Author: Richard Melson

The Issue of Deep Rhythms in History: Second Look

We have already seen, in the previous essay, that world violence against the vulnerable is a deep and constant theme or rhythm in world history, one that is “dutifully” avoided. (This avoidance may be called another rhythm all its own.)

In the realm of finance (Kenneth Rogoff’s book This Time is Different is about financial rhythms and cycles), we also sense deep echoes and rhythms:

Consider this entry on the medieval Florentine banking houses the Bardi and Peruzzi:  “These Florentine families gave their names to two great banking houses of the 14th century, commanding assets far greater than those of the later and more famous Medici bank.  They advanced loans to European monarchs, most notably Edward I, who used the money to finance his campaigns in the Hundred Years’ War.  He and his successors reneged on his debts in 1345, which led to bankruptcy for the Bardi and Peruzzi forms and sent shock waves through the European economy.

The Medici rules Florence from 1434-1494, long after these Europe-wide shocks.  Bond finance (governments borrowing from their own people as well as outsiders) to finance wars emerged out of insecurity on all sides of war finance and culminated in the brilliance of the Rothschilds (as Prof. Niall Ferguson’s contemporary two-volume history of this family shows).

Thus, wars and war finance have many centuries of gestation and provenance and defaults and shock waves were well known in the European economy of the fourteenth century long before the Medici and their famous patronage of the arts and their prominence in Papal politics.

One might argue that these are rhythms and echoes that have to do with deep structures like militarily organized violence (wars) and political organizations from kingdoms through states.

If you combine these two essays (56/57) you get a money-and-violence super-rhythm which goes on today.

Consider the Larousse entry on the Frescobaldi family:

“One of several banking families in 14th-15th century Florence with European-wide interests. 

“Their clients included Edward II of England, whose wars with Scotland they financed in exchange for customs revenues.

“The royal default on debts led to a crisis for the Frescobaldi bank in 1311.”

(Larousse Dictionary of World History, ed. Bruce Lenman, Houghton Mifflin, 1995, page 343)

This also shows you war-and-finance had a major destabilizing role in Europe long before our modern period and constitutes a potential rhythm or proto-rhythm.

Are There Deep Rhythms in History?

Kenneth Rogoff of Harvard wrote a very intriguing book in recent years with the title, This Time Is Different with the implication that fundamental discontinuities (i.e., this time is different) are questionable, if one looks deeply enough.  In the introduction of the book, the author raises the questions of “deep rhythms in history” without answering his own question.  Here’s a potential organizing principle: the world is always a system of violence directed at the weak. Take this entry from the Larousse Dictionary of World History:

Arawaks

The original inhabitants of the Bahamas (Lucayos) and the Greater Antilles (Taínos) who practiced a subsistence agriculture based on seafood, game, maize and cassava using Neolithic technology.  They live mainly in coastal settlements of large villages with caneyes (family houses) and bohios (chiefs’ houses) and had a hierarchical politico-religious structure based on a hereditary ruler, the cacique, who possessed a ceremonial stool (dulho).  A priestly caste-controlled worship of gods of place and nature (zemis) and ceremonies which led to heaven (coyaba). 

They were exterminated as a people by the Spaniards after 1519.

The words maize, tobacco, potato, hammock, canoe and hurricane all derive from the Arawak language.

If we think of the Rohingas of Myanmar, the Yazidis, the Tutsis in Rwanda, and the Darfur people in Sudan, of recent decades, we see a deep rhythm in history: the destruction of the unprotected.  Notice that the first Jewish ghetto in Europe (Venice) was established in 1516 around the time that the Arawak murders begin on a systematic basis.

This never-really-discussed basic rhythm of group violence has been glorified (e.g., The Iliad of Homer, the Aeneid of Virgil, the Old Testament, Scandinavian sagas, Japanese “war tales” such as the Heike Monogatari, etc.)

The omission in all education of this world-violence theme gives students a false sense of “how the world got to now.”

Movies as an Off-Campus “Open University:” Antonioni’s La Notte (The Night, 1961)

Michelangelo Antonioni was an Italian film director, screenwriter, editor, painter, and short story author.  

Antonioni died on July 30, 2007 (aged 94) in Rome, the same day that another renowned film director, Ingmar Bergman, also died.

He is best known for his “trilogy on modernity and its discontents”—L’Avventura, La Notte, and L’Eclisse from the early sixties.

One “hidden pillar” of the world Antonioni depicts in his movies is that “you are what you read.” This gives the viewer a “meta-intelligent” (latent overview signal) handle on the world being depicted:

In La Notte of 1961, Antonioni starts with an image of the Pirelli Tower in Milano, the most famous skyscraper of its time in Italy. In contrast to the impressiveness of the building, the characters in his movies are trying to “navigate” boredom and the enveloping sense of ennui.

One of the characters in the movie is said to be reading the masterpiece by Herman Broch, The Slkeepwalkers:

The Sleepwalkers (original title Die Schlafwandler), is a 1930s novel in three parts, by the Austrian novelist and essayist Hermann Broch. 

Opening in 1888, the first part is built around a young Prussian army officer; the second in 1903 around a Luxembourger bookkeeper; and the third in 1918 around an Alsatian wine dealer.  Each is in a sense a sleepwalker, living between vanishing and emerging ethical systems just as the somnambulist exists in a state between sleeping and waking.  Together they present a panorama of German society and its progressive deterioration of values that culminated in defeat and collapse at the end of World War I.

Antonioni implies the characters he depicts are a new version of “sleepwalker.”

When the movie starts, the characters played by Marcello Mastroianni and Jeanne Moreau visit a friend in the hospital who mentions his new work on Adorno.  Adorno (1903-1969) was a German-Jewish theoretician who wants to understand how the world has gone off the rails leading to WWII and the death factories of the Nazis.  He argues that this is connected (paradoxically) to the relentless rationality of “The Enlightenment” and works in a “dialectical” way (i.e., something becomes its opposite).

In the movie, there’s a scene where the author played by Mastroianni is at a book talk concerning his new book.

In other words, the world Antonioni is depicting, a kind of “odyssey” of ennui made confusing by gleaming architecture such as the Pirelli Tower of Nervi (built from 1955-1958) shown in the opening shot of the movie.

The books mentioned in the movie confirm the director’s “you are what you read” motif.

The recent book: The Sleepwalkers: How Europe Went to War in 1914 by Christopher Clark is consistent with this sense of things.

Incomplete One-Field Analysis

Prof. Neil Shubin of the University of Chicago is an outstanding paleontologist/evolutionary theorist and has written marvelous books such as Your Inner Fish:  A Journey into the 3.5-Billion-Year History of the Human Body.

“Cleverly weaving together adventures in paleontology with very accessible science, Neil Shubin reveals the many surprisingly deep connections between our anatomy and that of fish, reptiles, and other creatures.  You will never look at your body in the same way again—examine, embrace, and exalt Your Inner Fish!”

Prof. Shubin has done outstanding work in trying to understand post-dinosaur mammalian history and timelines.  (Rise of the Mammals was a recent PBS program that is relevant.)

What is inadequate about all such “bones-and-stones” approach to “how we got here” is that the human creature is ultimately downstream from culture as expressed in language (epic poems) and images (e.g., the Lascaux caves in France, say) and fossils, as wonderfully intelligent as the detective work is, are one flashlight and not the system of “searchlights” one really needs to understand anything.

The very first lines of Homer’s great epic, the Odyssey shows you this:

“Sing in me, Muse, and through me tell the story of that man skilled in all ways of contending, the wanderer…”

(Quoted from Robert Fitzgerald’s translation.)

Here one sees the cultural soul of the human: the invocation of muses, gods, the telling of stories, the singing of songs, contending and wandering.

All evolution: cosmic, earthbound, whatever, does not capture the essence of humanity as the first words of Homer’s Odyssey where words, songs, stories take us into the human while the fossils and fossil archaeology are fascinating material infrastructure, as Prof. Shubin’s outstanding skeletal digs and “detective work” show us.

Economics Reconsidered to Include Uncertainty

Standard definitions for economics say that it is about “cost-benefit” thinking. Everything costs time or money or effort or lost opportunities but offers different levels of expected benefit.  Economics, in this view, matches decisions to this “menu” of items and prices.

Actually, that is not a complete description at all because economics is about cost-benefit–risk-uncertainty thinking and that implies one needs to get into the dimensions of risk and uncertainty. 

A real decision involves more than costs and benefits but implies all kinds of “how can I be sure?” questions which means risk and uncertainty considerations. 

World-watching modified in this way is explored at policyuncertainty.com (Kellogg School of Management, Northwestern University)

This implies the need for new indicators such as:

Call for papers:  “Uncertainty and Economic Activity:  Global Perspectives” [PDF]

The extraordinary rise in trade policy uncertainty [archived PDF].

Policy News and Stock Market Volatility [PDF].

They say that practitioners of a field are always like general “fighting the last war” not this one, like the French generals in 1940 who were mentally in 1914. 

One must augment all economics textbook talk in this direction of risk-and-uncertainty without which all analyses are like backward-looking “stills” as opposed to forward-looking “moving pictures.”  All standard textbooks are uninformative on these issues.

“The Whole:” a Quick Second Look

We started this book with a quote from Wittgenstein “Light dawns gradually over the whole” and argued that the meaning of the “whole” is and will be elusive forever.

That is as it should be:

Think of the final pages of John Dewey’s classic book, The Quest for Certainty.  You’ll sense how Dewey oscillates between the “pin-down-ability” of the “whole” and its eternal slipperiness:

“Diversification of discoveries and the opening up of new points of view and new methods are inherent in the progress of knowledge.  This fact defeats the idea of any complete synthesis of knowledge upon an intellectual basis.  The sheer increase of specialized knowledge will never work the miracle of producing an intellectual whole.  The astronomer, biologist, chemist, may attain systematic wholes, at least for a time, within his whole field.

“Man has never had such a varied body of knowledge in his possession before, and probably never before has he been so uncertain and so perplexed as to what his knowledge means, what it points to in action and in consequences.”

(Dewey, The Quest for Certainty, Capricorn Books, 1960, pages 312/313)

Wholeness, Dewey senses, like the white whale in Moby-Dick, “won’t sit for a portrait.”   That is why the student should take an eternally “non-rigid” answer to these questions which are “arguments without end” and that’s fine.

Postdicting the 2008 Great Recession: Macro and Finance

Prof. George Akerlof (2001 Nobel) shows how macroeconomics overlooked the issue of financial stability as a pillar. He argues that Rajan’s 2005 paper and talk were uniquely prescient on this.

This is why we find thinking about, say, the Panic of 1873 so instructive especially when one adds an “omnidirectional” analysis: In 1873, we get Around the World in Eighty Days with the transport revolutions that make winning this bet about circling the world in eighty days, at all possible: railroads, steamships, etc.  London is shown to have emerged as the world money center, as described in Walter Bagehot’s classic Lombard Street. The opening line of The Magnificent Ambersons is (in paraphrase):  “The financial crisis of 1873 destroyed the fortunes of most people but made the Ambersons and this was the basis of their magnificence.”

The novel The Age of Innocence by Edith Wharton, set in the 1870s, shows the financial shocks of 1873 as a major player in the story.

Prof. Adam Tooze of Columbia published in 2018 a masterful account of finance and macro and politics relevant to our 2008 fiasco in his Crashed:

Crashed:  How a Decade of Financial Crises Changed the World

Hence Akerlof’s depiction, in the current Journal of Economic Perspectives, of how macroeconomics became separated from financial instability analyses is key:

“The Keynesian–neoclassical synthesis that had emerged by the early 1960s put constraints on macroeconomics. Foremost, it divorced macroeconomists from working on financial stability.  Luckily, after the crash of 2008, the prior work of finance economists has been belatedly acknowledged, and the subfield of macro stability has also emerged as quite possibly the most vibrant research frontier in economics.  Nevertheless, macroprudential concerns remain as back matter in the textbooks.  Correspondingly, macroprudential policy is undervalued in the councils of government.  Yet its importance remains, given the likelihood of another crash.”

In this context, little damage could be done by macro models lacking the details of the financial system.  But exclusion of such detail (with the attendant possibility of financial crash) from standard macroeconomics could be a problem in a different context: if the financial system changed in fundamental ways.  That was exactly the topic of Rajan’s (2005) Jackson Hole talk, “Has Financial Development Made the World Riskier?” [PDF] which did predict the crash of 2008 as it actually happened.  In terms of the skeletal model, had that “financial development” beyond a well-supervised banking system with deposit insurance driven the financial system out of the safe region of always hold?  In September 2008, the answer to Rajan’s question became clear: “yes, it had.” 

Journal of Economic Perspectives—Volume 33, Number 4—Fall 2019—Pages 171–186

What They Were Thinking Then: The Consequences for Macroeconomics during the Past 60 Years [PDF] by Prof. George Akerlof.

Bureau of Economic Analysis Materials for Every Student, Regardless of Major

We mentioned in a previous essay that an economist receives certain Bureau of Economic Analysis and Bureau of Labor Statistics updates and that allows them to “guesstimate” next year’s GDP growth by adding up average labor productivity growth (Y/L) to labor force growth. Remember Y (GDP) equals Y/L multiplied by L and percentage growth in Y is approximately equal to the sum of the other two variables: Y/L and L.  The sum approximates GDP growth and requires no mental gymnastics with complex mathematics of any kind.  A wise student would learn what’s on offer by these government update services and realize simple familiarity is half the game in everything.  The economics pundits are not ten feet tall.  They simply follow simple materials that the typical student does not have and has no idea that these materials exist.

BEA News:  Gross Domestic Product by Industry, 2nd quarter 2019 and annual update:

“The U.S. Bureau of Economic Analysis (BEA) has issued the following news release today:

“Professional, scientific, and technical services; real estate and rental and leasing; and mining were the leading contributors to the increase in U.S. economic growth in the second quarter of 2019. The private goods‐ and services‐producing industries, as well as the government sector, contributed to the increase.  Overall, 14 of 22 industry groups contributed to the 2.0 percent increase in real GDP in the second quarter.”

The full text of the release [archived PDF] on BEA’s website can be found here. 

The Bureau of Economic Analysis provides this service to you at no charge.  Visit us on the Web at www.bea.gov.  All you will need is your e-mail address.  If you have questions or need assistance, please e-mail subscribe@bea.gov”

Novels as a Kind of University Demonstrating Storms of Global Finance and Technification

Edith Wharton began writing The Age of Innocence in 1917 as a way of recalling and criticizing the world of her youth, which had not yet experienced the devastation of World War I (1914–18).  Beginning in July 1920, the novel was published in serial form in New York’s monthly Pictorial Review.

The centrality of finance and technical change can be seen. We are reminded of the very first line in The Magnifcent Ambersons of Booth Tarkington, which tells the reader that the basis of the magnificence of the Ambersons was established when they somehow benefited from the 1873 financial crisis which destroyed many others. (Whether the Ambersons were shrewd or lucky or wily is not clarified.)

The Age of Innocence is set in New York in the 1870s and the financial storm and “techno-storm” become vital:

The Panic of 1873:

In The Age of Innocence, the investment bank run by Julius Beaufort collapses, bringing shame upon him and his wife and throwing New York into a tizzy. Beaufort’s business failure is a fictionalized version of the Panic of 1873, industrial capitalism’s first worldwide depression. Then, the United States backed its currency with both silver and gold, but when Germany and several other countries stopped using silver to back their currency, the price of silver fell precipitously, devaluing U.S. currency. The U.S. Treasury made matters worse by releasing large amounts of paper money into the economy. Speculators and bankers now had to immediately pay off their debts with gold.

In 1873, a prominent investment banker by the name of Jay Cooke went bankrupt, the effects rippled throughout the entire U.S. economy, and panic ensued. Trading was suspended for two weeks on the New York Stock Exchange as company after company failed, wages dropped precipitously, and unemployment spiked. The rise of the labor movement can be traced to the widespread unrest and economic instability set off by the panic. Additionally, the panic allowed a few of the wealthiest businessmen—such as Andrew Carnegie, John Rockefeller, and Cyrus McCormick, who retained access to valuable capital—to vastly increase their wealth and snuff out competitors.

Technological Advancements

Characters in The Age of Innocence are aware their world is about to be forever changed by the culture of outsiders, brought to them in part by advancements in technology. Although inventions like the telephone were on the horizon, they seemed improbably fantastic to people living in the early 1870s world of telegrams and horse-drawn carriages. However, in the final chapter, Wharton depicts Newland Archer living in a world that has been significantly altered by these technologies, a mere quarter century later.

In 1876, for example, American inventor Alexander Graham Bell (1847-1922) patented an early telephone and wowed audiences by demonstrating the world’s first telephone call by placing a call from one telegraph station to another five miles away.  The Western Union company refused to buy Bell’s telephone patent, claiming his invention would amount to no more than a novelty. However, the first telephone line was built in 1877-78, and after that, telephone usage skyrocketed.  At the start of the 1880s, there were almost 50,000 telephones in use, a number that swelled to over half a million by the turn of the century.

A similar large-scale change was the invention and development of electricity. Although the first electric light was developed in 1835, it was not until 1879 that American inventor Thomas Edison (1847-1931) developed and patented a light bulb with a life span of 15 hours. Edison’s work also focused on the problems of electrical generation and conductivity.

At the same time that communication was becoming easier and the day was lengthened artificially through electric lighting, the distance between continents was shortened by advances in turbine steam engines. 

In the 1860s, it took between eight and nine days to cross the Atlantic Ocean; by 1907, the Mauretania (the ship that Dallas and Newland Archer take to Europe in the last chapter) makes the voyage in half that time.  This was a contributing factor to the great influx of European immigrants who arrived in the United States during the late 19th and early 20th centuries.

In Chapter 29, Newland contemplates the “brotherhood of visionaries,” who predict a train tunnel under the Hudson River as well as “ships that would cross the Atlantic in five days … and other Arabian Night marvels.” In 1904, excavation for train tunnels under the Hudson began, directed by Alexander Cassatt, president of the Pennsylvania Railroad. In 1910, New York’s Penn Station opened and began receiving traffic from electric trains that traveled through the tunnels.

Notice that the novel The Magnificent Ambersons is from 1918, Edith Wharton’s Age of Innocence from 1920. In each, the personal storms of private emotion are somewhat carried along and swept up into the storms coming from national and even global finance (1873 caused a tremendous crash in Germany and Austria called the “Grunderkrach” [founder’s crash]) as well as techno-waves that are very baffling to the people of the time.

Novelists As Prophetic?

There are three French novelists who say prophetic things in their writings, predictions that are based on intuition and sensibility and not on any formal forecasting at all, but far-seeing nevertheless. Consider these three:

Jules Verne (died in 1905):

Paris in the Twentieth Century (French: Paris au XXe siècle) is a science fiction novel by Jules Verne. The book presents Paris in August 1960, 97 years in Verne’s future, where society places value only on business and technology.

Written in 1863 but first published 131 years later (1994), the novel follows a young man who struggles unsuccessfully to live in a technologically advanced, but culturally backwards world.  Often referred to as Verne’s “lost novel,” the work paints a grim, dystopian view of a technological future civilization.

Verne’s predictions for 1960:

The book’s description of the technology of 1960 was in some ways remarkably close to actual 1960s technology.

The book described in detail advances such as cars powered by internal combustion engines (“gas-cabs”) together with the necessary supporting infrastructure such as gas stations and paved asphalt roads, elevated and underground passenger train systems and high-speed trains powered by magnetism and compressed air, skyscrapers, electric lights that illuminate entire cities at night, fax machines (“picture-telegraphs”), elevators, primitive computers which can send messages to each other as part of a network somewhat resembling the Internet (described as sophisticated electrically powered mechanical calculators which can send information to each other across vast distances), the utilization of wind power, automated security systems, the electric chair, and remotely-controlled weapons systems, as well as weapons destructive enough to make war unthinkable.

The book also predicts the growth of suburbs and mass-produced higher education (the opening scene has Dufrénoy attending a mass graduation of 250,000 students), department stores, and massive hotels. A version of feminism has also arisen in society, with women moving into the workplace and a rise in illegitimate births. It also makes accurate predictions of 20th-century music, predicting the rise of electronic music, and describes a musical instrument similar to a synthesizer, and the replacement of classical music performances with a recorded music industry.  It predicts that the entertainment industry would be dominated by lewd stage plays, often involving nudity and sexually explicit scenes.

Flaubert (died in 1880):

In his posthumous novel published in 1881, Bouvard and Pécuchet, a satire on random knowledge-seeking, the two clerks of the book title, conclude that sometime in the future, America will “take over” the world or its hegemonial leadership. To see that America would supplant Europe, in those days, is quite “counterintuitive.”

Bouvard and Pécuchet details the adventures of two Parisian copy-clerks, François Denys Bartholomée Bouvard and Juste Romain Cyrille Pécuchet, of the same age and nearly identical temperament. They meet one hot summer day in 1838 by the canal Saint-Martin and form an instant, symbiotic friendship. When Bouvard inherits a sizable fortune, the two decide to move to the countryside. They find a 94-acre (380,000 m2) property near the town of Chavignolles in Normandy, between Caen and Falaise, and 100 miles (160 km) west of Rouen. Their search for intellectual stimulation leads them, over the course of years, to flounder through almost every branch of knowledge.

Balzac (died in 1850):

In his novel, The Wild Ass’s Skin (La Peau de Chagrin), Balzac describes scenes and conversations which lead one insightful interpreter of his to remark:  “On the level of world history, this incident can be read as an allegorical prefiguration of the contemporary conversion of Asia to the materialistic motivations of the technological societies of the West.”  (Balzac: An Interpretation of La Comédie Humaine, F.J.W. Hemmings, Random House, 1967, page 173)

Hemmings says:  “Europe and then American norms are generally accepted among what we call the advanced societies of the world: a civilization concerned above all to stimulate and then gratify the innumerable private desires of its citizens…In Balzac’s day, this civilization had reached its highest development in Paris.”  (Hemmings’s book, page 173)

These three novelists bring to mind Heidegger’s (died in 1976) more recent sense that science and technology from Europe would take over dominant “planetary thinking” and that would “wring out” any sense of “being” or “being-in-the world.”

These three writers gave us “allegorical prefigurations” (to use the Hemmings’s phrase above) of the present which are startling in their far-seeing sense of things and that raises the question: who might their equivalents be in our time?