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  • Instapundit and the Medici Lesson

    Posted by James McCormick on June 23rd, 2006 (All posts by )

    [cross-posted on Albion's Seedlings]

    Instapundit has a post up on a book about the Medici and Italian banking:

    SO I’VE BEEN READING TIM PARKS’ Medici Money: Banking, Metaphysics, and Art in Fifteenth-Century Florence. It’s a pretty interesting book, with a juxtaposition of prejudices against sodomy and usury (both seen as “against nature”) as a background for the Renaissance.

    It’s mostly a history of the Medici banking empire, though, and it’s interesting to see how the bank declined. The problem was the passing of a generation of bankers who loved the work — Cosimo Medici said that he’d remain a banker even if he could make money by waving a wand — and its replacement by those who weren’t terribly interested in the actual work, but rather in the opportunity their jobs provided to hang around with kings, queens, and cardinals. Not surprisingly, things went downhill fast once that happened.

    I think that’s a metaphor for politics and journalism today — and a cautionary example for the blogosphere.

    Economic historian Joel Mokyr believes that these periods of innovation in technology (hard and soft) can be spotted repeatedly back to the Greeks (see his Gifts of Athena: Origins of the Knowledge Economy reviewed here, and the The Lever of Riches: Technological Creativity and Economic Progress). The distinction, finally, with the Scientific/Industrial Revolution was that the inevitable rent-seekers couldn’t get an adequate grip and the Malthusian caps were breached. The widening of the “epistemic base” (which Mokyr represents with the symbol omega) was creating usable knowledge (symbol lambda) faster than it could be controlled or stamped out by antagonistic parties. To quote Mokyr: “The broader the epistemic base, the more likely it is that technological progress can be sustained for extended periods before it starts to run into diminishing returns.” A virtuous cycle rather than a negative feedback loop gets established. He’s got a great article on Why was the Industrial Revolution A European Phenomena? available in .PDF format.

    When you look at where the Medici financial innovations came from, and ended up, (per Alfred Crosby’s The Measure of Reality: Quantification and Western Society, 1250-1600 reviewed here) … first northern Italy, then the Lowlands, then England, then back to the Continent and over to America by the second quarter of the 19th century, it sure seems like a pattern. Wherever the Republics appeared, bankers and prosperity were sure to follow. Fortunately for us, the English and American republican influences endured into the 20th century.

    The most readable pocket summary I’ve found of the movement of economic dynamism from northern Italy (Genoa/Florence/Venice) to the Lowlands is in Rodney Stark’s The Victory of Reason : How Christianity Led to Freedom, Capitalism, and Western Success. His overall hypothesis is a bit more aggressively retrofit that I think is warranted but his chapters on how prosperity moved from Italy to Holland to England are very well done.

    And speaking of how innovation escaped the religious and political authorities, for a wonderfully well-written little book on the impact of Newton on English and Continental life, you can’t get better than Jacob and Stewart’s Practical Matter : Newton’s Science in the Service of Industry and Empire, 1687-1851 As Holland’s Golden Age came to an end, Newton’s mathematical masterpiece was championed by a bizarre blend of Anglican clerics, provincial “engineers,” showboating lecturers, and French intellectuals. By the time that the higher-ups realized what Newton’s “action at a distance” might mean, it was too late. His ideas (including his own adherence to Baconian research principles) were woven throughout the English (and ultimately Continental) economy, and fueled an entirely new era of “public science” that continues to this day. The first Army of Davids actually attended lectures in coffeehouses on Isaac Newton’s laws of motion. The book wraps with the Great Exhibition of 1851, which both confirmed British dominance of the science and industry of the day and stimulated Continental and American appetites to catch up and surpass Great Britain.

    I hope to have a review up shortly.

    As for Instapundit’s warning of blogosphere co-option, I hope to poke around that question a bit during my review of his latest book (Army of Davids) — “The Army of Fagins versus the Barnicle Folk.” I think the “wisdom of crowds” effect pertains whether the crowd is civic, indolent, or criminal. And that’s an important part of the equation in sorting out how the Anglosphere will make use of its great freedoms. What you talk about is as important as the fact you’re talking. There’s an argument for hyper-empowered crabgrass Jacksonians — shades of the feared Norstrilians.

     

    5 Responses to “Instapundit and the Medici Lesson”

    1. Lex Says:

      I looked at the Mokyr essay. It is good. But after starting to read Gellner on civil society, and recent immersion in Macfarlane’s videotapes (I’ve listened to the ones on Gellner and Maitland), as well as reading Macfarlane’s Modern World books (Riddle and Making), I see that Mokyr leaves out an overarching question which Macfarlane, following Gellner, takes on.

      Even if the new technology arises from new useful knowledge, so what? The big question is, why were these new sources of wealth not just seized by predatory actions on the part of government, choking off the further development? That is the universal story of prior history. Why not in the 1700s, in England and to a lesser degree in a few other places? How was it that capital was accumulated, technology progressed, useful knowledge was allowed to grow — for a virtuous cycle to develop?

      Mokyr does not really deal with this. Merely explaining the technology leaves out the final, critical factor — how is possible for the inventors and developers and employers of the new science and technology were able to go about their business freely, without being pounced upon and looted? How did they escape being victimized by predation?

      Macfarlane attributes this extraordinarly and strange development largely to the appearance of civil society, founded on strong cultural and legal foundations — again, first, in England — primarily the law of trusts. I know this is hard to choke down. But listen to the Maitland lecture for the short version.

      You need both pieces of the puzzle — technology and institutions. Mokyr is very sound on the former, superficial on the latter.

      Also, I agree re: Stark. He fails to make a good case for his larger thesis — one which I agree with, actually. But his brief economic history of dark ages, medieval and renaissance Europe — especially, as you note, the critical role of the Italians — is beautifully done. His other compelling point is that England from very early on had the freedom and security and civic spirit and legality associated with Continental city republics — but it was immensely larger than any continental and could take advantage of economies of scale and a much more minutely subdivided division of labor. The rise of a vast number of water-driven mills in England during the medieval period and thereafter is a critical factor in developing the skill base that led to the rapid spread of steam-driven mills in the industrial revolution. Stark, then, falls short of his overarching goal, but provides a superior education on many important points nonetheless.

    2. aaron Says:

      Nice to see the posts on finance, econ, and soc again.

      Unfortunately my head’s just not been in the mood for reading lately, but I will come back too them.

      Keep up the good work.

    3. Michael Hiteshew Says:

      …periods of innovation in technology (hard and soft) can be spotted repeatedly back to the Greeks

      I think he meant to say “back to the Geeks”. You know: scientists, engineers, social philosphers, and economists ‘n stuff. Geeks.

    4. James McCormick Says:

      Heh. You want Geeky Greeks … this is as geeky as it gets:

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

      Mokyr’s view is that “singleton” advances are most easily lost. But Europe lost virtually none of its discoveries from the early medieval period onward (unlike the Chinese, for example).

      As for Lex’s comments above on Mokyr, they are welcome and generally accurate but I may have misled readers. In Mokyr’s defence I would say that he’s unapologetically an economic historian and doesn’t pretend to have as comprehensive a grasp on the meta-history literature. He explicitly notes that the great names of 20th century history (e.g. Landes, et al.) have spend lifetimes thinking about the European question. And he makes his case from his own area of specialty.

      He does, however, cite Macfarlane pretty regularly and quite respectfully re: books like Glass and Savage Wars of Peace, and his disciplinary colleagues (who I’ve been reading through) certainly mention Macfarlane re: Origins of English Individualism. So they certainly aren’t ignoring the cultural and religious influences on how technology gets used.

      The “Practical Matter” book is a wonderful recollection of just how influential religious controversy and radical social philosophizing was in the process of getting to a decent steam engine. Amazing and often counter-intuitive.

      We can regret that pigs don’t fly but it’s harsh to blame the pig. As Lex notes, use Mokyr for overviews on the technology side (and as a useful
      corrective to the po-mo historians who claim European advantage was a fluke). He’s a very well-read, even-handed writer with a clear style. But don’t forget him entirely as one teases out the contingencies, dependencies, and plain good luck of the arguments made by the “put it all down to trusts” school.

      For example, Mokyr feels that the British Industrial Revolution is only comprehensible in light of an “Industrial Enlightenment” that changed the social milieu for technology. In some ways, we can best see the blending of chance, culture, and technology in Rodger’s naval histories … or Macfarlane’s Glass history. A culture/nation must have a lot of necessary but insufficient intellectual/technological precursors, regular bits of luck, and “the wisdom of crowds” (aka republicanism) to stay ahead of the pack.

      And European hetereogeneity meant that the “lead” constantly shifted around. There was a regional strength through constant hybridization, competition, and cross-fertilization.

      Great productive theoretical leaps were made in otherwise barren Continental absolute states, and passed quickly to those areas that could put them to use. And, IMHO, the best that we might say is that the republics are a kind of weak magnetic field that constantly attract the people, ideas,
      and resources for success … even as those republics make strategic blunders that put them specifically in the soup for many decades at a stretch. And as the central republic of our era, we might say that the US most clearly performs this alchemical process on a global scale even as it struggles with iniquities, inequalities, and institutional inefficiencies. Maybe the Anglosphere is like the “house” … it always wins (so far) but sometimes has to flip a huge number of cards to do it.

      The tail end of Mokyr’s .PDF spends some time considered alt history about the West and the Rest, and thinking about the distinction between what’s possible, and what’s probable. Well worth reading. At some point down the road, it’d be fun to approach Professor Mokyr to get his latest ideas on the culture/technology mix at play in the Anglosphere.

    5. Lex Says:

      James, thanks for this response.

      I did not mean to suggest that there is any “put it all down to trusts” school. Macfarlane is always saying that it is a result of a vast array of factors. In fact, in SWOP, he says if you have to pick one thing it is “islandhood”. So, I don’t disagree with anything you have written.

      But I also think Macfarlane would say that the key that allowed the rise of a civil society strong enough to prevent predation by the state was the law of trusts. Just happensance that it happened, or happened that way.

      I just think that all the technological progress in the world gets you nowhere if you still have a predatory state that is able to step in and take it all away.

      From what I have seen, I agree absolutely that Mokyr is very, very good in is bailiwick. And I
      do not downplay the importance of the scientific/technical side. (Neither does Macfarlane, actually.)