The end of the Old European economy – the onslaught of the Steppe Peoples and the rise of capitalism

Gift economy prevailed in Old Europe for a long period of time. This economic system was functional and productive, and increased people's quality of life. In about 3000 BCE, a radical change occurred. Shepherds began migrating from the steppes (the third Kurgan migration), and conquered ever-increasing areas of land. They sought new dwelling places without the consent of local inhabitants. Their militant soldiers on horseback were previously unknown to the Old Europeans, who were helpless in this type of armed conflict. When the new arrivals met with no resistance, they settled in to live alongside the Old Europeans. They brought with them an entirely new system of social relations. A social hierarchy was formed, granting power to elites and despots. The exchange of goods also transformed as the principle of private ownership spread within the new social order. Consequently, profits from trade were collected by individual people. Whereas in Old Europe the idea of the common good was taken for granted, it was disregarded in the new model of society.

However, the principle of common good didn't disappear altogether. There were later echoes of this ideal in Ancient Greece, where the philosopher Plato saw the common good as a means to the salvation of the human soul. Another example from Ancient Greece comes from the village of Thorikos, in the southeast of Athens. Established as an Old European village, the silver deposits in Thorikos were never private property, and remained in the hands of local government throughout antiquity. When the government of Thorikos sold licenses to third party metal prospectors, the gains were used for the common good of all the villagers. The entire locality grew in wealth, and its form of government transformed from a village (kome) to an independent city state (komopolis). The inhabitants enjoyed such prosperity that they were able to build their own theatre, which even competed with the famous theatre in Athens. The Thorikos theatre was also a meeting place for local representatives.

Woman holding a bowl. 19.4 cm high statue from the Vinča culture, circa 5000 BCE. Discovered in Novi Bečej, Serbia.

The principle of private property has governed Western civilization since Ancient Greece. The shift towards individual ownership crucially changed the economic climate, and the exchange of goods eventually generated the extreme phenomenon of aggressive capitalism. Today, we are witnessing its consequences in the form of the climate crisis and the growth of inequality. In 1776, Adam Smith still naïvely assumed that the practice of free trade would bring affluence to all people in his classic work, “An Inquiry into the Nature and Causes of the Wealth of Nations”. Bengt Holmström, who received the Nobel Prize in Economics in 2016, has remarked that Smith was apparently unaware of the negative effects of capitalism. In our next blog post, we will examine critiques of capitalism and reflect on gift economy as an alternative model to capitalism in contemporary society.

Harald Haarmann and Kaarina Kailo

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