In this article we will discuss about the economic ideas of Hebrews, Plato, Aristotle and Roman.

Economic Ideas of Hebrews:

The beginnings of the science of economics and economic institutions are often traced back to the Hebrew and Jewish times. The society discussed in the Old Testament mentioned some of the characteristics of modern capitalism and private property. The Hebrews belong to the ancient civilizations of the world.

Their period dates back to 2500 B.C. It is believed by some scholars that Western Civilization has its origin in Hebrew civilization. Division of labour, market, exchange, money etc., were the institutions of those times. The philosophers of those times were real founders of all social theories even though their writings were in a scattered form.

The economic philosophy of the Hebrews was simple. The society in which they lived was also a simple one. Economic problems were never studied separately. Economics, Politics, Ethics and Philosophy were interconnected. But religion and ethics were given greater importance. Economic life was controlled by priests. They gave importance to agriculture. The Hebrews had definite ideas on subjects such as interest, agriculture, property, taxation etc.

(i) Interest:


The Mosaic Law prohibited interest taking or usury (high rate of interest). However, the Hebrew prophets did not use the term interest. The law applied only to the Hebrews. Lending of money at interest to strangers was allowed.

The Hebrews were asked not to collect interest from poor people because the poor borrowed money mainly for consumption purposes. This rule was modified in the times of Solomon when charging of interest at low rate was justified. Security for loans was in the nature of a “pledge” with well-defined rules for it. Thus the ideas of Hebrews on interest were more or less similar to those expressed by ancient Hindu thinkers.

(ii) Just Price:

Both Hebrews and Hindus exercised great care in formulating laws against false weights and measures and adulteration of articles of consumption. These were strictly prohibited by the Hebrews. Monopoly and speculation were even more strictly prohibited. Raising market prices for speculative means was disapproved.

There were also ceiling on the profits of retail shopkeepers which could not exceed the limit of 16 2/3 percent. The export of food grains was also prohibited and in times of scarcity and famine, hoarding of food grains was not permitted. Thus the concept of just price included correct weight, competitive price and reasonable rate of profit.

(iii) Labour and Wages:


The Hebrews realised the dignity of labour but the pride of place was given to agricultural labour. There was no labour problem as we have these days. Wage workers were common. The Hebrews did not lay down rules for regulating the relation between the employer and employee. The chief regulations were concerning mercy and justice to them. Payments were made in kind.

(iv) Agriculture:

Hebrews gave preference to agriculture. A Hebrew maxim runs as follows, “Although trading gives greater profit, there may be loss in a moment. Therefore never hesitate to buy land”. This shows that how agriculture had become the supreme occupation.

At that time the purpose of lawgivers was to fix the people in agricultural life which was a settled one. There was a tendency on the other hand to disregard trade and the mercantile community. Perhaps it is for this reason that Hebrews did not enter into commerce and manufacture to any great extent.

(v) Seventh and Jubilee Year:

There was a very peculiar institution of Seventh and Jubilee year among the Hebrews. The Hebrews left their land fallow in the seventh year after cultivating it for six years. This was done with the object of preserving the fertility of the soil. The slaves serving for six years were freed in the seventh year. In this year all debts should be cancelled.


The Jubilee year was another peculiar institution of the Hebrews. The Jubilee year was the fiftieth year. According to this provision the land sold to someone was to be returned to its owners in the 50th year. In those days land was the main form of wealth.

They tried to prevent concentration of wealth and also the acquisition of land of small holders by owners of large estates. By the institution of Seventh and Jubilee year the Hebrews desired to prevent inequality in wealth.

(vi) Money:

The Hebrews seemed to have understood the functions of money. Money was used mainly in the form of bullion. There was no question of stamped money.

(vii) Sabbath:

The Sabbath was the cornerstone of Hebrew Economic thought. It was their weekly day of rest, relaxation and good living. It was enjoyed by the masters of the house and his family as well as the slaves and the servants. According to Spiegel, “the institution of the weekend was a social invention that has no parallel in the civilization of Greek, Rome or other ancient culture”.

(viii) Property:

In those days land was the main form of property. Wealth was measured in lands, slaves, talents, silver, and other precious metals. The owner of a plot of land was the owner of all resources above and below the surface of land.

According to the Law of Inheritance the first claim on property went to the eldest son. If there was no son it went to the daughter and in the absence of a daughter it might go to the close relatives like brothers, uncles etc.

(ix) Trade:

In those days only surplus corn was sold in the market. The Hebrew wives were Craft – Women who used to spin wool and flax. Commerce flourished in the reign of King Solomon. He made successful voyages to distant lands, including India.

(x) Taxes:

Taxes did not exist in the Hebrew economy. Labour service was utilised for the construction of bridges, roads and other public utility services. Customs and toll tax were also collected. The toll tax was known as a tribute realised from every male for the maintenance of temples. Hebrew laws helped the dependents, fatherless and widows. The corner portion of the fields and vineyards were available for the poor.


On the whole the economic life of Hebrews was very simple. Their life was dominated by the priestly class. Religion, law, ethics, philosophy and economic ideas were bound together. Their educational system was very much influenced by religion and ethics.


Though their economic ideas were simple and scattered they had a greater power to influence the minds of people. According to Eric Roll, “the views of the Hebrews may appear extremely primitive to modern economics, their power to influence men’s minds is not necessarily inferior to that of many a refined and scientific theories.”

Economic Ideas of the Greeks:

The Greeks were the first to develop an economic theory, but it appeared in the form of ‘incidental observations, thrown off in the pursuit of a more worthy end’. “It is in the Greek writers that theorizing on economic matters first explicitly emerges” said Alexander Gray.

Though the Greeks being the pioneers in many branches of knowledge, they did not contribute much to the growth of economic ideas. There was no demarcation between politics, economics and ethics. The ancient world was founded on a system of caste distinctions.

The masters did not give due respect to odd jobs done by slaves. In the absence of freedom of choosing one’s occupation there was hardly any incentive for economic activities. However, Haney says that “the part played by the Greek ideas in the development of modern economic thought demands no small attention”.


Credit goes to Plato for giving some attention to the economic aspects of social organisation. The Greek philosopher who really laid the foundation of economics as a science was Aristotle. According to Eric Roll, “Plato was the first of a long line of reformers and his student Aristotle was the first analytical economist”.

Economic Ideas of Plato (427-347 BC):

Plato was a Greek philosopher. He was born in Athens in an aristocratic family. He was a pupil of Socrates. He taught mathematics and philosophy in the first great school of philosophers – the Academy, founded by him. His famous writings, ‘The Republic’ and ‘The Laws’ are the most important sources of his economic thought.

Credit goes to Plato for giving some attention to the economic aspects of social organizations. Eric Roll says that “he attempted to offer a systematic exposition of the principles of society and of the origin of the city state, as well as a plan for the ideal social structure”. He regarded economics a branch of ethics and politics.

(i) Origin of the State:

Plato traced the origin of the state to economic considerations. Plato said “a state arises out of the needs of mankind. No one is self-sufficient. All of us have many wants”. The state in order to supply the necessary commodities to satisfy human wants gathered together.


The partners and helpers of this gathering is called as the state.In Plato’s ideal state there were two classes, the rulers and the ruled. The rulers were the king and warriors and the ruled were artisans and unskilled workers.

The members of the ruling class must be set apart from early childhood and they should be educated in philosophy and the arts of war because they will have to protect the state against foreign attack. At the age of thirty they will have to pass an examination. This examination selects the future philosopher king and those who cannot pass are concerned with general administrative duties.

Plato distinguished five types of government:

1. Aristocracy – rule by the best.

2. Timocracy – rule by the soldiers.

3. Oligarchy – rule by a few.


4. The rule of the wealthy and

5. Democracy.

(ii) Division of Labour:

Plato’s main contribution was in his account of division of labour. By division of labour he simply meant the division of employment as an aid to social organisation. He based the origin of the state on division of labour. According to Plato the essential needs of mankind are food, clothing and shelter.

Therefore a city state must include a builder, a weaver, a farmer and a shoe maker or a representative of some other similar occupation. Every individual should do the work that is suitable for him. As a consequence all commodities are produced more plentifully, easily and of a better quality.

The division of labour into various trades was thus recognised as a necessary condition to economic welfare even though division of each trade into various tasks was not conceived by him. Moreover he did not consider the necessity of a wider market for the application of the principles.

Thus Plato’s idea of division of labour is different from that of Adam Smith. Smith’s division of labour is determined by the market, but Plato’s division of labour determines the market.


Secondly to Adam Smith the advantages of division of labour go to only the employers, but to Plato it is beneficial to the entire society.

Thirdly the cost of division of labour according to Plato is the difference in skill and talent. But according to Adam Smith division of labour leads to differences in skill and talent.

(iii) Size of Population:

The problem of population was also analysed by Plato. The size of population in his state was assumed on the basis of the best results of division of labour. He provided a careful regulation of population to maintain stability in the economy. The right number of population suggested by Plato for a state was 5040.

Only such a number provided opportunity for everyone to be familiar with all the other persons and help the economy to achieve self-sufficiency. It also helps to reap maximum productive efficiency. If the number showed a decreasing tendency, the state should offer prizes to encourage the growth of population. But if the number exceeds 5040 new colonies must be established.

(iv) Money:

Plato recognised the value of money as medium of exchange. He did not favour the idea of allowing gold and silver to be used by the common men. Instead he suggested the use of domestic coins for payment of wages and other transactions. He wanted the state to have a common Hellenic currency for the use of ambassadors, travellers, visitors etc.

(v) Interest:

Plato prohibited interest taking for loans, but later on he permitted interest taking as a penalty for delayed payment.

(vi) Value:


Plato considered value as an inherent quality of the commodity. A man should not attempt to raise the price, but simply ask the value of the commodity.

(vii) Agriculture:

Like the Hebrews, the Greeks too considered agriculture as the most desirable occupation.

(viii) Riches (Wealth) and Poverty:

Plato criticized riches and poverty. He was of the view that riches made a man careless while poverty led to inefficiency. To him great riches and happiness cannot exist together because the rich people spend a part of their wealth without any justice.

Plato had suggested an ideal property arrangement. Only farmers and artisans were allowed to get property while the rulers and the administrators were not allowed to enjoy the property rights. He realised that, the city was divided into two parts namely, city of the poor and the rich. These two parts were always at war with each other.

Plato regarded slavery as a permanent factor in the civilization of mankind. In his book ‘The Laws’ he stated that the treatment of the slaves should be liberal. Foreigners who were defeated in war and were taken as prisoners should be made slaves. In his city state, the slaves formed about 1 /3 of the population and they performed most of the economic functions.

(ix) Communism:

Plato’s ideas regarding communism are extremely remarkable. Plato’s communism is the most talked about and misunderstood part of his philosophy. In his ideal state the property should be collectively owned. Plato advocated communism to eliminate the evils of caste system. Plato’s ideal state was not a communist state in the strict sense of the term.


Though the aim was to abolish class conflict, it was not to be achieved on the basis of equality of opportunities. There were two classes, the ruler comprising of guardians and auxiliaries and the ruled called artisans. The members of the ruling class were to be well educated in the arts of war and philosophy. According to Prof. Haney, “Plato’s communism did not stand for an absolute mechanical equality, but recognised authority and class distinctions”.

(x) Education:

Plato stated that both boys and girls should receive the same kind of education. His idea on education is more important in the modern days.


Plato’s contributions made definite progress in economic thinking of his time. His economic ideas show that he was essentially a child of his time. He recognised division of labour and it was adopted as a means of easier and better production.

However, he did not recognise acquired skill, elimination of waste etc., as later economists were to admit its merits. Plato was a man of peace. He was the first thirteen who made economics a handmaid of ethics. At best we could consider Plato not as an economist but only as a social reformer.

Economic Ideas of Aristotle:

Aristotle was the first analytical economist who laid the foundation of the science of Economics. He was the student of Plato and tutor to Alexander, the great. He did not produce any economic treatise. Anyhow it was from him the writers of middle Ages got their main ideas. Though there is no continual analysis his scattered ideas especially private property, usury, and the just price had a greater influence on subsequent economic thought.

Even though Aristotle was the student of Plato he differed from him on important issues like the origin of the state, private property, communism etc. Plato was a deductive thinker, Aristotle followed the inductive method and therefore a more practical one.

While Plato was a radical thinker, Aristotle was conservative one. The reasoning of Aristotle is less imaginative and more logical and scientific than that of Plato. The main ideas of Aristotle was found in ‘Politics’ and ‘Ethics’.

(i) Idea of state:

According to Aristotle the state originates out of the needs of mankind. He explains the origin of the state in terms of household. The household is an association formed to satisfy the wants of the family members. The village grows out of a number of households and finally the state comes into existence.

Man is by nature a social animal, so the state is possible because all men live together in a society. The aim of the state is promotion of good life. Thus Aristotle attributes the origin of the state to economic and political causes.

In Aristotle’s Ideal state, there would be two classes—the ruler and the ruled. The former was classified as military class, statesmen, magistrates and the priest. The ruled were farmers, craftsmen, and labourers. The members of the ruling class would perform their duties according to their respective age. For example, they were soldiers when they were young and strong, statesmen in the middle age and priests in the old age.

(ii) Private property:

While Plato advocated public property Aristotle supported the institution of private property. Aristotle argued that public property would not be looked after as carefully as private property. To him private property was superior to public property on five grounds—progress, peace, practice, pleasure and philanthropy.

Private property is more productive than public property. The principle “what is everybody’s business is nobody’s business can be applied here. Hence, Aristotle said that property should be private. When there is private property they will make much progress because everyone will be attending to his own business.

Communism is not conducive to social peace. Quarrels are bound to develop when the principle of equal wages for equal work is not followed. Under public property there is the possibility of someone doing more work but getting small reward. The practical experience shows that private property is good than public property. Private property enables people to be sympathetic.

The institution of private property will promote good conduct among the citizens. If a man has property he can have a part of it for himself and share the rest with his friends. Further, Aristotle was against the imposition of ceiling on private property. Rather he pleaded for checking the growth of population.

If population is not checked, it will result in poverty which is the root cause of revolution and crime. Aristotle wanted the owners of private property to accept public responsibility. The property owners must act as trustees of the society. A similar idea was given by Gandhiji.

(iii) Scope of economics:

The word economics is of Greek origin and it means management of the household. Aristotle developed the theory of economics while discussing the elements of household management. There were two elements, namely, economics and chrematistics, the former, concerned with the art of consumption of wealth in the satisfaction of wants and the later with the art of acquiring wealth either by making money or by exchange.

Aristotle speaks two types of exchange—natural and unnatural. Natural form of exchange satisfies the human wants. The un- natural form of exchange aims at momentary gains. Aristotle speaks about two kinds of uses. One is the proper use which is similar to economy proper or value-in use. The other is similar to science of supply. For example, a shoe can be used for wearing and for exchange. Both are uses of the shoe.

The first type of use is economy proper and the second one is value-in-exchange or chrematistics. By saying this Aristotle laid the foundation for value in-use and value-in-exchange, which were later popularized by Adam Smith. Barter is also natural branch of chrematistics.

Thus, natural chrematistics concern the satisfaction of natural wants by natural uses of a commodity while exchange is an unnatural process of money making because man goes on undertaking this activity even after he has reached the point of satiety.

(iv) Money:

Aristotle’s theory of money explains “what money is and what money does”. Aristotle explained the necessity of money while Plato explained about only one important function of money namely medium of exchange,’ Aristotle explained the other functions of money, namely, store of value and measure of value.

Aristotle advocated a non-communist society. In such a society there would be barter, then the difficulties of barter would result in the introduction of money. He believed that money came into existence through legislations.

Aristotle’s treatment of money is said to be the best part of his economic thought. He said that money came to be introduced to facilitate commercial dealings. In the opinion of Schumpeter, Aristotle’s theory should be called the Metalist theory of money in contrast with Cartel theory of money propounded by Plato.

(v) Interest:

According to Aristotle interest taking was the most unnatural of all the methods of getting wealth, said Schumpeter. Money served only as a medium of exchange, it cannot be regarded as productive. As one piece of money could not produce another, interest was unjust. Money had no business to increase from hand to hand. In those days money was borrowed by the poor persons for consumption purposes and therefore interest taking was considered unjust.

(vi) Slavery:

Aristotle’s views regarding division of labour, inheritance, population and slavery were more or less similar to that of Plato. He supported the institution of slavery. He divided slaves into natural slaves and legal slaves. The natural slaves were inferior to others, both in body and mind. Those conquered in war were treated as legal slaves.

Aristotle’s Criticism of Plato’s Communism:

Aristotle did not fall in line with Plato in so far as the community of property was concerned. Under common ownership of property, people will not look after it carefully as it will be under private ownership. To him ownership of property was a natural instinct of man.

Aristotle had a new idea that property should be private, but the use of it should be common. Thus Aristotle modified Plato’s theory of Communism. He did not accept the extreme individualism of the Greeks. He wanted more and more goods under common use without affecting individual proprietary rights.


Aristotle defined monopoly as a position in a market of a single seller. He condemned it as unjust.


Aristotle laid the foundation of the science of Economics. He may be rightly called ‘the first analytical economist’. He adopted inductive method to explain the origin and growth of the city state. His ideas on private property are valid even today. In the field of exchange also he laid the foundation for the distinction between value-in-use and value-in-exchange.

Moreover his treatment of money is the best part of his economic thought. On the whole, Aristotle’s contribution to the development of economic thought was more important and his ideas developed in his “Ethics” exerted greater influence on the writers of the middle Ages.

Economic Ideas of Roman:

The contribution of Romans to the development of economic thought is very little. Their main field of interest was jurisprudence and their writings were very much influenced by Greek thought. The Greeks were thinkers, keen and analytic, whereas Romans were men of action, warriors and statesmen. The Greeks left a philosophy which deeply affected the ethics and economics of later thinkers but the Romans built institutions which affected law and politics.

Roman economic ideas can be gathered from three sources, namely, the jurists, the philosophers and agricultural writers. The Roman jurists were the original thinkers and the laws express the best Roman economic thought.

The chief writers were Cicero, Seneca and Pliny. These philosophers praised agriculture and condemned usury. The agricultural writers like Cato, Columella and Varro dealt with many economic aspects. While praising agriculture they regarded it as the salvation of Rome.

(i) Views on Agriculture:

The Romans were mainly interested in the improvement of agriculture. Agriculture was their chief occupation. They favoured small scale farming. Cato had written more on the technical aspects of agriculture. Cato regarded an agricultural estate of 150 acres of Olive groves and 62 acres of vineyards as the ideal one. Varro advised crop growing and stock breeding. Agriculture was viewed not as an industry run for profit, but as a problem of domestic economy.

(ii) Money and Interest:

Formerly, the barter system was prevalent, but later bimetallism, that is, coins of bronze and silver was adopted. At the same time Pliny favoured barter because to him, gold was the cause of the ruin of mankind. Roman jurists recognised the importance of money as medium of exchange.

They treated money just like a commodity whose value was more or less changeable and essential to its function. The Romans strongly condemned usury and money lending. But there was no legislation to prevent this. In the city of Rome the usual rate of interest was 4 to 8 percent.

(iii) Division of Labour:

Cicero laid emphasis on division of labour, as it had several advantages. Writers like Hutcheson and David Hume referred to Roman writers in their discussion of division of labour. They recognised geographical division of labour.

(iv) Commercial Regulations:

The Roman state interfered with economic matters and commercial regulations. Fines were imposed on merchants who had stored up food grains in the expectation of high prices. Goods were inspected by the authorities, and the entire quantity was confiscated if fraud was detected. The exportation of precious metals was banned.

(v) Labour:

The Romans condemned slave labour on grounds of inefficiency. They attached more value to hired labourers than to slaves and advocated that hired labourers should be used, in place of slaves to do the work in unhealthy regions and they should be assigned more important jobs on projects employing slave labour.

(vi) Value:

The Romans regarded utility should be the criterion for determining exchange value. Some commodities have greater value than their price. According to them price was determined by the forces of demand and supply. However, they did not develop more about value.

(vii) Natural Order:

The Roman jurists were the original thinkers of laws. They made a distinction between human law and natural law, which had much influence on medieval and later thought. Their ‘juscivile’ was a national law applicable to Roman citizens, while ‘jusgentium’, the body of law common to different nations, gives the idea of natural law, that is to say, the idea>of a body of law, which being common to all people is ‘natural’ to them. This idea laid the foundation stone for Smith and Physiocrats.

(viii) Private Property:

The Roman ideas on property also influenced the development of economic thought. The Romans discarded the communal ownership of property. The jurists defined individual rights on property and he was free to dispose of his property. Aristotle had limited the right of property; while the Roman law of private property showed unrestricted individualism which later provided the basis for the institution of capitalism.


It can be concluded that the Romans added little to the stream of economic thought. The reason was that Rome produced very few social thinkers. They approached social questions from the political point of view rather than the economic.

Prof. Haney has rightly observed that, ‘though the Romans did not directly develop economic theory, a knowledge of their writings is essential to an understanding of the continuity of the history of economic thought. For instance, the natural law conception, which the Romans evolved from the ‘jusgentium’ was to exert a considerable influence on the evolution of economic thought.”