[Smart Economics Reading] The Birth of Commerce Through the Code of Hammurabi

A Legal Code for Maintaining a Vast Empire…

It Led the Development of Commerce and Trade by Protecting Private Property

“An eye for an eye, a tooth for a tooth”

Hammurabi was a king of Babylonia who lived in the 18th century BCE, about 3,800 years ago. Babylonia was located in what is now Iran and Iraq, and he built a powerful, centralized empire there. He made various efforts to maintain this vast empire, including improving roads and canals and unifying the calendar, language, and religion around the capital, Babylon. Yet what makes Hammurabi familiar to modern people is not so much his empire as the legal code he left behind.

Half of the Code of Hammurabi consists of economic provisions

His code consists of 282 provisions in total, covering a wide range of areas including family, the military, slaves, agriculture, crime, commerce, inheritance, trials, housing, occupations, and marriage. What is interesting is that, unlike most ancient legal codes, its commercial provisions were unusually detailed and advanced. Broadly speaking, provisions related to the economy account for nearly half of the entire code.

Looking at Articles 42 and 48 of the Code of Hammurabi, we find: “If a man has leased farmland, he must pay rent even if he did not cultivate it. However, this does not apply in the event of flood or drought.” Article 53 also records: “If a man neglects to maintain a dike, and the dike breaks and floods another person’s farmland, orchard, or pasture, he must compensate for the damaged grain and other losses.”

The compilation of a legal code is a barometer of civilizational activity. When people live together in groups, conflicts inevitably arise, and resolving them requires rules that all members can accept. Those rules are the law, and when various laws and precedents are brought together, they become a legal code. The Code of Hammurabi, too, is a case law code in which all 282 provisions are based on precedents.

Law has many branches, including civil law, criminal law, commercial law, and procedural law. Among them, few fields require as much meticulous attention as commercial law, which governs trade. Criminal law can establish standards for many issues with just a few powerful rules, such as “an eye for an eye, a tooth for a tooth,” but commercial law cannot be so simple, even in an early civilized society. That nearly half of the Code of Hammurabi consists of economic provisions is therefore not surprising. Because large sums of money typically change hands in the marketplace, dispute resolution there requires techniques far more sophisticated than those used in ordinary civil disputes.

Law, Private Property, and the Birth of Commerce

A close look at the Code of Hammurabi shows that the concept of private property is presupposed in nearly all of its economic provisions. Examples include the rule that someone who steals another person’s property must pay compensation equal to ten times its value, or that if a borrowed ox dies, it must be replaced with another ox of equivalent value.

But in Babylonia, the protection of property rights went beyond merely determining ownership and extended to defining the economic benefits arising from leases and rentals. This is evident in the idea that leasing farmland gives rise to rent even if it is not cultivated, as well as in provisions setting rates after a ship is rented.

Respect for private property was a common feature across ancient civilizations. Rome’s Law of the Twelve Tables, which was influenced by the Code of Hammurabi, is known to have contained detailed provisions on claims and debts, inheritance, property rights, and real estate. Closer to home, the Eight Prohibitions of Gojoseon also provided for private property, as shown in the clause: “Whoever steals another person’s goods shall be made a slave. However, one who wishes to make compensation shall pay 500,000 jeon.” In Buyeo, which followed Gojoseon, the “1-chaek 12-beop” required a thief to repay twelve times the value of the stolen goods. This closely parallels the tenfold compensation found in the Code of Hammurabi.

Both Babylonia and Gojoseon were so ancient that mythic and historical eras overlap in their origins. Even so, the fact that their laws recorded systems of private property is evidence of how deeply rooted the human desire for economic prosperity is. Civilization and law, commerce and private property, developed almost simultaneously, influencing one another so closely that it is difficult to say which came first.

The development of civilization created the need to refine the law, and the legal codes produced in that process went hand in hand with the growth of commerce. As commerce expanded, laws protecting private property became more sophisticated, and the enforcement of those laws in turn promoted further commercial development. From Rome’s Law of the Twelve Tables to Gojoseon’s Eight Prohibitions, all underwent this process. Through the Code of Hammurabi, the Mesopotamian region was able to form a more open social structure, with commerce and trade far more active than in the rival Egyptian civilization.

▲ Please remember

The Code of Hammurabi, famous for the maxim “an eye for an eye, a tooth for a tooth,” was the essence of ancient Babylonian civilization and remained in force across Mesopotamia for nearly 1,000 years after Hammurabi’s death. A close examination of the Code of Hammurabi shows that the concept of private property is presupposed in nearly all of its economic provisions. Civilization and law, commerce and private property, developed almost simultaneously, influencing one another throughout the process.

Sung-no Choi, President, Center for Free Enterprise (CFE)

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Original title: [스마트 경제 읽기] 함무라비 법전으로 본 상업의 탄생

Author: Sung-no Choi

Date: 2020-10-12

Source: https://www.cfe.org/bbs/bbsDetail.php?cid=column&pn=6&idx=23161