Thursday, 8 December 2011

... but what about the South Sea Bubble...

David K Waltz has made a comment on my last post, I realised my response was going to be a bit longer than a "comment".

David raises the spectre of the South Sea Bubble and Tuplipmania.  I am not an expert on the Tulip Bubble, but I am aware that there is a question as to whether it was a significant as popular imagination suggests (i.e Dumas's The Black Tulip).

The South Sea Bubble (1720) can tell us a lot.  In the aftermath the British constitution was completely overhauled - the introduction of the position of Prime Minister (held by Walpole,still the longest serving Prime Minister) was the most obvious impact.  In addition, British public finance was put on a firm footing that laid the foundation of successive military victories and the Empire.  France's response to the Mississippi Bubble (1719) was less dramatic (they blamed the financier Law) and the consequence was a succession of military defeats.

Also, the popular response included Defoe's Complete English Tradesman where he writes (1726)

A tradesman's books are his repeating clock, which upon all occasions are to tell him how he goes on, and how things stand with him in the world: there he will know when it is time to go on, or when it is time to give over; and upon his regular keeping, and fully acquainting himself with his books, depends at least the comfort of his trade, if not the very trade itself. If they are not duly posted, and if every thing is not carefully entered in them, the debtor's accounts kept even, the cash constantly balanced, and the credits all stated, the tradesman is like a ship at sea, steered without a helm; he is all in confusion, and knows not what he does, or where he is; he may be a rich man, or a bankrupt-for, in a word, he can give no account of himself to himself, much less to any body else.
This contrasts with  the Rape of Lady Credit by stock-jobbers that Defoe described in 1709
The first Violence they committed was downright Rape ... these new-fashion'd thieves seiz'd upon her, took her Prisoner, toss'd her in a Blanket, ravish'd her, and in short us'd her barbarously, and had almost murther'd her
Much of the political and public rhetoric in recent years has been focused on criticism of financiers (but, unlike Defoe, not before 2006).  However, given the performance of Europe's politicians since 2008 is terrifying (for a European citizen) in that they seem to refuse to take responsibility (which countries were the first to break Euro rule, was it Germany and France?) and prefer to see the crisis as an opportunity to score political points (the Conservative party in the UK).

The British, between around 1688 and 1728, seem to have recognised the democratic nature of markets. Something that Aristotle commented on, and was discussed by scholastics that influenced the development of science through the likes of Bradwardine and Oresme.  Napoleon was scornful as Britain as a nation of shopkeepers, but that is precisely where its strength lay. And it is not simply a financial strength, how different is Defoe's description of a Tradesman from Hume's empiricism?

Its not just science that can learn from the markets.

1 comment:

  1. Tim,

    There is poetry in that quote - "he can give no account of himself to himself, much less anybody else"

    Interesting the amount of political change that occurred after the South Sea Bubble. Thinking about riots and austerity budgets and occupiers, perhaps history in the process of repeating itself again?

    Thanks for the link!

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