There once were two great cities: Athens and Sparta. The Athenians were the first to achieve impressive wealth and for a generation the Spartans could do no more than look on in envious admiration. What was their secret, the Spartan leaders asked? The Athenians had no doubt. Theirs was the more civilized city by far. Their craftsmen were the finest. Their public debate was the most sophisticated. Their buildings were the most magnificent. Poverty, as such, did not exist thanks to public woks paid for out of general taxation. And Athenian trade networks had penetrated every part of the known world.
But Pericles, who had been at the heart of Athenian government for a quarter century, was becoming concerned. He observed that a growing portion of his city's expenditure was being paid for by debt. Athenian debt was much sought after, being considered secure in respect of both its capital and interest, and so was easily sold, even to Sparta. Officials in the treasury assured Pericles that the city's growing list of I.O.U.s. would easily be supported by Athens's vibrant trade.
However, Pericles noticed that his city's trade had been on a plateau for the best part of a decade. He, better than anyone, understood how important the Athenian navy was in securing and maintaining trade routes. Against his advice, the city government had repeatedly opted to spend tax revenues on public works, rather than on its business infrastructure. What was the purpose of great wealth, the city elders argued, unless it could be spent on the city itself and besides, public works benefited all Athenians? Even more worrying, to his eye, was the amount of time men spent discussing this or that program in the comfort of the debating chamber, when in the past, the same men would have been away generating new business for the city.
The Spartan kings had decided early on that the only way their city would achieve Athens's prosperity was through under-consumption, over-investment in future productivity and hard work. Spartans unable to fend for themselves were automatically enrolled into the city's armies and subjected to a training regime of the highest discipline. As a consequence, Sparta was an austere city not known for its pleasures.
In retirement, Pericles could point to a single date when the dominance of his city came to an end. In itself, the event that triggered it was not that significant. A modest Athenian fleet, seeking to expand the empire, had stumbled into a superior Spartan one attempting the same and been crushed. But the psychological effect was enormous. Athenian debt started to be traded at an increasing discount to its face value, and the treasury found it ever harder to issue more debt to cover outgoings not matched by tax receipts. The debating chamber became little more than a bear pit of accusations. To keep a lid on public disquiet, the city elders started to pay workers with I.O.U.s, but the value of these promises rapidly diminished and work ground to a halt. In desperation, the elders invited Pericles to take charge once more, but the old man declined with the words "I cannot undo what you have brought upon yourselves. Now it is up to the pain of reality to bring about change, whether you wish it or not."
After many protracted encounters, the Spartan army eventually marched into Athens and their soldiers marveled at the greatness of the city they had captured, even in its now ruined state.