Download Ober092905

Productive Democracy: Openness, fairness, and the organization of
knowledge in the design of ancient Athenian institutions.
Josiah Ober. Princeton University. jober@princeton.edu
Draft of September 8, 2005
Sections:
• Democracy and productivity
• Athenian processes of knoweldge
• Openness, fairness, and transaction costs
• Athenian law on acceptance of silver coinage, 375/4 B.C.
• Conclusions
• Appendix 1: Nikophon’s Law
• Appendix 2: Athenian silver mining and minting.
Illustrations:
• Table. State-determined conditions for low transaction cost bargain-making
• Decision Tree. Coinage approval process.
• Figure. Tetradrachms (Athenian minted and “good fakes”)
Democracy is widely regarded by political theorists (among others) as superior to
more autocratic and hierarchical forms of government because (at the least) it is a better
vehicle for promoting normatively preferable conditions of life, including the procedural
conditions of openness and fairness.1 But if a democracy proves inefficient at gaining and
mobilizing resources it may be unable to sustain choiceworthy conditions of life. If
openness and fairness (and other normatively desired conditions) are achieved only at the
cost of a substantially lowered capacity to promote and sustain material flourishing, a
prolonged period of competition with more efficient autocracies (say, China) could
eventually present democratic states with an unhappy choice between keeping democracy
and maintaining their quality of life: under such circumstances, democracy would
certainly be imperiled. It would simplify matters for liberal theorists if democracy were
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inherently an economically productive form of human organization. But, unfortunately, it
is not that simple.
The question, “does democracy help or hinder economic growth?” has been
recently addressed by Amartya Sen, among others, with somewhat mixed results.2 Recent
analyses of democratic productivity can be summed up as faint praise: democracy seems
not to be intrinsically bad for economic growth. The next step is specifying just how and
why particular democracies that are economically productive manage to promote growth
in conjunction with other choiceworthy values. This is not an easy task. Although modern
data on economic performance is relatively extensive, two methodological problems
persist: First, the history of modern democracy (outside the “first world club”) is
relatively short and thus we lack long term data. Next, because modern democracies are
extremely diverse in respect to resources, history, and culture, it is difficult to sort out
exogenous from endogenous factors: Democracy is associated with economic growth in
the U.S., post-World War II German and Japan, and post-1991 Benin, Madagascar, and
Mali, but it is difficult to assess just what work democracy is doing in each case.3
Democracy and productivity
Political theorists are certainly aware of the issue of material productivity; Rawls’
difference principle is, after all, a compromise between productivity and fairness in
respect to distribution. Yet there is some tendency on part of political theorists to
outsource the issue of democratic productivity to economists.4 This is not surprising: in
the twenty-first century and at a nation-state level, democracy tends to come with a
market economy, and markets and productivity (along the government agencies
responsible for regulating markets) are in the province of economics. Yet leaving the
issue of democratic productivity to economists may leave unanswered the productivity
question that should matter most to political theorists: What work does democracy as
such -- as an organized form of self-governance associated with specifiable values and
political processes -- do in promoting productivity?
Some political scientists have recognized, at least since the 1980s, that
contemporary organizational theory can be a source of insight when addressing what we
might call “normativity meets productivity problems.”5 Yet when organizational theorists
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have responded to the question, “is democracy productive?” their answer has often been
“No; to the contrary, it is counter-productive.” In a body of influential work, Oliver
Williamson has argued that forms of democratic organization requiring actual
participation in decision-making are inherently inefficient, and that command-and-control
hierarchies will do better in all truly competitive environments.6 Of course, for liberal
theorists who believe that constitutional forms of liberalism can easily and safely be
severed from democracy (e.g. Fareed Zakaria), none of this need be particularly
troublesome.7 For democratic theorists who suppose (as I do) that in the long run (and
maybe in the short run) only a reasonably robust form of democracy will be capable of
sustaining the full set of conditions that liberals cherish, the problem is quite pressing.
One easy solution to the problem is to reduce the actual practice of democracy by
non-expert citizens to occasional preference-expression through the mechanism of voting,
and allow the real work of government to be handled by more or less accountable experts,
including specialists in markets.8 But reducing democracy to occasional voting comes
with its own troublesome issues: Kenneth Arrow’s impossibility theorem famously
demonstrated problems with voting as a fair means of preference aggregation and game
theorists question why any rational individual would incur the costs of spending any of
her valuable time in casting a vote that has no statistically meaningful chance of deciding
an election. Various answers to Arrow’s paradox and to game theorists might be
formulated by theorists interested in restricting democracy to expression of preferences
by the mechanism of voting – I leave it to them. Since the version of democracy I hope
to defend is considerably more participatory, I need to show that Williamson was wrong
about the inevitable productive advantage of command and control, and then I need to
specify the conditions under which a participatory democracy could be productively
competitive.
Recent work in organizational theory has in fact cast doubts on Williamson’s
claim that command and control hierarchy offers competitive advantage across all likely
environments. But new complications have been added: long-term productivity is now
seen as requiring a delicate balance: between (a) organizational learning that emphasizes
strong acculturation by members and standard routines within domains, and (b) a
sustained capacity for innovation that maintains intra-organizational membership
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diversity in order to promote transfer and adaptation of useful information across
knowledge domains.9 I assume that it would be possible to construct a thought
experiment that would yield a participatory democracy, characterized by sustained
learning and constant innovation (and thus productivity), as well as by a tendency to
generate and defend liberal values. But for those with a taste for connecting theory to
empirical evidence, a real-world case study might serve our current purposes even better.
Athenian processes of knowledge
Enter classical Athens: Ancient Greek city-states (poleis) existed in a highly
competitive environment in which failure was severely punished, by loss of state
autonomy or even by annihilation.10 Poleis experimented with a variety of constitutional
forms, in which a larger or smaller part of the adult male population participated actively
in government. Polis constitutions ranged from autocracy (e.g. Syracuse’s ambitious
tyrants), to more or less narrowly framed oligarchy (e.g. at Corinth), to Athens’ highly
participatory democracy. Thanks in part to new inventory of Greek city-states, which for
the first time collects in one place evidence for the ca. 1000 poleis that existed in the
classical Greek world (ca. 600-325 B.C.), it is possible to demonstrate empirically two
facts that bear on our topic: First, relative to its Greek city-state rivals, democratic
Athens did very well in terms of material flourishing over time: Athens beats all other
poleis on all quantifiable measures. Next, the data for the ca. 200 poleis for which we
have some constitutional information shows that having a democratic constitution does
not, in and of itself, guarantee that a polis will be especially productive.11
Turning to Athens itself, a historical survey of constitutional change and
productive capacity (measured by the state’s ability to wage war, to undertake major
building projects, and to enact social programs) shows that in the uniquely well
documented Athenian case, democracy is closely correlated with growth in capacity.
Moreover, the growth of democracy at Athens consistently leads growth of Athenian
productive capacity.12 In sum, in the competitive city-state environment, democratic
Athens flourished in material terms. And it flourished at least in part because it is was
democratic. Yet something about democratic Athens must have been different from other
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democratic Greek states that were not so successful. What was it, then, about Athenian
democracy that made it especially productive?
My general argument (in the book I am currently writing, which is in turn the
third part of a trilogy on democracy in Athens) is that Athens succeeded because of its
distinctive democratic organizational design based on institutionalized processes of
knowledge: i.e. information transfer and learning.13 The three key processes were
knowledge aggregation, coordination, and codification. Athenian democracy was more
concerned with the aggregation of useful social and technical knowledge than with
aggregation of preferences. It depended upon the coordination of voluntary individual
action across a large and diverse body of persons via institutionalized mechanisms for
developing and sustaining common knowledge. The processes of aggregation and
coordination are essential parts of my general argument, but in this paper I focus a third
knowledge process: codification of formal and informal rules in law. The Athenian
process of codification is especially relevant to issues of ethics and public affairs because
of its emphasis on openness and fairness. The fairness and openness of the Athenian law
code in turn helps to explain democratic productivity. Fairness and openness were, I
believe, intentional means and ends, self-consciously built into the legal system by
Athenian legislators, and rightly regarded by them as democratic principles.
In addition to showing how a participatory democracy can be economically
productive, this paper has two collateral goals: The first is to correct a widespread
misperception of Athenian democracy as a crude form of majoritarian populism in which
the immediately expressed will of a mob of citizens gathered in mass public assembly
directly determined the outcome of all important policy matters. That was more nearly
the case in the fifth century B.C., the imperial age of Pericles and Alcibiades. In the
fourth century of Plato and Aristotle, however, Athenian democratic governance was far
from simple majoritarian populism in terms of its overall organizational design -although Athenians remained strongly committed to the core principles of individual
liberty, political equality, and security of the person. The sophisticated fourth-century
Athenian system of democratic self-governance deserves to be better known by those
interested in historical cases of democratic government – and for that matter to readers of
Plato and Aristotle. The second collateral goal is more general: to show that historical
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case studies outside the canon of American constitutional law can be useful for theorizing
about the relationship between ethical principles (like fairness or openness) and the
practice of state government in a real world in which normative commitments are
expressed in a competitive environment that punishes productive inefficiency.
Once a decision about Athenian state policy had been made through the
aggregation of social and technical knowledge, and put into place through the
coordinated efforts enabled by common knowledge, it was codified in law and took effect
in the world: It became a formal part of the “rules of the game” that decided how rewards
-- economic, social, and psychic -- were distributed.14 The active forms of knowledge that
were conjoined and aligned through the processes of aggregation and coordination were
transformed through the process of codification into a fixed text: a law or decree. Yet that
now-codified knowledge was immediately returned to the realm of action through the
choices made by persons subject to the new policy. This sequence of knowledge/action
processes is quite clear when the policy in question is a law (nomos) meant as a
permanent change in the basic rules governing Athenian society. Yet it is no simple
matter for modern historians of ancient Athens move backwards from a law or its effects,
to the individual or collective intentions that produced it.15
The effects of any given codified policy may be profound or slight: doing less or
more work in the world than its originators had intended. Some of the short- and longterm effects of a new policy may closely track the legislators’ intentions. Other effects
may fall short of those expectations, or exceed them in ways that were unpredictable at
the time the policy was made. There are limits, therefore, both to how well the intentions
of often-anonymous, diverse, and collective Athenian legislators can be determined and
limits to how well the effects of legislation can be measured. Given these limits, causal
arguments about the relationship of how particular codified policies were meant to
promote Athenian productivity must necessarily be regarded as tentative. On the other
hand, among the questions that can be asked of a state’s policy as a whole is whether,
over time and in comparison with rivals facing similar opportunities and constraints, it
hindered or promoted productivity. Here, I argue that the Athenian legislative intentions
that we can specify and the effects that we can measure were leading in the same
productive direction, and thus that among the overall intentions and effects of Athenian
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legislation was to promote productivity: The codified rules of the game were, taken as a
body and over time, favorable to the growth of productive capacity. Moreover, they were
dependent for their productive efficacy upon their openness and fairness.
Of course not all policy – of Athens or any other state organization - is
specifically concerned with increasing productivity: the primary aim of a given initiative
may be (e.g.) to increase national security. Yet I take it as axiomatic that state policy
cannot long remain so depressing in its effect on productivity as to render the state, as an
organization, incapable of competing with its rivals. A good deal of legislation in modern
states is specifically concerned with enhancing productivity through very sophisticated
economic incentives and financial instruments. While the ancient Athenians had a much
less elaborate economic apparatus to draw upon in designing policy, at least some
specific Athenian legislative enactments appear to be self-consciously aimed at
enhancing productivity: we will consider one example, below. Moreover, if we look
beyond particular legislative enactments and their effects, it appears that certain general
design features of Athenian democratic institutions enhanced productivity.
Openness, fairness, and transaction costs
One general determinant of the impact on productivity of a new policy is the
effect it has on transaction costs -- that is to say, on the actual and expected ex ante and
ex post costs to individuals of making potentially profitable contracts or bargains. When
transaction costs are lowered, productivity is raised (at least potentially) because the
increased profit from low-cost bargains increases the value and the frequency of
transactions. The efficiency gain of contracting bargains in a context of low transaction
costs was proposed by R.H. Coase as an economic explanation for the emergence of the
business firm. Coase’s explanation was later adapted by Douglass North to explain the
emergence of the nation-state and by Robert Keohane to explain the emergence of
international institutions.16 Here my concern is to see how the policies made by Athens,
as a state, affected the transaction costs incurred by the members of the extended
Athenian community -- understood as those persons doing business within Athenian
territory. For much of the fifth century B.C. Athenian productivity was at least in part a
function of coercive imperialism and of violent or at least potentially violent resource
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extraction. But in the early democracy (508-478 B.C.) that preceded the imperial period
and in the post-imperial fourth century (403-322 B.C.), Athens had no substantial empire
from which to extract major resources. During these pre- and post-imperial eras, high
Athenian productivity must be supposed to be largely a function of a thriving domestic
and transit trade economy.
Knowledge is a key element in the transaction-cost/productivity equation: If both
parties to an exchange share full and transparent access to all the information relevant to
the exchange, their transaction costs drop. Conversely, under conditions of incomplete
information – and especially of asymmetrical access to important information -transaction costs increase. Suppose, for example, that A and B seek to exchange A’s
silver for B’s grain. A knows the exact silver content of the coins he is offering, but B is
ignorant of their silver content. B incurs, as a cost of making the transaction, finding out
that information. B will need to cover that transaction cost in the price of his grain.
Similarly, if B offers his grain in measures that are unknown to A, A will need to cover
the cost of measuring out the grain for himself before he can conclude the bargain.
Likewise, exchanges will be more costly if A and B must spend a lot of time and effort in
finding each other in the first place (an ex ante cost). If either A or B is uncertain as to
how any dispute arising between them will be arbitrated (an ex post cost), or has reason
to distrust the arbitration procedure, his risk factor increases. In each case, overall costs
of doing business go up , and as transaction costs mount the chance that a mutually
beneficial transaction will successfully be concluded decreases.
If A and B were both employees of a single firm, subject to the same command
and control hierarchy, each of the transaction-cost increasing information uncertainties
considered above would be lessened – which is the point of Coase’s argument about the
origins of the firm. Within the framework of an organization, the ground is leveled by
hierarchy (B is ordered to deliver a certain amount of grain to A at a certain time) and by
internal accounting mechanisms (both the cost of the grain and the amount are measured
in standard units specified in advance by the firm). Transaction costs are thus kept low.
Coase’s argument also helps to explain why firms seek to grow larger by adding
seemingly peripheral operations to their core processes: Vertical integration brings more
aspects of production under the low transaction cost regime. This in turn promises to
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extend the zone of efficient exchange and thus to increase overall profitability margins. A
similar story can be told about hierarchical states, which also employ extensive command
and control mechanisms and standardized accounting practices. Yet as the hierarchical
organization (firm or state) extends command and control, flexibility and entrepreneurial
enterprise may be lost – especially as systems get very large and complex. As a result,
profitability drops and the organization becomes more vulnerable to rivals.
Modern firms, concerned to regain flexibility and entrepreneurial advantage,
sometimes seek to create internal competitive markets that nonetheless remain governed
by standard firm-wide rules and accounting mechanisms. This arrangement in some ways
resembles the economic governance policies of a modern democratic state committed to
promoting a market economy: In both cases, the organization is seeking to capture some
of the benefits associated with hierarchy while avoiding hierarchy’s depressing
constraints: i.e. seeking conditions in which the rules provide a level playing ground for
productive exchanges on the basis of “symmetrical information” about the conditions
governing those exchanges. The goal is a knowledge regime that secures the transaction
cost advantages associated with equal access to relevant information and yet promotes
entrepreneurial enterprise by allowing individual choices to drive transactions. The
question before us is how a participatory democracy might do something similar in
gaining the advantages of symmetrical information and competitive markets, yet without
having developed an elaborate command and control hierarchy in the first place.
My hypothesis is that Athenian flourishing should be explained in part by the
state’s success in lowering transaction costs. This was accomplished, I suggest, through
standardizing and publicizing rules and practices that in turn helped build and maintain a
relatively reliable and secure exchange environment. We can test that hypothesis by, first,
specifying how various instruments available to a participatory democracy should operate
if the state’s goal were optimizing (i.e. driving down and keeping down) transaction
costs; and then asking how far Athens conformed to or diverged from that optimal
position. The available instruments include (1) comprehensive codes of formal rules
(laws, customs, administrative protocols) designed to protect persons and their property;
(2) standardized and easy-to-use dispute-resolution procedures (voluntary or optional
modes of binding or nonbinding arbitration, courts of law); (3) dependable state-imposed
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sanctions for punishing delinquents; (4) established standards for weights and measures;
(5) standardized exchange media (government-issued and guaranteed currency, standard
forms of contract); (6) convenient facilities such as centralized market places, welldesigned transport and communication networks, and effective policing to reduce losses
to theft. Finally, (7) the state can keep transaction costs low by keeping down the rents it
extracts (directly or indirectly) on exchanges, or allows others to extract.
Each of these various instruments must manifest two general properties associated
with democratic governance if it is to work effectively to lower transaction costs: It must
be both open and fair. By open, I mean that that the instrument is accessible in respect to
entry (as opposed to restricting entry according to extraneous criteria) and clear in
respect to interpretation (as opposed to being readily interpretable only by insiders “in the
know”). By fair, I mean that the instrument is equitable in its effects in that it distributes
goods and bads according to criteria recognized as equitable (as opposed to criteria that
are arbitrary or “loaded” in favor of insiders) and impersonal in that it does not identify
and pre-select particular persons or categories of person for special treatment (good or
bad) on the basis of extraneous (i.e. arbitrary or loaded) criteria. These various criteria are
laid out schematically in the Table, below. Major Athenian deviations from these idealtype criteria are indicated in italics.
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Instrument
1. Rules
(laws, customs)
2. Dispute
procedures
(courts,
arbitration)
3. Sanctions
(punishments,
limitations)
4. Weights and
measures
5. Exchange
media
(coin, contracts,
collateral,
sureties)
6. Facilities
(market-places,
transport, storage,
security)
7. Third-party
rents
(taxes, bribes,
protection)
A. Openness:
Accessibility/Clarity
Publicly posted or common
knowledge, stable, archived,
legible, simple, non-contradictory,
comprehensive, relevant to current
conditions
Swift, reliable, easy to use,
difficult to abuse, available to all.
Non-citizens without standing in
some legal procedures
All delinquents are liable to
punishments that are standardized,
appropriate to the infraction,
widely publicized
Standardized, simple,
comprehensive, stable, publicly
posted or common knowledge,
archived and accessible
Readily obtainable,
comprehensive, stable,
recognizable, reliable, and
standardized
Centralized open-access markets,
low cost transport, reliable and
secure storage, religious apparatus
is readily available
Taxes on exchanges low, simple,
centralized, returned to productive
system. Restraints on corruption,
violence, rent-seeking, misuse of
government apparatus.
B. Fairness:
Equitability/impersonality
Apply impartially to all parties;
protect bodily integrity, property,
dignity of all.
Bodily integrity and dignity of
citizens favored
Treat similar cases and similar
disputants similarly
Applied similarly to similar
infractions
Intentional murder of citizen
punished more severely. Slaves
liable to beating as additional or
replacement penalty
Impersonal, used by all
Impersonal, used by all
Only citizens (with some
exceptions) may own real estate.
Available for use by all on similar
terms.
Applied similarly to similar cases.
Sycophancy. Resident foreigners
pay some special taxes
Table. State-determined conditions for low transaction cost bargain-making
Italics = substantial and systematic Athenian deviations from optimal conditions.
The Table is meant to specify the ways that government regulation of conditions
governing a market would render bargaining in that market as close to frictionless as
possible – thus close to the ideal conditions imagined in what has become known as the
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Coase Theorem. As Coase himself pointed out, the ideal conditions of the Coase
Theorem do not exist and could not come into being in any real-world situation – and
thus with the best will in the world, no government can eliminate all transaction costs.17
At a minimum, a government, to exist and thereby facilitate the low transaction costs
regime, must have some way to maintain itself, which means it must levy taxes (row 7).
Moreover, the goal of lowering transaction costs is only one end of state policy. In
modern governments the principle of openness, both in terms of access and clarity, is
compromised by detailed rules created directly by legislative enactment and/or by
detailed administrative rules developed and administered by bureaucrats. These rules are
intended to fulfill important public purposes, (inter alia) to protect consumers from fraud
or safety risks. The complexity of modern rules, and the technical legal language in
which they are cast, does, however, raise transaction costs. Complex rules require that
those making bargains employ legal specialists to design contracts and to defend the
principals to exchanges against charges of having violated rules that are far from
transparent (at least to those non-experts lacking the necessary technical training).18 This
in turn bars entry to those who cannot afford to purchase the requisite legal expertise.
Democratic Athenian legislative process produced government rules and other
instruments that, in comparison to modern legislation, were simple and clear: laws and
decrees, for example, were relatively brief and composed in ordinary language. Nor is
there any reason to suppose that there were complex administrative rules working in the
background. Athenian government instruments were not, however, perfectly open and
fair: As the Table indicates, various Athenian instruments discriminated according to the
status of the individual in question. Looking at a particular piece of Athenian legislation
reveals a good deal about democratic commitment to fair and open process, rational
concern for lowering transaction costs, and ideological commitment to suboptimal
discriminatory practices.
Athenian law on acceptance of silver coinage, 375/4 B.C.19
At some point in 375/4 B.C., the Athenian assembly decided, on a motion by a
certain Nikophon, that the polis should consider a revision in the laws governing the
exchange of silver currency in the city. According to standard fourth-century Athenian
practice, that decision could have been made under provisions of the “Review Law” –
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that is at the annual meeting at which the Assembly took up a standing agenda item
mandating that each section of the Athenian lawcode be reviewed and voted upon by the
Assembly. Alternatively Nikophon’s motion to consider a change in the law may have
been made at an ordinary meeting of the Assembly, by invoking the “Repeal Law” that
allowed any specific law in the existing code to be challenged. In this latter case, the
Council of 500 (a body of lottery-chosen magistrates from all parts of Athenian territory
who served for single year) must have actively considered the matter in advance of the
meeting, and must have decided to place “considering changes to the silver laws” on the
agenda of the relevant Assembly meeting. In either case, following the vote that allowed
the silver laws to be reconsidered, the Assembly was legally required to name five
Athenians as advocates for the existing law. These five men would be responsible for
defending the laws against Nikophon’s challenge when it came time to decide whether to
change the law or not.20
His motion to consider revision having passed the assembly, Nikophon was now
required to write up his proposed new law on a whitened board, and also to indicate
which, if any, laws currently in force must be repealed in order to accommodate his
proposed new legislation. The board was prominently posted in the Agora (public
square), so that any Athenian who so desired could consider the exact wording of
Nikophon’s proposal and discuss it with others. Some time later, at a second Assembly,
the demos voted to empanel (on a particular day) and to provide pay for the necessary
number of “lawmakers” (nomothetai). They probably numbered 501-1501, or possibly
more, depending on how important the Assembly considered the proposed changes. The
nomothetai were selected by lot from the ranks of the ca. 6000 registered jurors - men
over age 30 who had that year taken the juror’s oath and so were available for service on
the People’s courts. 21
On the appointed day, Nikophon presented his case for changing the laws to the
nomothetai, in what amounted to a prosecutor’s brief. The five advocates, previously
chosen by the Assembly to oppose the change, served as defendants of the standing laws.
Having heard both sides in this quasi-trial, the nomothetai voted, apparently by show of
hands; a simple majority decided the matter. Nikophon’s motion passed, and thus his
proposed law came to be written into the Athenian lawcode and inscribed on a marble
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stele.22 Nikophon’s law concerned the process by which coinage circulating in the city
was formally approved as legal tender or removed from circulation. It specifies the legal
duties and scope of authority of a pre-existing Approver of silver coins. It establishes a
second Approver in the Athenian port of Piraeus with identical duties. It lists the various
magisterial boards that will be involved with setting up the Piraeus Approver and
indicates penalties for lawbreaking. As it happens, a marble stele inscribed with the law
was found by archaeologists in the agora, and so we have an almost complete copy of
Nikophon’s law. The law reveals much about the design of Athenian legal institutions,
suggesting that the Athenians explicitly sought to facilitate market exchanges by using
government institutions to lower transaction costs. The translated text of Nikophon’s law,
arranged for convenience of citation into outline form, is reproduced as Appendix 1.
The law on silver coinage tells us a good deal about how Athens addressed collective
action problems through design of institutions. The general intent of the law is to
facilitate mercantile exchange in the two key market-zones of Athens: the central Agora
and the port of Piraeus, some 5 miles to the south: the new Piraeus Approver is explicitly
(§11) established for the convenience of ship-owners, traders, and “others.” The law’s
apparent goal is ensuring that silver coinage remains a reliable and low-transaction-cost
exchange mechanism. Both in the Agora (as before) and (now) in Piraeus an expert state
official will be available to certify coins and thus to guarantee that the coinage in
circulation in Athens is of proper quality. The law mandates the acceptance of approved
coinage, thereby rendering approved coinage “legal tender.” It establishes a relatively
even playing field by mandating fair and open processes. Finally, it provides appropriate
incentives and sanctions so that that all those involved in the approval process are
motivated to fulfill their duties. The result is that all those involved in exchange are
provided in common with an essential item of information: that the currency in
circulation in Athens is good, of standard weight and purity.
The law assumes that exchange is taking place primarily in the form of coined silver
money, the standard means of exchange throughout much of Greece in the classical
period. Many, although not all, classical Greek poleis issued their own silver coinage in
state mints; each city’s coins featured distinctive types on the obverse and reverse. Many
poleis (like Athens) occasionally issued bronze and a few issued gold coins as well, but
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coined silver was the primary exchange medium. (For the conditions under which
Athenian silver coinage was produced , see Appendix 2).
Athenian coinage was extremely conservative; throughout the democratic period the
Athenians self-consciously retained a standard obverse (bust of Athena) and reverse (owl.
olive branch, AYE, see Figure); although stylistic differences allow expert numismatists
to date Athenian coin series, the untrained observer may find it difficult to tell a fourthcentury Athenian tetradrachm from mid-fifth century tetradrachm (see Figure at the end
of this paper, nos. 1-3). The “brand” of the Athenian drachma was thus (like, say, the
Nike swoosh or the Coca Cola script) very well established.23 The brand stood for solid
quality: Athenian silver coins were extremely pure and standardized in weight (17 gr.
±.15 gr.) for post-Persian war tetradrachms). A genuine “owl” (as the coins were called,
after the image of an owl stamped on the reverse) was thus dependable as an exchange
medium, a dependability that in and of itself served to lower transaction costs.
Exchanging goods for owls eliminated the step of assaying the purity of silver or
weighing bulk silver. Although owls (like all Greek silver coins) were exchanged
primarily on the basis of their commodity value (the worth of the silver itself), they also
possessed a “value added” in the Athenian state’s guarantee of purity and weight.
In the latter part of the fifth century, the Athenians had mandated the use of
Athenian coinage throughout their empire. By the fourth-century, the great empire was
lost, but Athenian owls remained among the most common coins in circulation in the
eastern Mediterranean region. A market favoring Athenian coinage was beneficial to
Athens in a number of ways: the state may have made a small profit on each coin it
produced (the exchange value of the coin minus cost of bullion plus minting cost), but
mining also enriched individual Athenians, supported local economies. Most importantly,
good coinage helped attract traders and their business to Athens – where they knew that
they would be contracting their bargains in a reliable exchange medium.
By the mid-370s the Athenians had become concerned with the fact that “pseudoowls” -- that is, silver coins with the “Athenian stamp” but not issued by the Athenian
state -- were circulating in Athens. These may have been produced by foreign states or by
individuals. Some of these pseudo-owls were similar to real owls in terms of their purity
and weight; fourth-century examples of pseudo-owls known to numismatists range from
15
coins that are difficult to distinguish from real owls to obvious imitations (See Figure
nos. 4-6). Section 2.a of the law distinguishes between two general categories of pseudoowls: “foreign silver coins with the Athenian stamp” and coins that were defective in
terms of silver content and weight: The law (§2.b) mentions both clads (lead- and bronzecore coins) and “counterfeits” (coins made of an alloy of silver and base metal).
It is a particularly notable feature of the law that it does not lump all pseudo-owls
into the category of bad coinage, but in essence distinguishes between “good fakes” and
“bad fakes” The good fakes (foreign pure silver coins of the proper weight that have the
Athenian stamp: §2.a) -- are to be “handed back” by the Approver, as approved. The bad
fakes (clads and counterfeits: §2.b) are to be confiscated by the Approver, cut through,
and permanently taken out of circulation. The confiscated coins are to be deposited with
the Council of 500. The Council is responsible for dedicating these bad fakes to the
Mother of the Gods. This apparently means storing them in the Metröon – the Old
Council-House, now being used as the state archives building.
It is not surprising that the Approver was ordered to confiscate pseudo-owls that
were not pure silver in that these bad fakes posed an obvious threat to the Athenian owl
brand. If bad fakes proliferated and were allowed to circulate freely, traders would lose
faith in owls as a means of exchange. If the state ignored clads and counterfeits, a danger
arose that, by Gresham’s Law, bad money would drive out good. This would drive up the
transaction costs that had been lowered by the reputation of owls for purity because
traders would be hesitant to accept genuine owls on the chance that they were bad fakes.
Ordering the Approver to confiscate bad fakes (apparently without
reimbursement) imposed a severe cost on their possessors – who can be roughly divided
into cheats (those who knew the coins were bad) and naïves (those who had taken bad
coins from others believing them to be good coins). Given the severe sanction of
confiscation, cheaters were likely to be discouraged from trading ex ante or weeded out
ex post: in either case their removal helped optimize the market. Naïves for their part
were penalized for their folly by the state rather than by opportunistic and betterinformed traders. Given the existence of the Approvers, naïve traders always had
recourse to the services of an expert and so had only themselves to blame if they ended
up in possession of bad fakes. Any injustice associated with penalizing the innocent naïf
16
was apparently countered by the gains associated with quickly removing bad fakes from
the system and efficiently punishing cheaters.
It is less immediately obvious why the law should have treated “good fakes” (like
those in Figure nos 4-6) as identical to real owls (nos 1-3), by turning them back to their
owners and requiring them to be accepted in transactions. The law asserts, in essence, “if
it is as pure as an owl and weighs the same as an owl – it’s an owl.” And thus “sincere
imitation” of Athenian coinage was not discouraged by the Athenian state. This is
initially puzzling in that, as we have seen, the owl “brand” was important to the Athenian
trading environment and the gains to the Athenian community from the production of
silver coins were considerable. Why not confiscate all pseudo-owls? I would suggest that
the law’s framers realized that this approach would drive up transaction costs, by putting
an unnecessary burden on transactions in which there was no intent to cheat. The
Athenians, in a sense, allowed “franchising” of their owl brand in order to facilitate trade.
Suppose, counterfactually, that the Athenians had chosen to confiscate all fakes,
good and bad, without reimbursement. This would impose very high costs on honest
traders who were in possession of good fakes and were offering their trading partners
silver-value identical to that of real owls. Alternatively, suppose the state had demanded
that when good fakes were presented to the Approver that they must be exchanged for
genuine Athenian coins. In this case, the Athenians would have to decide who should pay
re-minting costs -- that is the labor costs associated with gathering and transporting the
good fakes, melting down the silver, recasting new blank flans, and re-stamping the
blanks with official Athenian dies.
The state could run this (counterfactual) reminting operation at a profit (as did,
later, the Ptolemaic state monopoly in Hellenistic Egypt). Depending on the state’s profit
margin this would have imposed fairly high costs on traders. Or the state could exchange
real owls for good fakes at par, thereby eliminating costs to traders, but running a deficitproducing operation that could prove quite costly to the state. Finally, the state could
charge just enough for exchanging good fakes for real owls to cover its reminting costs.
This last option would impose moderate costs on traders. If we consider a hypothetical
decision tree (Figure 8.4) for the law’s framers, it is appears that that the choices
Nikophon’s law actually makes -- confiscating bad fakes and allowing good fakes to
17
remain in circulation -- optimizes the trading environment by keeping transaction costs
low for well informed and honest traders while discouraging cheats and fools. The
decision tree suggests that concern for protecting a state “brand” was trumped by a
concern for keeping transaction costs low.24
Coins brought
to Approver by
traders
Approver finds coins genuine
Approver detects fakes
Handed back as approved.
Confidence in coinage
supported. Low costs to all
Bad fakes: clads, counterfeits
Good fakes: pure silver, right weight
Confiscated
Dedicated.
High cost to
cheaters and
naïves only.
Confidence
in coinage
supported
Handed back as
approved. Very
high cost to state:
Loss of confidence
in coinage
Trader
reimbursed.
High cost to
state: Value
must be
determined
on case by
case basis.
Dedicated.
Very high
cost to
honest
traders
State pays
minting fees:
High cost to
state.
Handed
back as
approved.
Low costs
to all. Owl
“brand”
implicitly
franchised
Confiscated
Trader reimbursed
with genuine owls
Trader pays
minting fees
State profits
from minting
fees. High
cost to trader
Minting
fees at
state’s cost.
Moderately
high cost to
trader
Decision Tree: Coinage approval. Actual steps in bold. Costs in italics.
18
The law clearly creates two classes of fakes: good and bad – there is no middle
ground. Yet presumably there must have been fakes were not quite perfect, either in
weight or purity: confiscating a marginally inferior fake would risk penalizing an honest
trader. This hypothetical case suggests that the Approver took on the role not only of
objective expert, but of umpire: he was empowered to make quick and absolute
(confiscate/turn back) judgment calls on inherently ambiguous cases: Just as a pitch in
baseball is a strike if the umpire calls it a strike, a foreign silver pseudo-owl circulating in
Athens was good if the Approver called it good. The speed and clarity of the operation
were an intrinsic part of its economic value. It did not actually matter if marginally
inferior coins circulated in Athens, so long as they were consistently approved as they
circulated within Athenian territory. In essence, then, the approval system added a
fiduciary element to potentially “not quite right” coinage. Of course, in order for this
quasi-fiduciary system to work properly, both Approvers must judge consistently on
similar cases. The choice of public slaves for the office of Approvers allowed for a level
of professionalized expertise and consistency over time that would not have been possible
had the Approvers been lotteried citizen “amateurs.”
With these considerations in mind, we can imagine through the following
hypothetical scenario how the system was intended to work in practice, and how it
manifested democratic characteristics of fairness and openness: Wholesaler A is offered
100 drachmas by Retailer B for a certain quantity of wheat. B’s money is in the form of a
25 tetradrachms that appear to be owls. A professes to B that he wants to make the deal
but is concerned about the quality of the coins he is being offered. They have resort to the
Approver: B (or his agent), accompanied by A (or his agent), takes the coins to either the
Agora Approver or the Piraeus Approver, depending on whether they are making their
bargain in the city or in the Piraeus. A and B can be quite sure that they will find the
Approver sitting in the usual place, because they know he would be liable to be punished
if he were not. The Approver, an expert in assaying silver for purity and in possession of
a set of official weights, tests the coins offered by B. If he detects any bad fakes among
them they are confiscated; in this case B loses the entire value of those coins. B thus has a
strong incentive not to offer bad fakes in the first place (i.e. to be neither a dishonest nor a
19
naïve possessor of bad money). If all the coins are approved, B offers them to A, who is
now guaranteed of their value.
But suppose A now refuses to make the deal. B (in person or via a third party) can
“expose” A to the relevant magistrate (§5a-c). Because the amount of the transaction is
over 10 drachmas the magistrate refers the matter to a People’s court. If the court sides
with B, A loses all the grain he had for sale that day. The state takes half of A’s grain,
and B (or his third party agent) takes the other half of it. A therefore has a very high
incentive to accept the approved coinage without demur. The requirement that A accept
the approved coins removes any incentive on A’s part to use the official apparatus of the
approval process as a delaying device – to tie up B’s capital while A seeks a higher price
for his goods. Thus B is protected from the situation in which A is using the referral to
the Approver merely as a way to keep B’s offer alive while he seeks a better price for his
grain from Retailer C. Because he understands A’s incentives, B need not fear that the
cost of bringing his coins to the Approver will be increased by risk of losing his bargain.
The mandatory acceptance provision of the law means that A will not challenge
B’s coinage unless he really does want to make the deal and really does doubt the quality
of the coinage. Unless there is a lot of concern about bad fakes circulating in the city, the
transaction cost incurred by the resort to the Approver does not, therefore, become built
into everyday exchanges. The office of Approver remains a state-provided third-party
guarantee that ordinarily works in the background to lower the information inequality that
exists because B might know something about the quality of his coins that A does not.
As a sort of side-benefit to this equalizing of important information, there is a
common-knowledge gain: A and B (or their agents) are interpresent before the Approver
and so they have common knowledge of the value of the coins and the bona fides of those
offering and accepting them. That common knowledge extends to any interested
bystanders because the process is carried out in a very public place: B’s incentive not to
offer bad fakes is increased because he stands to lose his reputation for honesty if the
Approver confiscates his coins; likewise A stands to lose reputation if he seeks to welch
on a deal after the approval process has been completed.
In sum, the Approver system protected both A and B. If we suppose that A and B
had a choice of markets in which to do business, and if we assume that Athens was
20
unique in its provision of Approvers, we can see why A and B would choose to trade in
Athens. Thus we can begin to see how the democratic legal system provided Athens with
differential advantages over it rival states lacking such insitutions.
Among the notable aspects of the coinage law is the way in which it takes account
of the legal status of those whose behavior it regulates, even as it creates the conditions
for impersonal, “status-blind” exchanges in the Athenian market. Both the Approvers are
to be public slaves. This is made explicit in the provision (§11) for establishing a new
Piraeus Approver: he is either to be selected from the existing body of state-owned slaves
(presumably from among those working currently in the mint or as clerks in the
magistracies), or to be purchased on the open market if there is no suitable candidate (i.e.
no one with the necessary expertise in assaying) among the current human inventory. We
have already seen that the requirement for both consistency and expertise in the office of
Approver made it preferable not to use lotteried annual citizen-magistrates for this job.
Unlike free persons, the slave Approvers can be whipped if they are derelict in
their duties; the “parallel” legal penalty for free persons would be a monetary fine.25
Likewise, if a slave-seller of merchandise is exposed as refusing approved coinage and
convicted, whipping is added to the confiscation of goods (§9). There is a glaring
asymmetry here; the sanctions are clearly more severe for slaves than for free persons.
And yet slaves are otherwise assumed to be full parties to various transactions. The
public slave Approvers are, for example, to be paid a regular salary – section 14 of the
law is devoted exclusively to the issue of paying the salary of the two Approvers, and to
ensuring that the new Piraeus Approver is properly compensated for the partial-year
service that is anticipated. How, then, is the asymmetry to be explained?
A seller-slave (§9) might well be using his or her own capital, and acting as an
independent agent – slaves who “lived apart” from their masters and paid over a portion
of the earnings of their own privately-owned businesses are well documented in Athens.26
In this case, the function of the additional punishment is expressive: Whipping the slave
reminds all parties of the yawning gulf between slaves and the free. In other cases,
however, the slave-seller might be acting as an agent for his or her owner. In this case, in
addition maintaining the expressive purpose of enforcing status distinction, the legal
threat of beating has an economically rational purpose.
21
A slave acting entirely as an agent for a master might choose to engage in
dishonest (and thus transaction-cost increasing) business practices: Given that the goods
confiscated by the state were not his or her own, the slave’s material incentive not to
defect from ordinary and honest business practices depended on the unpredictable
monitoring and response of his master. Recognizing this, the state adds a severe physical
sanction, one that would operate irrespective of any sanction that the slave’s owner might
or might not choose to impose.
Alternatively, a slave owner, as a third party insulated by “invisibility” from
suffering reputation losses, and having calculated the risks of losing goods to
confiscation, might seek to coerce his slave into dishonest market practices by the threat
of punishment. The state matches that (potential) threat with its own coercive threat while
also (in other legislation) limiting the absoluteness of the coercive authority exercised by
free people over slaves.27 Nikophon’s law thus creates a “rational choice” situation for the
seller-slave: choose between being punished by the state or by his or her masters. The
obvious fact that both choices are fundamentally bad (even if not equally bad) vividly
illustrates Terry Moe’s recent call for the rational choice theory of social institutions to
take structural power asymmetries more fully into account. The Athenian system of
slavery relevantly allowed choice-making by slaves, but treating a choice between bad
and terrible as identical to a choice between good and okay is to blind ourselves to
essential moral and functional features of the system. This is just one example of why
political theory should engage more directly with issues of choice and efficiency.28
Nikophon’s legislation on silver coinage is a good illustration of some of the basic
principles of Athenian law, notably enforcement, jurisdiction, accountability, and
transparency: The law is provided with substantial enforcement provisions aimed at those
in the trading community who might break the law by refusing to accept approved coins.
Because Athens did not have an elaborate police apparatus, initiative for enforcement
was left in the hands of private individuals who observed wrongdoing – these might be
victims or concerned third-party bystanders. Section 5 of the law calls for “exposures”
(phaseis) of wrongdoers. Potential exposers are motivated to serve as voluntary enforcers
of the law by being offered a half-share in the confiscated goods of those convicted –
22
whether the conviction is obtained by relatively quick magisterial decision (maximum of
5 drachma gain) or by presumably slower court action (gain is >5 drachmas).
By contrast with §10, which restricts denunciations of magistrates to “Athenian
citizens with standing,” §5 does not refer to the status of potential exposers; the
implication is that anyone who so wishes can expose anyone else who illegally refuses to
accept approved coins. We cannot say exactly how this would have worked in practice
across the multiple status categories (free/slave, male/female, resident/ visitor,
citizen/noncitizen) that structured Athenian social relations. But on the face of it, there
are no status restrictions upon those who would take the role of exposer, and the apparent
care with which the law is framed makes it unlikely that this was merely an oversight on
Nikophon’s part: The openness of access to the enforcement mechanism is an important
“field of play leveling” feature, given that those involved in money transactions crossed
the full spectrum of Athenian status groups: citizen/noncitizen, resident/foreigner,
male/female, free/slave. As we have seen, the law does not treat free persons and slaves
identically in terms of punishment, but neither does the key enforcement mechanism
build in a legal advantage for citizen males as “privileged insiders.” That sort of formal
asymmetry would obviously increase transaction costs, in that “outsiders” would be
without legal recourse in the case of being cheated, and would have to somehow
compensate for that asymmetry in the bargains they struck.29
Jurisdiction is closely related to enforcement: the law not only specifies the
geographic jurisdiction of the two Approvers, but exactly which magistrates will have
what jurisdictional responsibility in terms of enforcement of the law (§§5a-c). Magisterial
jurisdiction is organized according to geography and commodity: the basic division of
magisterian responsibilities is according to a geographic principle: between the
Conveners who deal with matters in the city (especially the Agora §5b) and the Overseers
who deal with matters in Piraeus (especially the import market §5c). But exposures of
infractions in the grain market are to be referred to the Grain-guardians (§5a, c). In
contrast to trade in all other commodities, which remain unspecified, the law is especially
concerned that conflicts arising in the grain market be dealt with by a particular board of
magistrates with special responsibility for grain. This exceptional legal status accorded to
the grain market is indicative of the great and enduring importance of grain imports to the
23
city. Not only was imported grain a major revenue source for Athens (from harbor dues),
but it was a strategic necessity. At least periodically, the Athenian grain crop was
inadequate to fee the population of the city.30
As in other Athenian legislation, provisions concerning magisterial accountability
take up a very substantial amount of space in the coinage law. The public-slave
Approvers, as we have seen, are subject to whipping for failing to properly fulfill their
duties (§3). But other magistrates are likewise called to account: The six thesmothetai are
threatened with a collective punishment of 1000 drachmas if they fail to call courts into
session for trying serious cases brought to them by magistrates who receive “exposures”
from concerned individuals (§7). By contrast to that provision, which is aimed at a
particular body of officials, §10 empowers any Athenian with legal standing (that is, any
male citizen who has not been disenfranchised as a result of legal action) to denounce any
derelict magistrate to the Council of 500. This is an explicit statement of a general
principle of Athenian law that allows citizens to serve as prosecutors for “public” crimes
– that is, for delicts that have a directly adverse effect on the community at large. In the
case of denunciations under Nikophon’s silver law, the 500 members of the Council are
evidently to serve as the jurors in a formal legal proceeding in which the voluntary
“denouncer” would serve as prosecutor and the accused magistrate(s) as defendant. The
law limits the punishment in the case of conviction to dismissal from office with an
option additional fine of up to 500 dr.
The Council, as a body, does not have an overall managerial role to play in the
operation of the silver law, but the Council and some of its constituent members are
involved in setting the new bureaucratic apparatus in place: appointing the new Piraeus
Approver (§11), commissioning the contract for the two marble stelai inscribed with the
law in the (city) Agora and the (Piraeus) Import Market (§13), and destroying existing
stelai recording decrees that contradict the current law (§15). After the apparatus is up
and running, the Council or its members are responsible for receiving bad fakes for
deposit in the Metröon (§2b), for whipping Approvers derelict in their duties (§3), and for
accepting exposures in the Agora (§5b).
Presumably, it could come to pass, then, that the Council could be asked to try
itself – although in practice it appears that the Council would be responsible for
24
disciplining those of its members assigned to undertake the specific responsibilities laid
out in the law. Nikophon’s law, like other Athenian laws, seems to take a middle ground
between two goods: On the one hand there is the desired goal of separating accountable
agents from the institutions enforcing accountability. On the other hand there is the
administrative efficiency inherent in allowing a body with substantial aggregate
knowledge of a process to take a primary role in disciplining those who fail to fulfill their
role in the process. Likewise, assigning summary power of judgment to magistrates in
small transactions, but requiring judgment by a People’s court in matters over 10
drachmas, stakes out a middle ground. In this case the two goods are speedy, thus low
transaction-cost, summary judgments and adherence to the democratic principle that large
juries (whether of dikastai or bouleutai), rather than individual magistrates, should
ordinarily levy heavy punishments on free persons.31
Transparency is a final jurisprudential principle that is manifest in Nikophon’s
law. The exact wording of the law is made immediately available to those who might
have recourse to it. The law itself calls for its own public promulgation in the form of
two copies inscribed on stone stelai – one each in the city Agora (the surviving stele on
which the law is preserved is evidently this Agora copy) and the in the Piraeus. Both
copies of the law are displayed at the places where the Approvers sit and carry out their
jobs. We must, then, imagine each Approver as taking up his post in the immediate
vicinity of a prominently displayed copy of the law which specifies the duties of his
office, mandates his punishment for dereliction of duty, and details the procedure for
punishing those who refuse to accept as final his umpire-like judgments. The new law
thus quickly became common knowledge among those who made use of the Approval
process and anyone who did not like the way things turned out in the course of an
Approval could immediately refresh his or her memory of what recourse was available.
Conclusions
Athens is obviously very far from an “off the shelf” model for any modern liberal
democracy. But by considering the case of Athens as a participatory democracy that
competed successfully in terms of material flourishing against hierarchical rivals, I have
made two points that I believe are relevant to contemporary political theory: First:
democratic institutional design can be a key to economic productivity. The design of
25
democratic institutions certainly should promote primary democratic values; here I have
emphasized fairness and openness. Yet, and this is the second point, if it is to promote
productivity, democratic institutional design must also organize social and technical
knowledge effectively. It must help a community to make sense of and make use of what
it collectively knows. In Athens the lawcode emphasized fairness and openness while
simultaneously helping to organize what people doing business in Athens collectively
knew. The result of that conjunction was to systematically promote material flourishing.
Political theory is ordinarily concerned with justice, ethics, and with morally
defensible government policy. But political theory can and should also address state
insitutions, economic choices, and material flourishing. Isolating philosophical political
theory from social science concerned with economic choice-making is to risk
impoverishing both. By reference to a historical case study, I have attempted to show that
we will better understand the role of democratic values in promoting flourishing when we
recognize institutions as structures for both manifesting values and organizing
knowledge. This has in turn highlighted some of the potential advantages enjoyed by
democratic collectivities in respect to knowledge organization.
Substantial issues of scale and complexity must be confronted before any
specifics of the Athenian case can be applied to modern organizations -- whether nationstates, sub-state political units, or non-state organizations. Yet the theoretical principle I
have argued for here –institutional design for productive democracy must promote
democratic values while effectively organizing what the collectivity knows -- can be
generalized. If it is generally true that a system of democratic values entrenched in
institutions well-designed for organizing knowledge favors material productivity, it
would have some implications for public policy. Those concerned with designing
institutions for transitions from autocracy to democracy should, for example take
knowledge organization into account. Meanwhile autocratic states, if they are to compete
economically with democracies featuring fair, open, and thus transaction-cost lowering
insitutions, may be constrained to adopt institutions featuring similar values. Whether
they can do so while retaining undemocratic political systems is obviously one of the big
questions of the twenty-first century.
26
Appendix 1: Nikophon’s Law
Resolved by the nomothetai in the archonship of Hippodamas [375/4 B.C.];
Nikophon made the proposal:
1. Attic silver [coin] shall be accepted [by all sellers of goods] when
a. it is found [by the Approver] to be [pure] silver and
b. has the public stamp [dêmosios charaktêr: obverse: bust of Athena;
reverse: owl and letters AYE = “Athena”].
2. The public Approver [dokimastês: a public slave, see below] shall sit between the
[banker’s] tables [in the Agora] and approve [coins] on these terms every day
except when there is a deposit of money [state revenue payment], in which case
[he sits] in the Council-building [bouleutêrion].
a. If anyone brings forward [to the Approver] foreign [pure] silver [coin]
having the same stamp as Attic [coin] …. , he [the Approver] shall give it
back [as approved] to the man who brought it forward [for approval];
b. but if it has a bronze core or lead core or is counterfeit [i.e. an impure
alloy rather than pure silver], he [the Approver] shall cut through it
immediately and it shall be [confiscated as] sacred property of the Mother
of the Gods and he shall deposit it with the Council [of 500].
3. If the Approver does not sit, or does not approve in accordance with the law, he
shall be beaten by the Conveners of the People [syllogeis tou dêmou = 30 sitting
members of the Council, three from each tribe] with 50 lashes of the whip [i.e.
punished as a slave].
4. If anyone does not accept the silver which the Approver approves, he shall be
deprived of what he is selling that day.
5. Exposures [phaseis: a legal process by which concerned persons “outed” illegal
actions of others: here, sellers refusing to accept approved coin] shall be made [by
individuals, to magistrates, as follows]
a. For matters in the grain-market to the Grain-guardians [sitophulakes:
lotteried magistrates]
b. For matters in the Agora and the rest of the city to the Conveners of the
People
c. For matters in the import market [emporion] and in [the rest of] the
Piraeus to the Overseers of the Import-market [epimelêtai tou emporiou:
lotteried magistrates] – except for matters in the grain-market, since
[phaseis about matters] in the grain market are [to be made] to the Grainguardians [per 5a, above].
6. For matters exposed [by the legal process described in 5], those that [concern
sums that] are up to 10 drachmas the relevant magistrates [listed in 5] shall have
the power to decide. Those that are beyond 10 drachmas they [the magistrates]
shall introduce to the People’s court [dikastêrion].
7. The thesmothetai [a board of 6 lotteried archons: senior magistrates] shall provide
and allot a People’s court for [the magistrates named in 5 a-c] whenever they
request, or shall be fined 1000? drachmas.
27
8. For the man who exposes [wrongdoing, per 5], there shall be a share of a half [of
the assessed penalty] if he [serving as legal prosecutor] convicts the man whom
he exposes.
9. If the [exposed and convicted] seller is a slave-man or slave-woman, he/she shall
be beaten with 50 lashes of the whip by the magistrates [in 5a-c] with
responsibility in the matter.
10. If any of the magistrates does not act in accordance with what is written [here], he
shall be legally denounced [eisangellein] to the Council of 500 by whoever so
wishes [ho boulomenos] of the Athenians who have the legal right to do so
[exestin: i.e. the denunciation of a magistrate to the Council must be by a citizen
in good standing];
a. if he [the accused magistrate] is convicted he shall be dismissed from his
office
b. and the Council of 500 may levy an additional fine up to 500 drachmas.
11. So that there shall also be in the Piraeus an Approver for the ship-owners
[nauklêroi] and the traders [emporoi] and all the others [involved in exchange],
the Council of 500 shall [either]
a. appoint [an Approver] from the [existing] public slaves if available
b. or shall buy [a slave in which case] the Receivers [apodektai: lotteried
magistrates] shall allocate funds [for his purchase].
12. The Overseers of the Import-market [see 5c, above] shall see that he [the
Approver in Piraeus] sits in front of the stele of Poseidon, and they [the Approver
in the Piraeus and responsible magistrates] shall use the law in the same way as
has been stated [above] concerning the Approver in the city.
13. Write up this law on a stone stele and set it up [katathenai]
a. in the city between the [bankers’] tables [i.e. where the city Approver sits]
b. and [set up a copy] in Piraeus in front of the stele of Poseidon [i.e. where
the Piraeus Approver sits]
c. The secretary of the Council of 500 shall commission the contract [for
inscribing and erecting the two stelai] from the Sellers [pôlêtai: lotteried
magistrates], and the Sellers shall introduce [the contract] into the Council.
14. The salary payment [misthophoria] for the Approver in the Import-market [in
Piraeus] shall be [in the current year, prorated] from when he is appointed; and
the Receivers shall allocate as much [salary for him] as for the Approver in the
city.
a. [after the current year] the salary payment [of both Approvers] shall be
from the same source as for the mint-workers [i.e. a specific budget
controlled by some board of magistrates, not specified here but
presumably ascertainable by Athenians].
15. If there is any decree [psêphisma] written on a stele contrary to this law [nomos],
the secretary of the Council of 500 shall demolish [katheletô] it.
28
Appendix 2: Athenian silver mining and minting.
Athens was able to issue exceptionally large issues of silver coinage in part because
of the rich silver mines of south Attica. We do not know much about the legal institutions
governing silver mining in the fifth century, although the mines must have been stateregulated by the early fifth century since the Athenians decided in 483 to use an initial
windfall of revenue from the silver mines to support the public purpose of navy-building,
rather than distributing the windfall revenue to the citizenry (Herodotus 7.144.1-2). By
the mid-fourth century B.C. silver mining operations were governed by a detailed set of
laws regulating the leasing of mineral rights, as well as the relations between leaseholders
and local landowners. The goal of this legislation was to protect the property rights and
capital investments of various parties involved in a mixed agricultural/industrial regional
economy in which there would inevitably be conflicts over pollutants (smoke from silver
refineries), water (needed both to wash out the silver ore and for agriculture), labor
(slaves were used in large numbers in the mines and sometimes ran away), and so on.
The Athenian state took over the silver from individual entrepreneurs who (at least by
367 B.C. and probably before) leased mineral rights from the state under carefully
specified conditions. The state was the only seller of mine leases and the only buyer of
bulk bullion, and so had a monopoly at both ends of the supply chain. But Athens kept
the individual lessor’s incentives high and the state’s own profit margins relatively low:
In the fourth century leases were calibrated according to risk – with lease rates of proven
mines set much higher than speculative “new shafts.” The state bought bullion from
producers, evidently at a rate that amounted to the value of coined silver less minting
costs. Although there is reason to believe that mines were being leased in the 370s (our
earliest surviving list of leases, from 367/6 mentions an “older stele”) it may have taken
some time to get the incentives set right: The epigraphic evidence of mining leases
suggests that the mining district may not have fully rebounded from the Peloponnesian
War era decline until the 340s, by which time the state leasing of mines may have been
bringing in as much as 160 talents each year – an amount roughly equivalent to 25% of
imperial tribute in the mid-fifth century.
Much of the actual physical labor of silver mining was done by slaves. Mine slaves
were sometimes leased in groups by mine operators from large-scale slave owners (the
fifth-century general Nicias is said to have made part of his fortune this way). The living
conditions of mine slaves are largely unknown, but cannot have been even minimally
decent. The generally fair and open Athenian law regulating the circulation of silver
coinage thus rests uneasily on a foundation of the brutal exploitation of slave labor.32
29
1.
2.
3.
4.
5.
6.
Figure. Tetradrachms: Athenian owls (left: 1-3) and pseudo-owls (right: 4-6).
1. Athenian (482-80, 16.58g). 2. Athenian (449-413, 17.12g). 3. Athenian (393300, 16.91g). 4. Arabian? imitation (4th c, 16.95g): note test cut on upper right. 5.
Palestinian/Arabian? imitation (ca. 350, 17.1g). 6. Mesopotamian? imitation (c.
325-315, 16.85g).
30
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32
Notes
1
As well as individual liberty, equality of opportunity (and to some extent of goods), and
the dignity of the person. Democracy may be (and indeed, I believe, should be) regarded
as choiceworthy as an end, as well as a means, but here I am concerned with democratic
processes as means to achieving these various desired ends.
2
Sen 1999. See further: Barro 1996, Rodrik 1999, Rodrik 2000, Tavares and Wacziarg
2001, Rodrik and Wacziarg 2005.
3
African cases: Rodrik and Wacziarg 2005. The essays collected in Rodrik 2003 begin
this analytic work, by seeking to specify how and why institutions typically associated
with democracy do promote growth.
4
Among other exceptions, see Reiter and Stam 2002, arguing that democracies are more
capable than their autocratic rivals at waging war.
5
See, for example, Keohane 1984.
6
Williamson 1975 and 1985. This view has been challenged, if not definitively refuted,
by recent work on organizational learning: Grandori and Kogut 2002 229-30, Kogut and
Zander 1992 and 1996.
7
Zakaria 1997 and 2003.
8
Problem of maintaining accountability in the absence of democracy (using the example
of global institutions), with some proposed solutions: Grant and Keohane 2005.
9
There is now a large literature on innovation and learning. Levitt and Marsh 1988 is a
classic statement of the problem. See Chang and Harrington 2005 for a formal model.
10
Between one in three and one in four Greek poleis suffered more or less total
destruction of its physical infrastructure (sacking) or population (execution, expulsion,
enslavement), in the course of its history. Data available from author.
11
Inventory: Hansen and Nielsen 2004. The study of Athenain flourishing relative to
other polies, based in part on the Inventory, in preparation. I would be happy to share the
preliminary results with interested persons.
12
As with the cross-polis comparisons, the results are in preparation and available in
preliminary form from the author.
13
The first two parts of the trilogy: Ober 1989 and 1998.
14
Rules of the game (for economic payoffs): Baumol 2004, cf. 1993.
33
15
Athenian speakers in legal trials often attribute particular intentions to long-dead
lawgivers, claiming that Solon, for example, hoped to produce certain effects with his
laws -- and that those salutary effects would be promoted if the jurors made the right
decision in the current trial. Athenian forensic claims regarding lawmakers’ intentions do
have something to tell us about how later Athenians understood the laws under which
they lived, but forensic claims are not independent evidence for actual legislative intent.
16
Coase 1988 (originally published in 1937); North 1981 and 1990, Keohane 1984.
17
Coase 1988, chapter 1, notes ironically that what became known as the “Coase
Theorem” describes a frictionless exchange environment, whereas his work on
transaction costs was intended to demonstrate the impossibility of frictionless exchange.
18
Huber and Shipan 2002 offer a comparative analysis of the choice of modern
legislatures to draft detailed legislation or to leave the details to administrative rules
drafted by unelected civil servants – in either case the result is that the end users are
subject to rules that require expert interpretation.
19
Rhodes and Osborne 2003, no. 25. Editio princeps: Stroud 1974.
20
Athenian nomothesia procedure: Hansen 1999 168-69, with notes. We do not know
how the five advocates were chosen, or whether they would have been expected to have
some speical expertise in Athenian law. In any event, we can suppose that following their
appointment they were expected to study the existing laws carefully, as well as analyzing
the alternative proposed by Nikophon: if they were not experts coming into the
Assembly, they were expected to develop the requisite expertise in short order.
21
The whitened board rule allowed the Athenians to decide whether there was a prima
facie case for allowing the process for potential revision to go forward. If Athenian
opinion found Nikophon’s proposed change to be without merit, presumably a vote not to
empanel nomothetai or provide their pay would end his challenge. The point is that the
procedure is convervative in that it requires that momentum for change be sustained
across time (two assemblies and a meeting of the nomothetai) and across institutional
bodies (Council, Assembly, nomothetai). Presumably the Council could stop the proposal
from going forward by refusing to put “empanelling and paying nomothetai” on the
agenda of the second meeting – but there is no reason to suppose that would happen if
Athenian opinion was overall favorable to going forward.
22
It is not clear how the proceedings would go if there were multiple proposals for
mutually incompatible new laws. Depending on how long a given case took to decide, it
might have been possible for the panel to consider seveal motions on a single day
(Hansen 1999 169), but once the nomothetai had voted for a change, the new law would
be in place. The five advocates, who had prepared to defend the former law, would hardly
be in a position to mount a case in defense of the new law that they had just finished
opposing! So we must assume that either (by convention or by law) it never happened
34
that multiple mutually imcompatible proposals came before a given panel of nomothetai,
or that there was some sort of sorting device (a lottery?) determining the order of
presentation and that the first challenge to pass ended the proceedings. In this case
alternative proposals could, of course, be re-introduced in subsequent meetings of the
Assembly.
23
See, further, Trevett 2001.
24
Robert Keohane points out to me that maintaining liquidity in specie standard currency
is another (in this case macroeconomic) public good (especially important for trading
states) that is supported by Athens’ failure to discriminate against “good fakes.” It is
unlikely that the Athenains grasped the economic theory behind why a of loss of liquidity
would have deflationary effects, thus depressing production of goods, and potentially
precipitating economic depression (as in Europe 1873-96). But the Athenians could
certainly have noted the empirical fact that markets flourished when silver currency was
readily available, and they must have recognized that allowing “good fakes” to circulate
untaxed would attract foreign silver to the Athenian market.
25
Hypothesis that a drachma is a stroke of the whip: Hansen 1999.
26
Cohen 2000.
27
See Ober 2000 for details.
28
Moe forthcoming.
29
Slaves living outside of Athens are specifially foreseen as engaging in “exposures”
(phaseis) and “indications” (endeixeis) of violators of export rules that set up an Athenian
monopoly on ruddle in three of the four small poleis of Keos (Rhodes and Osborne 2003,
no. 40 lines 19-20): here slaves are offered freedom as well as a part-share of the
proceeds of a successful prosecution.
30
Special status of grain: Garnsey 1988.
31
The exception is various “caught in the act” criminals: Hansen 1976, Cohen 1983.
32
Athenian mining operations: Conophagos 1980. Leasing: Hopper 1953, with
discussion and bibliography in Ober 1985 28-30, Rhodes and Osborne 2003 180-82.
Relations between mining lessors and landowners: Osborne 1985, chapter 6.
35