Types of Economies

Fernand Braudel (see last post) wrote Civilization and Capitalism, 15th-18th Century. It's a three-volume work (The Structures of Everyday Life, The Wheels of Commerce, and The Perspective of the World). There are people who can write about a boring subject like the world's economy and make it sound exciting like a novel: wild sagas full of heroes and villains.

Braudel's view of capitalism is neither laudatory nor positive; of course he was a Frenchman. You get the idea of a parasitic phenomenon, but the parasites are people. To interpret Braudel's conclusions, you might say that capital is detached from the community. Its masters treat the people as a raw material, an opportunity. There is no more love lost on the population than we normally bestow on a clay quarry. Capital, Braudel says, will engage in sectors and ooze out over them—so long as risks are low, profits high. When conditions change, capital will abscond as quickly to do its oozing somewhere else. Braudel documents this process by many examples drawn from different times and geographies. Mining, for example, had capital's attention in Europe in the sixteenth century; then profits began to thin. Away went the masters of the universe. As always in such cases, the state had to pick up the pieces. Why does that sound familiar today?

When small groups gain autonomous stature in society, disintegration is around the corner. There is a naïve simplicity involved in picking one or another mechanism and proclaiming it to be superior, not to say transcendent. It's idiotic, really, to think that Markets allocate resources with unfailing wisdom—and therefore those who dominate them must be exempt from rules that apply to mere mortals. To mistake the tooling for the workman is a sign of stupidity. Of course it's done to favor a group, not because people really believe it—unless they really are quite limited. Alas, lots of people in Congress are. The preachers of the market are either fools or hypocrites.

Throughout my times in the economy, people talked about three kinds of economies—no make that four. The fourth was soviet-style socialism. The other three were American capitalism, Japanese style market share capitalism (which I think of as feudal), and European regulated markets. The feudal era in Europe was one of high integration, with the mutual duties of the so-called estates always on every person's mind. Attempts in the U.S. to replace the shareholder in corporations with the wider concept of the stakeholder represent well-meaning gestures in that direction. Sounds nice. A few people try it. But the spirit isn't there. You can't fake culture. It rises up from the gut. I'm reminded of the New Testament question: "If the salt of the earth has lost its savor, wherewith shall it be salted?" In the European context, where the shades of kings still hover in the sky, the state has continued to be an integrated element in commercial life. Ditto in Japan. In what begins to look like a tiresome see-saw, Europeans enviously wish to emulate the American market capitalism (e.g. Sarkozy)—only to be brought to their senses by times like these when, symbolically anyway, skyscrapers are crashing and rubble spreads everywhere. I'm really curious how the current turbulence will work itself out. My guess is that order in the traditional sense will return, in a way, only when the artificial wealth oil has bestowed upon humanity actually runs out. Late twenty-first century? Those will be interesting times.