The economic structure and organization of Spartan society to 371 BC was not sufficiently successful in maintaining Spartaâ€™s power and internal stability throughout the period. Although this system had originally brought Sparta to her hegemony in 404 BC with victory over Athens in the Peloponnesian War, flawed elements within her own economic system and the conservative nature of her leaders throughout the period had eventually led to the stateâ€™s decline. These elements included an imperialistic campaign despite the rigid structure of Spartaâ€™s limited economy, the process of land tenure and inheritance, and the results of an influx of foreign wealth into Sparta. The main result of these factors became a decrease in the population of Spartiate citizens necessary to maintain the relatively stable economic structure of the Spartan state. This led to a decline in Sparta from an empire of considerable strength to a gradual diminution in power, heightened by her defeat by Thebes at the Battle of Leuctra in 371 BC. .
Firstly, the rigid economic structure of Spartaâ€™s economy, although successful in creating a fine military state and suppressing the helot population in its own established territory (of Laconia and Messenia), had its own problems and was not designed to maintain an empire. Mitchell (1964, 306) confirms this by stating â€œSo long as Spartaâ€¦had little or nothing to do with the outside world, so long could it exist in the primitive state of economyâ€. However, Polybiusâ€™s view is more moderate in stating (in David, 1986, 57) â€œAs long as the Spartanâ€™s domination was confined to the Pelopennese (area), their own supplies and resources were sufficient for their needsâ€. The economy had two major bases, the agrarian production of the helots, and the commercial/industrial work performed by the perioikoi. These were each essential for the economy to function and allowed for the ruling Spartiate citizens to focus on their military activities, which they used in return to control the helots and engage in a business relationship with the perioikoi.