Κυριακή, 10 Ιουλίου 2016

Τα οικονομικά του Μ. Αλεξάνδρου Presentation by Maria Negreponti-Delivanis at the SAFEM congress, 4 -5 June, Royal Theatre of Thessaloniki

                    Τα οικονομικά του Μ. Αλεξάνδρου


Numerous Volumes have been written about the life of Alexander the Great, the campaigns for the conquest of the whole of the known world and his habits. The element of mysticism is naturally  dominant in a personality that changed the cultural model and the historical development of his era. As an economist, I will attempt to explore, not too deeply at the moment, as the issue is outside my research interests, some economic data relative to his campaigns. Unfortunately, the information referring to the ways Alexander the Great managed to finance his  constant and costly war operations, to whether he was a good or bad financial manager and to what extent he considered the assurance of his future economic survival and the continuation of his activities in his decisions, are matters covered by considerable uncertainty and confusion, so that relevant views are often conflicting. In particular, some sources claim that when leaving for Asia, Alexander the Great had little money with him, as his father Philip left him with huge debts when he died. On the other hand, diametrically opposite information asserts that Alexander the Great was able to fund his huge military operations because he owned large sums of money. What was the origin of this wealth and where was it hidden?

The answer to these questions is not easy, because it seems that the difficulty or ease of financing the military operations of the Macedonians refer to different time periods, and could both be applicable.

In Part I of this brief presentation I will deal with the funding of military operations of  Alexander the Great, while Part II will be devoted to Alexander as manager of the public finances of his era. Finally, the conclusion will attempt to determine the main directives and economic policy choices of  Alexander the Great.

Part 1. The
financing of military operations of Alexander the Great

More specifically, there are two phases in the Alexander’s military operations were funded.

A. The first funding phase

 First, Philip was the one who before his son Alexander had dreamed of conquering Asia. He knew that this operation would be very expensive, so all his life he tried to secure sources of funding. Thus, even before Alexander was born in 357 BC, Philip conquered Amphipolis and with it the gold mines of Paggeo and the gold mines of Thrace which he named Philippi. These mines were extremely valuable to Philip, because their earnings allowed him to prepare his Asian campaign, obtain weapons and war material technologically very advanced at the time, thanks to the innovations of Syracuse. With
this money Philip was able to rationally organize the administration of the state of Macedonia. According to the information available today, Philip was able to acquire 1000 talents from the mines of Thrace, amounting to 26 tons of gold per year. Philip began issuing gold but mainly silver coins, obviously in an attempt to economize on gold which was more rare in relation to silver. These coins depicted Hercules on one side and Jupiter on the other. The coins issued by Philip were imposed as a dominant means of payment throughout the then Greek world. These coins which were not uniform, but represented 25 different kinds, were later minted not only in Macedonia, but also in some regions conquered by the Macedonians, as follows: two in Macedonia, one in Egypt and 22 in Asia. There are many indications however that, in terms of quantity and value, the majority and most important ones were minted in Macedonia. Each talent weighed 26 grams, and its value amounted to 6,000 drachmas. It is assumed that every drachma was approximately equivalent to 10 current Euros in terms of purchasing power.
  However, according to all available information, after Philip's death, his successor Alexander only found a very small amount of gold and silver in the safe, estimated at approximately 60 talents. Philip also left Alexander with a huge debt, estimated at 500-800 talents. The unanswered question is how this debt was created, in spite of the existence of the gold and silver mines, which were held by Macedonian kings. At any rate, the official version is that Alexander began the conquest of Asia, with only 60 talents and food sufficient for just 30 days. This is the first phase of financing of the campaigns of Alexander the Great, which may give the impression of being inadequate, uncertain or problematic. Understandably, the question arises as to what happened to the gold and silver mines of Paggeo and Thrace. It is possible that they represented secret funds which for reasons unknown so far,  Alexander the Great did not want to reveal, not even to his closest associates. In my view, there are still many gray areas in this field, which I hope historians will shed light upon in the future. For now, we will just have to rely on what we know.  Note that after the death of Alexander the Great, 31 mines have been recorded whose production seems to have continued for another 100 years in 51 different locations, so that it is not excessive to assert that Greece was then flooded in precious metals. Unfortunately for a short while.

II. The second funding phase

 I shall now turn to the second phase, which can be characterized as the period of comfortable financing of Alexander the Great’s campaigns. This begins with the conquest of Asia in 329 BC and ends with his death.
Following the suppression of the funds originating in the mines of Paggeo and Thrace, which may have been insufficient, or may have been reduced in the meantime or even cut off, the conquest of Asia, could have been pursued by Alexander the Great  purely economic reasons, among others. Indeed, the conquest of Persia, which was the richest part of the known world, gave Alexander the Great the opportunity to realize all his grandiose conquest plans, following the acquisition of the immense wealth, treasures and gold of Darius . The mythical palace of Darius had gathered all the wealth of all the states of Mesopotamia. But these skyrocketing riches representing gold acquired over 3000 years, were unable to save their owner Darius from being conquered by the commander of all time, Alexander the Great.

Furthermore, according to existing information, Alexander had to recruit 20.000 mules and 5.000 camels in order to carry the mythical wealth of Darius, estimated at 12,000,000 silver pounds, while only the royal tent of Darius is estimated at more than half a billion euro.

In many ways it is interesting to note how Alexander the Great made use of this treasure, or at least part of it, and the resulting consequences which present a lot of interest for economists, as well for all the citizens of modern economies.

Unbelievable but true: Alexander the Great unlocked the warehouse where he kept the treasures of Darius and began distributing gold to the Greeks. For the first time in human history, as far as I know, inflation appears as the result of an unregulated amount of money flooding the market. Prices and soldiers' wages quadrupled and the cost of living rose. When Alexander the Great started his campaign for the conquest of the world, a soldier’s salary was around 10 current euros. After giving away Darius gold, soldier wages rose to about 40 euros.

Subject to finding new data concerning the life of Alexander the Great, I believe it deserves to be said in his memory, that apart from being considered the greatest commander in history, his decision to divide part of the spoils of his conquests among the citizens of the empire elevates him to a  first class popular leader first class with socialist roots, as we would argue today. Furthermore, his interest in securing additional wealth even after the acquisition of Asian treasures can be interpreted by his desire to continue forever, if possible, his military campaigns  for the conquest of the world, not to accumulate wealth for personal luxury of living.

Part II. Alexander the Great as manager of public finances

As a student of Aristotle, from 13 to 16 years of age, Alexander received an education in economics, according to which politics, as identified by Aristotle in "Nicomachean Ethics" should be based on the principles and values ​​of morality and promote the general interest and the welfare of citizens.

In the era of Alexander the Great, the state budget coincides approximately with the military budget, but as we shall see below, state intervention in the economy generally shared the same characteristics as in today's economies.

In the first place, soldiers’ wages represented the largest public expenditure, because of the constant wars. With the launch of the campaign in Asia, Alexander the Great had to ensure the salaries of 35,000 soldiers within a budget of 2,000 talents. These, amounted to approximately 120 million euros. This huge amount at the time could have been hard to secure before the conquest of Persia, but very easy after that. Furthermore, according to available sources, the wage differential between senior and junior soldiers was 7.5 times, with the lowest salary corresponding to ground soldiers and the highest to the cavalry. Please note,  that these wage differentials can be considered quite reasonable and comply with the prevailing economic theory, in contrast with the current irrational and impossible to interpret according to economic theory, differential of 360 times, which reflects the out of control inequalities in the distribution of wealth.

Soldiers’ wages naturally soared after the conquest of Persia and on the way to the conquest of India, due to the Asian wealth acquired by the Greeks. The troops were accompanied by skilled craftsmen to repair weapons and tanks, to build tents and beds. We should also highlight a very important detail, namely that the soldiers were accompanied by their families, a fact which  significantly raised the cost of campaigns. They were also accompanied by doctors, pharmacists and nurses. Alexander the Great had also developed a sort of military welfare, equivalent to today's social welfare, since the children whose father was killed on the battlefield received his salary in the form of pension, in addition to indemnity compensation.

Alexander the Great was very generous with his men, and often offered them celebrations and feasts in order to revive their spirits,  after each victory he used to reward them with money and jewels and when they were no longer able to fight he ensured them a pension, often greater than their salary.

The financing of all these huge costs was largely covered by the mines and war spoils, as discussed in Part I of my speech, which seem to have been largely sufficient, especially since Alexander the Great used to distribute part of them to his citizens.


The general conclusion of this brief presentation is that Alexander, apart from being the greatest and most inspired marshal in the world, was also a very effective financial manager, a fact which is less well known about him. I will proceed to mention some of the key features of this financial management:
* First, in spite of the fact that in his era the various dominant economic theories had not been formed yet, one can see that Alexander the Great acted as a Keynesian and not as neoclassical / or liberal, since he was specifically not in favor of austerity, but of strengthening demand, public investment and controlled inflation.
* Second Alexander the Great did not destroy any of the good infrastructure which he found in the countries he conquered. On the contrary, he chose to maintain, improve and take advantage of it. Thus, he left intact the management structure of Persia, which continued its  smooth operation even after the conquest.
* Third Alexander the Great appreciated the work effort and he used to generously reward his subordinates depending on their contribution. He had created a welfare system that protected the weaker, the elderly, the children and the sick.
* Fourth, he had a clear awareness of the existence and content of the Nation, and on this basis  distinguished Greeks from non-Greeks. It seems that Greeks did not pay taxes, since Greece was sufficiently wealthy not to need them, but on the contrary, the people who resisted the conquering force of Alexander were forced to pay taxes as a form of punishment.
* Fifth, although at first glance surprising, as long as unnecessary, Alexander the Great believed in the need of borrowing and acquired significant loans amounting to 1,460 talents. A possible explanation of the decision of Alexander the Great to resort to loans could be his desire to exploit inflation, which then prevailed and which is well known to favor the borrower, thus demonstrating advanced knowledge in economics.
* Finally, very little is known about the administration of the vast empire created by Alexander the Great, except that his luminous and inspired personality was the dominant and connecting link of this whole territory.

As a final note, let us ask ourselves for a moment how different the world would be if Alexander the Great had not died at the age of 32, probably poisoned by wine, according to the conclusions of recent research, but much later. He might have ensured the sustainability of the huge state of created by his conquests and the world would have evolved in a very different way.

Indicative bibliography
*Alexander the Great, King of Macedonia, by Frank. W. Walbank (Web)
*Alexander the Great: a very competent expert in finances by Dimitrios Kostopoulos, Source:ΑΠΕ-ΜΠΕ via Archaiologia( 30 November, 1912).
*Mining Greece: The goldmines of Alexander the Great (Source: Archeological Mysteries in Greece-Archetype Publications) http://www-miningreece.com/wp-content/uploads/2014/12/Alexandre.png)

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