Friday, February 01, 2002

History of the World-Parts II and III- - Douglas Turnbull is a bit nervous having me look over his shoulder as he continues his "Why did Europe become pre-eminent? " series. Here's parts one,two and three. Don't worry, we're all generalists at the core, making our best guesses at the world. Some of us have special patches of knowledge, but we're still working with a limited knowledge set. History is an interest of mine (I'm mostly self-taught) being the son of two History majors (my dad has a MA in History) and an avid reader of history as a kid. The first two pieces are solid, based on my modest understanding of that era of history. Part three starts to get into modern economics and finance, so I'll expound a bit on that era. I don't disagree with Turnbull's take (Econ is more applied common sense and psychology than anything); he's got intellectual game. I would make the case that the "Judeo-Christian" world-view of Europe was a catalyst of post-Middle-Age development. Having a single creator God meant that God made the universe with a large amount of order; a knowable God made a knowable universe, thus giving scientists confidence that their work would be fruitful. The Reformation and Counter-Reformation allowed people to take a new look at the Bible and the universe, allowing new ideas to flow, unlike more feudal areas of the world. Gentile bigotry also allowed a Jewish merchant class to develop. Jews were barred from farming and crafts and relegated to be merchants and bankers. This bigotry inadvertently enriched the Jews when economics moved to focus on just those areas. The curiosity stemming from the idea of a knowable universe created a cadre of explorers, checking out trade routes and less-understood areas of the world. Less curious Asians and Arabs stayed home for the most part ,although there's a little bit of history and archeology pointing to other visitors to the New World before Columbus or the Vikings. Thus, Europe got first dibs on the New World. Europe did exploit the material riches of the New World; you can take exploit in an economics sense (to utilize) or a Marxist sense (to take advantage of) and both are in parts true. European economies were able to use the resources better than the indigenous peoples and also crapped on the natives in the process. The resulting riches allowed the exploiting countries to develop faster. The early merchants were arbitrageurs, taking advantage of different prices in different places to make a profit. As transportation became easier and information about prices became more widespread, the profits in being middlemen dwindled, as Yonan’s Law of Arbitrage (“Free lunches are quickly devoured”) kicks in. Economics shifted to manufacturing when technology allowed for economies of size in factories. Modern corporate finance developed to raise the capital needed to build businesses larger than one guy could easily do on his own. Curiosity didn't kill the cat in this case, it sent the European cat around the world. Its spiritual descendents became the dominant powers of the world.

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