A Not-so-Brief History of Dime
May 18, 2011 § 3 Comments
“Is it not the secret aim and underlying motive of history to seek to explain the present?” asks Braudel, in this, the third and final volume of his magnum opus, Civilization and Capitalism 15th-18th Century.
Our present, even more so today in 2011 than when Braudel went to press in 1979, is an intensely capitalist one: it is pretty much the only show in town these days, and has been so for nearly a generation; many of us would be unable to conceive of life before, or without, capitalism. At the same time, an angry undercurrent of protest persists in every part of the world that holds capitalism responsible for much of the world’s suffering, and seeks a return to some mythical golden age. Both sides would probably benefit from a better understanding of the system, and therefore from a reading of Braudel’s trilogy.
Capitalism is primarily an economic system (though, as Braudel says, its social and cultural repurcussions are essential to its very definition and must not be ignored). There are three ways to study economics: as economic theory (which can then be applied for predictive or prescriptive purposes), as statistics (which can then be used largely for descriptive purposes) or as historical analysis, which can be used to explain the world in terms of the processes that transformed the past into the present. The last-named technique is Braudel’s weapon of choice.
I have written elsewhere about Braudel’s earlier volumes, his methodology of research and distinctive style. I shall not repeat myself here, but will merely point out that this is possibly the most readable book of the three, simply because it is at a slightly higher plane of analysis than the rest. Braudel’s first volume spoke only about consumption patterns around the world, and his second addressed the evolution of basic commercial exchange, at the level of the individual businessman or trader. In this volume, he takes it up a notch and discusses trade, industry and markets at the international level – and at this level, political history and economic history often interweave – political events have economic outcomes, and vice versa – and political history is more familiar to the layman, and so much more readable. Even so, this is a slow, heavy book, that demands its reader’s rapt attention for more than 600 pages and presumes a certain level of familiarity with regional history, geography, demography and economics; it is probable that Braudel wrote for other historians and economists, rather than for a lay public.
Mind you, Braudel’s story is not a complex one. Capitalism – especially commercial capitalism – has been around in different shapes and forms and levels of maturity for a very long time, across the world. Between the 15th and 18th centuries, aided by political and social circumstances, and brandishing the tools of capitalism to their advantage, European city-states that had so far been on the margins of history, suddenly gained the upper hand and ruled the world. While Braudel incorporates well-researched commentary on the factors quoted by other historians as being fundamental to the growth of European hegemony (colonization in Asia, slavery in the New World, and the industrial revolution in Europe), Braudel’s narrative is most animated when he describes the relay race of European supremacy, as the baton passed in turn, from Venice to Antwerp to Genoa to Amsterdam, to London, and finally to New York. For each period, he explains the economic and political circumstances that favoured the ascendancy of a city at one time, and those that hastened its fall from grace at another. The main effect that he aims for in his readers is a sense of surprise at the sophistication in financial innovations and practices already in use at these early stages. Nothing is really new, he seems to say; the medieval merchants had much the same instruments we possess today and were subject to the same temptations and frailties. By paying close attention to the way their fortunes rose and plummetted, we may manage to avoid similar pitfalls (but alas, we never do).
For instance, Braudel points out that bills of exchange, credit, banks, forward selling and public finance were already present in Venice in the 15th century, as well as in the vast market system that stretched from Jeddah on the Red Sea through Surat, Cochin and Masulipatnam in India to Malacca at the edge of the Pacific Ocean; that it was the Genoese merchants of the 16th century, primary lenders to Charles V of Spain, who, much like a Wall Street firm of today, ceased to take an interest in trade, and devoted their capital purely to financing and investments in metal commodities – their path to success, but also the key to their subsequent failure; that Amsterdam merchants put the interests of commerce over patriotism and made speculation and debt a national obsession (and so didn’t pay attention to a protectionist England progressively taking over her role); finally, that the English victories in the 18th century over the French, the Dutch, and indeed the entire world, were built, much to the amazement of her enemies, on the insubstantial foundations of paper money, government debt and artificial wealth – though, as Braudel quips, “was not artificial wealth a masterpiece of human achievement?”
I write this in 2011, at a time when the nominal value of outstanding OTC derivatives stands at $601 trillion (ten times the GDP of the entire world). Braudel’s words seem a touch ironic. Artificial wealth of the magnitude that we deal with today is an achievement alright – it is the triumph of human greed and wishful thinking over common sense. My conclusion: we may or may not have become more capitalistic in the last 500 years, but we have certainly not become more civilized.
Tagged: Fernand Braudel