Thursday, December 13, 2012


What is worth Anything But as Much Money as it Will Bring?
Samuel Butler

Ou il y a du commerce Il y a des moeurs douces.

The Expansion of Order into the Unknown

Having reviewed some of the circumstances in which the extended order arose, and how this order both engenders and requires several property, liberty and justice, we may now trace some further connections by looking more closely at some other matters already alluded to - in particular, the development of trade, and the specialisation that is linked to it. These developments, which also contributed greatly to the growth of an extended order, were little understood at the time, or indeed for centuries afterwards, even by the greatest scientists and philosophers; certainly no one ever deliberately arranged them.
The times, circumstances, and processes of which we write are cloaked in the mists of time, and details cannot be discerned with any confidence of accuracy. Some specialisation and exchange may already have developed in early small communities guided entirely by the consent of their members. Some nominal trade may have taken place as primitive men, following the migration of animals, encountered other men and groups of men. While archaeological evidence for very early trade is convincing it is not only rare but also tends to be misleading. The essentials that trade served to procure were mostly consumed without leaving a trace - whereas rarities brought to tempt their owners to part with these necessities were often meant to be kept and therefore more durable. Ornaments, weapons, and tools provide our chief positive evidence, while we can only infer from the absence in the locality of essential natural resources used in their manufacture that these must have been acquired by trade. Nor is archaeology likely to find the salt that people obtained over long distances; but the remuneration that the producers of salt received for selling it sometimes does remain. Yet it was not the desire for luxury but necessity that made trade an indispensable institution to which ancient communities increasingly owed their very existence.
However these things may be, trade certainly came very early, and trade over great distances, and in articles whose source is unlikely to have been known to those traders engaged in it, is far older than any other contact among remote groups that can now be traced. Modern archaeology confirms that trade is older than agriculture or any other sort of regular production (Leakey, 1981:212). In Europe there is evidence of trade over very great distances even in the Palaeolithic age, at least 30,000 years ago (Herskovits, 1948, 1960). Eight thousand years ago, Catal Huyuk in Anatolia and Jericho in Palestine had become centres of trade between the Black and the Red Seas, even before trade in pottery and metals had begun. Both also provide early instances of those `dramatic increases of population' often described as cultural revolutions. Later, `a network of shipping and land routes existed by the late seventh millennium B.C. for carrying obsidian from the island of Melos to the mainland' of Asia Minor and Greece (see S. Green's introduction to Childe, 1936/1981; and Renfrew, 1973:29, cf. also Renfrew, 1972:297-307). There is `evidence for extensive trade networks linking Baluchistan (in West Pakistan) with regions in western Asia even before 3200 B.C.' (Childe, 1936/1981:19). We also know that the economy of predynastic Egypt was firmly based on trade (Pirenne, 1934).
The importance of regular trade in Homeric times is indicated by the story in the Odyssey (I, 180-184) in which Athena appears to Telemachos in the guise of the master of a ship carrying a cargo of iron
to be exchanged for copper. The great expansion of trade which made possible the later rapid growth of classical civilisation appears from archaeological evidence also to have occurred at a time for which almost no historical documentation is available, that is, during the two hundred years from about 750 to 550 B.C. The expansion of trade also seems to have brought about, at roughly the same time, rapid increases of population in Greek and Phoenician centres of trade. These centres so rivalled each other in establishing colonies that by the beginning of the classical era life at the great centres of culture had become wholly dependent on a regular market process. The existence of trade in these early times is incontestable, as is its role in spreading order. Yet the establishment of such a market process could hardly have been easy, and must have been accompanied by a substantial disruption of the early tribes. Even where some recognition of several property had emerged, further and previously unheard of practices would have been required before communities would be inclined to permit members to carry away for use by strangers (and for purposes only partly understood even by the traders themselves, let
alone the local populace) desirable items held within the community that might otherwise have been available for local common use. For example, the shippers of the rising Greek cities who took pottery jugs filled with oil or wine to the Black Sea, Egypt or Sicily to exchange them for grain, in the process took away, to people of whom their neighbours knew virtually nothing, goods which those neighbours themselves much desired. By allowing this to happen, members of the small group must have lost their very bearings and begun to reorient to a new comprehension of the world, one in which the importance of the small group itself was much reduced. As Piggott explains in Ancient Europe, `Prospectors and miners, traders and middlemen, the organis- ation of shipments and caravans, concessions and treaties, the concept of alien peoples and customs in distant lands - all these are involved in the enlargement of social comprehension demanded by the techno- logical step of entering ... a bronze age' (Piggott, 1965:72). As the same author writes about the middle bronze age of the second millennium, `The network of routes by sea, river and land gives an international character to much of the bronze-working of that time, and we find techniques and styles widely distributed from one end of Europe to the other' (ibid., 118).
What practices eased these new departures and ushered in not only a new comprehension of the world but even a kind of `internationalisation' (the word is of course anachronistic) of style, technique, and attitudes? They must at least have included hospitality, protection, and safe passage (see next section). The vaguely defined territories of primitive tribes were presumably, even at an early date, interlaced by trading connections among individuals based on such practices. Such personal connections would provide successive links in chains over which small yet indispensable amounts of `trace elements', as it were, were transmitted over great distances. This made sedentary occupations, and thus specialisation, possible in many new localities - and likewise eventually increased the density of population. A chain reaction began: the greater density of population, leading to the discovery of
opportunities for specialisation, or division of labour, led to yet further increases of population and per capita income that made possible another increase in the population. And so on.
The Density of Occupation of the World Made Possible by Trade
This `chain reaction' sparked by new settlement and trade may be studied more closely. While some animals are adapted to particular and rather limited environmental `niches' outside of which they can hardly exist, men and a few other animals such as rats have been able to adapt themselves almost everywhere on the surface of the earth. This is hardly due merely to adaptations by individuals. Only a few and relatively small localities would have provided small bands of hunters and gatherers all that even the most primitive tool-using groups need for a settled existence, and still less all they needed to till the earth. Without support from fellows elsewhere, most humans would find the places they wish to occupy either uninhabitable or able to be settled only very thinly.
Those few relatively self-sustaining niches that did exist would likely be the first in any particular area to be permanently occupied and defended against intruders. Yet people living there would come to know of neighbouring places that provided most but not all their needs, and which would lack some substance they would require only occasionally: flint, strings for their bows, glues to fix cutting blades into handles, tanning materials for hides, and such like. Confident that such needs could be met by infrequent return visits to their present homes, they would stride out from their groups, and occupy some of these neighbouring places, or other new territory even further away in other parts of the thinly populated continents on which they lived. The importance of these early movements of persons and of necessary goods cannot be gauged by volume alone. Without the availability of imports, even if they formed only an insignificant fraction of what was currently being consumed in any particular place, it would have been impossible for early settlers to maintain themselves, let alone to multiply.
Return visits to replenish supplies would raise no difficulties so long as the migrants were still known to those who had remained at home. Within a few generations, however, descendants of these original groups would begin to seem strangers to one another; and those inhabiting the original more self-sustaining localities would often begin to defend themselves and their supplies in various ways. To gain permission to enter the original territory for the purpose of obtaining whatever special substances could be obtained only there, visitors would, to herald their peaceful intentions and to tempt the desires of its occupants, have had to bring presents. To be most effective, these gifts had best not satisfy everyday needs readily met locally, but would need to be enticingly new and unusual ornaments or delicacies. This is one reason why objects offered on one side of such transactions were, in fact, so often `luxuries' - which hardly means that the objects exchanged were not necessities for the other side.
Initially, regular connections involving exchange of presents would probably have developed between families with mutual obligations of hospitality connected in complex ways with the rituals of exogamy. The transition from the practice of giving presents to such family members and relations, to the appearance of more impersonal institutions of hosts or `brokers' who routinely sponsored such visitors and gained for them permission to stay long enough to obtain what they needed, and on to the practice of exchanging particular things at rates determined by their relative scarcity, was no doubt slow. But from the recognition of a minimum still regarded as appropriate, and of a maximum at which the transaction seemed no longer worthwhile, specific prices for particular objects will gradually have emerged. Also inevitably, traditional equivalents will steadily have adapted to changed conditions.
In any case, in early Greek history we do find the important institution of the xenos, the guest-friend, who assured individual admission and protection within an alien territory. Indeed, trade must have developed very much as a matter of personal relations, even if the warrior aristocracy disguised it as being no more than mutual exchange of gifts. And it was not only those who were already wealthy who could afford hospitality to members of particular families in other regions: such relations also would have made people rich by providing channels through which important needs of their community could be satisfied. The xenos at Pylos and Sparta to whom Telemachos goes to get news of his `much travelled father Odysseus' (Odyssey: III) was probably such a trading partner who by his wealth had risen to become king.
Such enlarged opportunities to deal advantageously with outsiders no doubt also helped to reinforce the break that had by then already occurred away from the solidarity, common aims, and collectivism of the original small groups. In any case, some individuals did tear away, or were released, from the hold and obligations of the small community, and began not only to settle other communities, but also to lay the foundations for a network of connections with members of still other communities - a network that ultimately, in countless relays and ramifications, has covered the whole earth. Such individuals were enabled to contribute their shares, albeit unknowingly and unintention- ally, towards the building of a more complex and extensive order - an order far beyond their own or their contemporaries' purview.
To create such an order, such individuals had to be able to use information for purposes known only to themselves. They could not have done so without the benefit of certain practices, such as that of the xenos, shared in common with distant groups. The practices would have
to be common; but the particular knowledge and ends of those individuals following such practices could differ, and could be based on privileged information. This, in turn, would have spurred individual initiative.
For only an individual, not his group, could gain peaceful admission to an alien territory, and thereby acquire knowledge not possessed by his fellows. Trade could not be based on collective knowledge, only on
distinctive individual knowledge. Only the growing recognition of several property could have made such use of individual initiative possible. The shippers and other traders were guided by personal gain; yet soon the wealth and livelihood of the growing population of their home towns, which they made possible through the pursuit of gain through trade rather than production, could be maintained only by
their continuing initiative in discovering ever new opportunities.
Lest what we have just written mislead, it must be remembered that why men should ever have adopted any particular new custom or innovation is of secondary importance. What is more important is that in order for a custom or innovation to be preserved, there were two distinct prerequisites. Firstly, there must have existed some conditions that made possible the preservation through generations of certain practices whose benefits were not necessarily understood or appreciated. Secondly, there must have been the acquisition of distinct advantages by those groups that kept to such customs, thereby enabling them to expand more rapidly than others and ultimately to supersede (or absorb) those not possessing similar customs.
Trade Older than the State
That the human race eventually was able to occupy most of the earth as densely as it has done, enabling it to maintain large numbers even in regions where hardly any necessities of life can be produced locally, is
the result of mankind's having learnt, like a single colossal body stretching itself, to extend to the remotest corners and pluck from each area different ingredients needed to nourish the whole. Indeed, it will perhaps not be long before even Antarctica will enable thousands of miners to earn an ample livelihood. To an observer from space, this covering of the earth's surface, with the increasingly changing appearance that it wrought, night seem like an organic growth. But it was no such thing: it was accomplished by individuals following not instinctual demands but traditional customs and rules.
These individual traders and hosts rarely know (as their predecessors rarely knew) all that much about the particular individual needs they serve. Nor do they need such knowledge. Many of these needs will indeed not even arise until a time so far in the future that nobody can foresee even its general outlines.
The more one learns about economic history, the more misleading then seems the belief that the achievement of a highly organised state constituted the culmination of the early development of civilisation. The role played by governments is greatly exaggerated in historical accounts because we necessarily know so much more about what organised
government did than about what the spontaneous coordination of individual efforts accomplished. This deception, which stems from the nature of those things preserved, such as documents and monuments, is exemplified by the story (which I hope is apocryphal) about the archaeologist who concluded from the fact that the earliest reports of particular prices were inscribed on a stone pillar that prices had always been set by governments. Yet this is hardly worse than finding, in a well-known work, the argument that, since no suitable open spaces were found in the excavation of Babylonian cities, no regular markets could as yet have existed there - as if in a hot climate such markets would have been held in the open!
Governments have more often hindered than initiated the develop- ment of long-distance trade. Those that gave greater independence and security to individuals engaged in trading benefited from the increased
information and larger population that resulted. Yet, when governments became aware how dependent their people had become on the
importation of certain essential foodstuffs and materials, they them- selves often endeavoured to secure these supplies in one way or another. Some early governments, for instance, after first learning from individual trade of the very existence of desirable resources, tried to obtain these resources by organising military or colonising expeditions. The Athenians were not the first and certainly not the last to attempt to do so. But it is absurd to conclude from this, as some modern writers have done (Polanyi, 1945, 1977), that, at the time of Athens's greatest prosperity and growth, its trade was `administered', regulated by government through treaties and conducted at fixed prices.
Rather, it would seem as if, over and over again, powerful governments so badly damaged spontaneous improvement that the process of cultural evolution was brought to an early demise. The Byzantine government of the East Roman Empire may be one instance of this (Rostovtzeff, 1930, and Einaudi, 1948). And the history of China provides many instances of government attempts to enforce so perfect an order that innovation became impossible (Needham, 1954). This
country, technologically and scientifically developed so far ahead of Europe that, to give only one illustration, it had ten oil wells operating on one stretch of the river Po already in the twelfth century, certainly
owed its later stagnation, but not its early progress, to the manipulatory power of its governments. What led the greatly advanced civilisation of China to fall behind Europe was its governments' clamping down so tightly as to leave no room for new developments, while, as remarked in the last chapter, Europe probably owes its extraordinary expansion in the Middle Ages to its political anarchy (Baechler, 1975:77).
The Philosopher's Blindness
How little the wealth of the leading Greek trading centers, especially at Athens and later at Corinth, was the result of deliberate governmental policy, and how little the true source of this prosperity was understood, is perhaps best illustrated by Aristotle's utter incomprehension of the advanced market order in which he lived. Although he is sometimes cited as the first economist, what he discussed as oikonomia was exclusively the running of a household or at most of an individual enterprise such as a farm. For the acquisitive efforts of the market, the study of which he called chrematistika, he had only scorn. Although the lives of the Athenians of his day depended on grain trade with distant countries, his ideal order remained one that was autarkos, self-sufficient.
Although also acclaimed as a biologist, Aristotle lacked any perception of two crucial aspects of the formation of any complex structure, namely, evolution and the self-formation of order. As Ernst Mayr (1982:306) puts it: `The idea that the universe could have developed from an original chaos, or that higher organisms could have evolved from lower ones, was totally alien to Aristotle's thought. To repeat, Aristotle was opposed to evolution of any kind.' He seems not to have noticed the sense of `nature' (or physis) as describing the process of growth (see Appendix A), and also seems to have been unfamiliar with several distinctions among self-forming orders that had been known to the pre-Socratic philosophers, such as that between a spontaneously grown kosmos and a deliberately arranged order as that of an army, which earlier thinkers had called a taxis (Hayek, 1973:37). For Aristotle, all order of human activities was taxis, the result of deliberate organisation of individual action by an ordering mind. As we saw earlier (chapter one), he expressly stated that order could be achieved only in a place small enough for everyone to hear the herald's cry, a place which could be easily surveyed (eusynoptos, Politeia: 1326b and 1327a). `An excessively large number', he declared (1326a), `cannot participate in order'.
To Aristotle, only the known needs of an existing population provided a natural or legitimate justification for economic effort. Mankind, and even nature, he treated as if they had always existed in their present form. This static view left no room for a conception of evolution, and prevented him from even asking how existing institutions had arisen. That most existing communities, and certainly the greater number of his fellow Athenians, could not have come into existence had their forefathers remained content to satisfy their known present needs, appears never to have occurred to him. The experimental process of adaptation to unforeseen change by the observation of abstract rules which, when successful, could lead to an increase of numbers and the formation of regular patterns, was alien to him. Thus Aristotle also set the pattern for a common approach to ethical theory, one under which clues to the usefulness of rules that are offered by history go unrecognised, one under which no thought of analysing usefulness from an economic standpoint ever occurs - since the theorist is oblivious to the problems whose solutions might be embodied in such rules.
Since only actions aiming at perceived benefit to others were, to Aristotle's mind, morally approved, actions solely for personal gain must be bad. That commercial considerations may not have affected the daily activities of most people does not mean however that over any prolonged period their very lives did not depend on the functioning of a trade that enabled them to buy essentials. That production for gain which Aristotle denounced as unnatural had - long before his time - already become the foundation of an extended order far transcending the known needs of other persons.
As we now know, in the evolution of the structure of human activities, profitability works as a signal that guides selection towards what makes man more fruitful; only what is more profitable will, as a rule, nourish more people, for it sacrifices less than it adds. So much was at least sensed by some Greeks prior to Aristotle. Indeed, in the fifth century - that is, before Aristotle - the first truly great historian began his history of the Peloponnesian War by reflecting how early people `without commerce, without freedom of communication either by land or sea, cultivating no more of their territory than the exigencies of life required, could never rise above nomadic life' and consequently `neither built large cities nor attained to any other form of greatness' (Thucydides, Crawly translation, 1,1,2). But Aristotle ignored this insight.
Had the Athenians followed Aristotle's counsel - counsel blind both to economics and to evolution - their city would rapidly have shrunk into a village, for his view of human ordering led him to an ethics appropriate only to, if anywhere at all, a stationary state. Nonetheless his doctrines came to dominate philosophical and religious thinking for the next two thousand years - despite the fact that much of that same philosophical and religious thinking took place within a highly dynamic, rapidly extending, order.
The repercussions of Aristotle's systematisation of the morals of the micro-order were amplified with the adoption of Aristotelian teaching in the thirteenth century by Thomas Aquinas, which later led to the proclamation of Aristotelian ethics as virtually the official teaching of
the Roman Catholic Church. The anti-commercial attitude of the mediaeval and early modern Church, condemnation of interest as usury, its teaching of the just price, and its contemptuous treatment of gain is Aristotelian through and through.
By the eighteenth century, of course, Aristotle's influence in such matters (as in others) was weakening. David Hume saw that the market made it possible `to do a service to another without bearing him a real kindness' (1739/1886:11, 289) or even knowing him; or to act to the `advantage of the public, though it be not intended for that purpose by another' (1739/1886:11, 296), by an order in which it was in the `interest, even of bad men to act for the public good'. With such insights, the conception of a self-organising structure began to dawn upon mankind, and has since become the basis of our understanding of all those complex orders which had, until then, appeared as miracles that could be brought about only by some super-human version of what man knew as his own mind. Now it gradually became understood how the market enabled each, within set limits, to use his own individual knowledge for his own individual purposes while being ignorant of most of the order into which he had to fit his actions.
Notwithstanding, and indeed wholly neglecting, the existence of this great advance, a view that is still permeated by Aristotelian thought, a naive and childlike animistic view of the world (Piaget, 1929:359), has come to dominate social theory and is the foundation of socialist thought.

The Fatal Conceit

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