Trade in Classical Antiquity (Key Themes in Ancient History) by Neville Morley

Author:Neville Morley [Morley, Neville]
Language: eng
Format: epub, mobi
Publisher: Cambridge University Press
Published: 2007-04-19T00:00:00+00:00

The costs of exchange

It is noticeable that Xenophon emphasises the importance of being able to offer the swift resolution of legal disputes, so that non-resident merchants were not forced to hang around in Athens waiting for justice (becoming liable for the ‘metic tax’ after a month) but could head off on their next voyage. Some of the most important costs in exchange were, so to speak, potential ones: the costs of enforcing an agreement or exacting compensation if the other party in the transaction should prove to be untrustworthy.

Shipwreck and piracy were not the only risks involved in trade, or even the most significant. Legal sources and literary evidence such as Cicero’s comments above give some impression of the enormous range of ways in which people might try to cheat one another in order to gain an advantage in exchange; Plato, indeed, wished to exclude all haggling, let alone salesmanship and the taking of oaths to guarantee the quality of goods, from his ideal state, on the basis that they undermined any hope of good order and honest dealing (Laws 916–17). The marketplace was a fertile source of disputes; from the merchant’s point of view, if the risk of being cheated or robbed – or falsely accused of sharp practice – was too great, or the cost of trying to protect oneself against it was too high, then it was better not to embark on a transaction in the first place. The development of any form of exchange beyond the small-scale, highly personalised exchanges between members of the same community depended on establishing a workable alternative to trust as a basis for proceeding. The historical plausibility of Herodotus’ account of trade between Africans and Carthaginians has been doubted (Curtin 1984: 12–13); it is best understood as an attempt to imagine how exchange could conceivably take place between two different peoples in the absence of the institutions that had been developed in fifth-century Greece to manage the problem.

Economic theory, as has already been noted, relies upon various simplifying assumptions in constructing models of the workings of exchange; one of the most important is that exchange is ‘frictionless’ (North 1981: 5). In practice, this assumption is clearly unrealistic; all exchange involves what are sometimes termed ‘transaction costs’: ‘the costs of measuring the valuable attributes of what is being exchanged and the costs of protecting rights and policing and enforcing agreements’ (North 1990: 27). Herodotus’ anecdote, however fictional, illustrates this point. Both parties have to invest considerable time and effort in discovering what value the other side places upon the goods they themselves have to offer, to establish an arrangement that suits both parties. Even so, the Carthaginians can have no idea, without expending further effort, of the purity and hence the actual value of the gold; we can only assume that the quantities on offer were so large or the Carthaginian goods so cheap that quality was not an issue – which would reflect the common Greek perception that some barbarian lands were simply overflowing with precious metals, scarcely valued by the local inhabitants.

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