E - 166 : The Decline & Fall of Magna Graecia

Preparing Fire Wood for Winter 2022 with Ahmed

Wanted to write this piece yesterday but the beautiful weather in the Ardèche was too tempting and I spent my day with my gardener preparing fire logs for next winter. Truly love manual work – so satisfying! Contrary to Finance where every project takes months if not years, when chopping wood you know what you have achieved in a day.

Today’s blog is about an implicit contradiction I often notice when Italians talk about the south of their country. Everybody agrees that the Mezzogiorno’s economy is structurally weak. Its GDP amounts to 60% only of Italy’s average. At the same time everybody is proud of Magna Graecia, a region so rich that it was at the center of the Hellenistic world. How do these two facts reconcile? How did an immensely wealthy region become so poor that it cannot live without support from the outside, be it the Italian Government or the EU?

Mezzogiorno - the Southern Part of Italy which earns only 60% of the national GDP

Have thought about this for a while and believe the answer lies in both climate change and changing trade patterns.

When Greeks settlers ventured to the west in 800 BC in search for arable land, they found Apulia, Calabria and Sicily. With their crystalline soils, a warmer and wetter climate than today, these parts of Italy were ideal for growing barley. Within a few decades, the settlers were able to export their agricultural surplus to their home country. The size of the early Greek towns says it all. Sagentum had 50’000 inhabitants, Agrigentum around 100’000, Syracuse up to 200’000 and Sybaris 100’000. These were huge towns at the time, rivalling Athens. From their earliest days, these Greek colonies participated in the Mediterranean grain, wine and olive oil trade. It made them rich beyond belief and stayed that way to the end of the Roman Empire in 476 AD.

Magna Graecia at the Center of Roman Trading

By the end of the Roman Warm Period around 300 to 400 AD, the Empire was bankrupt, rampant inflation had made money worthless, long-distance trading had collapsed and the mercenaries in Rome’s service – mostly Germans - had taken over. Only the eastern half of Rome, the wealthier part of the Empire, was able to avoid this fate and became Byzantium.

Between 400 and 600 AD, the towns of former Magna Greacia had not only to cope with a much more arid climate, the collapse of Empire also made them loose their customers overseas plus all their savings. The coup de grace came with the Black Death in 541, when the Byzantine Emperor Justinian tried to resurrect the Roman Empire. The pandemic killed first the mariners, then the custom officials and the citizens of the harbors around the Mediterranean and finally the Army – the most loyal customer for grain. No ships arrived any longer from overseas, willing to buy local goods. People in Southern Italy had no other choice than to revert to subsistence levels. The far developed division of labor collapsed, the towns shrunk and the harbors silted. Sybaris is an excellent example of this tragedy.

The Warm Medieval Period which started just before the Muslims conquered Sicily and continued to Norman rule provided some reprieve. The Fatimid Empire re-established international trade and maintained it when Sicily became Norman. The region produced sugar cane, cotton and silk and became a trading hub again.

It was not supposed to last. By the 13th century, the climate turned arid and colder again. The new crops would not grow any longer. And with the fall of Akko in 1291, the last Crusader foothold in Palestine, the trade with the Middle East came to an end as well. It was subsistence economy again.

The Spanish (red) and the Ottoman Empire (green( in 1583)

But the bottom was not reached yet. The rise of the Ottoman Empire after the fall of Constantinople in 1453 made Sicily, Calabria and Apulia the front line against this new, aggressive and seemingly invincible Empire. When the Kingdome of Aragon and Castille merged in 1492, the same year as Granada was taken and Columbus sailed off to discover the new world, Southern Italy and Sicily became part of the global Spanish Empire that fought with the Ottomans for supremacy. Exporting any agricultural product to the “infidels” was strictly forbidden. Export markets were lost to never open again – but even worse, Spain did not buy any of Southern Italy’s products. The economy fell into the doldrums – there was nothing to sell, no money to make. The towns which were once at the center of Mediterranean trading were now at the end of the world.

The Spanish Fortifications of Galipoli in Apulia

Spanish money that was needed though to fortify the towns against the ever present threat of the Algerian Corsairs which had allied with the Ottoman Empire. Their naval forces raided the coastal lines of the Spanish Empire with impunity, until all the major ports were heavily fortified and the coastline dotted with Saracen towers, we discovered during our sailing last year in Corsica, Sardinia and Sicily. The Spanish money, silver imported from Latin America, came not without conditions. It was only handed out to loyalists who allied with the Spanish Crown. The thriving economy with large, export oriented latifundios and rich merchants was replaced by a patronage system. In the absence of any other source of income a logic step for the local population but in the long run a catastrophic one.

The rigid system of Spanish government took roots in Southern Italy and Sicily. So did the inflation that the massive inflow of silver from Latin America caused. Everybody got poorer except the nobles which owned the lands and the towns, the real estate of the time. The last elements of the independent merchant class was destroyed. The economy became a zero sum game where nobody could win – except the elite which was firmly installed at the top of the social hierarchy. Everybody became a client of some patron. And every patron made efforts to cement the system to secure his gains.

As we know from so many economic studies, patronage and clientele systems cause poverty on a large scale. You do not need to look further than Argentina in modern history to see how a once thriving country can drop back into the developing world. It happens even today as we speak.

Whether the Mezzogiorno ever finds a way out of poverty will depend less on capital injections which mostly end up in the wrong hands anyway – a subject of one of my next blogs – than on culture. If the rule of law lets people keep the fruits of their hard labor and inventions, there could be change. Sadly, there are no signs of it.