Being enlightened

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

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

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

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]

Big books on the big question

I’ve nearly finished reading Deirdre McCloskey’s [amazon_link id=”022633399X” target=”_blank” ]Bourgeois Equality: How ideas, not capital or institutions, enriched the world[/amazon_link] – it’s out next month and I will be reviewing it elsewhere. This is of course the latest in her grand project, The Bourgeois Era, the first two being [amazon_link id=”0226556646″ target=”_blank” ]The Bourgeois Virtues[/amazon_link] and [amazon_link id=”0226556743″ target=”_blank” ]Bourgeois Dignity[/amazon_link]. (I reviewed the latter in The New Statesman at the time.) McCloskey originally planned six volumes, but it seems three might now be the total. As each is over 600 pages long, this is already quite a lot.

[amazon_image id=”022633399X” link=”true” target=”_blank” size=”medium” ]Bourgeois Equality: How Ideas, Not Capital or Institutions, Enriched the World[/amazon_image] [amazon_image id=”0226556743″ link=”true” target=”_blank” size=”medium” ]Bourgeois Dignity: Why Economics Can’t Explain the Modern World[/amazon_image] [amazon_image id=”0226556646″ link=”true” target=”_blank” size=”medium” ]The Bourgeois Virtues: Ethics for an Age of Commerce[/amazon_image]

Anyway, this isn’t a spoiler – I’ll save up my thoughts on [amazon_link id=”022633399X” target=”_blank” ]Bourgeois Equality.[/amazon_link] But reading it set me thinking about what other books one ought to have read to evaluate properly this series about the history and dynamics of capitalism (although McCloskey doesn’t like the word). These are the ones that came to mind first – and clearly this is a question that inspires BIG books.

David Landes, [amazon_link id=”0349111669″ target=”_blank” ]The Wealth and Poverty of Nations[/amazon_link].

Kenneth Pomeranz, [amazon_link id=”0691090106″ target=”_blank” ]The Great Divergence[/amazon_link] [amazon_image id=”0691090106″ link=”true” target=”_blank” size=”medium” ]The Great Divergence: China, Europe, and the Making of the Modern World Economy (The Princeton Economic History of the Western World)[/amazon_image]

Joel Mokyr, [amazon_link id=”0195074777″ target=”_blank” ]The Lever of Riches[/amazon_link]; [amazon_link id=”0691120137″ target=”_blank” ]The Gifts of Athena[/amazon_link]; [amazon_link id=”0140278176″ target=”_blank” ]The Enlightened Economy[/amazon_link]

[amazon_image id=”0140278176″ link=”true” target=”_blank” size=”medium” ]The Enlightened Economy: Britain and the Industrial Revolution, 1700-1850[/amazon_image] [amazon_image id=”0195074777″ link=”true” target=”_blank” size=”medium” ]The Lever of Riches: Technological Creativity and Economic Progress[/amazon_image] [amazon_image id=”0691120137″ link=”true” target=”_blank” size=”medium” ]The Gifts of Athena: Historical Origins of the Knowledge Economy[/amazon_image]

Robert Allen, [amazon_link id=”0521687853″ target=”_blank” ]The British Industrial Revolution in Global Perspective[/amazon_link]

Jared Diamond, [amazon_link id=”0099302780″ target=”_blank” ]Guns, Germs and Steel[/amazon_link]

Ian Morris, [amazon_link id=”1846682088″ target=”_blank” ]Why the West Rules – For Now[/amazon_link]

Acemoglu and Robinson, [amazon_link id=”1846684307″ target=”_blank” ]Why Nations Fail[/amazon_link]

Douglass North, [amazon_link id=”0521290996″ target=”_blank” ]The Rise of the Western World[/amazon_link]  [amazon_image id=”B00HQ18ICI” link=”true” target=”_blank” size=”medium” ]The Rise of the Western World: A New Economic History by North, Douglass C. Published by Cambridge University Press (1976) Paperback[/amazon_image]

Joseph Tainter, [amazon_link id=”052138673X” target=”_blank” ]The Collapse of Complex Societies[/amazon_link]

I’m sure there are tons more – McCloskey’s bibliography alone is 50 pages long. But anything essential left off this list?