Perhaps someone can explain this

A common comment on the eurozone crisis is that it would be very difficult for any country (say Greece) to leave the eurozone. There is even a prize for someone to come up with a good way, which Tim Hartford tells us would be very hard to win.

That the debt problem in itself would not go away by changing currencies is clear. But decolonisation involved literally scores of new countries issuing new currency in replace of the imperial currency. (Not India, it was always on the rupee, but plenty of African countries, for example and including by countries such as Canada, Australia, the US if you go far enough back ....) Why is leaving a currency zone and adopting a new currency regarded as so hard? It has been done many times.

UPDATE. Ed Dolan sets out the mechanisms by which countries have exited from currencies.

Angkor and the Khmer Civilization (2)

This concludes my review of Michael D. Coe’s Angkor and the Khmer Civilization. The first part of the review was in my previous post.


Classic Angkor: society
Having traced the path of the Khmer Empire, Coe now takes us through the society of the Empire in The Life and Culture of Classic Angkor. After a survey of the sources (Pp131ff), we start at the top with the imperial compound, which probably had so many people resident (“bureaucrats, servants, slaves, guards, religious specialists and others … including a sizeable corps of pages”) as to resemble a small city. Khmer society lacked a hereditary nobility: instead, royal officials were appointed (mostly from the major landholding families). Membership of the royal family was only recognised out to the fifth degree and entailed “little authority except that conferred by the monarch”. The appointed officials had the title khlon (in the C19th, they were known as okna).

This bureaucratic class was enormous, and existed on all levels of administration from the capital down to the smallest village (p.134).

Caste was never adopted in Khmer society: the notion of varna was used to grade folk at the royal court, but membership was allocated by the king. The king:

seems to have combined the secular, military role of a Kshatriya with the religious functions and ideology of a Brahmin (p.134).

The virtue of being able to pick and choose which parts of Indian culture and civilisation one found useful: the monarchs being the dominant pickers and choosers.

As for the peasant farmers (about 80% of the population in most agrarian societies), such rice farmers were:

subject to regular corvee labour and to occasional military service, and obligated to provide goods and services to the religious foundations, to landlords, to the mandarin bureaucracy, and to the king. Many of these laboured on the estates of large landholders, while others were attached to specific temples; and some were dedicated to providing the palace with certain types of products. Some of these sound like serfs, but little is known about serfdom in ancient Cambodia (p.134).

Where wealth comes from control of labour rather than (plentiful) land, some form of bondage is likely: if they were forbidden to leave without permission, then they were serfs. Either way, it seems likely that labour service was how land rent was paid.

Which leads to the issue of khnum “usually translated as ‘slave’”. In the C19th, outright slaves were of two sorts:

1) debt slaves, a theoretically temporary category, and 2) slaves for life, who were far less numerous, and who were either those who had been sold by their parents during childhood, or aboriginal Mon-Khmer tribesmen captured in the eastern highlands (these were treated abominably by the Khmer majority). The Classic inscriptions describe three kinds of slaves: 1) slaves legally acquired, 2) slaves who are inherited, and 3) religious slaves (p.134).

. Chinese chronicler Zhou Daguan says of the full slaves:

If young and strong, slaves may be worth a hundred pieces of cloth: when old and feeble, they can be had for thirty or forty pieces (p.134).

This being a barter economy based ultimately on control of labour. Indeed, it seems likely that khnum actually described “obligated provider of labour”:

The reality is that while khnum could never be aristocratic or bureaucrats (no individual khnum ever belonged to the varna), the term covered a wide spectrum of society from peasant commoners to the most abject tribal chattels living in degradation on the ground floor with the animals (p.135).

The ultimate font of authority was the raj (Sanskrit) or stach (Old Khmer). He was executive ruler, chief judge and law-giver. He had to rule through agents, who had their own kin and other networks: a clear limitation on his power, a limitation that varied with the “vigour” and circumstances of particular monarchs. There are few surviving portraits of monarchs, who lived in the centre of thousands of servitors. A teenage prince would have a Vrah Guru, a Brahmin teacher entrusted with his instruction according to the classic Indian texts (Pp135ff).

The empire was divided into provinces (likely 23 at its height) that were divided into villages (sruk or grama):

At every level there were mandarin bureaucrats (khlon, ‘chiefs’) representing the central administration, and who ensured that revenues (rice, goods, corvee labour, and the like) flowed smoothly upwards through the system. Most or all of these were appointed by the king (p.141).

The village headman (khlon sruk) was a royal agent: the village elders (mavrddha) represented the village.

An ambitious individual from a prominent family could by a tract of unoccupied land or obtain it from the king, then found a new (sruk with royal approval (p,141).

The incomes of many villages could support wealthy landholders: one C12th monastery within Angkor (Ta Prohm) received the revenue of 3,140 villages. Since Classical inscriptions were overwhelmingly religious in nature, knowledge of the religious hierarchy is much more extensive than that of the secular hierarchy. The latter included a corps of travelling royal inspectors (p.142).
As for law and order:

As in the rest of the Indic world, the Angkor state and empire were governed by rules laid down in the Code of Manu, a great compendium of Brahman law probably composed in the fourth century BC. Of course, modifications had to be made to a legal system that had been devised for the rigid four-caste system of Vedic India. … The Khmer king was the defender of law and order in Cambodia. His law courts, present on every administrative level right down to the village, instituted criminal proceedings against transgressors and guaranteed the integrity of landholdings and the settling of boundary disputes. Not even religious institutions such as temples were immune, since they as well as private individuals could be sued over land.
In theory, the king owned all land in the empire, but in practice he did not … his main function was to serve as umpire in unresolved land disputes, and to sanction transfers of rights to religious foundations and private individuals (p.144).

Much of the countryside is likely to have been largely controlled by such. Zhou reports there was an annual census in the 9th month: if control of labour is central, then keeping track of it would clearly be important.

The economy was an agrarian rice economy. Since the only surviving writings are on stone, there is a great deal that is not known. Including the actual function of the baray, the vast water features regularly constructed by rulers (they covered millions of square metres with volumes of millions of cubic metres). Coe reports the competing scholarly positions (Pp145ff), though recent evidence has confirmed they were used in irrigation.

Zhou was Chinese commercial attaché, so an authoritative contemporary source on such matters:

Because it was generally the women, not the men, who had charge of trade, Chinese merchants … took care to get a Khmer wife (p.149).

According to Zhou:

In small transactions barter is carried on with rice, cereals, and Chinese objects; fabrics are next employed, and, finally, in big deals, gold or silver is used (p.149).

Zhou’s list of trade goods is reproduced: unsurprisingly, the list of Khmer exports is rather shorter than the list of imports (a common situation when production is dominated by primary products).

As for taxes:

The Classic Khmer state was an immense revenue-gathering machine, and every individual in Cambodia except religious functionaries, priests, monks and slaves was subject to taxation, which was paid in kind, since there was no system of coinage. The king was the supreme receiver of taxes—there was a Khmer formula that went svey vrah rajya, ‘he eats the kingdom’ … but officials at every level participated in the system … The king also benefited by revenues from his immense landholdings, as well as from at least part of the booty gained from military victories.
There seem to have been taxes on everything – on land, on rice, on salt, wax and honey, and so forth. Land taxes were based on paddy size and productive capacity … Payments could be made in all kinds of goods, including not only rice but also slaves, buffaloes, elephants and especially cloth (p.150).

The religious exclusion was deemed a metaphysical exchange.

Drawing on Hindu precedent, Brahmins were excluded from taxation by virtue of the theory that they transferred one sixth of their spiritual gains to the king, a notion that was extended to exempt the great private religious foundations, themselves the recipients of vast revenues from land grants (p.150).

There appears to have been a considerable network of roads and bridges as well as use of horses, elephants and carts. Elephants travel around 24-40 km a day, and consume vast quantities of water—supplying the royal elephant herd must have been part of the purpose of the baray. Elephants and two-horse chariots were used in war (Pp151ff).

Wooden buildings do not survive, so inference from stone construction is required. Of such there is a vast amount, all mortarless. Khmer civilisation produced amazing sculpture, not a single piece of which is signed. Many aspects of Khmer civilisation remain little studied (Pp155ff). Zhou Daguan is the main source on daily life in Angkor and there is a clearly an element of exoticism in his descriptions (not to mention projection). He seems to have been particularly struck by the sexual openness of Khmer society, especially the women.

The region’s humidity is not kind to much of human creation:

No costumes, dress or textiles of any kind have survived from Classical times (p.175).

Zhou describes strict sumptuary laws in C13th Angkor. Sculptures depict no one with upper body covering except warrior kings and soldiers, who often have jackets or bodices ending above the waste. Coe takes us through the (limited) information on aspects of daily life (Pp184ff).

The scholarly debates on Khmer history are interwoven into Coe’s narrative. The anthropologist Clifford Geertz developed the notion that the Indic states of SE Asia were theatre states where display was the purpose; that, in his words, ‘power served pomp, not pomp power’ (p.179). Zhou’s quoted descriptions vividly describe massive ritual and ceremonial display centred on the monarch (Pp179ff). The history of modern totalitarianism suggests that display can very be much an aspect of power: of manifesting and expressing a converging set of expectations based on the prestige and dominance of the ruler—given that much more intensity if the ruler is seen as the conduit through which grand cosmic purpose flows.

Coe notes that:

There never seems to have been a time in Cambodia’s history when Khmers were not fighting each other, or waging war on foreign enemies (p.185).

This is hardly surprising, since there was such an enormous, concentrated extraction of surplus to fight over. It does mean there is a great deal of sculpted pictorial material on Khmer warfare, which Coe takes us through. Zhou was less impressed, saying “generally speaking, these people have neither discipline nor strategy” (p.187). It very much seems to be the warfare of “biggest wins”, with little evidence of a dedicated warrior class, rather than paid officers mobilising (possibly conscripted) peasants. Such a mode of warfare encouraged imperial dominance: the universal monarchs would have had little interest in creating a warrior elite that might be difficult to control.

There are over 1,200 surviving inscriptions from ancient Khmer, almost all in the early Kingdoms and Khmer Empire periods. Those in Sanskrit tend to be in poetic form. There was much concern for the cosmological, including astrological but no evidence that literacy extended beyond a small elite: on the contrary, the vast pictorial displays very much are what would impress and communicate to largely illiterate peasants (Pp188ff).

Coe notes John Miksic division of SE Asian cities into the heterogenetic, found along coastlines and borders of ecological zones, with few public monuments, but intensive trade, entrepreneurship and high population densities and the orthogenetic:

… located well inland, and were correlated with the production of a surplus staple crop – that is, rice – which could be commandeered by the authorities. Stability and ritual were the prevailing order, and there were impressive monuments of a religious nature. There was no money and little evidence of large markets and significant trade. … overall population density was very low. From everything that we know about Angkor, it would appear to have been orthogentic (p.191).

The old Thai capital of Ayutthaya (founded 1351, destroyed by the Burmese in 1767) was a “conscious clone” of Angkor. From this city, still little understood as a lived-entity but well-mapped as an archaeological one, the Khmer monarchs ruled an Empire that lasted as long as Rome’s (p.194) (at least the Western Empire).

And after
In the final chapter, The post-Classic Period: Decline and Transformation, Coe takes us through the distinguishing characteristics of post-Classical Khmer civilisation and the many theories (but little clear knowledge) of how and why the Empire collapsed.

Post-Classic Khmer civilisation was marked by:

The monarch is no longer a chakravartin, but merely king of Cambodia.
The capital in various locations between the Great Lake and the Delta.
Theravada Buddhism as the state religion, with Pali rather than Sanskrit as its language.
Stone temple architecture and prasats replaced by wood-built viharas (‘pagodas’) and other monastic buildings.
State and ancestral temples in disuse; or converted to Buddhist worship and made the object of long-distance pilgrimages.
Predominance of the Sangha (Buddhist order of monks) in all aspects of life.
Middle Khmer replaces Old Khmer as the language of the people and the court.
Written royal chronicles, but few contemporary stone inscriptions.
Absence or abandonment of large-scale public works, such as the barays and the major canals in Angkor and elsewhere.
Strong development of maritime trade with China, Japan, and parts of Southeast Asia.
Marked Thai (Siamese) influence in art, architecture, theatre and court life (p.195).

Clearly, the level of extractable surplus was much less. As Coe points out, the expansion of maritime trade gave Khmer monarchs could reason to move their capital to the “Quatre Bras” region “easily reached by junks coming up from the Delta” (p.197). Trade was “almost entirely in the hands of foreigners” (p.210): predominantly Chinese (and Japanese, before the Tokugawa bakufu closed off Nippon to the outside world) but also Malays, Arabs and various Europeans. The lack of a Khmer merchant class may well have seriously limited the standing of mercantile interests at court. The continuation of barter (i.e. the failure to adopt a coinage) probably limited the monarchy’s capacity to profit from maritime trade. While the continuation of monarchical domination of surplus extraction may well have helped foreclose the rise of a Khmer merchant class. (The monarchy displayed a remarkably cavalier attitude to Vietnamese migration into the Delta in the late C17th: this resulted in the subsequent loss of major direct access to oceanic maritime trade with the Vietnamese takeover of the Delta around 1700.)

Coe concludes that:

… civilizations – like biological species – usually fall from multiple causes, not single ones. Alterations in the religious paradigm, military incursions, over-population and ecological collapse, and the shifting of trade routes and patterns, finished off the Classic, monsoon-forest cultures of both Cambodia and the Maya area (p.197).

A civilisation is a system (or, if you like, an interlocked network of systems): if any key part starts to unravel, interactions can easily widen the pattern of unravelling. Resilience in the face of stress can require openness of thinking at least as much as institutional responsiveness and centuries of success can easily close off both.

Coe summarises the sources available for the post-Classic period (p.197ff), examines Theravada Buddhism and its role in Cambodia (Pp201ff), the use of Angkor as a Theravada centre (Pp204-5), Cambodia’s precarious place between Thai and (particularly) Vietnamese expansion (Pp205ff), the course of post-Classic history until Cambodia became a French Protectorate in 1863 (Pp208ff), the operation of post-Classic life and administration (Pp213ff), trade and commerce (p.219), post-Classic warfare:

There was no standing army – in times of war, the patron was expected to muster a force of his clients, and place himself or an officer designated by the king at its head (p.219)

post-Classic art (Pp220-1) and mental life (Pp222ff). This includes the Reamker, a reworking of the Ramayana to reflect Khmer culture and Theravada Buddhism. The chapter finishes with a one-page epilogue of Cambodian history from 1863 to the present, noting that Angkor’s five towers are on its flag, a descendant of its rulers is the monarch and Buddhism is again the state religion (p224).

Coe concludes with a list of rulers of Angkor and known pre-Angkor rulers (p.225) and a note on visiting Angkor (p.226).

Michael D. Coe’s Angkor and the Khmer Civilization is a very accessible survey of a civilisation which did so much to set the patterns of SE Asian history and culture: one that managed great architectural achievements while remaining a barter economy.

Angkor and the Khmer Civilization (1)

Michael D. Coe’s Angkor and the Khmer Civilization is “volume one hundred and nine in the series Ancient Peoples and Places” (p.4), a numbering which nicely indicates how large Khmer civilisation does (not) loom in the Western historical consciousness. Most people would be aware of the Angkor ruins, but have only the vaguest notion of the civilisation that produced it, except as the forerunner of modern Cambodia.

Which is a bit like saying the Roman Empire was the forerunner of modern Italy. Khmer civilisation during its classic period (802-1327) was the seminal civilisation of mainland SE Asia, dominating modern Cambodia, southern Laos, the Mekong delta and central Thailand. Coe’s book is an excellent survey of the rise and decline of this civilisation.

Coe’s scholarly speciality is “the other great monsoon forest civilisation” (p.7), the Maya of Mesoamerica, a comparison that informs his treatment. He divides the trajectory of Khmer society into Early Farmers, Early Kingdoms, Classic and post-Classic (p.9) with a useful full-page timeline (p.10).

The Introduction deals with European discovery and engagement with Angkor and Khmer history (Pp11ff) concluding with a full-page explanation and potted summaries of the various periods: hunters and gatherers to c.3600-3000BC, early farming period to c.500BC, Iron Age to c.200-500AD, early kingdoms to 802AD, Classic 802-1327 and post-Classic 1327-1863 (p.20): or, to put it another way; foragers, farmers, chiefdoms, states, empire, aftermath.

The ruins of Angkor are vast: the first colour plate is a synthetic-aperture radar image of Angkor from the space shuttle Endeavour:

The entire urban complex covers about 1000 square km (386 square miles), and its core area c.200 square km (77 square miles). There is nothing else to equal it in the archaeological world (p.11).

Coe then moves on to the geographical setting (Pp21ff) – the various black-and-white illustrations throughout the book and magnificent colour plates are helpful. So, for example, the picture of the massive Khong Falls (the modern day boundary between Laos and Cambodia) makes it quite clear why they “effectively block all boat communication between the lower and upper reaches of the river” (p.21), which makes the Mekong far less of a conduit for human traffic than it might be. The great waterway of Angkor was not the Mekong but Tonle Sap (the Great Lake) on the Tonle Sap River, a tributary of the Mekong.

The setting
Like much of Asia, Khmer was and is a rice civilisation. Khmer is one of the many Asian languages where the word for ‘food’ is ‘cooked rice’ (bai). Rice and fish are the basis of the economy (p.29), Coe taking us through the varieties of rice cultivation; dry rice, bunded field, flood-retreat and “floating” rice (Pp30ff).

Then it is on to peoples and languages (Pp33ff). A map of languages (p.35) makes it clear that linguistic boundaries do not entirely coincide with modern political boundaries. There is a significant Khmer borderland in Thailand and a minority remnant in southern Vietnam.

In modern Cambodia, there are some Tai (Thai, Lao) speakers along the upper Mekong, significant areas of Mountain Mon-Khmer as well as Mountain Cham and Cham enclaves. But language boundaries have also changed over time. The Mekong delta was Khmer until the late C17th, when the Vietnamese influx began, while the Tai peoples migrated down from Southern China in the C12th and C13th (displaying some similarities in their role vis-à-vis the Khmer Empire as that of the Germanic peoples vis-à-vis the Western Roman Empire). There is also the normal history of language mixing:

It is now generally recognised that Vietnamese is a Mon-Khmer language that shows the effect of long contact with Chinese in its vocabulary, in its use of tones, and its tendency to be monosyllabic (p.36).

The animist-shamanistic Mon-Khmer mountain peoples have been traditionally despised by the Khmer and subject to slave raids. The Cham had a significant rival kingdom before being conquered by the Vietnamese in 1471: the Cham had been Hindu-Buddhist but converted to Islam from the C11th onwards (Pp36-7).

The Khmer script (the first inscription of which dates from 611) is Indic in that it is far more complex than a simple alphabet. The language itself tends to be very concrete, borrowing abstract terms from Sanskrit and, after the adoption of Theravada Buddhism, Pali (still the main source of neologisms in contemporary Khmer). We have about 1200 surviving rock inscriptions, most in Sanskrit, and religious: the surviving Khmer script, while still largely religious in context, tends to deal with more mundane administrative matters (Pp40-1).

Foragers, farmers and early kingdoms
The fourth chapter, The Khmer before history (Pp43ff), deals with foragers, farmers and chiefdoms, the latter apparently the result of the advent of iron tools and weapons and increased social differentiation:

Onto this Iron Age ‘basement culture’ was to be grafted a belief system that had its origins over two millennia ago in the plain of India’s Ganges River, laying the foundation for what was eventually to become the civilisation of Angkor (p.56).

Moving on to the early kingdoms period (Pp57ff), Coe notes that the region known as ‘Indochina’ has culturally far more that comes from India than China: the exception being ‘Tonkin’ or the Red River valley (i.e. the proto-Vietnamese), which was sinicised.

Ironically, there are almost no Indian texts on the region (apart from reference to risky-but-high-return trading opportunities) but several Chinese texts which, given the linguistic difficulties of transliterating from non-tonal polysyllabic languages (Khmer, Sanskrit) to a tonal monosyllabic language (Chinese), and Chinese disdain for ‘barbarian’ peoples, are more ethnographically revealing than historically so (p.57). Coe quotes at length from various Chinese reports on the Mekong Delta Khmer cities and societies:

They have neither rites nor propriety. Boys and girls follow their penchants without restraint (p.59)

conveys the general tone. (The relative freedom of the sexes—and so sexuality—is a recurring comment on Khmer society by outside observers.)

The picture the Chinese chronicles give of a dominant state or states (‘Funan’, ‘Zhemla’) is contradicted by contemporary Khmer inscriptions, which indicate no dominant state or rulership. Scholars relying more on the latter (i.e. contemporary) records have built up a picture of a series of Iron age chiefdoms which, as Chinese demand for luxury goods increased, coalesced in the Mekong delta into trading ports with local rulerships:

The chiefs of these palisaded settlements bore the Mon-Khmer title of pon, an office that was passed down matrilineally (passing from the deceased to sister’s son). The population of a core pon-dom formed its own lineage or clan, with its own deity whose representative was the pon himself …
There was a hierarchy of pon, probably based on wealth and political influence. As early as the fifth century AD, superior pon started claiming kingship, taking on Indian names and titles … although Khmer names linger (Pp61-62).

The earliest Khmer king whose existence is firmly historically established, Rudravarman, ruled the Delta pon in the first half of the C6th (p.62).

This was the period in which Hinduism and Buddhism became firmly established in the region, particularly amongst the Khmer. Indian traders operated from the Red Sea (linking with the Roman Empire) to the Mekong Delta (thereby linking to Chinese trade). Buddhism spread easily along trade routes, being both a congregational and proselytising religion, comfortable with trade. That Brahmanism also spread was more surprising, since it is highly agrarian in its origins and structures (p.62).

It is less surprising if one considers that what actually spread was worship of the Hindu gods, particularly Vishnu and Shiva—figures of awe, power and prestige—and Brahmin status and learning. The caste system never established itself in Khmer society (p.63), except as a vehicle for court language. To put it another way: what spread was those parts of Vedic Brahmanism that were most compatible with royal status-seeking and Buddhism, particularly Mahayana Buddhism. Even better, the Indian states and principalities were not expansionist outside India, so Khmer rulers could pick and choose which aspects of Indianisation suited them: coins, for example, never took on, the Khmer lands remaining a barter economy until the arrival of the French in the mid C19th (Pp62-3). The archaeology of the Delta has been much disrupted by the violence of its C20th history (Pp64ff).

Being a barter economy was another similarity with Pharonic Egypt and Mayan Guatemala—barter societies whose rulers produced great monumental architecture. As the Khmer lands were barter societies, they lacked mechanisms to transfer obligations across time, with (given the hot and humid climate) particularly poor ability to store produce over the longer term. One can see the appeal to Khmer rulers of great projects that soaked up surpluses in ways the kings controlled: hence the constant building by the rulers of the later Khmer empire of yet new “temple mountains”, complexes and artificial lakes.

By the early C7th, political power seems to have shifted from the maritime cities of the Delta to inland cities controlling rice surpluses. Societies became more stratified, kings became more powerful, the pon title faded away, temple foundations spread. This is the period when the first Angkor site, Angkor Borei, was established, linked to the Delta by a long canal, with considerable striking Hindu and Buddhist sculpture based on lively reinterpretation of Gupta styles. Coe takes us through the archaeology of this and other Khmer sites from the period (Pp68ff). Several page inserts take the reader through the central points of Hinduism (Pp80-4) and Buddhism (Pp85-8).

Classic Angkor
Then it is on to the classic Angkorean period of Khmer Empire. Coe lists the defining characteristics (even though some also pre-dated or post-dated the period) as being:

A universal monarch as head of an imperial state.
The capital of the empire almost always based in Angkor.
Hinduism and/or Mahayana Buddhism as the state religion.
Religious architecture primarily in stone (sandstone and laterite) rather than wood.
State and ancestral temples.
Workship of the linga.
Prasats (shrine towers) housing images of the gods, often arranged in quincunx and supported by stepped pyramids.
Massive and extensive public waterworks, including canals and vast reservoirs (barays).
A network of highways, causeways and masonry bridges.
Inscriptions in Sanskrit, as well as Khmer.
Iconography primarily Hindu, mainly derived from the epics and from the Puranas. (p.97)

With no serious geographical barriers to unity, the warring minor kingdoms eventually produced a warlord able to conquer them all. This was Jayavarman II (‘protected by victory’) known posthumously as Parameshvara (‘supreme lord’) whose crowning as universal monarch in 802 in a Brahmin rite is taken as the establishment date of the Khmer Empire (Pp97-100).

An inset explains the somewhat chaotic dynastic succession processes in Cambodia whose tendency to fratricidal conflict was somewhat balanced by a tendency to select for competence (p.100). Jayavarman II established his capital at Hariharalaya (named after the deity that unified Vishnu and Shiva). His son Jayavarman III engaged in significant building in stone in the new capital, establishing styles that persisted through the history of the Khmer Empire including the building of an ancestral temple and a state temple, the last including a representation in stone of Mount Meru, home of the gods (Pp.101-2).

After a fratricidal conflict over the succession, Yashovarman I won and, after building 100 ashrams across his empire and embellishing further his father’s capital, moved to the capital to Angkor, where it remained for the next five centuries, except for “one brief lapse”:

There were probably several compelling reasons for this move – economic, socio-political, military and probably religious (undoubtedly he was advised by Brahmin gurus where and when this should take place), but suffice it to say that the Angkor region is strategically located about halfway between the hills of Kulen and the margins of the Great Lake, on the right bank of the Siem Reap River – not only an abundant source of water for whatever hydraulic schemes the ruler might be contemplating, but also a waterway as holy to the Khmer as the Ganges still and is to Indians (p.103).

A two-page map conveys the scale of what was eventually constructed on the site (Pp104-5). There was much construction:

Each of the major chakravartin who ruled the Khmer Empire felt it necessary to build important public waterworks, an ancestral temple, and a state temple, usually in that order (p.107).

Hence, given the resources at their command, the architectural splendours that so impress to this day in Yashodharapura (‘Glory-bearing City’). One of Yashovarman’s waterworks was 7.5km (4.7m) by 1.8km (1.1m): one estimate is that it must have taken 6 million man-days to build its embankments alone (p.107). In an agrarian barter economy, labour service cannot be “held over”: it must be used each year or lost.

Kings followed kings, until Jayavarman IV (reigned c.928-41) moved the capital to Koh Ker (Chok Gargyar), 90km (56m) to the NE. Why, we do not know. As the site provided easy access to sandstone, the monumental and other statues of this interlude have produced many of the admired masterpieces gracing various collections around the globe. After a period of weak rule and disintegration, Rajendravarman II (r. 944-68) moved the capital back to Angkor and reimposed imperial rule on the breakaway rulerships. He built Banteay Srei, a Shivaite complex that gets its own two-page insert (Pp110-1). He and his son and successor Jayavarman V (r. 968-c.1000) were both pious Buddhists, but Mahayana Buddhism is a tolerant and syncretic faith (p.112).

Then followed a 9 year civil war, won by Suryavarman I (r.1011-49), who demanded of 4,000 officials an oath of loyalty (that if one broke it one would be “reborn in the thirty-second hell as long as the sun and moon shall last”) that was still being used by the Cambodian crown in C20th. Suryavarman also required it be sealed in blood.

The wealth of the Khmer Empire rested on extraction of surplus from rice-growing peasants. Goods and labour service sufficed for the needs of its monarchs: particularly as the surplus was “soaked up” in uses controlled by the monarchs—notably huge building projects. This did, of course, mean that the Khmer Empire’s history was dominated by using and fighting over that surplus—foreign invaders attempting to loot the products of that surplus or acquire surplus-generating territory, internal rebels seeking to gain control of the surplus in their region, usurpers seeking to gain control of the surplus for the entire empire.

The succession of kings continued, marked by grand building projects, revolts and wars. Rulers of such power had to be praised. One inscription tells us of Undayadityavarman II (r.1050-1066 ) that:

He excelled in seducing women to his will by his beauty, warriors by his heroism, sages by his good qualities, the people by his power, Brahmins by his charity (p.114).

The ‘cult of personality’ is a perennial feature of autocracy for, when loyalty is compulsory, how does one successfully signal loyalty? Playing the game of excessive public flattery is a form of signalling that has some costs involved, so is more reassuring. Various kings succeeded to rule of the Khmer Empire. Some were successful, some less so; some favouring Buddhism, some Shiva or Vishnu. Success and grand building projects tended to go together. So, Suryavarman II (r.1113-c1150) extended the empire, defeated the Cham enemies, invaded the Vietnamese realm based on the Red River by land and sea repeatedly (if unsuccessfully) and built Angkor Wat, which gets its own multipage insert (Pp117-121).

A Cham invasion threatened the continuity of the Empire, but Jayavarman VII (r.1181-c.1215):

arguably not only the greatest of all the Khmer kings but also the greatest personage in Cambodian history (p.122)

restored the power of the Empire, crushingly defeated and conquered the Cham, avidly promoted (Mahayana) Buddhism and engaged in the normal grand building projects: including the grandest of all, Angkor Thom (Pp122ff).

Rulers after Jayavarman VII found keeping the Cham within the Empire proved too hard (though the Cham later succumbed to the Vietnamese). At some point in the C13th, there was a massive (royal) reaction against Buddhism, since every single Buddhist sculpture in Angkor was smashed or defaced while Angkor was “re-Hinduised”: this was iconoclasm on a massive scale and a manifestation of religious intolerance previously foreign to the region. Meanwhile, chiefdoms of the Tai people migrating down from Southern China began to put pressure on the Empire’s northern frontiers. In the early C14th, the Empire rapidly declined. The last Sanskrit inscription was carved in 1327, which is taken to be the end of the Khmer Empire. But not, of course, of Khmer civilisation, which transmuted into something different. In particular, it became overwhelmingly Theravada Buddhist, the first Pali inscription being carved in 1309 (Pp128ff).

Rulerships are based on patterns of expectations, incorporating particular framings (such as religion). Stress can lead to shifts in those patterns that can encourage the adoption of new framings. Alternatively, shifts in those framings (such as religious changes) can themselves cause stress that may undermine expectations rulership relies upon. With our limited information, it is very hard to see whether the shift to Theravada Buddhism was a response to stress, a cause of stress or both.


This review will be concluded in my next post.

Civilisation and surplus

I once asked an Israeli archaeologist why archaeologists (and historical anthropologists) seem to be so influenced by Karl Marx. He replied that it was because Marx talked about economic surplus and they study the products of economic surplus. Makes sense.

Civilisation rests on the production of surplus—that is, the production beyond the needs of subsistence. In agrarian civilisations, typically 8 out of 10 people worked as farmers. That meant that they produced enough surplus food (and other agrarian products such as material for clothing) for 1 in 5 people to do something else. That "something else" being all the things that make a civilisation (which may include farmers working on other things in down times).

Early civilisations start off in warm climes near water (i.e. river valleys towards the equator) because you can have a concentrated population cultivating fertile land and less effort is put into staying warm, so it is easier to produce a surplus.

Surplus is not exploitation as such (although there are certainly exploitative ways to extract surplus: the most efficient ever exploitative extractor of surplus being Stalin's regime—he could make mass starvation work for him). Surplus is the basis of civilisation.

As technology improves, being in a warm area becomes less important as better technology means it becomes easier and cheaper to stay warm. Indeed, there is some tendency for the technological "cutting edge" of civilisation to move to colder climes, since they get more pay-off from technology and tend to be more time-conscious due to the need to store food and other supplies over winter. (Climate's effect on temporal outlooks may have had something to do with which parts of Europe adopted the Reformation and which did not, though distance from Rome and consequent command-and-response issues were clearly also important.)

With the transformation of production we call the Industrial Revolution, the ratio of people needed to produce food dropped dramatically as technology allowed more to be produced with less human effort. By 1920, primary production stopped being the biggest employer in the US. (By 1930, services were the biggest employer, so the "manufacturing moment" in US economic history—when secondary industry dominated employment—lasted 10 years.)

Institutions make a difference; some sets of institutions are much better at facilitating transactions (and so gains from trade and thus the production and use of surplus) than others. Clearly, the British institutional heritage of US and Canada works better than the Iberian institutional heritage of Latin American. (Which is why Hispanics flood North: they can earn more income simply by being in a different institutional context.) Scandinavians in the US do considerably better (in terms of average incomes) than do (pdf) Scandinavians in Scandinavia.

Culture (which overlaps with institutions and is profoundly affected by religion) also makes a difference as it affects attitudes to time, willingness to transact, etc. Hindus and Sikhs from South Asia, on average, do considerably better in the UK (in terms of employment and income) than do Muslims from South Asia.

Combinations of differences within cultures and institutional contexts also make a difference: Muslims in the US do considerably better (in terms of income, employment and integration) than do Muslims in Europe.

Geography can make a difference beyond producing food and staying warm. Water transport is generally much cheaper than land transport. It is easier to produce a surplus operating out of water hubs than relying on land transport. Capital markets are about trading in surplus: ideally, directing it to more productive ends. And, if you are a trade hub, the demand for capital will be greater. There is a reason why the Serene Republic of Venice was a persistent financial innovator (inventing bonds in 1171, for example).

So, Marx was correct in that surplus matters: but he was utterly wrong in what it represents and the implications thereof.

[Cross-posted at Critical Thinking Applied.]

Why did the Middle East select for monotheism?

A variation on the Whig interpretation of history that still has surprising sway is of human religious history as having a “natural” progression from animism through polytheism to monotheism. It has led to such nonsense as the psychotic tyrant Akhenaton being written up positively solely because he was monotheist (or, at least practised monolatry: Kerry Greenwood’s Out of the Black Land provides a revealing fictional treatment). This animism-polytheism-monotheism “progression” is an interpretation that has nothing to recommend it, apart from monotheist self-satisfaction.

If one doubts that polytheism is perfectly compatible with highly sophisticated societies, I refer you to classical Rome and Greece; to India, China and Japan. If you doubt it is perfectly compatible with thoroughly modern societies, I refer you to Japan, Hong Kong, Singapore and Taiwan. If you think monotheism is necessary for a highly compassionate morality, I refer you to Jainism and Buddhism.

Not only does the animism-to-polytheism-to-monotheism progression fail as a moral and intellectual claim, it fails as history in the quite basic sense that monotheism is purely a product of the Middle East. It spread from there around the globe (indeed, it is still doing so), but it evolved nowhere else.

The Middle East itself produced not one but several forms of monotheism: the proto-monotheism of Zoroastrianism; the monolatry-turned-monotheism of Judaism; the universalising monotheism of Christianity; the universal dominion monotheism of Islam; plus various offshoots of the above. Monotheism in its various forms now thoroughly dominates the religious landscape of the Middle East. So, what is it about the Middle East that it has repeatedly selected for monotheism?

Social geography
When looking to a recurring pattern in a particular region, it is a good idea to start with social geography; the patterns of interactions of people with the terrain.

By the time monotheism first arose, the enduring patterns of Middle Eastern social geography were already in place. River-valley civilisations dominated by major urban centres interacted with herding pastoralists living in the surrounding deserts, mountains, plateaus and plains. Their interactions were those of trade, raid and conquest: interspersed with retaliation and protection payoffs. The fear of the settled (and thus vulnerable) farmers had for the mobile (and thus dangerous) pastoralists is well expressed in the Biblical story of Cain and Abel.

The great conquering peoples of the Middle East after the demise of the last Mesopotamia-originating empire (also subject of a famous Biblical story)—the Iranians, Arabs, Turks and Mongols—were all pastoralist peoples. Pastoralist conquest became so much a pattern of the region that Abd-ar-Rahman Abu Zayd ibn Muhammed ibn Muhammed ibn Khaldun, statesman, jurist, historian and scholar, in his The Muqaddimah: An Introduction to History, written in 779 AH (1377 AD), famously developed his cycles of history based on it.

His analysis is that rule is based on the rise of group feeling (asabiyyah) that leads to rulership over others (pp 107-8). Having conquered urban lands, the ruling group becomes distracted by the luxuries available that weakens group-feeling and courage. This proceeds until it is swallowed up by other nations or dynasties (p.109).

Ibn Khaldun’s theory is based on internal dynamics and external response. Expenses grow (p.134), the ruling group become complacent and lose their edge (p.135), rulers become more isolated seeking people directly beholden to them (p.137) leading finally to dynastic senility and wastefulness, making them ripe for eventual replacement (p.142). Decay in authority usually starts at the edges of the dynasty’s territory (p.250). He repeats the theory in different words at various places (e.g. p.246ff), usually providing historical examples of the various processes. Russian demographer Peter Turchin has developed the theory further.

A review essay on a book on tribalism in the Middle East puts ibn Khaldun's model well:

… outlying tribes tied together by traditional kinship solidarities conquer, settle, and rule a state. In time kinship loyalties loosen, the rulers urbanize and grow effete, their state loses control over distant tribes, and the cycle begins again.

Precisely because herding life is mobile, kinship and lineage provide protective and support services. This provides a strong, but constrained, source of social solidarity. As the Arab proverb goes “me against my brother, my brother and I against our cousin, my brother and cousin against the stranger”.

What began as a response to the demands of pastoralism can also deal with other sources of social insecurity. In the words of an enlightening review essay on Pakistan:

At the heart of Lieven’s account of Pakistan is kinship, pervasive networks of clans and biradiris (groups of extended kin) that he identifies as “the most important force in society,” usually far stronger than any competing religious, ethnic, or political cause. Several millennia of invasions, occupations, colonizations, and rule by self-interested states resulted in a “collective solidarity for interest and defense” based on kinship becoming paramount in the area that is Pakistan.

Monotheism’s advantages
The aforementioned great conquering pastoralist peoples—Iranians, Arab, Turks and Mongols—were all, with the exception of the Mongols (who came from furthest away and were profoundly affected by the long history of interaction with China), in their conquering phase, monotheist. Monotheism offers a motivating identity and framework of expectations able to operate across lineages. The common identity of believer is, in the right circumstances, able to unite people across otherwise competing lineages—Muhammad’s success in being the first person to unify most of Arabia is a striking example of this.

The common identity of believer can also unite across the pastoralist-farmer divide and do so in a way which gives an identity to cling to in adversity: both clearly important in early Hebrew history. Given that the pastoralist-farmer barrier in the Middle East can be particularly porous, depending on circumstances, an identity that can be persisted with across it has clear selection advantages.

[Read the rest at Skepticlawyer or at Critical Thinking Applied]

We are APES

In an article in the October issue of Quadrant, Paul Monk labels homo sapiens as Apprehensive Pattern-seeking Emotional Story-tellers or APES. As nice a summary of our cognitive nature as I have come across.

Paul Monk writes:

As neuroscientist William Calvin puts it, our brains are susceptible to colourful rhetoric, to being swept along by group dynamics that overwhelm our emotional autonomy and critical faculties, to finding hidden patterns where none exist. They are highly susceptible for these reasons to myths, stories, superstitions and mass emotions. Our memories are selective and unreliable, our decision-making easily swayed by the last thing to make a vivid impression on us; our intuitions about logic, probability and causation are powerful but flawed in a number of ways and these flaws are actually magnified rather than diminished by our creation of complex, increasingly data-dependent social orders.

Given Paul Monk is a principal of Austhink, cognitive biases are his meal ticket.

A fine, if somewhat poetic, description of our Apprehensiveness is provided in John Carroll's flawed-but-engaging (and interestingly flawed) book Jerusalem, Jerusalem: Wow the Ancient City Ignited the Modern World:

Fear is the dread of the known threat. Angst is the dread of the forever unknown, what is essential to becoming. The future does not hold danger, the future is danger. ...
Animals live in the eternal present. Humans live in the eternal coming-into-being. Angst, not fear. ... the inevitable incompleteness of experience, a being that is always becoming. What we call intellect is compelled to record that incompleteness in two dimensions, time and space.Time is measured against the past and the future -- memory and anticipation (Pp28-9).

While he somewhat exaggerates the gap between us and animals (such as higher primates), what Carroll is alluding to here is a distinction in our expectations about the future. Economist Frank Knight famously distinguished between risk and uncertainty:

Uncertainty must be taken in a sense radically distinct from the familiar notion of Risk, from which it has never been properly separated. ... The essential fact is that 'risk' means in some cases a quantity susceptible of measurement, while at other times it is something distinctly not of this character; and there are far-reaching and crucial differences in the bearings of the phenomena depending on which of the two is really present and operating.... It will appear that a measurable uncertainty, or 'risk' proper, as we shall use the term, is so far different from an unmeasurable one that it is not in effect an uncertainty at all.

To put it more simply, uncertainty is risk that is immeasurable, not possible to calculate. But both are about anticipation, apprehensiveness, expectations: about looking forward.

As anyone in business knows, risk is heterogeneous. For example, small business copes with the unknown variances in hiring new people by using any risk-minimising techniques that are available (notably, use of networks that provide implicit “guarantees”: as in “I don’t know X but they were recommended to me by Y, who I do know and I do not believe Y wants to damage their connection to me by recommending a dud”). Large businesses, more able to cover risk and less able to directly connect effort to output, compensate by paying a “corporate premium” that acts as a “hostage” for productive behaviour by the employee. (I see no particular reason why training profiles—which are often used to explain the wage premium in large corporations—should be greatly different between large and small businesses: difficulties of supervision strike me as far more differentiating.)

Interest rates, asset prices and assessments of risks are intimately connected. As David Glasner notes:

... interest rates emerge out of the process of evaluating all durable assets, which are nothing but claims to either fixed or variable future cash flows of various durations and risk characteristics. ... One of the good things about Milton Friedman’s 1956 restatement of the quantity theory of money was his explicit recognition that interest rates are determined not in a narrow subset of markets for fixed income financial assets, but in the complete spectrum of interrelated markets for long-lived physical and financial assets.

(There are some complications in this, which need not detain us for the moment.) What makes an asset an asset is its potential for future use.

In aggregate terms, it is generally reasonable to assume that risk in an economy “bell curves”—that failed judgements of risk and successful judgements of risk cancel out around a positive mean. [If that mean is positive, risk assessments on average are too high and will tend to fall: if the mean is negative, risk assessments on average are too low and will tend to rise.] But suppose some economic shock leads to a sudden downward shift in the general ability to meet established obligations: the [previous experience] assumption of successful overall coverage of risks may [will] no longer apply. There will [likely] be an increase in people’s preference for holding money (to reduce their exposure). Ironically, the overall risk profile of the economy [will then tend to] may improve, since bankruptcy and closure will disproportionately hit those on the tail end of the risk bell curve. The effect will [then] be to put downward pressure on interest rates, reflecting shifting assessments of risk.

In this situation, there may well be an increase in (negative) uncertainty: but this will not be directly reflected in interest rates because these cover only risks-as-calculated. Prices cannot directly incorporate what cannot be calculated but can and will reflect the consequences of uncertainty’s effect on behaviour.

I say negative uncertainty because, as George Ip notes:

… it is not “uncertainty” per se that bothers business. Whether uncertainty is unwelcome depends entirely on what’s at stake. What would you prefer: 100% probability of dying next year, or 50%? Most of us would choose the latter. Similarly, business would prefer zero probability of a burdensome new rule, but if that’s not possible, would certainly take 50% probability over 100%. The administration’s decision to delay implementation of a new ozone standard perpetuates uncertainty. Business welcomed it nonetheless because now they do not have to spend money to meet it for at least two years, and perhaps forever if in the interim a new president chooses never to implement it. Does the Federal Reserve create some uncertainty when it undertakes quantitative easing? Probably, but in the process it makes the stability of inflation around 2% much more certain, and that, most businesses would say, is a reasonable trade-off.

In the absence of any ability to calculate, the framing through which one views the incalculable determines responses. A classic instance of uncertainty shifting from positive to negative is that, when the stock market was booming during the late 1920s, lack of information over the weekend would be interpreted positively. As and after it crashed, lack of information was interpreted negatively.

Economic “confidence”—including business confidence—is, to a large degree, how what cannot be calculated is being framed in a given time period: whether it is being framed positively or negatively and how much so. This is likely to be based on various indicators but, by its non-calculable nature, cannot be definitively so. The wider the range of uncertainty, the more unstable confidence is likely to be, because the greater the possibility of new information changing how the uncertainty is being framed.

Just because something cannot be calculated does not mean we will not frame expectations to cover that uncertainty: it just means that such expectations cover more than is directly inferable from such information as we have. We will apprehensively tell stories based on (at least partly created) patterns that fit with our preferences, because we are APES. But, of course, without preference and expectations we would have no basis to act (other than randomly). Being APES may go with the territory of having a certain level of cognitive complexity.

[Cross-posted at Critical Thinking Applied]

An age of every day marvels

Economist Arnold Kling recently posted on the issue of "scientific stagnation", and whether we were in a period of it. Now, without getting into the arguments about string theory, and whether it is a dead-end (there is more to science than physics), I offer the following excellent paragraphs from the above post:

... we tend to under-estimate the achievements of computer technology because they become so widely available so quickly. Going to the moon seems amazing, because almost nobody participated in that. Using Google Maps seems pedestrian, because all your friends can do it.

and

One could argue that the social payoff from space travel just hasn't been there. The trip to the moon was not epoch-making because the moon had very little going for it. If Christopher Columbus had discovered a continent with the ecology of the moon, that discovery would not have been an epoch-making event.

On the latter point, one commenter on the post noted:

Anyone know who Captain John Davis was?
No? He was the captain of the expedition that was the first in recorded history to set foot on Antarctica. I'd say no epochs were made, pretty much proving the professor's point.

We live in an age of every-day marvels. Perhaps we should appreciate that more.

Migrants, jobs and voice

This is based on a comment I made here.


Alabama has recently enacted a law that makes it illegal for illegal migrants to work to support themselves and their families with spillover effects to any migrants who have family members who are illegal migrants:

Many legal Hispanic workers are fleeing the state because their family and friends don't have the proper papers and they fear they will be jailed.

Observing both the US and Australian debates over immigration, it is clear that anti-immigrant sentiment (which this law is pandering to) is primarily a function of two factors:
(1) level of unemployment;
(2) how much sense ordinary citizens have that migration is "under control".

In the US, the solution to the first is for the Federal Reserve to fix by increasing aggregate spending. (Any supply side reforms, however worthy, are unlikely to be anywhere near as effective.) Or, to put it another way, do its job as well as the Reserve Bank of Australia has.

The second is bedevilled by the fact that one side of the debate "wins" if nothing effective is done about illegal immigration while ordinary citizens can only get a sense of having a say if legal policy (the one they get to vote on) matters. In Australia, there was a notable and dramatic drop in anti-immigration sentiment when the then Howard Government ostentatiously cracked down on boat arrivals: this despite the same Government running a high immigration policy and the least "Eurocentric" policy in our history.

(Australia is also the world-champion at "cherry-picking" migrants--it is helpful to be a prosperous, English-speaking island-continent.) The effects and experience of high level of migration vary greatly between different segments of the society: which naturally reflects how one reacts to, and frames, the issues. A certain amount of ongoing sentiment about migration simply flows from this but it also affects how the above factors operate.

By simply labeling any concern by voters that they get a say over migration as "racist", the "open borders" folk generate a comforting sense of moral superiority, completely elide the issue of democratic control and the status of citizenship while profoundly discounting the concerns of those who disproportionately bear the costs of migration. All of which poisons public debate over the issue, (deliberately) obscuring much of what is at stake.

As one would expect, given this, problems are most intense in Europe, since lack of accountability is so built into contemporary European politics.

Just price and human autonomy

This is based on a comment I made here.


In any discussion of “just price”, one should not blame the Romans, even by implication, for any notion that extends beyond fair bargaining. They had no truck with notions of intrinsic value, as we can see in this quote from Servius Sulpicius Rufus, writing in the first century BC here:

All buying and selling has its origin in exchange or barter; there was once a time when money did not exist and terms like ‘merchandise’ or ‘price’ were unknown. Rather, each person bartered what was useless to him for that which was useful, according to the exigencies of his current needs; it often happens that what one man has in plenty another lacks. However, since it did not always and easily happen that when you had something that I wanted, I, for my part, had something that you were willing to accept, a material was selected which, being given a stable value by the state, avoided the problems of barter by providing a consistent medium of exchange. This material, struck in due form by the mint, demonstrates its utility and title not by its substance but by its quantity, so that no longer are the things exchanged both examples of wares, but rather one of them is termed the ‘price’ [Praetorian Edict: D.18.1.1pr].

Medieval “just price” thinking had other origins, including that development of Aristotelian natural law philosophy known as Scholastic philosophy.

At the heart of natural law theory is a notion of things having defining purposes (their final cause). So, interest on money was verboten since the purpose of money was exchange and interest charged for what was not the purpose of money. There was also argument that money—remembering their only form of money was coins—was sterile, so it "growing" of itself was against nature. Hence Aristotle’s denunciation:

There are two sorts of wealth-getting, as I have said; one is a part of household management, the other is retail trade: the former necessary and honorable, while that which consists in exchange is justly censured; for it is unnatural, and a mode by which men gain from one another. The most hated sort, and with the greatest reason, is usury, which makes a gain out of money itself, and not from the natural object of it. For money was intended to be used in exchange, but not to increase at interest. And this term interest, which means the birth of money from money, is applied to the breeding of money because the offspring resembles the parent. Wherefore of an modes of getting wealth this is the most unnatural (Politics, Book One, Part X).

Once you have a notion of proper (indeed defining) purpose, that puts limits (sometimes severe limits) on where bargaining can go. This is particularly clear in sexual ethics: the "defining purpose" of sex and genitals is procreation, so there is no permitted "sexual bargaining" that allows sex outside marriage (the vehicle for raising children) or sex that does not permit the possibility of conception (no masturbation, no oral or anal sex to point of ejaculation; no artificial blocks to conception, all of which is use of defined-to-be-procreative organs against their nature). Which is the same sort of reasoning as "money is round bits of metal the purpose of which is exchange, so charging interest is against its nature".

So, in Scholastic thinking, a just price has to fit within the defining uses, the final cause, of things. Such as, the purpose of economic activity is to sustain life. Which has all sorts of implications, such as limitations on return; on what you can charge for.

One can have notions of fairness, or even of commonality, which do not rely on notions of "just price" grounded in intrinsic nature of things. There are good reasons to have rationing in a besieged city, for example.

But there is a difference between "this is a violation of our sense of fair play/common life" and "this is a use of something outside its nature/proper purpose". Between "this is not just behaviour to fellow citizens" and "this is an against-its-nature use of x". The latter involves potentially quite serious limitations on human autonomy, the former is paying a particular form of attention to it.

A misbegotten Union

The people who supported the euro, and particularly UK entry into the euro, were wrong. Not arguably wrong, not partially wrong; just flatly, unequivocally, completely wrong. Rarely in the history of public policy has one side in a public policy debate been so swiftly, and so comprehensively, vindicated.

A tale of two islands
The debacle is so complete that citing specific evidence seems unnecessary but we merely have to compare Iceland with Ireland. Iceland decided that a small island of 320,000 people had some niche advantage in grand finance. It was hubristic nonsense that went horribly wrong. But Iceland had two saving graces in the disaster. First, it realised that it was far too small to guarantee the banks and did not do so, thereby failing to saddle its taxpayers with enormous liabilities. Second, it was not in the euro so could let its exchange rate reflect the change in its economic circumstances.

Contrast this with Ireland. The “Celtic Tiger” bought into the nonsense that is land-rationing and suffered the normal penalty of land prices surging way beyond likely income returns as expectations of capital gain fed themselves, helped by cheap credit. (I say ‘land prices’ because houses are large decaying physical objects, it is the land a house is on which shoots around in value.) When it all came tumbling down, the Irish Government made things worse by guaranteeing the banks (who therefore had much less incentive to change behaviour or fix their own problems) saddling the hapless Irish taxpayers with huge liabilities. Ireland was also stuck with the euro, so could not let its exchange rate reflect the change in its economic circumstances, thus becoming a test case in exactly what was wrong with the euro. Hence Ireland's drop in employment has been considerably worse than Iceland’s.

Looking at the graph of 2007 to 2010 changes in employment for OECD countries, Australians can note what a different place we have been in compared to the US and most of Europe: for us, the Great Moderation is still going (particularly clear if you move the start year back to 1959). While any Australian who has been paying attention over the last 30 years can appreciate the useful role of a floating exchange rate as economic “shock absorber”. That is what countries in the euro now lack.

ECBing downwards
The European Central Bank (ECB), with its trumping focus on maintaining price stability, has made things worse. The point of the euro was, in effect, a deutschmark-for-everyone, just sign up. The ECB has pursued a policy that makes some sense for the German economy and no sense for anyone who is not. In a weird historical resonance, the ECB is playing a similar role in our period of the Global Financial Crisis and the Great Recession that the Bank of France did in the 1928-1932 period (pdf): driving down expectations of the path of money supply and spending, so having a depressing effect on economic activity—just the thing to make a debt crisis worse (pdf).

Once as tragedy, then as farce
In another weird historical resonance, while many Americans seemed to have thought they were elected a new FDR, what they ended up with is a new Herbert Hoover—someone with a high reputation for intelligence and energy, willing to break from the “stale” patterns of the past, who engages in a lot of activity (pdf) which is either pointless or actively counter-productive while failing to pay attention to the Fed’s disastrous monetary policy. Kevin Baker offered the Obama-as-Hoover analogy early but it is now in some danger of becoming conventional wisdom.

The historical resonances continue, as the Fed has engaged in a mix of passive (and not so passive) monetary tightening intermixed with feeble and temporary easings—the net effect being to drive down expectations of the path of money supply and spending, which encourages people to hold onto money, given falling inflation and economic activity expectations, causing a downward spiral in transactions, pushing the US economy well below its trend growth path. Yet people babble on about inflationary risks, just like the 1930s. (Alas, much of the economics profession seems clueless, the key central banks seem to be running on myths, worrying about inflation is popular, though misguided, even as financial markets have very low inflation expectations, which is not helping asset markets while international prudential bank regulation is set to make things worse.)

A paper on who went protectionist in the 1930s and why (pdf) helps explain why we are having these historical resonances. Just as a lot of the problem now is people reacting to the stagflation of the 1970s, so the problem then was people reacting to the post WWI inflations, including the notorious German hyperinflation. In both periods, people's fears about returning to past inflationary episodes encouraged inappropriately tight monetary policies.

A recent post points out (scroll down to the version in English) that a striking historical resonance is that the countries which had problems with the gold standard during its 1873-1895 deflationary period included Greece, Italy, Spain, Portugal: the same countries which are now having problems with the ECB’s tight money policies.

Euro nausea
As the euro disaster unfolds, it is worth remembering what is at stake. There are more euros (banknotes and coins by value) in circulation than US dollars. The euro is the second largest reserve currency and second most traded currency. The question increasingly becomes, not whether Greece will default, but where the process of default will stop and how much of the financial system is at risk of collapsing as sovereign bonds fall to, and then beyond, “junk” status. With the IMF issuing serious warnings about the global implications. As does George Soros while the co-author of the classic study of financial panics This Time is Different: Eight Centuries of Financial Folly thinks the situation is (fairly but not absolutely) dire.

Now, it is true that Greece is a deeply fiscally dysfunctional polity. But that is the point: Greece should never have been part of a common currency with Germany. There was simply never enough economic commonality among the members for the thing to work (a problem expressed nicely here). But, here’s the thing: the attempt to do what could not be done made things worse. This is not a crisis that the poor euro got caught up into, this is a crisis that not only has the euro made worse, it is one that it (and especially the ECB’s management thereof) did a significant amount to cause.

[Read the rest at Critical Thinking Applied, or a slightly earlier version at Skepticlawyer]

Whiteman’s Dream

October 2011 Dinner - The Australian Adam Smith Club

Prof Gary Johns
on
Aboriginal Self-Determination:
The Whiteman’s Dream

The Adam Smith Club will host a dinner meeting on Wednesday the 5th of October 2011, at the Curry Club, 396 Bridge Rd, Richmond 3141.

The Hon Dr Gary Johns is Associate Professor in Public Policy in the PPI. He served in the House of Representatives from 1987-1996 and was Special Minister of State and Assistant Minister for Industrial Relations from 1993-1996 and as an Associate Commissioner of the Commonwealth Productivity Commission 2002-2004. He was for 10 years, Senior Fellow Institute of Public Affairs, Australia, and a senior consultant with ACIL Tasman economic consultants from 2006-2009. He is a member of the editorial board of Agenda (ANU) and President of the Bennelong Society.

Gary Johns will outline the thesis of his book, Aboriginal Self-Determination: the Whiteman’s Dream. Land rights, welfare and culture have locked aborigines out of the good life. Land has become a burden, welfare has become disabling, and bad behaviour is mistaken for culture. There is a way out. Aborigines must abide by the same rules as every other Australian -- seek out opportunities, study hard, and free themselves from a culture of bad behaviour. This is in contrast to the white man’s dream of Aboriginal self-determination. This grand experiment has failed. Aborigines, especially those in remote Australia, need an exit strategy from the dream. The exit strategy outlined in this book destroys the rallying cry for culture. Instead, it shows that the way to self-determination is through individual dignity.

Attendance is open to both members and non-members. Those desiring to attend should complete the pdf (link below) and return it to the Club no later than Tuesday the 4th of October 2011. Tickets will not be sent. Those attending should arrive at 6:30pm for dinner at 7:00pm. The cost is $40.00 per head for members and $45.00 per head for non-members

download the invitation and newsletter at
www.adamsmithclub.org/LF100.pdf
(the file is ~200k acrobat file)