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Mercantilism, Risk, and Portable Capital: Inventing the Newly Rich Week 11 Lecture 2 19 November 2004 OUTLINE: Mathematics and rationalization: The Quest for Efficiency “Re-investing” the world with Value Private Property and Consumption What is a thing worth? (M.S.R.P. = ???)
Week 11 Lecture 2
19 November 2004
Mathematics and rationalization: The Quest for Efficiency
“Re-investing” the world with Value
Private Property and Consumption
What is a thing worth? (M.S.R.P. = ???)
A legacy of Mathematics: Economic rationality and efficiency
Body as machine; clockmaker cosmos; Labor = Property; Rationality; Efficiency; Calculation; invention of race as principle of identity /de-humanize
CF: Galileo - math/numeracy as the new idiom/language
1) Human being as machine ---> division of labor
Cosmos as mechanical clock ---> immutable laws of competition, market, Invisible Hand --> The Divine Clockmaker
Work is GOOD!
Calvin, Calvin, Calvin!!
NB: This is a total INVERSION of old values!!
Greed is a cardinal SIN!
“Work” is punishment for Adam’s Original Sin
Has power has power powerless
REVIEW: Calvin’s contribution
Rembrandt: portraits = VOCATIONS
P.S. NOW we can talk about “class”! It is defined as our relationship to
RISK is Good.
Success is a sign of our election.
Locke (again!?): Two Treatises on Government (1690)
26. Though the earth and all inferior creatures be common to all men, yet every man has a "property" in his own "person." This nobody has any right to but himself. The "labour" of his body and the "work" of his hands, we may say, are properly his. Whatsoever, then, he removes out of the state that Nature hath provided and left it in, he hath mixed his labour with it, and joined to it something that is his own, and thereby makes it his property. It being by him removed from the common state Nature placed it in, it hath by this labour something annexed to it that excludes the common right of other men. For this "labour" being the unquestionable property of the labourer, no man but he can have a right to what that is once joined to, at least where there is enough, and as good left in common for others.
31. But the chief matter of property being now not the fruits of the earth and the beasts that subsist on it, but the earth itself, as that which takes in and carries with it all the rest, I think it is plain that property in that too is acquired as the former. As much land as a man tills, plants, improves, cultivates, and can use the product of, so much is his property. He by his labour does, as it were, enclose it from the common. Nor will it invalidate his right to say everybody else has an equal title to it, and therefore he cannot appropriate, he cannot enclose, without the consent of all his fellow-commoners, all mankind. God, when He gave the world in common to all mankind, commanded man also to labour, and the penury of his condition required it of him. God and his reason commanded him to subdue the earth- i.e., improve it for the benefit of life and therein lay out something upon it that was his own, his labour. He that, in obedience to this command of God, subdued, tilled, and sowed any part of it, thereby annexed to it something that was his property, which another had no title to, nor could without injury take from him.
For Locke, the job of government is to PROTECT this property.
1. State of Nature: God gives us everything in common
2. Yet: I have my own “person” --- cf. Descartes: I am sure of I
3. The “labor” of my “person” is mine
4. When I put labor into something, I take it out of the State of Nature
5. I can keep as much as I can use without spoiling
Gold, silver, money have the value that is the “tacit agreement of men”; note how many times Locke uses the word CONSENT
NB: Nominalist turn: money/gold/silver have no value in themselves; rather, they have the value [name] agreed upon by “tacit consent”
Meaning, you can loan money to non-Christians, but not to Christians.
But Jews can loan money to Christians.
Recall Cantor - blame Jews for the Plague
(Cf: Douglas - purity; Spain 1492)
Jews as bankers and usurers
Shylock provides the “bond” [guarantee] for the ships at sea --- but loans at interest [a pound of flesh]
Medieval invention of “Purgatory” --- an escape-valve --- usurers don’t necessarily have to go to Hell forever… can pay off their mortal sins in Purgatory and others can mediate for them by indulgences and masses
Pope Pius in 1730s: Maybe Catholics can loan money, too.
How about at…4.5%…
NB: It was a sin; now it is ok.
Creation of Trade Companies: Dutch East India Co.; British East India Co
England uses raw materials to manufacture finished products
Finished products exported/sold to American colonies
Consumer goods: from colonies:
Thomas Aquinas: Summa Theologica [1200s]
NB: What is a thing worth? Fixed essences = essentialism = eternal
Then Aquinas answers his opponents and draws his own conclusion --- he appeals to the Gospel of Matthew in his deduction:
There is such a thing as a FIXED (just) price for an item
(what would a nominalist say???)
Essentialism v. “NOMINALISM”
There is no essential connection between a thing and the name (representation / meaning) we give it
IN OTHER WORDS: names --- and meanings AND PRICES--- are ARBITRARY and CONTINGENT agreements
Shakespeare: “A rose by any other name would still smell sweet as a rose.”
Locke has justified private property and as much of it as you can use so long as it doesn’t spoil. No intrinsic or essentialist “worth” --- rather, what is mutually consented to.
But how do we compute the cost of labor?
If the human body is a machine…couldn’t one calculate the labor it performs in some mathematical fashion??
Marx: have you turned a human being [labor] into just another commodity? [something to be exchanged with money]
We barter - not out of benevolence - but out of self-interest
NB: Adam Smith INVENTS the word “Mercantilism” in order to talk about what he is against. He is rather arguing for a laissez-faire capitalist Liberalism
Calvinism: worldly prosperity sign of divine favor: relation to Bible?
Note shift from Mediterranean to Atlantic: not Venice / Italian Peninsula but UK, Netherlands, France, Spain, Portugal
Dutch Revolt: 1572-1648
Calvinists discontent with Charles V (Spain)
under the Holy Roman Empire
Achieve de facto independence in 1587
Spanish truce 1600-1615; re-engage as part of
Thirty Years War
Recognize Dutch Independence 1648
During revolt, extraordinary
Dutch East India Co. chartered
1572: £9million in trade goods
Great Tulip Crash of 1637
Dutch tulip craze: “To a Dutchman of the Golden Age, the tulip was not a mundane and readily available flower. It was a brilliant newcomer, still bearing something of the allure of the exotic East and obtainable only in strictly limited quantities.”
What is a just price?
Questions start to become meaningless…
Need new way of thinking them through
Made of: 100% cotton
Made of: 100% cotton
Made of: 100% cotton
(and a logo)
Maybe it’s not about the T?
Made of: 100% beefcake
“Market” price = object’s value as a commodity [i.e., as interchangeable unit of exchange]. But what are they selling??!
[i.e., as interchangeable unit of exchange]
A #1: Because we
Are all MARXISTS!
A #2: STATUS
What stabilizes into order? SELF-INTEREST AND COMPETITION turn chaos into order like clockwork.
Traditional/Biblical: pursuit of material interests condemned as one of seven deadly sins: AVARICE [greed] --- I.e., unethical and immoral
17th-18th cc. transformation: pursuit of material interests eventually --- hidden reasons of God --- work ethically and morally to contain unuruly / destructive human desires.
“All we like sheep have gone astray, everyone to his own way…We have turned, we have turned, Everyone to his own way…”
mercantilist world of empire and luxury items [sugar, tobacco]
1. A benevolent Deity: Newton, Locke, Smith
2. Laws of Nature --- clockwork laws implanted in nature/us for the best.
3. Appearances deceive: fixed price vs. market price
Self-interest appears to be selfish and lead to anarchy
In reality (for Smith): greatest good for individual leads to the greatest good of all [“Invisible Hand”]
4. Subjective individualism: my good and my desires center
5. “Copernican revolution” in human sentiment:
Old: self-interest/competition/greed are AVARICE
New: they are the positive values bringing order out of chaos
Baroque world: a universe run by an omniscient Provident God …. who, like a giant Clockmaker, has made “the very best of all possible worlds”
In the coffee houses and salons, a new intellectual world of “Enlightenment” will emerge --- talk about religious tolerance, social contracts and the virtues of liberty and human freedom . . . conversations ironically made possible by an institution of absolutism we have already seen . . .