Xenophon was a man of affairs, whose interests touched the practical life of the world on many sides, as is evidenced by the broad scope of his extant works. He was also, however, a pupil of Socrates. In his economic thought, therefore, he vacillates between the positive interest of the practical economist and the negative criticism of the Socratics.^[375] On the whole, his practical bent dominates, and is especially exhibited in his essay on the Revenues of Athens,^[376] as also in the fact that he was the first writer to produce a work devoted entirely to economics.^[377] The spirit of the moral philosopher, on the other hand, is prominent wherever the influence of Socrates is felt, as in the first chapters of the Economicus and in the Memorabilia. When the Socratic ideal dominates, he, in common with other Greek thinkers, confuses economics with ethics, and private with public economy.^[378] He makes the science of economy deal with the management of private estates,^[379] and believes with Plato and Ruskin that the same qualities are necessary for the successful handling of the affairs of either house or state.^[380]

Xenophon insists strongly on utility or serviceableness as a necessary quality of property (???ata, ?t?ata). By this, however, he means primarily, not potential utility in the object, but ability of the owner to use rightly.^[381] Even exchangeability does not insure value in anything, unless the seller can use to advantage that which he receives in return.^[382] This idea of value is true enough from the ethical standpoint, and should not be left out of account, as is being recognized by modern economists. But to attempt to build a theory of economic value on such a basis, as Ruskin does,^[383] would result in hopeless confusion. Value is not merely an individual and moral, but also a social and economic, fact.

A hint of exchange value is given in the implied classification of goods as usable or salable.^[384] But there is no discrimination between useful things in the economic and uneconomic sense. In the Revenues, on the other hand, when free from Socratic influence, Xenophon makes a positive contribution to the theory of value. He observes that the exchange value of goods varies with supply and demand, and that this law is, in a sense, self-regulative by the fact that workmen tend to enter other fields of activity whenever any industry becomes unprofitable through an oversupply of its products.^[385]

WEALTH

The double standpoint of Xenophon is well illustrated in his doctrine of wealth. On the one hand, he values it highly, and tries to deduce practical rules for its increase and enjoyment.^[386] On the other hand, like Socrates and Plato, he makes derogatory comparisons between economic and spiritual wealth.^[387] As in the case of value, he offers no clear definition of economic wealth (?t?s??). It is defined indiscriminately as “whatever is useful to life,” and “useful” is “everything that anyone knows how to use.”^[388] But, as seen above, this is a purely subjective notion, and is only one element in economic wealth.^[389] He also defines it (???ata) as “the excess of goods over needs,” making it a merely relative term:^[390] but here again the thought is ethical rather than economic, an attempt to teach the somewhat ascetic principle that a man’s riches are measured by the paucity of his wants.^[391] The hostile or indifferent attitude to wealth is also assumed in the comparison of it with so-called mental wealth and wisdom^[392] and in the implication that it involves many cares.^[393] The idea so prominent in Plato, however, that the acquisition or expenditure of great wealth is not consistent with justice, is not emphasized by Xenophon. He calls that man happiest who has best succeeded in just acquisition, and who uses his wealth in the best manner.^[394]

PRODUCTION

The Greeks had no specific word for production, as we have, since industry, though well developed, was not a dominant feature of Greek life, and economics had not become a separate science. The word ???as?a, meaning “labor” or “business,” served the purpose. The term was used of productive labor,^[395] of building or manufacturing,^[396] of work in raw materials,^[397] most commonly of agriculture,^[398] of industries in general,^[399] of the trades, commerce, or other business for money-making,^[400] and of a guild of laborers.^[401] The term ? p???t??? t????, “the productive art,” which approaches more nearly to a specific, technical expression, was also used.^[402] Thus, though there is no clear-cut term for production, the statement of Zimmern^[403] that the Greeks had no better word for “business” than ?s????a, “lack of leisure,” is hardly warranted.

Xenophon was far more interested than Plato or Aristotle in the problem of practical production. His shrewd discussion of agriculture, and his urgent appeal to Athens to increase her revenues by systematic exploitation of the mines, and by the encouragement of industry and commerce, reveal a mind awake to economic advantage. Though at times he seems almost to make war and agriculture the only true means of production, it is evident that he has a live interest in all means of acquisition.^[404] Toward the theory of production, however, his contribution is not large. In the Economics, he recognizes the importance of labor and natural resources in production, and in the Revenues, he sees the necessity of capital.^[405] But naturally, like Aristotle and the southern planter, he confuses capital with labor, in the person of the slave.^[406] The fable of the dog and the sheep reveals a knowledge of the machinery of production, and some insight into the proper relation between the employer and the laborer.^[407] Xenophon’s distinct contribution to future economic thought, however, consists in his appreciation of the fact that economic production has its definite limits; that the same ratio of profits cannot be increased indefinitely by the constant addition of more labor and capital, but that these must be proportioned to the greatest possible return.^[408] To be sure, he does not appreciate the scientific significance of the principle. His purpose is rather to emphasize the danger of overproduction, and he even fails to grasp the necessary application of this danger to the silver mines. However, as the enunciator of the principle, he may be called the forerunner of the doctrine of diminishing returns.

As seen above, special emphasis was laid by Xenophon upon natural resources as an element in production, both in land and in the mines. His great interest in and eulogy of agriculture as the basal industry, upon which all other sources of wealth depend,^[409] have caused him to be classed with the physiocrats of modern time but such an interpretation is hardly warranted. Without doubt, agriculture is, in his opinion, the supremely honorable occupation. It shares with war the right to be placed above all other vocations.^[410] It permits the maximum of leisure and physical development, and is not unworthy of the personal attention of a prince.^[411] It is the most pleasant, most productive,, most dignified, of callings; the best exercise for the athlete, the finest school for education in patriotism and justice, and it offers the greatest opportunity for the exercise of hospitality to men and reverence to gods.^[412] Indeed, it is the first of all occupations for an honorable and high-minded man to choose.^[413] Here we have the highest eulogy of agriculture in Greek literature. It is in essence a sound statement, and offers a needed message for today.

Though Xenophon recognized the practical importance of capital in industrial enterprises,^[414] he developed no theory of it in his writings. He appreciated, however, the value of being able to keep a surplus.^[415] The term ?f???, as used by him of the provision of raw material for weaving, probably signified nothing more than it would have done to any Athenian business man of his time.^[416] The word originally meant a “starting-point,” especially in war.^[417] Later, it signified the “means” or “resources” with which one begins a project,^[418] especially in business. It was an easy step from this general business use to the meaning, “financial capital” of a banker.^[419] Other terms for capital were ??e???, used of interest-bearing capital in antithesis to ????, of goods merely for use;^[420] ???p?a, “goods that yield a produce,” as opposed to ?p??a?st???, “goods to be enjoyed,”^[421] which is suggestive of Mill’s^[422] definition, “that part of his possessions ... which he designs to employ in carrying on fresh production,” and of his two kinds of capital, “circulating” and “fixed”; p???t???, “things for further production,” as opposed to p?a?t???, “things merely for use”;^[423] ?ef??a???, of capital as opposed to interest or income.^[424] The term ??a???, also, since it came to mean a “contribution of money,” was often used of a loan, and therefore approached the signification of “money capital.”^[425]

Xenophon is considerably more favorable to labor and the industrial life than are the other Socratics. He quotes Socrates with apparent approval, that to do something well is well-being, while he who does nothing well is neither good for anything nor beloved of God.^[426] Work is far better than idleness. It produces more happiness, makes the laborer more temperate and just, and is the sine qua non for the independent life.^[427] This is a strong plea for industry, and is especially significant, since it refers primarily, to manufacture rather than to agriculture. The reference, however, is to women workers, whose loss of leisure would not be an injury to the state. Each person is encouraged to provide for himself, and to do his work in the best possible manner,^[428] and the maxim of Epicharmus, “For labor, the gods sell all goods to us,” is heartily approved.^[429] All the foregoing passages are Hesiodic in their insistence upon the value of industry.^[430] But apart from his evident acceptance of the doctrine of Socrates, as quoted above, Xenophon exhibits a positive interest in labor. His attitude toward the advancement of industry and commerce is thoroughly modern, except that he does not contemplate the employment of free citizen labor.^[431] He emphasizes labor almost as strongly as natural resources as an important factor in production. He believes also that industrial thrift and prosperity are the best means of realizing a more quiet and orderly state.^[432]

Even the practical Xenophon, however, is not free from the moral-aristocratic prejudice against mechanical arts (a?a?s??a?) for the better class of citizens. He admits that they are justly spoken against, and held in ill-repute, since they tend to weaken the laborer both in body and in soul.^[433] The artisans have no leisure to give either to their friends or to the state, and in a warlike state the citizens cannot be thus employed.^[434] The artisan is also servile because of his ignorance of the higher moral sentiments (t? ?a?? ?a? ??a?? ?a? d??a?a).^[435] All this sounds like Plato, but Xenophon differs, in that he is in no wise opposed to the unlimited development of industry and commerce, provided the drudgery of it may be done by non-citizens.

The principle of the division of labor is clearly stated by him, but here again he differs from Plato in that his prime interest is practical and economic rather than moral. He presents it as the reason why royal dishes are superior in flavor to others, and makes the acute observation that the division of labor is not so fully applied in the small city, because there are not enough consumers to support a man in one trade. In the large city, on the other hand, the consumers are so numerous that even the trades themselves are divided and subdivided. Thus much greater skill is developed, and better results realized, for he who spends his time in work of the narrowest compass (?a??t?t?) must accomplish this in the best manner.^[436] He does not specify the advantages of the division of labor to industry, except that it results in greater skill, but he reveals especial insight in stating so clearly the relation of the market to the development of the principle.^[437] In this, he is the forerunner of Adam Smith, who observes that a minute division of trades cannot exist except in the larger cities, especially in coast and river towns.^[438] The assertion of Haney,^[439] that the Greeks referred only to a “simple separation of employments,” is certainly unwarranted in the light of this passage, for Xenophon expressly distinguishes here the simple from the more complex subdivision. He says that some are employed on men’s shoes, others on women’s; some do the sewing (?e?????af??), others do the cutting (s?????), and that the same also is true in the manufacture of clothing.^[440] This passage is also an evidence that the development of industry in fourth-century Athens must have been extensive. Xenophon also, like Plato, observed the fact that the diversity in the natures of men is the basis for the division of labor,^[441] though he did not follow him in his doctrine that men and women should have the same work.^[442]

Unlike Plato, the idealist, Xenophon, the practical man of affairs, takes the institution of slavery for granted, seemingly unconscious of any ethical or economic problems involved.^[443] However, as a matter of common-sense, he advises that slaves be treated with consideration. He would give them a proper degree of liberty,^[444] and arouse them to do their best^[445] by a fair system of rewards and punishments. In the case of those slaves who hold positions of trust, he advises that their affections should be won by kindly treatment, and even by making them sharers in the prosperity of the household.^[446] Slavery is, of course, a condition most irksome to the free-born. The unfortunate Eutheros would almost prefer starvation.^[447]

In his treatise on the Revenues of Athens, Xenophon shows some appreciation of the theory of money. He appears to take for granted that money must have intrinsic value. At least, he understands that silver is a commodity whose value is affected by its use as such, as well as by its employment for currency.^[448] He also apprehends the value of a silver currency for international commerce.^[449] His naÏvely enthusiastic argument for the indefinite increase of the stock of silver, however, is suggestive of the mercantile fallacy, which identified money with wealth.^[450] But perhaps he is merely using for practical purposes of argument the fact that the Athenians were accustomed to look upon silver as the metal for fixed and constant value.^[451] In any event, he sees that the increase of silver must be attended by a corresponding increase in business activity, if its value is not to depreciate,^[452] and he cannot be accused of the error of the mercantilists, that a country is impoverished by the export of money.^[453] He must also have understood clearly the importance of stability of value in a currency, since he deems it necessary to show that the increased output of silver will not decrease its value, and that silver is the least changeable of the monetary metals.^[454] Despite his enthusiasm for his thesis, which causes him to exaggerate the stability of silver, he does not fail to grasp the direct effect of supply and demand upon it,^[455] just as upon gold^[456] and other commodities.^[457] He shows also some understanding of the quantitative theory of the relation between gold and silver.^[458] It need hardly be added that, in strong contrast to Plato, his attitude toward the precious metals, especially silver, is very favorable.^[459]

EXCHANGE

Xenophon presents no theory of exchange,^[460] though he is frankly interested in the advance of commerce and trade. In his opinion, the greater their development, the better it is for the city of Athens.^[461] He is full of practical suggestions to stimulate commercial activity.^[462] So assured is he of the prime importance of extensive commerce to a nation, that, in the spirit of modern commercialism, he insists upon the necessity of peace for its sake.^[463] To his mind, increased trade means not only material advantage, but social and political as well, in that greater prosperity, more labor, and a better distribution will mean greater satisfaction, and hence less danger of revolution in the state.^[464] He entertains none of the prejudice of the other Socratics against the money-makers’ art, a fact which may well be a warning against the too ready acceptance of their attitude as the usual verdict of the Athenian citizens.^[465] In his practical suggestions for the development of commerce there is a hint of the protective principle. He advises that certain advantages be granted to shipowners so as to induce them to increase their shipping.^[466] But the purpose is not to limit the advantage to Athenian merchantmen, nor to restrict import trade. It is rather the opposite. He would enrich the city by tribute on both imports and exports, imposed for sumptuary and revenue purposes,^[467] and would also develop a public merchant-marine for rent to merchants, as a further source of income.^[468]

POPULATION

In antithesis to Plato and Aristotle, the problem of population has no difficulties for Xenophon. He does not deem it advisable to set a limit on the population of the state. On the contrary, he conceives it as one of the advantages of his plan in the Revenues, that thereby the city would become very populous, and thus land about the mines would soon be as valuable as that in the city itself.^[469]

DISTRIBUTION

Xenophon is far less concerned about the problem of distribution than Plato. He has no suggestions as to wages, profits, or prices, no ideal state where an equitable distribution shall be realized, no yearnings after equality, or complaints against the evils of extreme wealth or poverty. Like Plato, he would avoid civic discord in the state,^[470] but by the increase of production and exchange rather than by their limitation. In Socrates’ parable of the dog and the sheep, he presents a suggestion of a theory of profits, but his plea is for the employer instead of the laborer. The right of the former to share in the profits of the business is based on his service as overseer of the work, and as protector of the workmen.^[471]

Our author does not definitely reveal his attitude toward the poorer masses, but it seems probable that he had little interest in them, except in so far as their condition might affect the fortunes of the state. He was, of course, opposed to giving them full political rights,^[472] and would probably have preferred a system such as that in Plato’s Laws, where all free citizens have sufficient income so that they can give their time largely to the state, and where all laborers are slaves. He did not think of suggesting that the poorer citizens work in the mines, or even that aliens do so, but suggested rather that each citizen have the income from three state slaves.^[473]

While Xenophon is not usually considered among the socialists of Greece, he approaches perhaps even nearer than Plato to one phase of modern socialism. Like Plato, he opposes the extreme individualism of the political and private life of his day.^[474] He also reveals the Greek feeling of the social obligation of private property.^[475] Again, as do Plato and modern socialists, he magnifies the power of law to transform economic or social conditions.^[476] But in advocating the modern doctrine of the socialization of industry, with an economic, and not a moral or political, motive, he has advanced beyond either Plato or Aristotle, and approaches modern socialism.^[477] As seen above, however, his economic motive is not interest in the welfare of the masses, for by his scheme they would all be slaves. He desires only to abolish poverty among the citizens.^[478] He would have the state become entrepreneur, not merely in one, but in many branches of industry. State merchant shipping,^[479] public ownership of slaves,^[480] public exploitation of the mines,^[481] public buildings near the mines, for rental to strangers,^[482] are all in his plan. The rich must finance the scheme, but their profit will be 18, 36, or even 200 per cent.^[483] Companies are to be organized so as to obviate individual risk.^[484] Thus will poverty be no more, plenty for all will reign, and there will be an era of prosperity and security for the state.^[485]

His thesis is, in a word, that what private capital can accomplish for the enrichment of itself alone, state capital can accomplish to better advantage for the enrichment of the whole citizenship,^[486] a doctrine which strikes a truly modern socialistic note.