A Wealth-and-Welfare Reading of Xenophon's Estate Manager

Our next text is Xenophon’s Estate Manager.  Xenophon (ca. 430 BC – 354 BC) was a renowned Athenian gentleman-farmer, philosopher, and soldier.  Although only briefly a student of Socrates, he evidently had enormous respect for the great philosopher, because he authored several dialogues in which Socrates is the protagonist.  Estate Manager is one such text.  (Socrates himself left no written works; our picture of him comes entirely from the writings of Plato and Xenophon.)  His admiration for Socrates and his disdain for democracy resulted in his banishment from his home polis.  He was granted an estate under Spartan protection, which enabled him to live as a leisured aristocrat.  This is probably when he turned his attention to literary pursuits.  He was eventually granted permission to return to Athens in 365 BC, where he remained until the end of his life.


According to Robin Waterfield, who translates and introduces the version I use, Estate Manager is “a treatise on the activities of an estate-owner: what he must do, when and how, as well as how he should treat his wife and slaves.”  Xenophon almost certainly drew on Hesiod’s Works and Days, “which is a mine of practical information on the very topics Xenophon covers.”  The Greek title of the work, Oikonomikos, roughly translates as “one skilled at managing a household.”  While Estate Manager is intended to convey practical advice, it also has a moral.  Skill in private administration is likened to skill in public administration, which in turn requires and reflects virtue.  This “implies that self-discipline is the foundation of all kinds of external management.”  Thus, although describing and praising the agricultural life takes up a large fraction of Estate Manager, it would be incorrect to classify it as an agricultural treatise.  “It is only in the context of The Estate Manager as a quasi-philosophical, moral treatise that the eulogy of farming makes full sense.”


The first part of the dialogue consists of Socrates inquiring with his friend Critobulus (Crito of Alopece) into the nature of estate management.  The second part, which is considerably longer, has Socrates recount a conversation he had with one Isomachus, which contains the bulk of the text’s practical and moral advice.  The dialogue between Socrates and Isomachus is especially important when Isomachus claims he can impart lessons in leadership to his servants.  “Socrates becomes very excited by Isomachus’s claim that he can teach his foreman to wield authority on a farm, since this implies that Isomachus can teach kingship, regarded by Xenophon and Plato as the highest form of political constitution…[I]t is clear that conjoined with the theme of estate-management are the philosophical themes of self-discipline and of kingship, which is a constant topic in Greek political theorizing.”


A wealth-and-welfare reading of Estate Manager looks quite similar to a wealth-and-welfare reading of Works and Days.  More topics are covered in Estate Manager than in Works and Days, and the work is significantly longer.  But there is little qualitative difference in what a contemporary economist would take away from the text.  Xenophon has Socrates discuss production and distribution, specialization and exchange, and political and economic institutions.  But as with Works and Days, the treatment is superficial by contemporary social-scientific standards.  As we will see, this will reinforce our conviction that a liberal economist would not approach the text in this way.


The opening discussion between Socrates and Critobulus focuses on whether estate management is a legitimate branch of human knowledge.  They decide that estate management is like medicine or carpentry: It is both a “‘branch of knowledge’” and a “‘skill’”.  Furthermore, just as “‘an expert carpenter could do for someone else just as good a job as he does for himself’”, the skills associated with estate management are generalizable and transferable, meaning they can be outsourced.  In brief, “‘there is a science of estate-management, which is not dependent on whether or not someone happens to have assets…’”


The knowledge of the estate manager is a crucial component of his competence.  Even something so simple as classifying assets and liabilities depends on their recognition as such by the estate manager: “‘It follows that the same things are assets if one knows how to make use of them, and are not assets if one doesn’t.’”  Socrates insists that “‘horses are not assets for someone who doesn’t know how to make use of horses, and likewise for land, flocks, money, and anything else whatsoever which someone doesn’t know how to make use of’”, reaffirming the importance of personal knowledge for effective management.  Contemporary economists will recognize elements of methodological subjectivism in these statements. 


Prudence and husbandry are essential skills for an estate manager.  Undoubtedly “‘some people own a great many possessions of all sorts’” yet “‘are unable to make use of them when they need to, don’t even know whether they are safe and sound, and hence cause themselves, and their servants a great deal of irritation.  On the other hand, those who have not more but fewer possessions have them immediately available and are able to make use of them as they need.’”  Unlike in economic theory, more goods is not always better.  The key is not the quantity of goods possessed by a householder, but whether the householder can use them most effectively, by placing them in right relation with each other.  In a competently managed estate, “‘everything is arranged in the proper place, not at random.’”  Bringing order (nomos) to the estate (oikos) is the ultimate goal.


The discussion eventually comes to the servile arts.  Unsurprisingly, our aristocratic interlocutors hold craftsmanship and manual labor in contempt.  Socrates claims “‘the manual crafts, as they are called, have a bad name and are not rated at all highly in our countries.  There are good reasons for this.  You see, those who work at them and apply themselves to them are forced to be sedentary, and spend their time out of the sunlight…As a result, their bodies are ruined, and this physical debilitation is accompanied by considerable weakening of their minds too.  These so-called manual crafts give people no time to bother with friends or country, and consequently their practitioners are thought to be bad at dealing with friends and at defending their countries.  In fact, it is a rule in some countries [e.g., Sparta] and especially those for a reputation for military prowess, that only non-citizens can work at manual crafts.’”  Agriculture, arms, and public affairs are respectable; other practices are not, and a truly honorable estate manager shuns them.  As in Works and Days, a wealth-and-welfare reading of the text would have a hard time making sense of this contempt for productive activities.


The conversation then segues to one of the most interesting parts of the dialogue: the relationship between estate management and authority in general.  Socrates and Critobulus come to agree that a good estate manager requires the same skills as a good commander, and a good commander the same skills as a good ruler.  Hence, there is a link between estate management and kingship.  Commenting favorably on a report he heard of Cyrus, King of Persia, Socrates remarks, “ ‘Those commanders of garrisons or districts or provinces who turn out with the full quota and have their men equipped with good-quality horses and weapons are promoted by him [the king] and enriched by generous gifts; but those commanders who are found to be neglecting their commands or making a profit out of them are severely punished by him and others are appointed to their posts.’”  And with regards to civilian administration, “‘those rulers who are able to show him [the king] a populous domain and land which is being worked and has plenty of the local trees and crops—to these he assigns extra land, and he enriches them with gifts and rewards them with official posts; but those whose land he finds unworked and sparsely populated because of their strictness or oppression or neglect are punished by him an deprived of their command, and others are appointed to their posts.”  In terms of contemporary economics, the analogy to appropriately designed reward structures in hierarchically administered systems, such as business firms, is obvious.


Regarding agriculture, “‘even those who are very well off cannot distance themselves’” from it, says Socrates.  “‘You see, it is plausible to claim that the practice of agriculture is simultaneously a source of pleasant living, of increasing one’s estate, and of training the body for being able to do everything a free man ought to be able to do.’”  Contemporary economists will see in the following statement a causal claim about the relationship between political and economic institutions: “‘The land also plays a part in encouraging farmers to take up arms to assist their country, because its crops grow out in the open for the victor to take.’”  Socrates’s summation is equally laudatory: “‘Whoever it was who said that agriculture is the mother and nurse of all other arts was right, because when agriculture is faring well, all the other arts are strengthened too; but wherever the land is forced into barrenness, all the other arts, whether based on land or sea, are more or less smothered.”  Economic historians can vindicate Socrates’s claim: they know that, for the vast majority of human history, land was the most important factor of production.  Agriculture absorbed most of a society’s labor and was responsible for most of its output.


In the second part of the dialogue, Socrates recounts to Critobulus a conversation he had with Isomachus, a man known to be both virtuous and skilled in household management.  Themes of this conversation that wealth-and-welfare economists will find interesting include the division of labor between husband and wife and the appointment of competent household stewards.  As for the household division of labor, Isomachus elaborates on a widely-shared belief among ancient Greek aristocrats that men should specialize in bringing wealth into the household, and women should specialize in allocating that wealth within the household: “‘In so far as the two sexes have different natural talents, their need for each other is greater and their paring is mutually more beneficial, because the one has the abilities the other lacks…Just as God has made men and women share in procreation, so society makes them share in estate management.’”  Economists no doubt will appreciate the discussion of how the division of labor can improve the efficiency of the organization, but will find Isomachus’s grounds for assigning functions based on sex outdated, to say the least.


The second theme, finding and appointing good stewards, has a notable discussion of principal-agent problems.  Socrates asks Isomachus how to recognize, train, and assigning capable “‘foremen’”, who are almost certainly slaves.  “ ‘[I]t must be of prime importance that he is loyal to you and your property, since any foreman’s knowledge is no good at all without loyalty, is it?’” asks Socrates.  Isomachus answers in the affirmative, emphasizing the necessity of teaching servants both loyalty and responsibility.  Interestingly, Isomachus believes that avariciousness does not disqualify a slave for promotion to foreman.  Isomachus says that such men “‘are very easy to train for this work: you only need to show them that, if they take responsibility, they’ll make money!’”  In other words, an appropriately devised schedule of rewards and punishments can align the incentives of principal and agent.  “When I see that they are behaving responsibly,” Isomachus continues, “I make sure I congratulate them and reward them; when I see irresponsibility, I make sure my words and actions are caustically critical.’”  In summary: “‘Anyone who wants to make people capable of being responsible must be capable of supervising and scrutinizing the work, must be prepare to show gratitude for work performed well, and must not be afraid of administering punishment when irresponsibility demands it…the master’s eye is the most effective way of producing good work.’”


The remainder of the text returns to a theme familiar to readers of Works and Days: practical tips for succeeding in agriculture.  Planting and harvesting obviously receive significant attention.  Contemporary economists will find little of value here, except at the very end.  Isomachus provides an interesting account of what we might call farm flipping: purchasing poorly managed agricultural estates, making them productive, and reselling them.  “‘[T]hose who are capable of applying themselves and of working hard at farming find no more effective way of making money than agriculture, as my father found out by engaging in the business himself, and as he taught me too.  He never used to let me buy land that had been farmed, but he used to recommend me to buy land which, because of the owners’ neglect or inefficiency, was unworked and unplanted…You should know, Socrates, that between us we have now greatly increased the original value of many plots of land.’” 


Socrates asks, “‘Did your father retain all the plots of land he worked…or did he also sell them, if he had a good offer?’”  Isomachus replies that he sold the land straightaway, and often used the proceeds to purchase additional mismanaged land.  Socrates remarks that Isomachus’s father “was naturally inclined to love farming to the same degree that traders love corn…When they [traders] want to make money, they don’t casually get rid of the corn in any old place, but they take the corn to where they hear the corn is fetching the highest price and the people’s demand for it is the greatest, and sell it to them there.’”


As mentioned previously, Socrates is fascinated by the possibility that estate management can be taught.  If one can give instruction in estate management, then one can give instruction in authority itself.  “‘For the ability to make people good at wielding authority obviously entails the ability to teach them mastery, and the ability to make people masters entails the ability to make them kings.’”  Isomachus agrees, noting that “‘the ability to wield all authority…is common to all activities, whether they are concerned with agriculture or politics or estate management or warfare.’”  But while a good administrator may come from anywhere, not anyone can be a good administrator.  Isomachus stresses that “‘anyone who is to have this ability requires training and must also be naturally talented and above all favored by the gods.’”  Wealth-and-welfare readers would have a hard time interpreting this part of the text.  Perhaps the closest analog in contemporary economics is the literature on human capital, especially strategic investments in human capital.  These investments can take very different forms, depending on whether they are generalizable or organization-specific.  Likewise, Socrates’s and Isomachus’s discussion of cultivating authority depends on the degree to which authority as such vs. context-dependent authority can be taught.


As with Works and Days, a wealth-and-welfare reading of Estate Manager leaves us feeling underwhelmed.  It is not that the topics have little to do with conventional economics.  It is that the treatment of these topics, according to conventional economic standards, are quite rudimentary.  In fact, sometimes they are simply wrong.  For example, Xenophon has Isomachus infer the orderliness of the marketplace from the orderliness of households.  After relating to his wife the importance of arranging goods in an orderly fashion, Isomachus generalizes the point: “‘…Athens as a whole has ten thousand times the possessions we do, and yet none of our servants has any difficulty in buying and bringing back home from the agora anything you tell him to get, which proves that they all know where to go to get anything.  And the reason for this is precisely that everything is kept in its appointed place [emphasis added].’”  In other words, there is no categorical difference between order in taxis and order in cosmos.  This comes very close to an outright rejection of spontaneous order, without which there would be no such thing as social science!  After all, if coordination always arises because of command, then there is nothing for social science to explain.  The marvel of the market lies in the fact that the market is orderly despite the fact that nobody is consciously ordering it.


The problem with reading Estate Manager as a conventional economics text is that it is, strictly speaking, not about economics at all.  In fact, Waterfield translates rather than transliterates the title because he wants readers not to mistake Estate Manager for a work of proto-economics.  As Waterfield argues in the Introduction, “For a work to be concerned with economics, properly speaking, it must at the very least include some analysis of economic factors; Xenophon draws our attention to various aspects of human life which in the hands of an analyst could be regarded as economic factors, but he goes no further than drawing our attention to them: they are not analyzed and they do not play a part within the broad scale of a concept such as ‘the economy’.” 


Waterfield goes on to quote Joseph Schumpeter’s argument for why observations of the kind that permeate Estate Manager do not qualify as economics: “Common-sense knowledge goes in this field much farther relatively to such scientific knowledge as we have been able to achieve, than does common-sense knowledge in almost any other field.  The layman’s knowledge that rich harvests are associated with low prices of foodstuffs or that division of labour increases the efficiency of the productive process are obviously prescientific and it is absurd to point to such statements in old writings as if they embodied discoveries.”


Does this mean there is no point in reading Estate Manager if one’s goal is to increase one’s conventional economic understanding?  Almost certainly, yes.  But arriving at this answer demonstrates the absurdity of the question.  The whole point of this analysis was to show that conventional economics, focused as it is on wealth and welfare, fails to appreciate the timeless truths embodied in texts such as Estate Manager.  Wealth-and-welfare readings cannot help but skim the surface of these works, without truly entering into them. 


Nobody disputes that any competent principles of economics textbook can convey the importance of, say, the division of labor more effectively than Estate Manager.  From the standpoint of liberal economics, this is the wrong evaluative criterion.  A liberal reading, one that was inherently more sympathetic to Xenophon’s circumstances and purposes, would spend more time and effort, not less, on those aspects of the text that seem outdated.  What external factors made the text’s arguments relevant to actual human problems?  Can we step outside of our post-industrial world, in which land is a marginal factor of production, and project ourselves into a world in which land is almost everything?  A wealth-and-welfare reading must subordinate Xenophon to contemporary concerns.  A liberal reading would have subordinated contemporary concerns to Xenophon. 


To put it differently: a wealth-and-welfare reading ends with us lecturing Xenophon about everything that he got wrong.  But a liberal reading ends with us engaging Xenophon to see, with the help of the economic way of thinking, what he got right.


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