Ancient civilizations and modern economics

[This may need to be moved to GD or IMHO, but I’m putting it here for now because I’m looking for responses at least somewhat based in fact]

My question is fairly simple, though the answers may not be. Basically, I’m wondering how helpful a modern understanding of economics would have been to ancient civilizations. For instance, I recall reading that inflation was a major problem in ancient Rome. Would more effective economic policy have delayed or even prevented the fall of the Roman empire? How 'bout other ancient civilizations?

I would imagine the type of working government at the time would have a pretty big impact on fiscal policy. In the sense that, even with the modern knowlege we have of economics, ancient rulers might decide to ignore it anyway.

I can’t help but think that current financial knowlege and successes aren’t at least SOMEWHAT based on the development of new types of government.

I’ll try. :slight_smile:

All trade started with barter. However, barter isn’t always convenient. You may be a prosperous individual, but if you don’t have some good that is desired by the person who has something you want, how can you get him/her to let you have it? This problem occurred to people back near the dawn of civilization (as in city-states), and they had the very logical solution: money.

There’s just one problem with using money: You have to use some substance (until the {very recent} invention of currency, i.e., paper certificates) that everyone agrees is valuable. It appears that not too long after someone had the idea of using gold and silver (and sometimes other metals, jewels, or other valuable substances (e.g., salt) that are reasonably portable) coinage, as a means of maintaining standardized measures, was invented more than once in the various early civilizations.

The next problem is that after you’ve allowed for people who hoard when opportunity arises, you still have enough in circulation so that trade can flourish. This was a perennial problem that historians can elaborate on better than I. Alexander had serious money problems (and his free and easy way of giving money to his troops wasn’t the only reason), which were solved temporarily when he captured the mints and treasure of Persia.

But there was always a problem in the ancient world - and even the medieval one - keeping money in circulation. It was a serious problem for the Roman empire, and I’ve heard arguments that a perennially empty fisc was one of the most important causes of its fall (OTOH, different historians have different ideas of the most important cause).

If you read histories of England, you’ll find that the kings were always having to find ways to raise money when they wanted to go to war. The history of the Jews in Europe is very often (to say the least) tied up in “usury” laws that forbade Christians (but not Jews) from charging interest on loans.[sup]*[/sup] The same is true of other European nations, but I’m using England because I’ve at least read some English history (my knowledge of the history of other European nations is abysmal, alas).

An important reason why various sovereigns chartered voyages of exploration was that they were seeking wealth. That’s why all the explorers were always asking the locals where they could find gold.

It is argued (and I find it fairly convincing) that the reason why the “first world” nations are wealthy, and the modern world economy is good, is because of the hundreds of tons of gold and silver that were taken from South America. One concise source of this argument, tightly reasoned (once you get past the story of Rodrigo the miner), is the latter part of first chapter of Weatherford’s Indian Givers. The chapter begins with a narration of the poverty, etc., of the modern-day Bolivian miners, tells of the mass of golden treasures that were extracted from the “Indians”, and the different treasures which were made from the gold once it reached Europe. He then explains the effect of it all on the economies of various nations, as the gold was used by Spain and Portugal to buy stuff, and other nations set out to get some of it for themselves.

From the first chapter of Indian Givers:

My belief is that the ancients would not have believed what economic theory teaches us (and some of it must be wrong, as there are contradictions). :slight_smile: Either they wouldn’t have believed it (because it ran contrary to their beliefs/aspirations), or they would have hoped for a different outcome anyway. Bear in mind that they would have found it difficult to convince their people that a promissory note/gold or silver certificate/whatever-it-says on-the-paper-money-in-your-wallet was “just as good as” gold, silver, bronze, jewels, salt, goods from the market, or food. Personally, I think it would have been a nearly-impossible job.

Maybe others will provide corrections/clarifications on some of the stuff I didn’t handle adequately?
[sup]*[/sup]Jewish law also forbids usury to other Jews, but it also has a different definition in their usage. The laws of the Christian kingdoms on moneylending read as ordered by the Church, which interpreted any interest charge as “usury”.

This is easily a GQ question, depending how it is phrased. Economics applies to a broad range of topics and is not a product of any particular type of production system, ownership custom, or cultural Zeitgeist.

Most obviously applicable is the idea of comparative advantage in international trade. Knowing that trade is not a game where one’s gain is necessarily another’s loss would save a lot of hassle and improve welfare almost immediately. Unfortunately, even today people still can’t get that idea into their heads.

An understanding of the efficiency of competitive markets could help to encourage market based methods of production and distribution. I don’t know to what extent farms, for example, were privately owned and operated; but in the cases where they weren’t, putting them into private hands could greatly improve production and waste less resources.

Some will argue that competitive markets spawn innovation, though I don’t know how much historical evidence backs that up. We can’t use today’s world as an example because we have a method for manufacturing knowledge that is fairly new. Absent the scientific method, a competitive market may just be the least wasteful way to produce and distribute the way people have for thousands of years, or maybe not…I don’t know.

Understanding where and why markets fail would also be useful. The tragedy of the commons is a phenomenon that is profitable to understand. The downsides of poor or asymmetric information could encourage activity by creating better standards for goods and services. An understanding of externalities could be utilized to subisdize activities that are underprovided and penalize activities that are overprovided.

For example, when an army goes off to war it returns with a corps of engineers and tradesmen who had to learn to make supplies, build seige engines, construct roads, etc. If an ancient ruler were familiar with the broken windows fallacy, she could establish publically-funded schools to turn out skilled engineers and tradesmen.

A lot of economic bads could be avoided by understanding where and why they come about. Much pollution obtains as a result of a failure to make actors internalize the costs of what they do. A long-standing tradition to use resources efficiently would be much better than religious commands to subdue the Earth or worship the land.

The guild systems may or may not fare well. They create monopoly supplies, which mean higher prices and lower supply. The upside is that they formed important social safety nets, taking care of their members in the bad times. If a leader understood the costs of monopoly production relative to competitive production, she may use the power of the state to create a social safety net and discourage guilds. Prices would drop across the board as supply increases because the guilds are gone and the state would take over the roll of providing for those struck by hard times. Society may have just as many sick and unlucky people to care for, but it would no longer have guilds facing off against each other in a war to get monopoly profits. Thus there could be a significant net gain.

An understanding of risk could create markets for insurance among other things. This could help to reduce significant individual suffering simply by allowing people to buy and sell risk.

In addition to risk, and understanding of interest could help to foster markets for capital and create more efficient pricing of financial goods. The first financial speculator was a Greek who bought future rights to olive presses. Such financial speculation creates incentives to invest and helps minimize risk, and that is a good thing.

It might also encourage ancient rulers to invest in productive assest. Instead of King Bob’s Massive Tomb we may have King Bob’s Memorial Highway or King Bob’s School of Literacy and Mathematics.

Game theory has been useful in the creaton of efficient markets and auctions. Such knowledge would be useful in situations where gains could be made by creating markets, but a naive free-market approach would be harmful.

We can’t always assume that ancients behaved suboptimally. Suppose that the understanding was there to sell fire insurance. Could that really be feasible in a world that is rife with open flames; highly flammable waterproofing; and often dense, convoluted wooden buildout patterns? How would an insurer tell arson from a real accident? How many insurers would go under because neighborhoods burn down whole and bankrupt the insurers? We can go into wild speculation: Maybe a strong insurance industry would precipitate building and buildout patterns that discourage destructive or massive fires. Even without speculating, there are a lot of areas where modern economics could have been applied and utilized in the ancient world.

I am not convinced.

“Gone is the notion of gold, treasures, kingly hoards; gone the prerogatives of merchants or farmers or working guilds. We are in the modern world where the flow of goods and services consumed by everyone constitutes the ultimate aim and end of economic life”
-Adam Smith, The Wealth of Nations

What constitutes “wealth”? The Aztecs had great amounts of gold but they lived in grass huts and wore animal skins. Europe and North America (above the Rio Grande) are wealthy not because of gold but because of the efficient utilization of vast natural resources to create products that can be consumed by the masses.

Contrast this with ancient civilizations where the majority of labor was to generate food and trinkets for the ruling lord or defend his land against rivals.
I would say that the biggest lesson learned would be to not base your economy on some arbitrary substance like gold since it limits the economy to how much gold you can accumulate. Not to mention that a metric measured is one that is addresses - which basically means if you base your economy on how much gold is accumulated, you will end up focusing your economy on the accumulation of gold.

Instead, it would make more sense to create a standard currency (the Romans had a shitload of coins IIRC), measure the economy in terms of total production and purchasing power and adjust your monetary policies accordingly.

You didn’t notice that I had doubly designated it as my opinion, by parenthesizing and changing the color? :confused:

Not being an economist, I do not worship at the shrine of Adam Smith. I readily concede he was a genius, but even geniuses can get things wrong. Vast stores of knowledge, of history, of mathematics, of science, etc., have been amassed since this justly celebrated theorist lived and wrote.

[opinion]
I do not have sufficient book knowledge of the vast realm of econ theory to be able to critique him myself, but I have seen very good arguments (obviously not equally persuasive to all readers, as you have much company in continuing to sacrifice at that altar), which “persuaded” me. I live in the world of logic, as much as I possibly can - no human can escape either his “breeding” or his personal proclivities - and I do my very best to rise to the level of logical processing of all data. Alas, it doesn’t always suffice. And most people don’t even try. They choose their conclusions to fit their gut feeling, and then do “cut and try” until they feel they have a logical underpinning. I’m not saying you’re wrong; just that some of his arguments don’t make sense to me, and I’ve read others’ work which made much more sense. Please understand: I am not, not, not accusing you of logical fallacies to any greater extent than that of any other educated and presumably intellectual person. I am simply saying that we all have weak points in our individual grasp of the world as it really is, as opposed to how we (and those to whose intellectual works we individually subscribe) perceive it. The Creator knows which of us is right, and it may be that we are both seriously mistaken in our perceptions of how economies work. I do the best I can, and I grant you the courtesy of presuming you do the same unless and until you demostrate the contrary, and I operate on the assumption that you - or any other discussant on any topic - do(es) the same.
[/opinion]

I think you need to do some reading. Neither of these assertions about the lifestyle of the Aztecs is even remotely true. I’ll hafta think about what I can suggest you read, as you probably will not find Weatherford’s presentations convincing, considering that he is one of those who believes the economic history he reports in Indian Givers. Maybe Colibri can suggest something? Or someone else who is also knowledgeable about anthropology (I was totally inactive here for several years, and have not yet learned which other non-lurking Dopers also know the field). Most of my books about indigenous peoples south of the Rio Grande are packed away, and I wouldn’t even know where to start digging, if I were physically able to dig in them. :frowning:

However, the Aztecs did have a sophisticated material culture. I readily concede none of us would have thought them nice people. They sacrificed the hearts cut from living victims to the sun god. Even though we may feel it doesn’t excuse the practice, they did believe it was necessary in order to keep the sun rising every day. And they were raised to believe that, one of the most durable reasons why human beings believe and/or do anything.

You are talking about the economies that exist today, that came into being because there were people with money to create consumer demand to create/produce those things.

This could be argued for the Aztecs, although I am doubtful. It absolutely could not be argued, based on the information we have about them, about the Incans. The emperor lived in great state, but the vast majority of his subjects’ efforts were devoted to their own affairs.

All this is true. It was the reason that the economy of Europe was completely static from the “Dark” ages through the high Middle Ages. I suggest that you read some history of the late years of the western Roman empire. The government struggled to hold the empire together, but it couldn’t feed itself (it had been depending on Egyptian wheat to feed the city of Rome in particular, and the peninsula of Italy in general at least since the time of Augustus). It was the inability to feed the citizens, and to pay the armies, which was responsible for the fall of Rome. Yes, the various invaders were ferocious fighters, but if the empire had not long since stopped using citizens in the army, it might well have been able to repel the invaders. However, even the emperors ruled at the pleasure of the city of Rome’s inhabitants (you’ve heard of “vox populi, vox dei,” haven’t you?), :slight_smile: and I’m sure you know that you don’t win many elections telling the voters you want their sons to go to other places and fight (maybe die). (current parallels are left as an exercise for the reader)

It was the beginning of trade by the merchant princes of Venice and other Italian cities with the Muslim states which was responsible for the exodus from nearly complete stasis.

And under some emperors, the coinage was debased (i.e., not “pure” gold, silver, what have you; and I suspect that some issues might have been “short weight”, all classical, tried and true methods of gaining funds for the fisc. I can’t offer my own cites, but I’m going on the word of scholars - Harry Turtledove {Ph.D. in Byzantine history}, frex), both in the original and in the “eastern Rome” (Constantinopolis) to Byzantium incarnation. I think you need to learn more about the economy of the Roman Empire.

My knowledge is limited, and there are several active Dopers who know a great deal more about economic history prior to the Renaissance than I. Maybe some of them will speak up? Please? I know that early in the Roman Empire’s existence they began pressuring the protectorate states they conquered (or would have, if some rulers hadn’t been too smart to fight them) to leave their treasuries (in Asia Minor, there were a number of city-states which had enormous (for the time, at least) stores of gold, etc.) and their crowns to the emperor, at the death of the ruler at the time of their conquest/whatever. In certain cases (e.g., Herod the Great), the heirs were allowed to govern portions of the previous sovereign’s territory, but they ruled at the emperor’s pleasure, and were responsible to pay vast annual taxes - and with later emperors, “voluntary contributions” - to support the government and armies.

Barter doesn’t take place if one does not have a surplus. Barter grew out of the sense of gift giving - I be nice to you, you be nice to me. Gold, jewelry, etc have no economic value to a subsistant people if you think of it as bartering, but in the sense of gift giving…

My three and a half cents, lol

:eek: :smiley:

Economic theory, like political theory, is based on studying classical and modern civilizations. The only trouble is many modern theorists base their theories on past theories - with no understanding of some of the basics.

Personally , I found most of the classes on politics and economics, too obtuse.

However, I found the classes on anthropology most interesting. I also found the classes(sociology, marketing) dealing with how groups intereact between and among themselves helpful. Anthropologists like to suppose how ancient peoples got along by examining how they lived - as evidenced by what traces they left behind.

On the whole, modern economic theory is mostly meaningless to any ancient civilization, since control of economic forces are largely outside the purview of its citizens.

msmith537, I thiink what tygerbryght was getting at was that the influx of gold and silver from the New World gave Europeans a lot more money, not that bullion is wealth in itself. It allowed the European economy to expand, ending the medieval period of deflation. If your economy quadruples, you need four times as much circulating money.

I doubt the modern perspective on economics would have made much difference, except to a handful of unusually enlightened individuals. For starters, there’s a huge difference between hearing good advice and acting on it. Few responsible rulers needed to be told that living within your means and not getting into debt was a good idea; it was living up to that principle. Hell, we’re not doing it NOW.

Second, the mindset needed for modern economic ideas was lacking through most of history. As far as ancient rulers were concerned, one thing counted: power. And usually power meant how big an empire you ruled, how big your army was, and how much in taxes to support both that could be squeezed from the populace. In most ancient societies, if there was a bad harvest one year that left farmers and merchants impoverished, the government’s response was to raise the tax rate- to make up the revenue shortfall! As long as the peasants didn’t actually starve to death, the populace was viewed simply as the ox pulling the plow. And if a struggling government was fighting (literally) to stay in power, it would debase coinage, impound whatever wealth could be summarily seized, do whatever it took to keep the troops loyal NOW. Occasionally it was recognized that the power of nations ultimately rested on their economic strength- the Confuscian ethic valued peace, stability and the rule of law, for example-; but more often Lord So-and-so would tear down his own realm fighting to stay in power: in rulers’ eyes, that’s what it was FOR.

Thirdly, there were serious barriers to advanced economies until recent time. In much of feudal Europe there literally was no state: no government or laws beyond the decree of the local rulers. Without a civil society everyone was on their own. People looked to the local lord, the Church, family or guild for protection. Trade items did diffuse across large distances, but the challenges of making a living as a trader were formidable. Where water transport was unavailable, it was seldom profitable to transport anything but luxuries more than a few hundred miles. Bandits, brigands and pirates were a constant menace; the local lord might be just as bad, being little more than a trumped-up warlord himself. By medieval standards, a prosperous country was one which hadn’t been overrun by an army for at least a generation, had a lord who’s taxes weren’t too heavy, and where you could travel to and from a yearly fair with a reasonable chance of not being robbed by road bandits. In short, it was a struggle even to establish a market economy in the first place, much less anything more advanced.

Witness all the handwringing about so-called “outsourcing.” Even Lou Dobbs is on that bandwagon.

:mad: Modern economics is not about balancing one’s fucking checkbook. This is the SDMB and it is time for this sort of DIY Economics to stop.

Such as the Roman generals who willing gave their lives in combat to inspire their troops to victory. Or the dictator Cincinnatus (sp?) who left office at the end of his term to resume life as a humble farmer. Even if they were inspired by a lust for power and common greed, showing them a way to make their kingdom richer simply by becoming more efficient would catch the eye of many rulers.

Of course, I would imagine that as a hypothetical question the OP would sort-of assume that such ideas would be integrated, otherwise there’d be no point in posing hypothetical questions in the first place.

The OP didn’t ask about modern “economies,” it asked about modern “economics.” If communal property existed, or was contemplated, in the ancient world, then modern economics would have been relevant. If people faced risk, then modern economics would have been relevant. If goods needed to be produced and distributed, then modern economics would have been relevant. If some costs and benefits of production, exchange, or any other economic activity were born externally by people not making the economic decisions from which the costs and benefits arise, then modern economics would have been useful. If group decisions had to be made, either by whole societies or by small councils (sp?), then modern economics would have been applicable. If goods or services were to be auctioned, then modern economics would have applied. If pollution existed, then modern economics would have applied. If it could be difficult to tell a highly skilled expert from a moderately or poorly skilled expert, then modern economics would apply. If one region engaged in trade with another region, then modern economics would apply. If producers of goods and services wanted to produce in the least wasteful manner possible, then modern economics would apply. And so on.

Modern economics is simply not dependent on the culture in which it is embedded. Some economists look at the institutions and customs to figure out why things are the way they are. Some economists build from the shape of, and not the particular content of, preferences to draw their results. Some economists look at economic decisions as games where irrational decisions can be made. The particulars of a model will change with circumstances; but the basic theoretical frameworks can be applied quite broadly—so broadly, in fact, that neoclassical economist can study rats and pidgeons to determine whether they are economically rational. (They are.)

I don’t know how ancient we want our ancients to be, but there are a number of surprisingly modern things that popped up in the past: fractional banking invented by the Knights Templar in the 13th c. Fiat currency being instituted in China in 7 AD.

I’m assuming that we’re talking about Friedman or Keynes or even, gasp, the Austrians, with their equations and etc., or are we talking about something else?

And for the record, a familiarity with modern economics hasn’t helped a lot of modern civilizations out either.

Can you elaborate on this? It seems to me that you either would have money, or you wouldn’t … i.e., you could afford to pay for something, or not. If everyone had money but wasn’t using it, then what were they doing? Bartering? Or just self-sufficient enough that they didn’t need to buy stuff?

Or make everything 1/4 the cost. Actually, you do want to increase the amount of money in the system as well. A low “velocity of money” can inhibit economic activity because people tend to hoard it.

An economy does not expand simply by adding money to it. The Germans tried that in the early 20th century with disasterous results.

The European economies expanded because of technological advancements and trade.

Gold is kind of an interesting thing because it was both currency and a commodity with little practical use as anything but currency and jewelry.

toadspittle Quote:
Originally Posted by tygerbryght
But there was always a problem in the ancient world - and even the medieval one - keeping money in circulation. It was a serious problem for the Roman empire, and I’ve heard arguments that a perennially empty fisc was one of the most important causes of its fall (OTOH, different historians have different ideas of the most important cause).

Are you talking about “liquidity”? I can imagine ancient and midevil governments having their wealth tied up mostly in land and real estate assets. This could cause problems if your “currency” is gold and you can’t simply print more money. I’m guessing that this might have helped introduce paper currency. You know an IOU from the Baron was as good as gold because he stilled owned the land. Eventually it probably just became easier to trade IOUs and eventually it became standard.

Kind of the same way a credit card was once a luxary item and now it’s practically replaced currency for all transactions greater than $20.

Good money tends to drive bad money out of the system after all (“good” being easy to use, widely recognized and easily available and transferable).

AFAIK, those ancient/medieval governments owned the land and everyone paid taxes to use it. I don’t know how their wealth would be tied up in land. If they wanted more money, they increased the taxes owed.

Read my previous post re: the origins of factional banking. The Templars acted as bankers for merchants, churches and Crusaders. With the Crusades, people realized that there was a lot of shit outside of Europe and, like silks and spices, people back home would pay good money for it. The problem was getting the gold from here to there to pay for it all. So, the Knights set up a series of banks wherein one could deposit money, receive a note stating the amount they had deposited and then withdraw the same amount from another bank.

In time, someone realized that the likelyhood of everyone withdrawing their money out of the bank at once was small and only X percent needed to be available for withdrawls. Thus, the other money could be lent out, interest earned and interest paid on accounts. The birth of fractional banking.

It wasn’t until the High Middle Ages/beginning of the Renaissance that banking done solely by bookkeeping was introduced (at least on a wide scale, I vaguely recall Sumerians doing this).

I think the birth of modern economies had much to do with agriculture that was capable of producing large SURPLUSES, year after year.
The Romans had an agricultural system that depended on slavery and the ever-increasing expansion of the empire. technologically, their agriculture was a dead end. And, while it is true that the Romans could import grain from Egypt, they had no way of paying for it (other than stealing wealth from other parts of the Empre, or vis debasing the currency (inflation)).
Surpluses in agriculture are what enabled cities to grow, and industry to develop. The fact that there was virtually NO industrial innovation in the 800-year Roman Empire, is proof that Rome could never master agriculture to the extent of late-Medieval Europe.

And that’s exactly what happened, until there was a surplus of money in the system.

A surplus which didn’t happen until after the Spanish and Portuguese ships began to bring back ships loaded with gold and silver from the New World. Remember, Queen Isabella had to hock the crown jewels to get the money to finance Columbus’s voyage. Gee. Do you mean that the queen of Spain was broke before the ships full of bullion began to come home? And Weatherford - and his sources - actually knew what they were talking about? Some of Weatherford’s reverences:

Fernand Braudel, Civilization and Capitalism, 15th - 18th Century (trans Sian Reynolds) Harper & Row Vols 1 & 2 (of 3)

Walter Prescott Webb, “The Frotier and the 400-Year Boom,” in The Turner Thesis Heath, 1949

Eric R. Wolf, Europe and the People Without History Univ/Calif Press, 1982

:smack:
I’m sorry, but you have not stated this correctly. They added currency, which had no gold to back it. That’s known as inflation, I believe. If the government has got the gold (or other universally accepted form of valuta) in its vaults to cover “current accounts” with foreign banks and investors, it ain’t inflationary.

Unless I badly misunderstand the way any national economy functions, it was impossible - or nearly so - for inflation to occur prior to the invention of currency (which is, in effect, a promissory note on that nation’s government. [COLOR=Blue]The Weimar Republic issued vast reams of paper money, without gold to back it AND without selling bonds to cover the debt.)[/COLOR]

:smack:
And the technological advancements occurred because there was unmet demand, in the form of Spanish and Portuguese grandees with gold burning a hole in their pockets, and nobody to build the furniture, blow the glass, make the dinnerware, etc., ad nauseam, that they wanted, and could suddenly afford. So they attracted merchants who suddenly began to visit them and take commissions. Which they then went to Venice (for glass), and France (for cloth), and Germany and England (for furniture). And the economies began to hum.

The reason their wealth was tied up in real property was because that was all they had. Let’s back up to the 4th century, when, IIRC, the Roman government decreed that all persons were henceforth locked into the class in which they were born, whether that was senatorial, equestrian, etc. (I don’t recall all the different classes, sorry.) And the landowners (what the Brits of the last few hundred years called “gentry”,) which, AIR, were the equestrians, paid all the cash they had in taxes (which were astronomical). After the money was gone, most of them just abandoned their lands, because, again AIR, the alternative was to be sold as slaves if they couldn’t pay the taxes. And no, they weren’t allowed to sell land for money to pay the taxes. :eek: Is it any wonder that the landowners had no incentive to support and fight for the empire when the invaders came??? When a government gets that dumb, it’s got “one foot in the grave, and the other on a banana peel.”

:rolleyes:
Have you been reading Andrew Tobias? I don’t recommend it. I just googled to try to find out why you’d say something so silly, and found he said that in 1996. I’ll make a homemade hot fudge sundae for the first person to report on all the other fallacies in that article. WARNING: You must come to Mississippi to collect. :stuck_out_tongue: But I use a rich vanilla ice cream, nuke the fudge until it bubbles, and serve in a salad bowl. Not elegant to look at … :wink: but very yummy.

Now, Tobias’s most egregious error was to turn Gresham’s Law on its head. He actually explains it to mean the same thing as Gresham’s Law, but all he’s accomplishing is to confuse his readers, sadly enough. And I don’t care how big his rep is, or how rich he is, or that he’s got a degree from Harvard Business School. In the last decade I’ve come to lose all respect for M.B.A.s, regardless of what school they attended. They’re all tin-pot despots, worshipping at the altar of Wall Street and driving research and innovation out of the U.S., and into places which will surpass the U.S. in wealth and other ways in the not-too-distant future, alas!

There is only ONE way to continue to have technology advances in a manufacturing setting, and that is to sink money into R&D, and tell the stockholders to just put the stock certificates in their bank vaults for ten or twenty years, when they will be VERY glad they did. <SIGH>

And that’s what happened time and time again in the ancient (Eurasian) world. A new king/emperor/tyrant/whatever would come to power. He’d owe his backers who helped him get there, big time. When he came to power, the coinage would change (usually the new coinage would have his likeness on it, something that helped the poor to be able to distinguish bad coinages from good, over time). If there wasn’t enough money in the treasury, he’d either have the mint make shortweight coins, or adulterate (yes, that’s the correct term) the gold/silver with a “base” (cheap) metal.

Here’s the real financial genius:

from here - a (very) brief bio of Thomas Gresham.

When was this? The Sumerians had granaries for this purpose seveal thousand BC.

I always understood that the growth of cities in the medieval age was because after the Black Death, there weren’t enough people to man the farms, or to expand them and thus they went to the cities, learning new trades because there is really no need for farmers in the city. As services began to grow, people found use for their specializations in export (for example, finished textiles from Flanders and later Britain, crystal from Bohemia, etc.). It appears to be a tautology, but the growth of cities sparked the growth of cities.

Well, yes. They added currency which technically would be part of the money supply. For all practical purposes, I was using the two terms interchangably.

Increasing the money supply (ie producing more currency) causes inflation.

No, I’m just basically recalling what I learned in economics a few years ago and pulling stuff out of my ass to fill in the gaps.

Uh…yeah…whatever…

It is a fallacy to assume that manufacturing is the most important sector of the economy. In any event, any good MBA knows that a company must innovate to survive. We also know that pioneers are often the guys who end up with an arrow in their ass for their trouble.

No, she didn’t have to.

Since none of the cites above are particularly scholarly, nor go into details, see the detailed discussion of the negotiations with the Crown in Felipe Fernandez-Armesto’s Columbus (1991; Duckworth, 1996, esp. 62-3). What Ferdenand and Isabella weren’t able to provide in kind, by calling in various obligations, was raised for them via a sydicate of Genoese and Florentine bankers. They had, after all, just managed to finance the Reconquista on much this basis; exercising royal power did not necessarily require having the readies to hand. (Though this did have the consequence that most of the wealth from the New World passed through Seville straight to Italian and German bankers, rather than being kept by the Crown.)
The myth about the crown jewels having to be pawned seems to have started with Las Casas.

In times of trouble, gold and silver often retained their value - sometimes as a hedge against infaltion. When the world was in chaos, people tended to hoard precious metals. You see this kind of behavior in a grander scale in the Civil War. They use almost anything else, instead. Essentially, people often only pay in good money what they think they can get back.