Wednesday, October 5, 2011

Economics

Before I get started on this annoyingly misunderstood technology - and that it is a 'technology' is where I will start - first I'll suck up some of the maximum blogger-approved space on this blog by embeding the following video:



I hope you all take the time to actually watch it.  And let me say that if it leaves you thinking that one side is right and the other is wrong, then go back and watch it again, because you clearly have not understood a fucking thing.

I've been writing my way through Civilization IV, accepting as 'technologies' the various elements from the tech-tree of that game.  A method of organization is a technology as much as a tool or a machine.  Technologies exist to solve problems, which occur as the result of some social element getting out of control.  For example, increased food supplies in late 17th century Europe caused a population spike, which encouraged the growing of more food, which put pressure on public lands and created the need to define ownership of said lands where no need had previously existed, which inspired John Locke to write about what ownership was, which helped kicked off a greater investigation amongst intellectuals about the rights and privileges of individuals, which we call the flowering of liberalism.  The problem was social pressure; liberalism was a technology proposed to address that problem.

Very often we are given to believe that technologies are things that sit around in existence waiting to be discovered ... and sometimes we propose or imagine that this or that technology could have been incorporated seamlessly in any period of human history, such as pistols in the late Roman Empire, or motorcars in feudal Japan, or the printing press in pre-Hyksos Egypt.  We assume that if we had the paper and the actual know-how, that Cheops could have presided over a spectacularly educated Nile civilization.  We conveniently forget that the principles of writing long essays haven't been conceived of yet; or that the sum of human knowledge was so small that it could have been printed on presses in the space of a few afternoons.  We think, no problem, people will INVENT those things as soon as they have the technology.  We fail to recognize that a printing press that does not address a societies need for a printing press is really only a large piece of junk, which would more likely be dumped in a Nile-fed bog before it inspired a civilization-changing revolution.

In some of the discussions I've had in the past about my trade system, I've heard arguments advanced about how economics work, or what's right and wrong about economics, and the 'law' of supply and demand, etcetera, etcetera, and I've shaken my head in wonder at the hopelessly entrenched perception people have of this era and how it works ... and how it defines how every era must of worked.  That every era is the same, and that human beings are substantially the same beings regardless of the age in which they live, is a liberal fantasy which I hope some of these civilization posts have been able to dispel in some small part.  We'd all like to think we could walk up to a Roman, wave a hand and then share a beer with him or her just as though we were all down at the pub on an ordinary Friday night.  We have proof the Romans knew what beer was, so the rest of the supposition simply follows from there.  If they had beer, they clearly had Friday nights, with the end of a long week being time to party.

And thus it follows that if there were people producing objects, and people buying objects, an economy existed that must have followed the principles laid out by Adam Smith in the late 18th century, or by the two fellows depicted in the video above.  These ancient peoples just didn't know it, goes the argument ... but those 'laws' were there, unquestionably.

That Adam Smith was describing his time, or the peculiar circumstances arising from the Industrial Revolution, in which production and demand soared due to a wide array of political, cultural, biological and technological influences, is irrelevant - goes the argument.  We human beings are who we are, and that will never, EVER change.

Economics as a social science was developed in the ensuing century with all the accuracy and rationale to be expected of people who did not have the resources to know what the hell they were talking about.  And today there is an abundancy of misinformation defining the actions and behavior of both economists and the "practical men" who believe in economists that can't hope to be measured except in the certain truth that rulemaking for either Hayek or Keynes only creates chaos and suffering.  At this point, "leaving the economy alone" is a euphemism for changing all the regulations currently in place ... which is funny, since "fixing the economy" also means changing all the regulations currently in place.

A medieval world has no such conceptions.  "Regulation" was a principle in which a seller's wares, if proven to be worthless or improper, meant the use of physical force in order to have the money returned, along with physical force to ensure the disappearance of said seller from the general community.  This ranged from beatings to slavery to prison to death, depending on the quality and social danger presented by said worthless goods.  You might get away with selling a blind mule.  But if the saddle you sold leads to the death of a child, don't count on outliving the child long.

The idea that laws needed to be passed to ensure the quality of goods and services simply did not exist.  Guilds controlled the quality, and did so at the end of a stick or a rope, as need be.

"Debt" was something states practiced - and which nobility took a part in, being responsible for states or parts of states.  Ordinary individuals did not take out 'loans,' and certainly not from a bank.  Starting capital was provided by guilds, the former taking a percentage of your wages through most of your life, in decreasing or increasing amounts, as circumstances warranted.  A "bank" existed only on the largest possible level ... and when huge banks failed, as the Fuggers, the Medici and others certainly did, the "economy" did not rush to rescue them with capital.  Wealthy individuals went belly up, some were killed or left penniless, while new financial wizards took their place, and the poor continued their lives unaffected.  If the country was overrun for lack of funds for an army; if the local lord was forced to bargain slaves and goods as a tribute to maintain independence; the ordinary person had little or no say in the exchange.  Persons were seized, lands were seized, material was traded and the "economy" went on exactly as before.  People raised food for themselves and their lord, they lived miserable, non-materialistic lives, and the bourgeois did not exist.

The world's reaction to modern economic crises is based upon one simple criteria which did not exist in the medieval world:  COMFORT.  Specifically, the comfort of the modern consumer, which is based upon the cultural structure that promotes comfort in every aspect and circumstance of your life.  Governments now exist to ensure your comfort, and they campaign with arguments that they will ensure your comfort.  And as long as you are comfortable, in some job, with enough money to buy the elements of your comfort, media and furniture and housing and the like, you will continue being passive and ignorant about both your economy and your government.  Producers struggle to make profit in the industries that bring you the very most comfort possible, and the richest producers are those who create things which you in your comfort-driven lifestyle perceive that you CANNOT live without:  transport and distraction, both of which are fed by the production of stored kinetic power.

No one cared to provide either to your medieval counterpart.  There was nothing to be gained in providing either, and in most cases it was impossible to provide either.  Your medieval counterpart was expected to get along anyway.  Unsurprisingly, your medieval counterpart did, with less comfort and less likelihood of success.

The modern economy panders to you.  No one pandered to your medieval counterpart.  If you cannot recognize the difference in how that economy must have worked, no amount of wordage I could throw at you will.

Bonus Question:  Why is the economic structure of EVE not a representation of a primitive economy?

11 comments:

Carl said...

I'm glad that you've chosen to write this post at this time. I'm just wrapping up reading a book on the history of money and economics called, "Debt: The First 5000 Years" by noted anthropoligist and anarchist, David Graeber. I think you and your game would benefit greatly from reading this book.

I'm going to take a whack at your bonus question and then we'll see if I can come up with something response-worthy for the rest of your post.

Primitive economies were (and sometimes still are) human economies. EVE's economy is a commercial economy. A human economy only uses money for specific things, usually brideprice and/or blood-debts (sometimes called flesh debts). In a human economy everything else runs on a credit-and-debt system that doesn't involve physical money or even units of account. A commercial economy assigns a monetary value to everything. EVE wouldn't work if it were governed by a human economy because in order for it to be a game, everything must be assigned a value that relates to other objects in the game. If EVE were run as a human economy and you needed bullets, you'd just ask your friend for some and that friend would gladly hand them over. If your friend needed a spaceship he'd ask you for one and neither of you would worry too much about who owed what to whom. You're humans, after all, and humans help each other. Not much of a game there.

Regarding your assertions about debt, I have a few points to make.

1. Ordinary individuals most certainly took out loans and they did so frequently after coinage was re-introduced to Europe. They got these loans from moneylenders/usurers. If they didn't pay it back they had to sell all their possessions, their wives and their children and/or go to debtor's prison to be tortured and/or killed. That is, unless they were aristocrats, in which case they were allowed servants, given fine meals and prostitutes were brought to them by their jailers. The weird part is that for a long time in Europe it was illegal to charge interest, and so the courts weren't much help to usurers until the Church decided that charging interest was OK.

2. You're painting a picture of medieval life that is very harsh. In reality, the Middle Ages in Europe, specifically after the passing of the Roman Empire were a time that was very good for peasants. Slavery was almost entirely eradicated, there were many peasant freeholders, and state-sponsored warfare (and the subsequent mass-killings and enslavings) did not exist. Your picture of the middle ages comes from modern scholars trying to justify the world as they saw it. The anthropological record is quite different.

However, as the Middle Ages began to give way to the Renaissance the conditions you describe showed up. Serfdom, debt-slavery, war, and violence spread across Europe along with the re-introduction of coinage.

Bonus question: did you know that China actually abandonded fiat currency (AKA paper money and bronze coin strings) in the 16th century?

Double-bonus question: why was the merchant-adventurer regarded so highly in medieval Persia?

Alexis said...

Actually, Carl, the further back you go, the less likely you are to find positive references to medieval life; I rush to point out you quoted a "modern scholar" in writing your comment, while describing modern scholars.

For my perceptions of medieval life, I shall be happy to rest my laurels upon Boccaccio and Dante, and not modern scholars.

Carl said...

Consider that both of these authors lived at the tail end of the Middle Ages and neither was an historian.

Chr├ętien de Troyes was from the same period and also a poet, but few take his illustrations of medieval life as representative of how things were back then.

Alexis said...

I don't deny that any given period of life contains pleasure, or a degree of happiness or humour. I'm sure people still enjoyed making love, that they still considered laying next to a trout stream on a hot day with their feet dangling in the water a thing of wonder. I certainly don't dispute that there was happiness and pleasure.

But people lived short lives. War on a small scale between families and states was constant. Not just every few years, but every season. Disease, famine and death were constant. And most important in reference to the post, people did NOT see their salvation in trading what they had for what they wanted. They did not, by and large, work for wages. They did not view the rustic furniture they had with the expectation that they would have in their lives a better table, a better bed, a better cart and so on and so forth. They did not see the acquisition of wealth as something their happiness depended upon. They saw the acquisition of heaven as the reward of a long life, lived hard but lived well.

This is a very, very different perspective from our sense of economy, and cannot be reconciled however many modern scholars try to make it so.

Carl said...

I totally agree that life in the middle ages was something that we are very, very far from and probably have little hope of understanding. Although that may change in another generation or two, due to the impending collapse of capitalism as we know it.

Our views of "the good life" were formed by hundreds of years of violence. Hundreds of years of debt, war, and slavery formed our views of what the meaning of life is now. We are so far from the Middle Ages that we can no more understand those folks than we can the hunter/gatherers of the Paleolithic era.

Additionally, our understanding of where we are is completely clouded by this terrible period of history which preceeded it and the authors of the middle of our own era attempting to make sense of it (Locke, Smith, Nietzsche). We cannot imagine things being different than they are now, or how they even got this way to begin with.

Finally, if you could master the language of the ancient Romans and had the opportunity to visit them, I would like to think that you could share a cup of wine with a plebian and have more than the weather to talk about.

Alexis said...

Wouldn't hold your breath about the Roman thing.

True, probably won't ever get it. But as these civilization posts have progressed past the D&D era, I feel it is my purpose at this point to discuss what the culture ISN'T, having written almost fifty posts about what it IS. In this case, that economic fundamentals like supply and demand, consumerism, debt load and so on simply don't apply to a mercantalist or pre-mercantalist world.

Eric said...

"that this or that technology could have been incorporated seamlessly in any period of human history, such as pistols in the late Roman Empire, or motorcars in feudal Japan, or the printing press in pre-Hyksos Egypt"

This position always confuses me, because it's so easy to disprove:

http://en.wikipedia.org/wiki/History_of_the_steam_engine

Ben Brooks said...

Indeed the greeks (or maybe earlier peoples at that) did invent steam technology. However it wasn't put to use as anything other than a curiosity until about the industrial revolution. Mostly because up until that point slaves, in name or fact, were much cheaper. It was a massive increase in demand and the growth of factory machinery that required such a power source to be produced.

I mean, we had oil as fuel and understanding of the axle, piston, and so on for millennia. Why wasn't the internal combustion engine invented by Roman engineers? A large part of it was that they had no concept of the thing or a real need for it. Also, advanced technologies require large amounts of subsidiary industries and resource gathering agencies to support them.

Look at more recent examples; I've been on a classic sci-fi kick for a bit and keep running into vastly outdated technologies written about by visionary authors who in most other respects we are still trying to catch up with. The computer tech in The Mote in Gods Eye and Ringworld were still tape driven! :)

Like Alexis's example of the printing press, in the middle ages so few people could read much less write, and we got all these monks sitting around without much to do...

And of course we have the tech to have made bases on and in orbit around Mars, just not the will to do it.

Oddbit said...

Eric if you scroll down to the portion on early uses of steam power it wasn't integrated into those societies at all. In fact it was used in limited cases for little or no real value.

Dusk said...

Eric, I think you've missed the point- imagine if you inserted a steam-engined car into the era of the aeolipile instead of simply pointing at things which were _developed_.

If you'd read Alexis' post properly you would have seen at the end of the same paragraph you quoted it said,
"We fail to recognize that a printing press that does not address a societies need for a printing press is really only a large piece of junk, which would more likely be dumped in a Nile-fed bog before it inspired a civilization-changing revolution."

Addressing your example (which shouldn't be considered universal anyway), yes the greeks and romans may have had steam-power but that didn't mean they could simply intuit the technology into say a car or train or some anime-style airship.

Eric said...

"early uses of steam power it wasn't integrated into those societies at all. In fact it was used in limited cases for little or no real value."

That was [intended to be] my point- that steam powered machines were invented repeatedly, but they didn't have any historical impact for a good 1500-odd years, until circumstances changed to make them an economically useful source of power.