Proxeny: Institutions, Trade and Growth in the Ancient Economy

Abstract: Recent works have argued that ancient Mediterranean economies were able to grow intensively. A common explanation is a process of Smithian growth spurred by reductions in transaction costs and increased trade flows. This paper contends that an ancient Greek institution, proxenia or proxeny, was among the innovations that allowed such process in the period 500-1 BCE. Proxeny entailed a Greek city-state declaring an individual from another city to be a ‘public friend’, a status that came with both functions to perform and privileges to enjoy. The paper presents the institution, shows how it could reduce transaction costs between communities and models its mechanisms. Then, proxeny is studied systematically via text and network analyses on data coded from the full body of digitized Greek inscriptions. The analysis shows that: (i) at least half of all attested proxeny relations were likely to be economically motivated; (ii) proxeny captures the vast majority of all privileged economic relationships; (iii) the distribution of influence within the proxeny network maps the concentration of trade and economic interests.