Linguistics and Literature Studies 1(3): 135-141, 2013 http://www.hrpub.org DOI: 10.13189/lls.2013.010301 Surplus and Default in Xenophon’s Business Economics Leonardo Paganelli State University of Genoa, Italy – 4, Via Balbi, Genova 16126 (Italia) *Corresponding Author: [email protected] Copyright © 2013 Horizon Research Publishing. All rights reserved. Abstract Surplus and default are both as old as Man «Xenophon […] too often irritates the reader by incessant himself. Yet the first work which studies the phenomenon of repetition of the same pattern of sentence, of the same deficit in a scientific way is Xenophon’s Oeconomicus formula, and even of the same word. […] It is strange that he (fourth century B.C.). Conversing with Critobulus, Socrates constantly uses the same word over and over again in the not only develops a technical nomenclature to denote compass of a few lines. A translator is often compelled to defaults and losses, but also reveals what to do for have recourse to synonyms».4 transforming them into profits. We shan’t subscribe to such a severe judgement. Repetitions in Xenophon’s Oeconomicus – and especially in Keywords Socrates, Xenophon, Default, Business the first part of it (chap. I-VI), the so-called Economics Critobulus’Dialogue – denote the effort of creating the nomenclature of business economics and accountancyex nihilo. Elsewhere, we sought to classify the fundamental entries of Xenophon’s «lessicocontabile (= accountants’ 1. Introduction: Surplus and Default at lexicon)»5in Greek. Here we are doing the same in English. Business economics:ΕΠΙΣΤΗΜΗ ΤΗΣ ΟΙΚΟΝΟΜΙΑΣ the Origin of Business Economics epistēmētēsoikonomias (Oec. I 1 B, VI 4, etc.; Liddell, Scott «Ma cos’è questa crisi? 1996 [3], 660, 1204; Montanari 2004 [7], 819, 1448). No (=Butwhat’sthiscrisis?)» doubt, ΟΙΚΟΝΟΜΙΑoikonomia is a most polysemous term. [Rodolfo Tonino “De Angelis”, 1933]. However, when Socrates speaks of ΕΠΙΣΤΉΜΗΤΗΣ It has already been sustained that «accounting would have ΟΙΚΟΝΟΜΙΑΣ epistēmētēsoikonomias, he surely hints at the been impossible without some surplus to take into account».1 «science of the ΟΙΚΟΣoikos». Yet ΟΙΚΟΝΟΜΙΑoikonomia – in This is the reason why accountancy originated in Socrates’ opinion – isn’t a sort of «domestic science» (as Mesopotamia as soon as ancient Mesopotamian peoples – some annotators maintain). On the contrary, Socrates’ because of soil fertility – got some surplus to accumulate. ΟΙΚΟΝΟΜΙΑoikonomia deals with the nature and function of We have already maintained that accounting is «a mental the ΟΙΚΟΣoikos (the latter being the cell of economic form a priori of human intellect».2 As such, it cannot only organization). Socrates’ innovative change is just reckon profits, but also losses. Modern accountants say that considering the ΟΙΚΟΣoikos not merely as a «(family) house», balance may be either «positive» or «negative», registering but rather as a prototype of «(family) business» (see either a surplus or a default. enterprise or concern). Only the ΟΙΚΟΣoikos as a business Therefore, it happens that – in times of crisis – a clever company – we shall note – can be the object of a science accountant must register losses more often than profits. Most which may be compared with medicine: namely, an people think business economics to be useless in times of ΕΠΙΣΤΗΜΗepistēmē including a general theory (that’s what crisis, when surpluses and profits lack. The contrary is true: we call «business economics») and an applied science (that’s during economic depressions, the science of accountancy is what we call «accountancy»). It is to be noted, then, that even more useful, since it prevents temporary losses from Socrates’ ΟΙΚΟΝΟΜΙΑoikonomia doesn’t correspond exactly 3 becoming permanent defaults. to modern «economics» as being the science of money. Indeed, today’s financial economics is the equivalent of ΧΡΗΜΑΤΙΣΤΙΚΗkhrēmatistikēof the ancient Greeks (literally: 2. Xenophon: The First Nomenclature of the «science of ΧΡΗΜΑΤΑkhrēmata = capitals»). On the other Business Economics and Accountancy side, ΟΙΚΟΝΟΜΙΑoikonomiaof the ancient Greeks is closely linked to the notion of ΟΙΚΟΣoikos as a «(family) business»; 1Cfr. Paganelli 2012 [11], 1227-1228. therefore, it appears to be the equivalent of today’s «business 2Paganelli 2012 [11], 1227. For further information, we must quote Id. 1992 [9]: perhaps, repeating what we wrote (more than twenty years ago) isn’t necessary. 4Marchant 1923 [5], xxvii. 3 See the late Osvaldo Paganelli’s doctoral dissertation (1953/54 [12]). 5Paganelli 1991 [8]; cfr.Gabrovec Mei 1990 [2]. 136 Surplus and Default in Xenophon’s Business Economics economics and accountancy». Now, whether [7], 2372). If ΧΡHΜΑΤΑkhrēmata are «capitals», ΟΙΚΟΝΟΜΙΑoikonomia includes in itself ΧΡHΜΑΤΙΣΤΗΣkhrēmatistēs has to be the «capital owner» – ΧΡΗΜΑΤΙΣΤΙΚΗkhrēmatistikē (as Socrates maintains at the not the «capitalist», since modern capitalism didn’t exist yet end of chap. II), or «financial economics» includes in itself in fourth-century Athens (that is why Critobulus could never «business economics and accountancy», it’s a problem much become a skilled «capitalist»). Evidently, ancient debated by ancient and modern economists. ΧΡHΜΑkhrēma was only «financial capital», not «industrial» Business management:ΟΙΚΟΝΟΜΙΑoikonomia (Oec. I 1 one: it follows that the science called ff.; Liddell, Scott 1996 [3], 1204; Montanari 2004 [7], 1448). ΧΡHΜΑΤΙΣΤΙΚΗkhrēmatistikē corresponds to modern Socrates defines ΟΙΚΟΝΟΜΙΑoikonomia not only as the «financial economics» (see capitals), «science of the ΟIΚΟΣoikos» (see business economics), but whileΟΙΚΟΝΟΜΙΑoikonomia is rather similar to our «science also as the «ΤEΧΝΗtekhnē = art and technique of managing an of management» (see business economics). Both seem to be ΟIΚΟΣoikos»: that’s what we call «management». Of course closely linked in Socrates’ opinion: thus Critobulus – the act of OIKΟΝΟΜΕIΝoikonomein, etymologically deriving becoming a good ΟΙΚΟΝΟΜΟΣoikonomos (see manager) – from ΟIΚΟΝΝEΜΕΙΝoikonnemein (see to manageor shall become a skilfulΧΡHΜΑΤΙΣΤΗΣkhrēmatistēs at the same administer), isn’t the very same as «domestic science», time. namely housekeeping: on the contrary, it’s closely linked Costs:ΔΑΠAΝΑΙdapanai, see to expend = with the notion of OIKΟΣoikos as a«(family) business». No ΔΑΠΑΝAΩdapanaō (Oec. III 15; Liddell, Scott 1996 [3], 369; doubt ΟΙΚΟΝΟΜΙΑoikonomia – in Socrates’ opinion – isn’t an Montanari 2004 [7], 492). In Socrates’ opinion, the balance idle debateon the basic elements of economic theory, but of an ΟIΚΟΣoikos is based upon economic equilibrium rather a practice. Socrates doesn’t accept the distinction (so between ΠΡOΣΟΔΟΙprosodoi (see revenues) and widespread today) between «business economists» and ΔΑΠAΝΑΙdapanai. In particular, Xenophon thinks that «business managers or businessmen». According to his ΠΡOΣΟΔΟΙprosodoi are within the man’s province, ethical intellectualism, the knowledge of business economics whereasΔΑΠAΝΑΙdapanai concern the woman as «joint is a necessary and sufficient condition to know how to manageress» of the family business. No doubt, such a manage a business; and, conversely, the one who doesn’t division of labour between male and female, husband and know how to manage an enterprise, proves beyond all doubts wife, would be outdated today – yet it wasn’t so in that he doesn’t know the «science of (business) enterprise». fourth-century Athens. But (what’s more surprising) Capital(s):ΧΡHΜΑ(ΤΑ)khrēma(ta) (Oec.I 7 ff.; Liddell, Socrates seems to have already understood – twenty-four Scott 1996 [3], 2004-2005; Montanari 2004 [7], 2371). Of centuries ago – that economic equilibrium consists of a course, ΧΡHΜΑkhrēma can’t mean «industrial capital», positive cost-revenue balance. In other words, which didn’t exist before the Industrial Revolution: it must ΠΡOΣΟΔΟΙprosodoi must be higher thanΔΑΠAΝΑΙdapanai, so surely mean «financial capital». In this Dialogue on business that the difference «revenues minus costs» may be a positive management, the notion ofΧΡHΜΑkhrēma is strictly related number (ΠΕΡΙΟΥΣΙΑperiousia: see profit). As concerns that, to one’s capability of «managing» it (= ΧΡHΣΘΑΙkhrēsthai, Socrates is certainly ahead of his time. Now, we have no from the same root). Socrates theorizes that not every proof that Xenophon knew something like a «balance sheet» KTHΜΑktēma («possession») is a ΧΡHΜΑkhrēma: only what (today consisting in a «statement of assets and liabilities» can be managed is a «capital». Conversely, a KTHΜΑktēma – and a «profit and loss account»). Actually, we know very if one doesn’t know how to manage it – is possibly a little about Xenophon’s own bookkeeping techniques (it «possession», but surely not a «capital». It follows that appears that he employs the term ΔΑΠAΝΑΙdapanai to denote «capital» is an absolute value, whereas «possession» is a also «expenditure», whilst modern accountancy is used to relative one: evidently, ΧΡHΣΘΑΙkhrēsthai (see to manage or distinguishing between «costs» and «expenses»). However it use) and ΧΡHΜATΑkhrēmata («capitals») are etymologically might be, we must admit that the essential logic of balance linked in Socrates’ economic theories. No doubt, linking was already clear to Socrates’ mind. together the ideas of «capital» and «management» is an (to) Decrease: ΜΕΙΟΩmeioō (Oec. III 15; Liddell, Scott innovative change – and it seems to occur in Critobulus’ 1996 [3], 1093; Montanari 2004 [7], 1318). In business 6 Dialogue for the very first time.