking on account that it was the people who decided how to collect money for the state, through direct representation. Let us stress again that, “leitourgia” was about rich people who could afford to take the cost . A road to Acropolis, full of inscriptions showed who was given a “leitourgia”, and what it was. One can still read these inscriptions, full of pride and in most cases vanity in the Archeiological Museum of Athens.


‍The Greeks had a mixed economy, with the state playing an important role in an otherwise more or less free market. The state owned strategically important properties such as docks, ports, roads, and mines, while the citizenry enjoyed trade and a flourishing private economy. 

The state was funded by a well-developed system of taxation. Originating in the Mycenaean era, the leaders of settlements had to pay tribute in kind, to the higher in the hierarchy, in a system similar to that of feudalism. . In the Archaic era, the citizens had to pay a tax to the city, mostly for defense and infrastructure. Broader introduction of coins made the process easier.

In Rhodes the rich aristocracy, who exclusively held political power, considered it a moral obligation to feed the poor of the city and they did so voluntarily. Nonetheless, assets and agricultural production were taxed in case the city didn't have an other source of income.

Another important source of income to the city was indirect taxation. It was applied mostly in trade, and the tax rate was usually 2% (one fiftieth). In Athens in 400 B.C., after the Peloponnesian War, trade had stagnated. Yet, Athens taxed 9.000.000 drachmas, plus the fees for using the port facilities. But that wasn't always the case. Delos in 230 B.C, on the same rate of 2% collected only 17.900 drachmas. Rhodes, before 166 B.C., according to Polibius' work “Histories”15 collected nearly 1.000.000 drachmas from fees and taxation on the imported and exported goods.


An interesting example is the case of Delos. In 166 B.C, the Romans played a big part in Greek politics. Delos used to be under the patronage of the state of Macedonia, under which Delos managed to become a large and important port by taking advantage of its religious status. When Delos was conquered from the Macedonians and captured by the Romans, the Romans gave the island to Athens. Not only that, but most importantly made Delos a free port. No taxes or fees were to be collected in the port of Delos. Although we do not have clear written evidence, archaeology can give an image of what happened. The city got even richer. New buildings rose, and more space was made for the emporium. It is estimated that the island held 10.000 slaves a day. And that answers, on the question “Why did the Romans made Delos a free port?”. They did so, as to trade slaves they captured in their wars with Persia. A complementary theory, suggests that Rome made Delos a free port, in a try to weaken Rhodes, which took sides with Macedonia. The story end with Mithridates VI of Pontus, who attacked Delos in 88 BC, killing 20.000 of the resident Romans. Another devastating attack was by pirates in 69 BC, and by then the trade routes had moved to the west. Delos never recovered.

Trade Commerce advanced a lot in ancient times. Among cities it became regular feature of daily life. At an earlier time in Greek history trade was occasional and sporadic. As the Greek states rose from regional into international powers, trade became faster and a larger part of the economy. Although traders were much less than the farmers, all farmers took on the role of occasional traders. Farmers would trade their goods themselves by land and sometimes by sea.

Of course trade was not an easy business. Many city states meant many borders to cross and many tariffs to pay. There were frequent wars and, at times, many pirates and thieves competing for booty on the seas. Inland the problem was tackled with the creation of a road network, which was perfected in the early roman period.

Trade by the sea was more extensive. It was easier and cheaper to carry large quantities of goods by sea than it was by land. Archaeology has shown that a ship in the classic era could carry 20 to 70 tons, but in the Hellenistic era the capacity rose to 120 or more tons. We can estimate that a ship at that time could travel maximum 40 km a day. In ancient times they traveled mostly in the morning and rarely at night with the guidance of the stars. As mentioned in “The social and economic history of the hellenistic world”16 by M. Rostovtzef:

“Trading distances became bigger and bigger through the centuries, and relationships among cities grew more and more complex. Athens, bought its wheat from Egypt and the Black Sea. In the year 374 it is known ,based on the collected tax and the price paid that 23.200 tons of cereals were imported to cover the needs of Athens and Peraeus Alexandria in the Hellenistic times traded indirectly with India luxury goods. After all not all things could be trades with nearby cities. Iron, silver, especially gold, pepper and most notably slaves were to be found deeper in the three continents that surround the Mediterranean. But at the first century BC Rome drew the center of commerce to the west. Slaves, iron and wheat were the main resources, Rome needed on its first days as an empire. Athens, Corinthos and the Greek cities became important once again, as stations for transit trade.”


The usage of coinage played crucial role in trade. Coins were mostly silver, although bronze coins were used mostly in everyday exchanges. Cities cut their own coins, but there were groups of cities that had the same system, so every denomination had the same weight. Coins of other civilizations were in use too. For example in the classic period the Persian “darikos” was broadly used, and it consisted of 8,4 grams of gold. In the classic era the Athenian drachma was always in high demand, and always abundant, thanks to the limitless silver that was extracted in Laurion. Soon, in , almost all cities in the Aegean and many in Minor Asia used it.

In the Hellenistic period, a changing geopolitical situation brought about a change to the currencies which were being used by the Greeks. Macedonia, now a much stronger power, minted the coins which were most commonly used. Macedonian currency, like the coins minted in Athens, consisted of 9 grams of pure gold. Its silver denominations, with Alexander the Great on the side, flooded the Aegean markets. Later on, it was the Roman denarii that were used broader.

‍The Greek economy had a free market for currencies. Although there were regulations and restrictions inside each city, anyone could use any type of coin in trade and in general in exchanges. No central power ever managed or aspired to impose one common currency was. The usage of coins not only made trade easier but opened the way to credit and the banking system.

‍This broad variety of coins created the need for currency exchanges. In the 5th century, during the classic era, the first banks were created. Banks got their name, by the bank, the table on which bankers worked. They accepted deposits and invested them to make profit. One could make a deposit to secure his money in a safe place, or to make transactions or even make payments through the bank. The interest rate on deposits was rarely regulated and stable throughout the centuries, between 10% to 12 %. Banks most of the times lent to rich citizens, since common people borrowed from their family without interest rate. But banks had an interest rate, usually near 18%. Unfortunately we have no evidence of private banks lending to cities. Most banks were private, but there were public banks too. Athens and Delos, Kos, Tinos, Militos were famous. These banks rarely lent money to individuals. They were used for safety deposits, and they lent money to state treasuries that were empty. Public banks assisted in the process of tax collection.


In his seminal work, “Politics”17 , Aristotle describes the need for the polis:

“It is manifest therefore that a state is not merely the sharing of a common locality for the purpose of preventing mutual injury and exchanging goods. These are necessary preconditions of a state’s existence, yet nevertheless, even if all these conditions are present, that does not therefore make a state, but a state is a partnership of families and of clans in living well, and its object is a full and independent life.”

‍Because it is clear that a “a partnership of families and clans” can only be realized in if the partners all live in the same place and practice intermarriage.

Aristotle argues that the existence of families, brotherhoods, religious organizations, or social and recreational groups are necessary but not sufficient to the survival of the state.

The purpose of all the state’s component organizations are means to an end: to satisfy human happiness, or, as Aristotle puts it, to achieve the state of a “good life.” A state is the partnership of clans and villages in a full and independent life, which in Aristotle’s view constitutes a happy and noble life.

Aristotle’s view of the state reflects the common ancient sentiment that the state is a means to an end to help the people achieve the “good life.” The political fellowship must therefore be deemed to exist for the sake of noble actions, not merely as a necessity for living in common.

This Aristotelian moral view of life in the Polis suggests a meritocratic ethic far ahead of its time. Instead of status by birthright, Aristotle implies that those who contribute most to the Polis should have a larger role in the state.


This short work has presented a panoramic overview of the economic and political status of the Ancient Greek Civilization. There have been presented the basic three pillar ideas, upon which the idea of the City State stood, and the way that they affected the lives and the actions of the Greek, as members of a society. Then followed a presentation with the way than most of the cities were organized socially and politically. Afterwards, there was a presentation of the economic life of the Polis. The exploitation of the land and of the mineral wealth. Also of war as a source of income. Finally there was an examination of the free trade between the cities and of the way the markets functioned. Without taking into account the currency, and the way it was used this work would have been incomplete. Many paradigms and primary sources were presented so as to take an accurate closer view.

No one could deny the great influence of ancient Greece on the development of Western Civilization. It has spread through time and it had stretched across the earth. Many ancient Greek contributions have persisted more or less unchanged into the modern era. As the poet Percy Shelley stated, “We are all Greeks”. Ancient Greece has been always relevant, especially in changing times, like ours. It rests therefore upon shoulders to find a new lesson to teach ourselves, on the way we organize our societies. History, sets an example to us. If they did it, we can make it too. The free exchange of products, services and ideas. Stories of free men, in independent cities. Let these be our prime examples as we build our societies. And thus, as Pericles said about Athens18:

“Future generations will wonder at us, as the present generation wonders at us now.”

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Alexander Pardalis

Alex Pardalis is an entrepreneur with experience in financing, business development and management and president of a mutli-million dollar real estate development company.