Tag Archives: history

1989 and all that

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One of the most brilliant history books I’ve ever read is the late Tony Judt’s Postwar: A History of Europe since 1945. It was revelatory, not just because he was a brilliant writer, but also because of that framing of modern history on this side of the Atlantic as a story of all of Europe. The Iron Curtain turned out to have been an internalised barrier too. So Judt was able to reveal the epochal importance of German reunification and membership of the EU for other central and Eastern European countries. For many of us ‘Remainers’, the failure of the official campaign in the UK’s disastrous EU referendum to remind voters about how hard won modern Europe has been was inexplicable.

I’ve just finished Europe Since 1989: A History by Philipp Ther (a translation from the German original). While not on the same scale, Ther acknowledges his debt to the way Judt framed the continent as a whole. Having said that, this is a book focusing largely on the experience of the former Soviet bloc, and exploring the reasons for the different outcomes for different countries. One message is how much earlier history influences the present, for example in the differing cultural and social attitudes to entrepreneurship, or conformism. Another is the extent to which east Germany (and Berlin until relatively recently) suffered from what Ther describes as “the most radical shock therapy in postcommunist Europe.”

I found the detail interesting – Ther is obviously familiar in great depth with many of the former planned economies. I had one big frustration, which is that the entire post-1989 history is interpreted through the prism of ‘neoliberalism’. I agree with my colleague Colin Talbot that this is largely used as a generic term of abuse, one often aimed at economists in general. Ironic, really, when applied in the context of the dramatic economic collapse of the non-market economies. Ther isn’t as bad as many users of the term, in that he does appreciate that there was a specific ideological project – spearheaded by Reagan and Thatcher, supported by a group of economists. However, while talking freely about ‘neoliberal hegemony’, he also writes: “The political practice of reform in eastern Europe always diverged from pure theory,” and “Brussels’ agenda was not strictly neoliberal,” (writing about transfers of funds to the former communist countries amounting to many times the amount of Marshall Aid). He continues: “Overall, European integration and its attendant programms were a tremendous success.”

So one ends up with the impression that the first neoliberal wave was Jeff Sachs with his ‘shock therapy’ theory, and the second was Vaclav Klaus. It’s a bit thin, although of course the ‘shock therapies’ were simplistic and indeed quickly disowned by many economists. So although at least this book doesn’t claim all of economics, the mere idea of economic reform in a disintegrated planned economy, is neoliberal, it’s an analytical frame that hinders rather than helping understanding of post-1989 Europe.

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Being enlightened

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I’m reading and enjoying Joel Mokyr’s forthcoming [amazon_link id=”B01EGQA1Z2″ target=”_blank” ]A Culture of Growth: The Origins of the Modern Economy[/amazon_link] (which I’ll be reviewing for another outlet). It’s another perspective on the Enlightenment and Industrial Revolution than covered by his earlier books, [amazon_link id=”0195074777″ target=”_blank” ]The Lever of Riches[/amazon_link] and [amazon_link id=”0140278176″ target=”_blank” ]The Enlightened Economy[/amazon_link]. The book is out in October.

[amazon_image id=”0691168881″ link=”true” target=”_blank” size=”medium” ]A Culture of Growth: The Origins of the Modern Economy[/amazon_image]

One of the things I’m enjoying is the range of references – from Frances Yates, whose [amazon_link id=”041527849X” target=”_blank” ]Giordano Bruno and the Hermetic Tradition[/amazon_link] and [amazon_link id=”0415254094″ target=”_blank” ]The Rosicrucian Enlightenment[/amazon_link] I devoured as an early modern history-crazy teenager to Sam Bowles’ [amazon_link id=”0691126380″ target=”_blank” ]Microeconomics: Behavior, Institutions and Evolution[/amazon_link]. Speaking of the Enlightenment, the FT today has a glowing review of Anthony Gottlieb’s [amazon_link id=”0713995440″ target=”_blank” ]The Dream of Enlightenment: The Rise of Modern Philosophy[/amazon_link]. One to add to the wish list.

[amazon_image id=”0713995440″ link=”true” target=”_blank” size=”medium” ]The Dream of Enlightenment: The Rise of Modern Philosophy[/amazon_image]

Money and civilization: it’s complicated

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William Goetzmann’s [amazon_link id=”0691143781″ target=”_blank” ]Money Changes Everything: How Finance Made Civilization Possible[/amazon_link] is exactly the kind of book I find relaxing to read before going to sleep. Apart from the fact that it’s too chunky to carry around, it is a panoramic historical sweep packed with interesting nuggets.

[amazon_image id=”0691143781″ link=”true” target=”_blank” size=”medium” ]Money Changes Everything: How Finance Made Civilization Possible[/amazon_image]

Money is hardly my Mastermind special subject, and I certainly don’t get emotional about it as so many commentators do. So I have no view about the criticism of the book by people like this reviewer, whose point seems to be that Goetzmann doesn’t agree with every word of David Graeber’s [amazon_link id=”1612194192″ target=”_blank” ]Debt[/amazon_link] . I’m certainly not going to opine about pre-history. However, Goetzmann is making a far more general argument, rather than a specific case about the role of debt in ancient society (& anyway I think that particular dyspeptic reviewer significantly misrepresents the book’s argument).

Goetzmann’s point is that there is an intimate inter-relationship between financial arrangements and instruments and other economic and social institutions. Indeed, he argues that this is causal and financial innovations made ‘civilisation’ (in the sense of social and political changes observed through history) possible. Intellectual innovations like writing or probability theory, and social innovations like the intermediation of individual savings into investment at scale, were driven by finance. Of course, the causality runs the other way round too: certain economic and social institutions were necessary for financial innovations to occur. “The joint development of financial tools and complex society was a process of give and take on many levels.” It’s complicated, folks! Simple accounts are probably wrong.

Goetzmann is certainly not a financial determinist. He writes: “Necessity is the mother of invention. … Financial technology is redundant, adaptive, and sometimes mercurial. The institutions we take to be sacrosanct, inevitable and indispensable probably are not. Given the random outcome of historical events, another set of institutions might have emerged to serve the same financial problems. Financial innovation is thus a series of accidents of history – the caprice of time, location and opportunity.” This seems absolutely convincing to me, rather than any Graeber-like projection of ideology onto the past. And – as Goetzmann notes – “In times of financial crises, society has tended to express a collective nostalgia for a pre-financial world.”

The book is broadly chronological, starting in ancient Mesopotamia, visiting China, mediaeval Europe, 18th century France and western Europe, back via Marx to China, then the 1920s, Keynes and the war, and a final short section on modern finance. There are all kinds of examples I didn’t know about – the Templars as bankers, the early example of corporate structure in the shape of Toulouse’s Honor del Bazacle. Like Jared Diamond through a different lens, Goetzmann sees the fragmentation and political competition of western Europe in mediaeval and early modern times as an important contribution to its subsequent reliance on capital markets. All very enjoyable, and I’d say essential for anyone interested in financial history.

Civilising money

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I’m enjoying William Goetzmann’s [amazon_link id=”0691143781″ target=”_blank” ]Money Changes Everything: How Finance Made Civilization Possible[/amazon_link]. So far I’ve gone through pre-history and early Chinese financial innovation and am embarking on mediaeval and early modern Europe. The book’s general theme is that financial innovations enabled civilisation to progress, starting with the origins of writing in ancient Mesopotamia because of the need to record financial transactions including the payment of tribute to the temple. It is stuffed full of the kinds of new information I love to accumulate. For example, in 386 BCE a group of Athenian grain traders were put on trial for price fixing and hoarding. They faced the death penalty, rather stiffer than the fines facing cartels these days. Who knew the Athenians had competition policy?

[amazon_image id=”B017MVYMSA” link=”true” target=”_blank” size=”medium” ]Money Changes Everything: How Finance Made Civilization Possible[/amazon_image]

The book argues that ancient Greece also originated the mentality that wealth could be intangible, abstract. Finance was decoupled from physical assets such as land or grain. What’s more, because hundreds of Athenian citizens acted as jurors in trials, often concerning financial matters such as compound interest or cost-benefit calculations, financial literacy was widespread: “Athenian numeracy was not simply a skill required for a successful business. It was a trait on which the democratic process fundamentally relied. …. The monetization of Athens was not only important to the emergence of democracy, it was also a factor in the development of Greek philosophy. … Monetization led to abstract thought.”

Sadly, we now seem to have the financialization without the widespread numeracy and capacty for abstract thought. Seems like the ancient Greeks were ahead of 21st century democracies on that front. For new technologies – including financial innovations – to bring progress, surely they need to be widely understood. A populace that doesn’t understand can’t ensure they share in the benefits.

Strolling minstrels and pedlars

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Today we went to a family party and I needed a very small book to pop into my party handbag for reading on the tube. I picked, more or less randomly, Herbert Butterfield’s [amazon_link id=”0393003183″ target=”_blank” ]The Whig Interpretation of History[/amazon_link], which I bought in the late 1970s and surely haven’t read since. My old Pelican copy has the whiff of library, brittle spine and yellow pages of an old paperback (but thank goodness no creatures living in it, as my brother once found in his college history books).

“History has been taken out of the hands of the strolling minstrels and the pedlars of stories and has been accepted as a means by which we can gain more understanding of ourselves and our place in the sun – a more clear consciousness of what we are tending to and what we are trying to do. It would even seem that we have perhaps placed too much faith in the study of this aspect of ourselves, and we have let our thinking run to history with more enthusiasm than judgement.  … Behind all the fallacies of the whig historian there lies the passionate desire to come to a judgement of values, to make history answer questions and decide issues.”

He goes on to say history is more like a travel guide describing a foreign land than an arbiter of what is true and what is false, while moral indignation and calm judgement rarely go hand in hand.

[amazon_image id=”0393003183″ link=”true” target=”_blank” size=”medium” ]The Whig Interpretation of History[/amazon_image]