Ancient Egypt was amongst the first major human civilizations in existence.
Only really predated by the Mesopotamians and a handful of smaller collectives,
Egypt has been the most significant nation in the world, for a good chunk of civilized history
The longevity of this society is hard to fathom.
The pyramids the most recognizable symbol of Egypt’s power and prosperity
were constructed about 500 years after the nation took shape.
Cleopatra, the last Pharaoh of Egypt died in 30bc some 2 and a half thousand years later.
This means that the fall of ancient Egypt happened closer to the construction of the Burj Khalifa
than it did to the construction of the pyramids.
This vast timeframe is part of what makes Egypt, and by extension, it’s economy so fascinating.
It serves as a recorded journal of societal,
and economic development from the inception of civilization.
It also means that the economy of ancient Egypt is not a singular case study,
but rather a narrative of growth over an almost unfathomable timeframe.
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Outside of being genuinely fascinating the economy of ancient Egypt is enlightening to
really pull apart because it represents an economy in it’s most basic form.
Free from lot of the noise and distractions that make up modern economics.
Targeted inflation, debt cycles, derivatives contracts, and even the
financial sector are all crucial components of our modern and hyper-advanced economies.
Egypt, had none of these, and that is actually great,
because it means that we can explore and economy in its purest form.
No frills and nuance, just an economy desperately
trying to best harvest and allocate resources to satisfy
the central economic problem
There are only so many resources available in the world, technology can help to improve
what is possible to create but there is always going to be an eventual limit.
Humans on the other hand are legendarily hard to satisfy. A human that is well fed, with good
shelter will yearn for better food and a better home. Even today’s billionaires don’t seem to be
materially satiated regardless of how many, yachts and planes and politicians and mansions they own.
This, of course, causes the issue that economists somehow have to figure out how these limited
resources are going to be shared amongst a population of people with unlimited demands.
We have explored the central economic problem before on this channel many times before, and
we will likely explore it many times again because as the name would suggest,
it’s literally the foundation of economics.
There have been countless attempts to address this problem,
everything from unfettered lezi fair capitalism, to universal basic incomes to communism.
But, whether they knew it or not,
the Egyptians were really the first to give this problem a proper crack.
There solution for most of the history of the civilization was a centrally planned economy
for the big picture stuff, with a pinch of personal liberty for smaller scale consumption.
There was a strict hierarchy of society with a foundation in farm labor,
and a pinnacle with absolute power residing in the Pharoh.
Egypt was primarily an agrarian civilization, meaning most of the time and effort of the
nation’s workers was invested into growing enough food to feed the nation’s workers.
This made farming the core of industry throughout Egypts history.
These farms were owned by the state and administered
through the temples that lined the banks of the river Nile.
These temples were centers of commerce, government, and religion all rolled into
one and by reflection, the governance of Egypt was organized in the same way.
All the food was farmed for and delivered to these temples, where it would then be
distributed to workers based on fair and standardized wages paid out in grain.
A simple farm laborer was normally paid around 200 kilos of grain a month,
depending on their experience and how plentiful the harvest was.
These temples would also act as outposts for local government
all while of course, still being places of worship.
Religion, commerce and government all being administered by a single hierarchy
would be like the catholic church, the central bank, and all branches of government
falling under a single umbrella and all being reigned over by a single person.
Throughout the dynasties of egypt the pharoh was respected as a god on earth.
Which was an absolute win for that bloke.
“The annual harvest is better than ever?” You have your Pharoh to thank for that.
“We are in a famine and everybody is starving”. Your Pharoh must be displeased,
try praying harder next time!
All jokes aside this structure was actually a pretty robust
blend of absolute control and personal liberty.
This rigid hierarchy sounds like it made the vast working-class
slaves to a bureaucratic social hierarchy.
But in reality, they had a surprising amount of liberty.
For starters, even a lowly peasant could take a grand vizier to the equivalent of court,
if they were somehow wronged by the vizier’s actions and they could demand compensation.
A grand vizier was one step below the Pharoh in the governing hierarchy.
This shows a lot about how in many ways the people of ancient Egypt had a lot of liberty.
For comparison, go and sue a sitting US senator and let me know how that goes for you.
This liberty also spilled over into the economy, in a really weird sort of way.
People were paid in grain but they could use that grain for
pretty much whatever they saw fit, grain was a currency as much as it was a staple food source.
There are depictions and records of cows selling for x amount of
grain and or a shirt being sold for y amount of grain on a fixed price list.
By modern standards, this sounds very rigid, but what societies did exists as contemporaries
to ancient Egypt took more of a, you get what you are given approach to their working class.
This was the foundation of free-market trade,
where the people of the nation could help solve the central economic problem
by picking and choosing what needs were fulfilled and what they went without.
It was by no means perfect, using grain as a currency had its issues of course,
but it certainly elevated the standard of living for even the lowliest egyptian laborer
well above the subsistence lifestyle of their tribal peers.
Now in many ways, the Egyptian empire was afforded the luxury of personal liberty because of their
favorable environment. In fact the empire was originally formed in what went on to be known as
the cradle of civilization
We recently explored the reason why in the modern world
cold countries are richer than hot countries in a recent video on the channel.
One of the takeaways of this video was this correlation wasn’t always the case.
Infact for most of human history,
the opposite has been true with wealth been centralized around warmer climates.
This was because life in 3,000 BC was not easy, most people on earth at this
point lived in very small communities of subsistence farmers, or hunter-gathers.
Managing a group of a few hundred people was hard enough, let alone
the hundreds of thousands of people that made up the Egyptian empire.
Farming was rudimentary, and the larger the civilization the more mouths there were to feed.
Fortunately, the banks of the Nile and accommodating weather of Egypt were
extremely conducive to people and farming.
The land was was home to decent soils, consistent weather,
and inbuilt irrigation with the seasonal river floods.
This is what led to Egypt becoming one of the Cradles of civilization.
It was effectively life on easy mode for these early humans that did not
have the technology to make a home in more hostile areas.
Effectively it was a human petri dish. A nice accommodating environment filled
with everything humans needed to be comfortable and flourish.
What happens when you leave a petri dish out in the sun for a few thousand years?
well it develops a culture, very similar to the one Egypt did.
Because farming was so easy in this region as compared to other area’s around the world
it meant more calories could be yielded from smaller plots of land
with fewer humans needed to toil the fields.
This is what allowed the formation of a more complex social hierarchy with scholars,
and governors, priests, and craftsmen who for the first time in human history
did not work directly with the food they ate.
By comparison, human settlements in less hospitable locations needed to
have 100% of their population working 100% of the time, just to fend off starvation.
Food production in Egypt was actually so plentiful that even the farmers didn’t
have to commit themselves to feeding a swelling population year-round.
The egyptian calendar was broken up into three very distinct seasons,
the planting season, the harvesting season, and the flooding season.
The planting and harvesting seasons are pretty self-explanatory
and as bad as having your land flooded sounds, it was a huge win for the nation.
The annual river floods raised the river banks and and deposited rich
river soil onto the fields while also spreading water before robust irrigation.
Besides making farming even easier, the floods freed up alot of time.
While their fields were submerged, the farmers really couldn’t do that much.
Now while I am sure these hardworking farmers would have been content to take
it easy for these few months, the dynasties had other idea’s.
They dedicated this time towards the mother of all teambuilding exercises.
These idle farmers would go on to form the labor force behind local temples,
quaries, canal’s, roads and of course, the pyramids under a system known as the
Corvée
Every year able-bodied farmers and laborers were put onto construction projects during the floods.
This system collectively known as the corvee, was akin to a form of slavery.
These workers didn’t have much of a choice over whether or not they worked,
and they didnt get paid for the time they put into these projects.
but they were free to go back to their regular lives once the season was up.
In many ways, this was a form of taxation, they weren’t getting the workers to pay back a portion
of their paycheck but they were demanding that they pay back a portion of there time.
Although in fairness it must also be recognized that throughout most of its
history these peasant workers still needed to pay regular tax on their grain. If they didn’t pay,
they would be forced into additional corvee duty?
An interesting side note is that this system was not relegated to the ancient history books.
The corvee system used for the construction of public works only fell out of widespread use
in 1890, after the occupation of Egypt by the British, who were at that point very anti-slavery.
In fact, unpaid labor was instrumental in the construction of the Suez canal.
But of course, in the ancient world, the project at hand was the construction of those pyramids.
Everybody from the ancient greeks to modern archeologists have called this
the product of slave labor, but it wasn’t all bad news for the laborers dragged into work.
Sure, the peasant workforce of the nation probably wasn’t thrilled about
dragging stones around all day, but it did serve as a form of vocational training.
The pyramids were not just the result of brute force, they required meticulous planing,
precise workmanship, the use of advanced tools and the co-ordination of many men.
This was an opportunity for these workers to learn valuable skills that
they could bring back to their towns and implement in their regular work.
The other big advantage to the common man was that theses works were not always taken out on
vanity projects like big old pyramids, often times the work was done on much more utilitarian works.
Things like roads and public places did work to increase the quality of
life of the average egyptian, but no individual would invest the time and
effort into building them unless they were specifically compelled.
It wasn’t known to them at the time but this was due to the tragedy of the commons.
We have explored the tragedy of the commons specifically in our video on do we need taxes,
but in short, nobody is going to pay for something they can get for free if someone else does it.
If someone else builds a road there is nothing stopping other people from using it,
if people get it for free why wouldn’t the original road builder just wait for someone
else to build it so they can get it for free and so on and so forth until no road gets built.
By forcing everybody that would benefit from a new road to help build that road,
nobody feels hard done by and there is the added benefit of actually having a road...
In many ways this covee system was akin to the military conscription that exists in nations
like Taiwan, South Korea, Isreal, or any other country that says it also owns some other country.
the conscripted military personnel of these nations are probably not thrilled
about the whole ordeal. but it is still an opportunity to gain some skills and
experience while contributing to the national agenda. Be that building a wonder of the world,
or angrily shaking a fist at your neighbor, whatever floats your riverboat.
So since this was one of humanities first shot at a major civilization, how was their economy,
Did they solve the problem?
The central economic problem is really fascinating in the context of ancient Egypt
because the policies of the empire have clearly been made to address
how they would handle the problem of unlimited desires with limited resources.
When it came to personal consumption it was all about personal liberty,
they let the population decide what they demanded and that’s what would be supplied.
But they also realized that there were projects in the best interest of the nation that nobody
would individually pay for if they had the option, so that option needed to be taken away.
There are industries today that are much better conducted by private enterprise,
in the same way, there are industries that are much better conducted by a government.
The economy of ancient Egypt was of course not nearly as complex as the
economies of the modern-day, but the lessons they learned over their 3,000
years are no less relevant and that’s because economics is a social science.
technology, industry, hyper-advanced financial systems they have all changed,
but people, people will always be the same.