Central Planning in History – The Greek Bronze Age
Monday, August 13, 2012
Daron Acemoglu and James Robinson

The idea that the central planning of the economy in the Soviet Union was driven by ideology seems compelling and obviously true. But it isn’t that simple actually.

For one thing, it turns out that centrally planning the economy was not something rare or anomalous in history. Actually, it was quite common. So central planning in itself has nothing whatsoever to do with Marxism.

To see what might have driven central planning as a way to organize the economy, let’s consider some famous historical examples of central planning. One of the best documented and agreed on occurs during the Greek Bronze Age.

Around 3200 BCE there was the start of the Bronze Age in the Eastern Mediterranean. Though this terminology refers to the use of bronze (an alloy of copper and tin) which replaced stone for tools and weapons, there was a whole series of correlated technological, social and political changes. In particular the Bronze Age was associated with increased political centralization and the formation of states throughout the Mediterranean basin.

How did the economy of the Greek Bronze Age states work? These states were based on a city where the political elite lived. We have a unique record of the activities of these polities because many clay ‘Linear B’ tablets written by state administrators have survived. Fascinatingly, these tablets have only survived from the period right before these states were destroyed in conflicts (think Troy…). The palaces were burned down, we don’t really know by who (the Sea People?), and the fire baked and preserved the clay. The tablets basically are state records of taxation and industrial production. There was no money and apparently no markets. As the Cambridge archaeologist T.J. Killen points out in his review article in Y. Duhoux and A. Morpurgo Davies’s volume A Companion to Linear B: Mycenean Greek Texts and Their World, only four or maybe five of the existing Linear B tablets ever use the word ‘bought’ and always in the context of slaves. 

The state seems to have taxed agricultural output, though we do not know to what extent they directly owned land. They seem to have controlled nearly all industrial production, for instance of textiles, ceramics, tools and weapons. They monopolized trade, and Killen characterizes trade as a type of reciprocal gift-exchange. This was useful probably because Knossos, for example, one of the best studied of the bronze age states, had neither copper nor tin locally and thus had to import them from outside via this type of exchange.

Since there was no money, the state basically moved around all of the goods itself by fiat. It supplied food and inputs to weavers and then took their output. It stored large amounts of food and goods in the palace complex.

As Killen puts it: 

the key role in the movement of goods and the employment of labour was played, not by a market or money, but by a central redistributive agency… in the Mycenaean world, by a central palace.

Killen concludes:

this was a redistributive (or command) economy.

Article originally appeared on Why Nations Fail by Daron Acemoglu and James Robinson (http://whynationsfail.com/).
See website for complete article licensing information.