Socrates’ Decline of Democracy & Sidney Homer’s Supra-Secular Cycle of Interest Rate
Originally published March 13, 2017 Last edited June 10. 2017 By Michio Suginoo
The previous reading, When Democracy fails 1: Ephemeral Democracy and the road to Tyranny in light of Socrates’ Political Cycle from Plato’s “the Republic”, introduced Socrates’ supra-secular political cycle: Socrates’ 5 political regimes and his view on how Democracy emerges and descends. In Plato’s “the Republic,” Socrates articulated how society can transform through 5 political regimes in the following order--Aristocracy, Timocracy, Oligarchy, Democracy and Tyranny. Overall, Socrates reveals how ephemeral each regime is: each regime is merely a part of the entire process. Socrates also illustrates his view on the rise and fall of Democracy. In his exposition, an emergence of demagogues plays a significant role in reducing Democracy into Tyranny.
This reading, in order for us to better capture Socrates’ implications about the decline of democracy, explores some Roman historical narratives relevant to the decline. In this attempt, we also revisit the hypothetical framework of the civilization cycle implied by Sidney Homer to better capture the time line of the decline.
Section 3 visits relevant historical narratives and contemplates Socrates’ view on the decline of democracy through historical analogies. Section 4 makes a brief review on Sidney Homer’s hypothetical framework that interprets Western Civilization cycle from the supra-secular perspective of interest rate cycle. Thereafter, it proposes a systematic method to make historical analogy, by integrating Socrates’ view and Homer’s view.
Homer’s implication is that the state of money, when expressed in the cycle of interest rates, might reveal stages of the western civilization cycle. Incorporating Socrates’ synthesis into Homer’s hypothetical framework, Section 4 of this reading attempts to capture Socrates’ synthesis of the decline of democracy along the evolution of interest rates’ supra-secular cycle.
Section 3: Historical Analogies:
The end of the Roman Republic and the Assassination of Julius Caesar
The assassination of Julius Caesar, which took place in about 4 centuries after Socrates’s death, marks an approximate bifurcation point in the Roman Civilization, where the Roman Republic transformed into the Roman Empire.
Apart from his military achievements, Julius Caesar attempted a series of reforms in many spheres of the Roman territory. His presence, once his dictatorship was proclaimed, came to pose a potential threat to some of the Roman oligarchs in the Senate. Although the oligarchs’ motive in assassinating Caesar was to preserve their power, the assassination ended up destroying the Oligarchs themselves by triggering social unrest and another civil war.
Roughly speaking, in a “mega scope,” Roman civilization started with monarchy, then made a dramatic transition into its republic, ultimately degenerating into a tyranny. Then, after a long and gradual social dissolution, it arrived nowhere, but entered into the Dark Age. How did the Romans themselves assess their situation? Miriam Griffin (1988) provides us with insight into the Roman view on the collapse of the Republic:
“why did leading members of the Roman governing class, who themselves had most to gain from the existence of the Republic, destroy it, thereby committing political suicide?
The Roman (…) thought of the issue in terms of moral degeneration. They believed that, whereas their ancestors had aspired to glory through service to the state, their contemporaries had come to put their own ambitions above the public welfare. The catalyst in the decline of traditional morality they felt to be the increase in Rome’s power and wealth. The enormous opportunities for ruthless self-aggrandizement by individuals threatened the state in two directions. …” (Griffin, 1988, p. 109)
This resonates with Socrates’ view on the decline of democracy.
In his will Caesar had pre-nominated his grandnephew, Augustus, as his successor. With the endorsement of the Caesar’s will, Augustus took revenge against the Caesar’s dissidents and ultimately purged them. The republic regime ended with the defeat of the oligarchs in real term. The Roman territory became temporarily divided among Augustus and his peers, Mark Anthony and Marcus Lepidus. Later, Augustus had to purge his own peers in order to reintegrate the Roman territory. This marks the beginning of the Roman Empire.
In modern time, he is regarded as the first emperor of the Roman Empire, although he himself refused to acknowledge his title as a tyrant or emperor. Instead, he called himself Princeps Civitatis, the first citizen of the state. During his reign, Augustus waged wars in foreign lands and expanded the territory of the Empire. Augustus’ time is characterised as “Pax Augusta,” the beginning of the “Pax Romana.”
The assassination of Julius Caesar ended the Roman Republic and Augustus’ successful revenge solidified [1] the regime of life-time reign—in other words tyranny—the Roman Empire. Augustus was successful in waging war abroad and expanded the Empire, rather than exhausting it by engaging in a series of domestic struggles. Augustus might qualify as a great emperor. Nevertheless, not all successors after him proved to be so. The notoriously cruel tyrant, Caligula, reigned about a century after the assassination of Julius Caesar. Under its empire system, the Roman civilization took a gradual path to a decline.
Zeitgeist and its Avatar:
The Roman Republic achieved a Roman style democracy, where all citizen-title-holders had voting rights. It is different from the Greek style democracy that Socrates and Plato contemplated. And it is also very different from the notion of democracy that we contemplate in our modern context. Not every single process of Socrates’ formulation precisely fits to the Roman historical narrative. Nevertheless, the transition of the Roman Republic to the Roman Empire looks as if it were already formulated in the Socrates’ “The Republic.” The following two points support the idea.
Socrates’ formulation of tensions between rulers and oligarchs was manifested by the assassination of Julius Caesar and subsequent civil wars.
Socrates’ formulation of warmonger tyrant was manifested by Augustus’ imperial expansion of the Roman Empire.
Isn’t what Socrates had exposed a cycle of spirit that manifested temporal conditions of political economy, or Zeitgeist if you like?: and historical figures such as Julius Caesar and Augustus had emerged as avatars of Zeitgeist that Socrates envisioned.
There was another political avatar of Zeitgeist, Marcus Licinius Crassus, a contemporary of Julius Caesar and Augustus. Here is a brief profile about the Roman politician, Crassus.
“Crassus had begun accumulating his fortune by organizing a fire brigade that put out fires only if paid in advance. In those cases where the owner failed to pay and the building was destroyed by fire, Crassus would buy up the burned-down ruin at a fraction of its worth as a standing structure. He acquired a large number of tenements in this fashion, restored them, and let them out at fancy rents. In addition, Crassus lent money at interest and acquired ownership of silver mines, agricultural estates, and slaves in great numbers. He even educated his slaves to become readers, stewards, and cooks. The huge income that accrued to Crassus from all this wealth enabled him to bribe officials so that he could buy up additional confiscated estates at depressed prices.” (Bernstein, 2000, p. 46)
“A much quoted remark of his was, “No man is rich who cannot support an army”: the fact that Crassus could may help to explain how he obtained the command against Spartacus at a time of financial stress. Less dramatic uses of his wealth included lending money to political associates free of interest, and providing lavish hospitality. The result, we are told, is that Crassus had considerable influence with the Senate. It is likely that he was one of the first to take the measure of the changed political conditions brought about by Sulla’s doubling of the Senate’s membership. The new men often needed money to maintain their new station, and they would relish invitation to dine with a noble of ancient family. But Crassus was not content to be a conservative politician. Shady and unorthodox himself, he liked to support black sheep and sponsor radical causes, Though resentful of Pompey’s successes, he joined as consul in 70 in restoring the rights of tribunes, and in successive years he supported several tribunes on trial. He also lent money to young aristocrats such as Caesar, or funded their electoral campaigns, as in the case of Catiline.” (Griffin, 1988, pp. 106-107)
Up to now, we learned two things: the way Crassus made his wealth through real estates in order to fund and pursue his political ambition; how unconventional he was in the political arena.
Now, somehow we might be inclined to ask ourselves: is there something that resonates with our contemporary experience?; is there anyone, whose profile resembles to, if not to be same as, that of Crassus? A blend of a real estate tycoon and a big unconventional politician? How about Mr. Trump? We will come back to this notion later when we overview John David Ebert’s historical analogy in the next reading. Now, let us continue with the profile of Crassus.
“Crassus was eager to show that he was more than a moneybags and that, like Pompey and Caesar, he could successfully command troops in battle. Accordingly, he provoked a war with the Parthians in Mesopotamia and set off on his campaign with 44,000 troops under his command, foot soldiers for the most part. At the battle of Carrhae in 53 bc, the Parthians attacked the Romans with ten thousand horse archers and a corps of one thousand Arabian camels, making quick work of the job at hand. Crassus attempted to negotiate a surrender, but the Parthians set upon his troops with such ferocity that only ten thousand of the original forty thousand managed to escape. For Crassus, the Parthians reserved a special fate that expressed their disdain for the money-mad Roman civilization that he represented. They finished him off by pouring molten gold down his throat.” (Bernstein, 2000, p. 46)
Along the historical narratives of the three Roman politicians—Crassus, Julius Caesar, and Augustus—Socrates’ synthesis of decline of Democracy resonates: a rise of a dictator, internal strife with oligarchy, civil wars, and a series of wars in foreign lands. It was as if the Socrates’s framework, which was crafted during the Greek Civilization, already foresaw the future transitional events of the Roman time. All these political actors, somehow, appear to play roles of avatars who carry within themselves the spirit of time, Zeitgeist, that the temporal political and economic conditions invoked at the particular epoch, the turning point of the Roman Civilization from the republic to the empire.
Resonance of historical narratives with Socrates’ synthesis strongly suggests that these historical narratives are not merely a series of random events. Our reality is open and at least subject to three underlying factors—recurrence, evolution, and uncertainty—therefore, it is not deterministic. What happened in the past would not likely repeat in the same manner. In this sense, rejecting a deterministic notion, I hypothetically interpret the Socrates 5 Political Regimes as a probabilistic guideline that is informative of the likelihood of the direction in the supra-secular cycle of political economy. In this sense, it is not important to see whether the life of each political figure precisely fits into Socrates’ hypothetical formulation.
Instead, what matters is a bigger picture. We need to capture the notion that the spirit of the time that Socrates envisioned emanates collectively from the historical figures and their surrounding socio political and economic conditions and psychology.
Section 4:Sidney Homer’s Saucer
Rhythm of Zeitgeist, Civilization Cycle along Interest Rates Frontier
In this section, we make an attempt to capture the rhythm of the Civilization Cycle through the hypothetical framework suggested by Sidney Homer. The early part of this section covers a compilation of excerpts and paraphrases from the existing content in this website, “INTRODUCTION: Sidney Homer's "Saucer": Supra-Secular Rhythm of Interest Rates and the Evolution of Civilization.” (Suginoo, 2016) Then, the late half of this section explores new attempts to integrate Socrates’ synthesis into Homer’s framework to arrive at “Socrates-Homer Hypothesis.”
Homer was one of the most distinguished, innovative bond investment experts of his time (1902–1983). In his masterpiece, A History of Interest Rates (Homer & Sylla, 2005), Homer compiled available pieces of information about historical interest rates for four millennia, from Babylonian times to the 20th century. In the first five chapters of his book, Homer projected centennial minimum floors for interest rates (I will call it the “lowest interest rate frontier” [2] for discussion purposes) throughout three ancient civilizations—Babylonian, Greek, and Roman. His chart of the lowest interest rate frontier depicted the presence of a common supra-secular rhythm among all three civilizations (Homer & Sylla, 2005, p. 63). Chart 1 reproduces Homer’s work on the lowest interest rate frontiers of these three civilizations.
Despite their differing profiles in terms of geographical setting, culture, and social structures, these three civilizations demonstrate a remarkable similarity in the rhythm of interest rate evolution along the time horizon. In Homer’s chart, throughout the three civilizations (Babylonian, Greek, and Roman), the interest rate frontier started at a higher level at the earliest life stage of each civilization and gradually declined, demonstrating advancement of financing activities. Then, it formed the bottom floor; afterwards it reversed, starting a new momentum of a rising interest rate frontier (ascending to a higher financing cost level).
Homer stylized the common rhythm manifested among the three historical cases in the shape of a “saucer.” (Homer & Sylla, 2005, p. 64) Homer projected on each part of the Saucer, each with own distinctive notion:
advancement of commerce during the descending slope;
the period of commercial prosperities at the flat bottom;
the period of social and commercial disintegration and political breakdown during the ascending slope (Homer & Sylla, 2005, pp. 64, 560).
Homer’s inference appeals to intuitive notions: each life stage of civilization and the commercial evolutions are both mutually reinforcing; and interest rates (funding cost) play a significant role in interlinking them.
Moreover, Homer drew a significant caveat from Chart 1. In this chart, the family of the greater Western Ancient Civilization, represented by the constellation of interest rate frontiers, reaches its culmination (the lowest bottom) during the Roman time, thereafter somehow lost its successor. Thereafter, the continuity of the greater Western Ancient Civilization vanished into the Dark Age (Homer & Sylla, 2005, p. 64).
Rhythm of Zeitgeist, “Socrates-Homer Hypothesis”:
Although there might be disputes over Homer’s identification of commercial evolutions over the time horizon, the most important notion is that Homer left us a strong notion that the evolution of the lowest interest rate frontier might be highly associated with the cycle of the western civilisation. In a plainer expression, the state of money has something to do with the evolution of civilization.
Now, combining Homer’s “Saucer” with Socrates’ synthesis, we can explore the interest rate frontier from a different angle, a perspective of political cycle. Here, any meaningful inference drawn from it, I would suggest to call it, “Socrates-Homer Hypothesis.” Here, I hypothetically regard Socrates’ synthesis of 5 political regimes as his approximate guideline for political transformations along each life cycle of the greater western civilization—more specifically the Babylonian, the Greek, the Roman, the post-Dark-Age—rather than a notion in the scale of a single state life cycle. Therefore, my attempt is to hypothetically project Socrates’ synthesis on Homer’s Saucer in a civilization scale. Now, with historical analogy made earlier in this reading, let us make the first attempt.
Along the Homer’s lowest interest rate frontier in Chart 1, we can locate the transition of the Roman Civilization from the republic to the empire. This might give us an insight about the timing of the decline in democracy along other objective measure, the interest rates. The epoch of our interest is the one of Crassus, Julius Caesar, and Augustus. That is the first century B.C. Interestingly, when we look for the epoch along Chart 1, we locate it at the very bottom of the Roman interest rate frontier. From this chart, it is clear that this epoch coincides with the lowest interest rate frontier throughout the greater Western ancient civilization: notably, interest rates reached the bottom at 4%, a level comparable to the modern prime rate (Homer & Sylla, 2005, p. 62).
Fewer than five centuries after the Romans overthrew their monarch in 509 BC, the Roman Republic came to its endpoint: the tectonic, political transition from republic to imperial regime took place. It came with the rise and fall of Crassus, the assassination of Julius Caesar, the dissolution of the Republic during the civil wars, Augustus’ foundation of the Roman Empire.
We can project these historical narratives along the chart: emerging from monarchy, the Republic prospered along the descending period of the interest rate frontier; and the republic came to its impasse and transformed into the Roman Empire at the bottom of the Homer’s Saucer. In other words, the Roman transition was staged at the culmination of the financing conditions (very bottom of the interest rate frontier), when the cost of funding was at the lowest level throughout the Roman civilization.
After Augustus, around the time the notoriously cruel tyrant, Caligula, came to reign in 37 A.D. about a century after the assassination of Julius Caesar. Then, the lowest interest rate frontier started making a supra-secular reversal. Thereafter, the lowest interest rate frontier kept rising. In synch to the rising lowest interest rate frontier, the Roman Civilization took a gradual path towards the decline. Thereafter, the entire Western Ancient Civilization lost its momentum and vanished into the Dark Age.
Interpreting the notion of “Socrates-Homer Hypothesis”:
In brief, at the bottom of Homer’s Saucer, Socrates’ synthesis of decline of democracy resonates with the Roman historical narrative of the paradigm shift from its republic regime to its empire. The turning point of a civilization coincides with the period during which the lowest cost of funding is achieved in supra-secular perspective. This is the notion of “Socrates-Homer Hypothesis.” In a way, “Socrates-Homer Hypothesis” is a manifestation of the rhythm of Zeitgeist at the bottom of the Homer’s Saucer.
It premises the following notions.
money plays a significant role in the evolution of civilization.
The supra-secular movement of money—the lowest interest rate frontier—reflects the life cycle of political economy in a civilization scale.
Let us respond to this question, by going back to Socrates’ synthesis of political cycle: Why does the decline of democracy take place during the bottom of Homer’s Saucer? The bottom of Homer’s Saucer corresponds to the period during which the lowest financing cost is achieved. In other words, Socrates-Homer Hypothesis states that the decline of democracy takes place in the period during which the cheapest financing cost is achieved.
Socrates formulated the regime shift along the transformation of the wealth distribution. In his synthesis, as the proliferation of property ownership penetrates into a society, the society transformed from Aristocracy, to Timocracy, then to Oligarchy, and finally to Democracy. In this passage, the transaction of properties grows and its growth expands the demand for financing that induces financial innovation. Financial innovations drive down financing cost, therefore, advances the record of the lowest interest rate frontier. (This is a simplified supra-secular picture, tracing the lowest interest rate frontier. It ignores the inflation-deflation cycle, which could have material implications in a shorter time frame argument.)
The time horizon of this chain reaction extends to a civilisation life cycle. And it, logically, lead us to the following inference: the paradigm shift in political regimes and the financial innovation are mutually reinforcing and advances the lowest interest rate frontier until the civilization arrives at Democracy, where in principle the right for property ownership is granted to all.
In the extension of this simplified perspective, the paradigm shift from democracy to tyranny is a setback for proliferation of property ownership, therefore, it ceases the advancement momoentum for financial innovation. As a reminder, a demagogue, before transforming to a tyrant, declares civil wars against the oligarchs, the property owners. The subsequent paradigm shift from democracy to tyranny is a great setback in the context of proliferation of property ownership. It would trigger the reversal of the lowest interest rate frontier. This would naturally shape the bottom of Homer’s Saucer. This is an inference derived from Socrates’ synthesis and fits to the notion of “Socrates-Homer’s Hypothesis.” In a way, the paradigm shift from democracy to tyranny ends the bottom of Homer's Saucer, according to this rough simplified deduction.
Our observation of the Roman case, from the perspective of “Socrates-Homer Hypothesis” goes beyond the stand-alone story of the Roman Civilization. It suggests that in a bigger picture, this very bottom of the interest rate frontier throughout the constellation of three ancient western civilizations marked the beginning of not only the decline of the Roman democracy, but also the decline of the entire Ancient Western Civilization.
In the forest-tree analogy, when we project Socrates' political cycle along the Homer's Saucer, a forest perspective of the life cycle of civilization emerges. We can observe trees by visiting historical narratives along the Homer's Saucer.
Now, in the next reading, shifting our focus to our modern time, we make an attempt to reflect “Socrates-Homer Hypothesis” on our time.
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[1] In the Roman Republic, dictatorship was already in place by Sulla in 82 BC, before the governance of Julius Caesar.
[2] The lowest interest rate frontier, defined as the lowest interest rate during each century, represents the lowest cost of funding during each corresponding period. At any given point in time, the lowest interest rate is granted to the best credit record holder. Therefore, its trajectory traces the best frontier of financing conditions during each century. In other words, arms’ length, or ordinary, interest rates never drop below the lowest interest rate frontier throughout each century. Here, we are not interested in tracing the detailed short-term progression of interest rates during each period. In a way, the lowest interest rate frontier marks the frontline in the advancement of financing conditions during each corresponding period.
References
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Griffith, T. (2012). Plato, The Republic. Cambridge: Cambridge University Press.
Grube, G., & Reeve, C. (1997). The Republic. In J. M. Cooper, Plato Complete Works (pp. 971-1123). Indianapolis: Hackett Publishing Company, Inc.
Jowett, B. (1988). The dialogues of Plato. Chicago: Encyclodepia Britannica, Inc.
Lee, D. (1987). Plato, the Republic. London: Penguin Books, Ltd.
