Institutions, taxation, and market relationships in ancient Athens

This paper explores the institutional and economic development in ancient Athens from around 600 BC into the fourth century, a period during which the Athenians experienced oligarchy, tyranny, a gradually evolving but eventually far-reaching male democracy, followed by a return to more influence for the elite. Concomitantly, economic life changed qualitatively and quantitatively. Self-sufficient farming gradually gave way to market relationships and there was substantial economic growth. This analysis of institutional changes in Athens emphasizes the importance of credible commitments from those in power to other groups in society. It is furthermore likely that the increasing reliance on market relationships gradually transformed individual behaviour and individual beliefs, leading to changes in the formal and informal rules in society. Taxation played an important role: it pushed people into market relationships, illustrated the need for credible commitments, and helps to explain why foreigners were so prominent in trade in ancient Athens.