Yves Smith — Michael Hudson: William Goetzmann’s Money Changes Everything – A Travesty of Financial History Which Bank Lobbyists Will Applaud

Yves here. I received a review copy of Goeetzmann”s book, and I recoiled when I read the blurb. It was such an obvious example of orthodox propaganda that it went straight into the rubbish bin.

But sadly, the book is being touted by the usual suspects, such as the Financial Times, the Wall Street Journal, and the New York Times, as authoritative on the origins of money when it is unadulterated Austrian twattle. So Hudson is to be commended for doing the unpleasant but important task of slogging through the nonsense and debunking it. Please read his post and circulate it widely.…

More elite propaganda. Many if not most of them likely believe their own BS.

Naked Capitalism
Michael Hudson: William Goetzmann’s Money Changes Everything – A Travesty of Financial History Which Bank Lobbyists Will Applaud
Yves Smith

Richard Koo — “Paradox of thrift was the norm before industrial revolution”

Rather than "paradox of thrift," I would say that it was the absence of credit owing to lack of investment opportunity with an expectation of repayment. More liberal credit extension made higher growth possible but brought financial cycles with it. 

Koo recognizes this but chooses to call it the result of the paradox of thrift. That seems odd to me.

Real-World Economics Review Blog
“Paradox of thrift was the norm before industrial revolution” 

Richard Koo

Diane Coyle — Civilising money

I am going to have to read this book. Fortunately, it is modestly priced. You can "Look inside" at Amazon.

Publisher's blurb:

In the aftermath of recent financial crises, it's easy to see finance as a wrecking ball: something that destroys fortunes and jobs, and undermines governments and banks. In Money Changes Everything, leading financial historian William Goetzmann argues the exact opposite--that the development of finance has made the growth of civilizations possible. Goetzmann explains that finance is a time machine, a technology that allows us to move value forward and backward through time; and that this innovation has changed the very way we think about and plan for the future. He shows how finance was present at key moments in history: driving the invention of writing in ancient Mesopotamia, spurring the classical civilizations of Greece and Rome to become great empires, determining the rise and fall of dynasties in imperial China, and underwriting the trade expeditions that led Europeans to the New World. He also demonstrates how the apparatus we associate with a modern economy--stock markets, lines of credit, complex financial products, and international trade--were repeatedly developed, forgotten, and reinvented over the course of human history.

Exploring the critical role of finance over the millennia, and around the world, Goetzmann details how wondrous financial technologies and institutions--money, bonds, banks, corporations, and more--have helped urban centers to expand and cultures to flourish. And it's not done reshaping our lives, as Goetzmann considers the challenges we face in the future, such as how to use the power of finance to care for an aging and expanding population.

Money Changes Everything presents a fascinating look into the way that finance has steered the course of history.

Finance and economics are two side of the same coin, one coin among the many, albeit a very important coin, that figured in the development of civilization and life as we know it today. But even today, finance and economics remain separate disciplines, and very few understand their intimate connection through price ("money") as the basis of markets, and accounting as the common language of finance, business and economics. 

The Enlightened Economist
Civilising money
Diane Coyle | freelance economist and a former advisor to the UK Treasury. She is a member of the UK Competition Commission and is acting Chairman of the BBC Trust, the governing body of the British Broadcasting Corporation

Blake Smith — Slavery as free trade

For nearly four centuries, the Atlantic slave trade brought millions of people into bondage. Scholars estimate that around 1.5 million people perished in the brutal middle passage across the Atlantic. The slave trade linked Africa, Europe and the Americas in a horrific enterprise of death and torture and profit. Yet, in the middle of the 18th century, as the slave trade boomed like never before, some notable European observers saw it as a model of free enterprise and indeed of ‘liberty’ itself. They were not slave traders or slave-ship captains but economic thinkers, and very influential ones. They were a pioneering group of economic thinkers committed to the principle of laissez-faire: a term they themselves coined. United around the French official Vincent de Gournay (1712-1759), they were among the first European intellectuals to argue for limitations on government intervention in the economy. They organised campaigns for the deregulation of domestic and international trade, and they made the slave trade a key piece of evidence in their arguments.

For a generation, the relationship between slavery and capitalism has preoccupied historians. The publication of several major pieces of scholarship on the matter has won attention from the media. Scholars demonstrate that the Industrial Revolution, centred on the mass production of cotton textiles in the factories of England and New England, depended on raw cotton grown by slaves on plantations in the American South.

Capitalists often touted the superiority of the industrial economies and their supposedly ‘free labour’. ‘Free labour’ means the system in which workers are not enslaved but free to contract with any manufacturer they chose, free to sell their labour. It means that there is a labour market, not a slave market.

But because ‘free labour’ was working with and dependent on raw materials produced by slaves, the simple distinction between an industrial economy of free labour on the one hand and a slave-based plantation system on the other falls apart. So too does the boundary between the southern ‘slave states’ and northern ‘free states’ in America.

While the South grew rich from plantation agriculture that depended on slave labour, New England also grew rich off the slave trade, investing in the shipping and maritime insurance that made the transport of slaves from Africa to the United States possible and profitable. The sale of enslaved Africans brought together agriculture and industry, north and south, forming a global commercial network from which the modern world emerged.

It is only in the past few decades that scholars have come to grips with how slavery and capitalism intertwined. But for the 18th-century French thinkers who laid the foundations of laissez-faire capitalism, it made perfect sense to associate the slave trade with free enterprise. Their writings, which inspired the Scottish philosopher Adam Smith’s Wealth of Nations (1776), aimed to convince the French monarchy to deregulate key businesses such as the sale of grain and trade with Asia. Only a few specialists read them today. Yet these pamphlets, letters and manuscripts clearly proclaim a powerful message: the birth of modern capitalism depended not only on the labour of enslaved people and the profits of the slave trade, but also on the example of slavery as a deregulated global enterprise.…

Powerful article.
AEON
Slavery as free trade
Blake Smith | PhD candidate in history at Northwestern University in Illinois and the School for Advanced Studies in the Social Sciences in Paris