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Capital Gains
| Article
# : |
10968 |
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Section : |
BOOK WORLD
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| Issue
Date : |
6 / 1986 |
2,237 Words |
| Author
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Mario Cantu
Mario Cantu holds a PhD in economics from SUNY. He teaches at
Northern Virginia community college and writes extensively for
investment advisory journals. |
This noted Stanford University economist Nathan Rosenberg and legal scholar L. E. Birdzell, Jr., have written a stirring account of the origins and nature of the free enterprise system. Although the book includes vignettes from economic history--the development of insurance, double-entry bookkeeping, bills of exchange, etc.--How the West grew Rich focuses on how capitalism generates forces within itself leading to its perpetuation and advancement.
Rosenberg and Birdzell identify themselves early as supporters of decentralized economic system with a minimum of government interference. Indeed, throughout the volume we find an implicit belief that the capitalist economic engine achieved its greatest momentum in an atmosphere encouraging experiment, adventure, and adaptation to new realities where sacrifice was richly rewarded virtue. In this sense, our current facination with deregulation is nothing new. The conflict over deregulation had its parallel in the Middle Ages when feudal overlords lost power to nouveaux riches merchants. These merchants quickly inventing money, banks, and accounting, as well as by developing new goods and services. Shouldn't we be following the same course today, the authors imply?
The authors argue that current economic conditions can be understood by looking into the past for trace elements that are still present in our commercial affairs. And they begin with a description of life in the Middle Ages.
Rapid economic growth was impossible during the Middle Ages because people were bound by birth to their professions or trades. Only with the lessening of political and religious restriction on commercial activities were individuals free to pursue endeavors whose rewards were greatest. Indeed, the feudal system bound the villein (resident of a manor) in such a subservient relation to his lord that had the poor farmer run from his liege, he would have been hunted like a slave. Moreover, the lords of the manor, bishops, and barons resisted change, since they derived immense benefits from a feudal system.
In the high-wrought language characteristic of the book, the authors argue that the medieval mindset shielded people from the painful psychological consequences that results from a belief that personal disasters may be attributable to one's own miscalculations. It gave a clanking chivalry and a luxurious religious hierarchy the comfort of thinking that their oppressions served the cause of justice instead of being mere banditry. The embarrassment one experiences stems from the realization that
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