Only the rise of a totally new revolutionary technology that displaces the existing technology will stop the maddening accumulation of wealth. However this does not mean that the old order will be reestablished. The new order that will emerge may instead upend society, as is typical of any upheaval that follows in the wake of a revolution.
But the debt crisis is unlike the capacity/consumption crisis. It can be solved, only that it takes a lot of guts and an iron spine. The policymakers are evading this task in kicking the can down the road. They are extending more debts so that the borrowers can repay old debts. You can imagine what this will lead to: a debt bubble that will eventually burst with catastrophic consequences. If only they had heeded the advice of Philip Gibbs (1877-1962), an English journalist and novelist, "It's better to give than to lend, and it costs about the same", they would have forgiven a greater chunk of the outstanding debts. But nobody has the statesman-like character to push through such a measure.
It has been recently reported on Bloomberg.com that the first sovereign default was committed by the Greeks in the 4th century BC when 10 municipalities defaulted on their debts to the temple of Delos. Another version has it that of the 13 states that borrowed from the temple in 377-373 BC, only two fully repaid. The resulting bad debts amounted to four fifths of the sum borrowed. As fate would have it, the most pressing credit problem now is with modern Greece. It seems that debt and credit are not Greek to the Greeks. So to the ancient Greeks we defer, to learn how to solve the seemingly tough debt crisis.
Ancient Athens or Attica, one of the Greek city-states, encountered a major crisis of wealth imbalance at the beginning of the 6th century BC. The Athenian society then was on the verge of collapse because of the huge amount of debts owed to the wealthy creditors. But it had the good fortune of having Solon, a legislator and statesman, to handle the crisis. Solon was appointed chief magistrate in 594 BC for a temporary period, giving him tyrannical power though he wielded it in an enlightened way. He devalued the drachma by a quarter, or as another account has it, by 40 percent. Citizenship was granted to skilled immigrants. He also had to convince the rich that debt write-offs were in their best interest. Had the society collapsed, even the rich would have been devastated. The rich relented but it wasn't without a price. Solon reserved for them the appointment as administrative officials. In addition, they were given the right to speak and vote in the assembly while the poor could only vote. This was the forerunner to the full democracy which was to be established in 508 BC.
It was also to preserve the phalanx fighting arrangement that Solon carried out the debt forgiveness, thus restoring the small farmers to their land and abolishing debt slavery. Its phalanx fighting formation entailed every hoplite infantryman fighting side by side as equals, suppressing differences in social status. Democracy was a logical extension of this. This was further buttressed by the pattern of its economic activities. Most Athenian peasant farmers grew their olive or wine crop on a 10-acre plot with the help of one or two slaves. They thus worked independently unlike the Chinese who required a central organisation to manage water for the efficient growing of rice.
Any account of ancient Greek history, especially its two major powers, ancient Athens and Macedonia, wouldn't be complete without any mention of silver. Athens rose on the back of Mt. Laurium silver while Macedonia that of Mt. Pangeios in Thrace. Athenian silver mine discovered in 483 BC was used to finance the building of a fleet of triremes that enabled Athens to project its power over the Aegean Sea, a major trade conduit for the Greek city-states. More important was safeguarding its grain supply which had to be shipped from the northern shore of the Black Sea through the choke points of Hellespont and Bosphorus. Being a hegemonic power, it was able to exact tributes from other city-states seeking protection against Sparta, a rival power.
Athens also used the silver to mint standardised coins called the tetradrachm. One tetradrachm was equivalent to four drachmae. The vast availability of the tetradrachm, famously known as the owl silver coins, smoothed the flow of trade. With the tetradrachm, Athens could bear trade deficits which reinforced the coins' role as the standard medium of exchange for the Aegean sea trade. Actually the riches from its silver mines allowed the Athenians to afford the time to debate and vote in the assembly. The silver paid for the slaves who carried out most of its economic activities. There were a high number of slaves in its silver mines, quarries, maritime galleys (as rowers), pottery workshops and farms (especially those owned by the rich).
However Athens's riches sowed the seeds of its downfall. It was locked in the long running Pelopponesian war with Sparta from 431 to 404 BC. The war consumed most of its silver wealth. So it had to impose high taxes on its farmers. Many of the small scale farmers had to abandon their farms which in turn were acquired and consolidated by the aristocrats who used slaves to work the farms. As fields worked by slaves were inefficient, higher tax was levied forcing more small farmers off the land. Athens eventually lost the Pelopponesian war but it was spared destruction by Sparta. It even managed to reinstate democracy in 403 BC.
Meanwhile in the northeast of the Greek peninsula, another power, financed by silver, was rising with the ascension of Philip II. One of the things that Philip II of Macedonia, the father of Alexander the Great, did to cut into Athens's commercial dominance was to flood the market with his own silver tetradrachm coin. He could afford it as he had his own bigger silver mine at Mt. Pangeios in Thrace. This brought down the price of Athenian owl coins, leaving Philip II's tetradrachm as the medium of exchange for Aegean commerce. Macedonia eventually defeated Athens in the Battle of Chaeronea in 338 BC. Imposing dominion over the Greek city-states was one thing but subjugating other empires needed a lot of wealth. The wealth in the form of gold and silver came from the Persian war booty. The silver made its way into the commerce of the Greek city-states as well as the newly conquered areas, inflating prices but also increasing trade. However war booty had its limits because it could only come from the Persian ruler who had hoarded wealth instead of releasing it into the economy. Had Alexander lived long, he'd have a hard time keeping his empire intact. Soon after Alexander's death, his vast empire split into four regions, each ruled by one of his generals.
As for Athens, by the 2nd century BC as its aristocratic farms grew to thousands of acres, the Athenian society went down a death spiral.
Certainly there are many lessons that can be gleaned, particularly:
If only the modern Greeks had the farsightedness and sagacity of their forebears, they certainly wouldn't have chosen their current path to perdition. Instead of listening to the EU politicians and ideologues, it's time for the Greeks to dust off the annals of their forebears and escape the mindless grip of fiscal austerity.
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