God is a Capitalist

by Roger McKinney

  Pharaoh granted land use to military commanders and nobles as a reward for service. In turn, the commanders and nobles would lease the land to peasants to farm. Pharaoh owned the mines from which workers extracted gold, silver, copper and other metals. He owned the quarries that produced the stones for buildings and monuments. And he owned the Nile River which provided fish and rejuvenated the soil during floods. The same principle of rent applied to these as applied to agriculture. In addition to owning everything, pharaoh regulated the flows of goods and services, organized labor and regulated imports and exports.

  Pharaoh’s bureaucracy collected taxes, or rent, from the various sectors of the economy and redistributed them, some to pay salaries, some as offering to temples, and some stored for future distribution, in the case of drought for example. The Bible describes an episode of such redistribution in Genesis. Four hundred years before the exodus, God gave pharaoh a dream which disturbed the king because none of his advisers could interpret it. Then God gave the interpretation of the dream to Joseph, who was in prison at the time because of his refusal to commit adultery with a former master’s wife. The wife had accused him of rape and sent Joseph to prison. Joseph interpreted pharaoh’s dream as a prophesy of an approaching seven year famine in which much of the population of Egypt would die if they did not prepare for it. In recognition of Joseph’s wisdom, pharaoh made him his vizier, or second in command of all Egypt.

  God did not tell Joseph how to prepare for the famine. Joseph may have relied on custom, for he taxed the people’s wheat and stored it in preparation for the famine. When crops failed due to the draught, Joseph sold the people’s food back to them in exchange for their land, thereby making slaves to pharaoh of the entire population. As the Bible says, "So Joseph bought all the land of Egypt for Pharaoh, for every Egyptian sold his field, because the famine was severe upon them. Thus the land became Pharaoh's." (Genesis 47:20) Technically, pharaoh already owned the land, so the Biblical story must mean that the people gave up even more of their rights to the revenue from the land. The story emphasizes the insecurity of property in Egypt and the absolute control over land and people enjoyed by pharaoh.

  The state administrators prepared budgets for the state based on forecasts of the harvest. They had discovered a correlation between the height of the Nile flood and the size of the following harvest to help them make those forecasts. In theory, good pharaohs would live within their means, but like most politicians today, they often lacked such discipline.

  Peasants enjoyed little time for themselves. When not working in the fields to plant or harvest, pharaoh drafted them to work on his building projects. The Oxford Encyclopedia of Ancient Egypt explains: “In all such efforts – the creation or maintenance of agricultural domains, the organization of expeditions to mines and quarries, the realization of large building projects, or the development of the artisans’ class – the central administration, directed by the vizier, acting on behalf of the king, controlled the movements of the population and the use of manpower; through the intermediary of the ‘Office of the Vizier’ and the ‘Office of Manpower.’” The workers on pyramids and other monuments weren’t technically slaves, since they received food and wages for their work, but they had no part in the decision to work or not; pharaoh decided for them. “The system of conscription, applicable to the entire working population, excludes by definition the necessity for slavery.”

  The construction of pyramids was part of the plan of the pharaohs to dominate the Egyptian economy as well as to satiate their enormous egos. Toby Wilkinson wrote in The Rise and Fall of Ancient Egypt,

  The monuments were not just symbols of the king’s authority throughout the country; they were also practical instruments of that authority in the central management of the economy. For the local population, the small step pyramid in their midst would have served as a constant reminder of their economic duty to the state: a duty to pay their taxes to support the court and its projects. From the state’s point of view, the monuments and their associated administrative buildings – with one facility in each province – made the collection of revenue both easier and more systematic.

  At the end of the Third Dynasty, the monarch and his administration had achieved their ultimate goal: absolute power.

  Pharaoh controlled prices directly and indirectly. Taxing and storing surpluses during good harvests and selling the surplus after bad harvests tended to keep prices from rising and falling to reflect supply and demand. He also set prices for many goods. According to the article “Government and Economy” on The Ancient World, Ancient Egypt web site, laborer might earn 5.5 sacks of grain (400 lb.) for a month of work while a foreman might receive 7.5 sacks (550 lb.). A shirt might trade for five copper deben, a deben being equal to three ounces of copper. A cow could cost 140 deben.

  The Egyptian economy in light of economic history

  The depiction above of the Egyptian economy shows the poverty of our knowledge of the ancient economy and daily life based on primary sources. In addition, court bootlickers wrote most of the ancient texts to glorify the pharaoh and justify to the masses and the gods his theft and murder. However, we can flesh out many details if we assume that human nature has not changed in the past 4,000 years. In that case, the insights distilled from 300 years of economics will apply equally to the ancient Egyptians when adjusted for technology. For example, Egyptian farmers used oxen to plow fields and thresh grain. Oxen continued to be cutting edge farming technology in many parts of the world as late as the 1950’s, so we know a great deal about economies based on farming with oxen that would have applied to the ancient Egyptians.

  As mentioned earlier in the chapter on capitalism, economic historians have determined that the standards of living of people measured by per capita G.D.P. all over the world remained stagnant from the beginning of written history until about 1600 AD in the Dutch Republic and 1800 AD in Western Europe and the U.S. We will not stray too far from the truth if we assume that people in the seventeenth century lived very much like the ancient Egyptians.

  Ancient Egypt likely had a number of beggars equal to at least 20 percent of the population because France and England produced enough food in 1700 for only 80 percent of their people to have the calories needed to perform a normal day of physical labor in spite of vastly improved farming methods according to Nobel Prize winning economic historian Robert Fogel in The Escape from Hunger and Premature Death, 1700-2100. The remaining 20 percent could gather only enough calories by begging to manage a short walk, so they could not have lived far from the place in which they practiced their begging. Also, the cycles of drought and famine made famous by the classical economist Robert Malthus would have afflicted Egyptians as well as Europeans and that is what the Bible records in the Book of Genesis. Europe did not escape the vicious cycle until the advent of capitalism in the seventeenth century.

  The number of people counted among the non-farm workers, the nobility, craftsmen, miners, soldiers, administrators, priests and temple staff, would have been small because of the low levels of productivity in agriculture. Throughout history, the number of people who could work in non-farming roles depended on agricultural productivity because farmers could grow only enough food for their families plus a small surplus. The surplus fed the non-farm workers and so limited their numbers.

  One ancient document, the Papyrus Wilbour, shows that grain was taxed at the rate of one and a half khar (20.31 U.S. gallons) of grain per aroura (two-thirds of an acre) according to Edward Bleiberg in “Understanding the Ancient Egyptian Economy.” At eight gallons per bushel, assuming a maximum of 12 bushels of wheat per acre translates into a tax of 30 percent of the harvest. It is possible that in bad harvests a compassionate Pharaoh would reduce the tax, but it is more likely that he would not if he were ambitious. Wars were very expensive and were the chief cause of the bankruptcy of kings in Europe throughout history. Pharaohs spent huge amounts of wealth conquering and controlling Nubia (Sudan) and Palestine. And of
course their building projects are legendary. It is unlikely that a “god” would scale back his ambitious plans for conquest and building monuments to himself in order to alleviate the suffering of his people.

  Today, most farmers in the poorest counties are women whose only tool is a short-handled hoe. Usually the men are busy looking for day labor. Development agencies have tried to give farmers oxen in order to lift their productivity because they can farm about 20 acres of land with a yoke of oxen, far more than is possible with a hoe, so we can assume Egyptian standards of living would have taken a huge leap with the adoption of farming with oxen. But then it stagnated and we know from history that the next advance in farming technology did not appear until a horse collar was invented that did not constrict the horse’s ability to breathe, roughly around 1000 AD in Europe. The horse collars used to pull ancient Egyptian and Roman chariots allowed horses to pull light loads, but heavier loads choked the air passages of the animal. The horse collar avoided the wind pipes and allowed the horse to use its full strength to move loads or plows. With horses, farmers could plow twice as much land as with oxen and double their productivity and their wealth.

  Along with metal plows, horse shoes and the use of fertilizer, farming productivity first began to rise in Europe in the middle ages. Why did it take farmers so long to discover the horse collar? After all, pharaoh’s military used horses to pull chariots. Life in ancient Egypt provides a clue: without secure property rights, farmers have no incentive to innovate and improve their productivity because the people in power will reap the benefits, not the farmers. As with most slaves, Egyptians would have exerted as little effort and thought in their work as possible knowing that they would never get more than just enough to keep them and their families barely alive. Asking Egyptian farmers to invent ways to produce more for the state would have been like asking slaves in the American south to find ways to make their masters richer. As a result, standards of living for the entire world changed little from the beginning of history until the invention of the horse collar.

  Scholars have engaged in heated debate over the question of whether ancient Egypt was a command economy or a market economy. The truth seems to be that it was mainly a command economy with a tiny space for markets. To better understand ancient Egypt we need to look to the former USSR or Communist China before the reforms of Deng Xao Ping. Both were command economies in that, being socialist, a small group of elites made all of the decisions about what to produce, who would produce it, and how it would be distributed.

  We know from the Soviet and Chinese experiments that command and control economies destroy wealth. Both nations attempted to eliminate markets entirely, even getting rid of currency and banks at one time. Mass death resulted. Over 30 million people starved to death in the USSR in the 1930’s and roughly the same starved in China in the 1960’s. Neither nation could feed its people in spite of the fact that they enjoyed some of the richest farm land in the world. Not only did farm workers lack incentives to produce, but the transportation systems were so bad that much of the food spoiled before it got to the consumers. The U.S. loaned the Soviets and Chinese the money to buy food through most of the 1970’s and 1980’s in order to prevent more mass starvation.

  After the Bolshevik Revolution of 1917, the Soviet Union abolished private property in land for the most part, but left about 4 percent of the land in private hands. The New Argument in Economics, The Public versus the Private Sector, edited by Helmut Schoeck and James W. Wiggins, contains this insight: “In 1959, these little private plots accounted for well over 46 percent of the Soviet Union's production of potatoes and vegetables, 38 percent of the output of beef and veal, 51 percent of the output of pork, 50 percent of the output of milk, and over 80 percent of the output of eggs.”

  The Pilgrims who founded the Plymouth Colony in 1620 should have served as a warning to the Soviets and Chinese, but they did not know the true story, just as most Americans do not know it. The official story, celebrated by children in thousands of grade schools every November, teaches that the pilgrims faced a rough first winter and many starved. The next year the Indians taught the Europeans how to farm and the next harvest was so abundant that the pilgrims announced a holiday and invited their rescuers, the tribes, to Thanksgiving Dinner.

  The truth is far different. Every school child should be familiar with it because the governor of the colony, William Bradford, wrote about it in his History of Plymouth Plantation. The colonists practiced a form of command economy. They all worked together on planting and harvesting crops while the leadership distributed the produce according to need. But the pilgrims remained in danger of starvation for years because the harvests were small and "much was stolen both by night and day, before it became scarce eatable." The tribal people could not help them.

  Then the harvest of 1623 arrived with abundance undreamed of by the pilgrims. What changed? Tired of the starvation, corruption and crime, Bradford tried a “new” method of organizing production on the farm: he abandoned the command economy, distributed the land to individuals and families and informed them they could eat only what they grew. The energy of the Pilgrims surprised Bradford and seems to have angered him a little.

  Another problem with command economies such as Egypt’s is waste. The great twentieth century economist Ludwig von Mises in his Socialism: An Economic a Sociological Analysis published in 1922 demonstrated that the greatest weakness of command economies is the lack of accurate prices. Prices coordinate market activity by signaling the relative abundance or scarcity of goods. High prices communicate to producers that they should increase production. Low prices tell them to scale back. Without accurate, market-based prices, there is no coordination of production with demand so excess in some goods exists alongside scarcity in others. The excess turns to waste, and if people waste and consume more than they produce, they grow poorer.

  The lack of accurate prices plagued the Soviet, Chinese and early Pilgrim economies and caused wide scale starvation. Post-Soviet Russia and post-reform China enjoy an abundance of food, as did the pilgrims when they abandoned communal farming. Ancient Egypt could not have escaped the consequences of a command economy any more than the Soviets, Chinese or pilgrims could. We may not know about the many disasters that must have afflicted the nation over its long history because the records we have left were primarily propaganda for the state. But most of the population would have lived very close to starvation with no hope of achieving a better life.

  Egyptians must have suffered greatly from envy, too. Socialists and many Christians have assumed that ridding the world of material differences between people would cure the human race of envy. Envy motivates many crimes and fights, so eliminating it should create a more peaceful and loving society. However, the Bible teaches that evil is part of human nature; only God can cure the human heart, and that takes a miracle. The previous chapter described the work of the great sociologist Helmut Schoeck in his monumental study Envy: a Theory of Social Behavior that confirmed the Biblical teachings. After studying history and the anthropology of primitive as well as modern societies, Schoeck discovered that similarity enflames envy. For example, the kibbutzim of Israel eliminated all material differences between members, going as far as prohibiting them from having their own clothing so that every member wore clothing drawn at random. Instead of alleviating envy, the members magnified other differences, especially time spent alone and in leadership positions, and enflamed their envy of each other causing continual conflict. The communes survived, but rarely grew because more people abandoned them than joined.

  Envy has kept people poor since the beginning of history. Suppose that a farmer in ancient Egypt overcame the damage that its command economy inflicted on the motivation to work and discovered a technique for growing wheat that produced say 50 percent more output per acre. Envy would have caused his neighbors to charge him with using witchcraft to benefit his acreage or to the harm theirs. They would have insisted that the state prevent him from
using the new technique. The United Nations experienced such debilitating envy a few decades ago when attempting to help poor farmers in Uganda. The Ugandan farmers labored with short-handled hoes to scratch crops from the stingy soil. The UN tried to start a pilot program in which it would give oxen to farmers in order to raise their productivity and standard of living to that of the ancient Egyptians. However, the farmers refused the oxen. They told the UN representatives that if they accepted the oxen, their neighbors would be envious and would steal them in the night, butcher and eat them if the farmers did not slaughter them and share the meat with their neighbors. Fear of envy made the farmers prefer poverty to the envious anger of their neighbors.

  Another reason the ancient Egyptian people as well as the rest of the world remained in a state of near starvation poverty until the advent of capitalism appears in the reward structure of society. Throughout history, the only paths out of subsistence farming were through service in the military or to the state because of the contempt for commerce in traditional societies. Soldiers could occasionally grow wealthy if their armies won battles and they could loot the wealth of the vanquished. Or if he could get into the bureaucracy, he could accept bribes and use his authority to steal from the masses. Because these were the only means of advancement in society, ambitious people directed all of their energy toward them instead of toward inventing better ways to produce food and clothing.