The Case For The City State: Ancient Greece And Renaissance Italy Provide A Model For Economic Dynamism That Modern Day Europe Could Use

Ancient Greece’s first great economic boom took place around 500 B.C., the result of political power shifting into the regional democratic clusters.

The current discussion of how Greece and Italy can overcome their economic devastation will have little effect until these countries finally decide to stop faking their own existence. Neither country has functioned as a centralized state since their unification movements of the mid-19th century, the result of ideals more romantic than realistic. Since that time, Greece and Italy have been kept afloat by tourism, agriculture and-in Italy’s case-a knack for turning out practical products of great design.

Contrast this situation with the wealth and influence the ancient Greeks and Renaissance Italians achieved. One characteristic shared by these older societies makes all the difference: their embrace of the city-state as a political-economic model.

Venice flourished when it was forced to compete with Genoa and Milan.

In both ancient Greece and Renaissance Italy, democracy was not incompatible with aristocracy. Even their oligarchies were not necessarily illiberal. Yet the real strengths of the Greek and Italian city-states lay in their economic and social dynamism.

Ancient Greece’s first great economic boom took place around 500 B.C., the result of political power shifting into the regional democratic clusters. The great poleis-Athens, Corinth, Thebes and the colonized areas of Hellenic Asia-fueled prosperity and expansion by specializing their industrial production within four areas: agriculture, food processing, mining and pottery.

It was a time of technological revolution too. The iron tools made in Greece beginning in the 6th century were so advanced that they were used later to equip Rome and Ptolemaic Egypt.

The strengthening of the independent polis also meant the beginning of investment in industry, an activity that had previously been frowned upon. The introduction of coinage followed, the result of the new emphasis on local economies that were then starting to expand and trade with each other. As wealth spread, aristocratic patronage declined and was replaced with economic-civic relationships. An explosion in interregional trade between city-states followed.

Regional diversity facilitated innovation. Having witnessed the difference between the private-property economy of Athens and the strict collectivism of Sparta, both Aristotle and Democritus concluded that the former was a superior form of economic organization. Nearly all of ancient Greece came, in time, to embrace private property.

Ownership did not, however, allow the rich to be above the law. In Athens, where privately held property was most prominent, the democratic legal system did not allow judgments to be based on ownership. A private-property based hierarchy was eschewed in favor of democratic equality.

The Italian city-state, much like the poleis of ancient Greece, held to no one-size-fits-all model. Liberal Florence was unlike despotic Milan, which in turn was a far cry from the small and resolutely independent Lucca. The mercantile paradise of Genoa had little in common with the otherworldly principality that was Venice.

Economic competition tied them together, particularly as each city-state struggled for prominence after the retreat of the Holy Roman Empire from Italy after 1400 and the peninsula was basically a land with no government. This competition became the engine of growth and power.

That held at the level of the citizen, too. Talented individuals could attain social status, a phenomenon that historian Jacob Burckhardt hailed as “the birth of the Individual.” Indeed, the first generation of civic humanists-which included Leonardo Bruni, Francesco Barbaro, and Matteo Palmieri-praised wealth and worldly goods as preconditions for “active civic virtue.” The Renaissance city-state created the proper conditions for the rise of the “economic man.”

The struggle between city-states spurred such competition that overseas exports began to far exceed imports. Tyrants, whatever their unattractive personal qualities, encouraged this competition. In republican states such as Florence, anti-tyrannical and anti-imperial Tuscan cities formed alliances that also became free-trade zones. Trade in wool, salt, silks and olive oil all flourished during this time, driven by the modernization of transportation and the division of labor. The modern-day entrepreneur also came on the scene, emerging out the guild-run craft economies of the Middle Ages.

The city-state of Lucca was an unusually successful example of the age. Unlike Pisa, Siena, Perugia and other major Tuscan cities, Lucca did not succumb to Milanese or Florentine expansion, holding its own as an economic powerhouse in the silk industry. Lucca’s leader, Paolo Guinigi, modernized the banking system and promoted trade in Carrera marble along with the manufacture of silk products. He did all this while fending off-and sometimes appeasing-the powerful Viscontis in Milan, who looked upon Lucca as a wolf would a spring lamb.

The city-state model has not completely vanished in the modern day. Oligarchic free-market havens like Singapore and Hong Kong and the direct-democracy cantons of Switzerland are direct descendants. Near-autonomous regions such as Bavaria, in southeastern Germany, are also similar. All boast highly educated populations, low crime, low unemployment and efficient economic models operating as highly skilled micro-empires.

Even Italy has its own modern city-state. The autonomous province of South Tyrol is essentially the fief of its animated lord-governor, Luis Durnwalder, who has been in office for 23 years-and who draws a salary higher than President Obama’s.

Since the 1990s, South Tyrol has become one of the most prosperous regions in Italy and in the whole of Europe. It has almost no unemployment and is debt-free. Its GDP per capita is 30% higher than Italy’s national average and twice as high as in Sicily. As punishment for this success, Rome requires South Tyrol to pay tribute: Since 2010, the region has been forced to give 10% of its budget, or about €500 million, to the financially strapped central government.

While ancient Greece and Renaissance Italy were hardly free of war, violence and corruption, the model they provide for dynamic economic independence cannot be denied. Regional competition, the necessity of private property, entrepreneurial freedom, the leadership of visionaries and of conservative economic practices: All of these brought those countries out of their respective dark ages and onto the world stage. It is high time these two Mediterranean countries put these aspects of their glorious histories back in business.