Correlated coupling between living in cities and developing science

MY EDITORIAL ON YOU TUBE

I continue working on the hypothesis that technological change that has been going on in our civilisation at least since 1960 is oriented on increasing urbanization of humanity, and more specifically on effective, rigid partition between urban areas and rural ones. I have been meditating on the main threads which I opened up in my previous update entitled ‘City slickers, or the illusion of standardized social roles’. One conclusion comes to my mind, as both an ethical, and a praxeological precept: we, humans, we should really individuate the s**t out of our social roles. Both from the point of individual existence, and that of benefiting to the society we live in, it is of utmost importance to develop unique skillsets in ourselves. Each of us is a distinct experiment in the broad category of ‘human beings’. The more personal development each of us achieves in one’s own individual existence, the further we can advance that local experiment of ours. Standardizing ourselves serves just the purpose of coordination with others, and that of short-term hierarchical advancement. The marginal gains of standardizing our own behaviour tend rapidly towards zero, once we are past the point of efficient coordination.

I think I will be weaving that thought into a lot of my writing. It is one of those cases when science just nails something already claimed as philosophical claim. What science? This time, I will be developing on the science known as ‘swarm theory’, and I will try to bridge between that theory and my meditations on human individuation. The swarm theory – which you can study by yourself by reading, e.g. Xie, Zhang & Yang 2002 [1] ; Poli, Kennedy & Blackwell 2007 [2] ; Torres 2012 [3], and Stradner et al. 2013 [4] – takes empirical observations of swarm animals, such as bees, wasps, ants, and applies those observations to the programming of robots and neural networks, just as to studying cooperation in human societies. It is one of those eclectic approaches, hard to squeeze into any particular drawer, in the huge cabinet of science, and this is precisely why I appreciate it so much.

The basic observation of the swarm theory is that collective coordination is based on functional coupling of individual actions. Coupling means that action of the social entity A provokes action in the social entity B, and it can provoke action in three distinct patterns: random, correlated, and coordinated (AKA fixed). Random coupling happens when my action (I am the social entity A) makes someone else do something, but at the moment of performing my action I haven’t the faintest idea how that other person will react. I just know that they are bound to react someone. Example: I walk into a bar and I start asking complete strangers whether they are happy with their lives. Their range of reactions can stretch from politely answering they are truly happy, thank you so much for asking, through telling me to f**k off, all the way up to punching my face.

When I can reasonably predict the type of other people’s reaction to my action, yet I cannot predict it 100% accurately the magnitude of that reaction, it is correlated coupling. Let’s suppose I assign homework to my students. I can reasonably predict their reaction, on a scale. Some will not do their homework (value 0 on the scale), and those who do it will stretch in their accomplishment from just passable to outstanding. I intend to focus a lot on correlated coupling, in the context of collective intelligence, and I will return to that concept. Now, I want to explain the difference between correlated coupling and the third type, the coordinated AKA fixed coupling. The latter means that a given type of behaviour in one social entity always provokes exactly the same kind of reaction in another social entity. Bal dancing, I mean the really trained one, comes as a perfect example here. A specific step in dancer A provokes always the same step in dancer B.

In my update entitled ‘A civilisation of droplets’, I started to outline my theory about the role of correlated coupling in the phenomenon of collective intelligence. Returning to that example of homework which I assign to my students, the assignment I make is a piece of information, and I communicate that piece of information to a group of recipients. Even before the advent of digital technologies, assignment of homework at school had a standardized form. I remember my own school days (long ago): the teacher would open up with something like ‘Attention! This is going to be your homework..’, and then would say the substance of the task(s) to perform or would write it on the blackboard. It was a standardized communication, which provoked, in us, students, non-standardized and yet scalable and predictable reactions. That assignment worked as a portion of some hormone, dropped among potentially receptive entities (students).

The development of social roles in cities works very much through correlated coupling of behaviour. Let’s take the example of the urban job market. People migrate to cities largely because of the career opportunities offered there. If the urban job market worked in random coupling, a job offer communicated to job seekers would have unknown consequences. I run a construction business, I look for staff, I communicate around the corresponding job offers, and I receive job applications from nurses, actors, and professional cooks, but not a single person with credentialed skills in construction. This is a case of random coupling between the substance of jobs I search to staff, and the qualifications of applicants. Let’s suppose I figured out how to train a cook into a construction worker (See? You just make a recipe for that ceiling, just as if you were preparing a sauce, and then you just apply the recipe: the right structure, the right temperature etc. Simple, isn’t it?), and I sign a work contract with that person, and then they call me on their first scheduled day of work just to say they changed their mind and they will not turn up. This is a case of random coupling between contracts and behaviour.

If the same market of jobs worked in fixed coupling, it would be central planning, which I know perfectly from the times of my childhood and teenage years in the communist Poland. It works as a system of compulsory job assignments and the peculiar thing about that system is that it barely works at all. It was tons of fun, in the communist Poland. People would produce all kinds of fake medical papers in order not to be assigned industrial jobs in factories. The government figured out a system of incentives for those workers: high salaries, additional rations of meat per month etc. Result? A wonderfully blossoming black market of fake job certificates, which would officially certify the given person is a factory worker (= money, meat), whilst the same person would run a small private business on the side.

It is interesting to study those three possible types of behavioural coupling – the random, the correlated and the fixed – in the field of law and contracts. Let’s suppose that me and you, my readers, we sign a business partnership contract. In the random coupling version, the contract would cover just some most essential provisions, e.g. duration and scope, and would give maximum freedom in any other respect. It is like ‘We do business together and we figure the thing out as events unfold’. I used to do business in this manner, back in the day, and it falls under every possible proverb about easy ways: the easy way is a way to nowhere, sort of. A good contract needs reasons for being signed, i.e. it needs to bring real order in an otherwise chaotic situation. If the contract just says: ‘We do whatever comes to our mind’, it is not really order, it is still chaos, with just a label on it.

Fixed coupling corresponds to contracts which regulate in great detail every footstep that parties might be willing to make. If you have some business experience, you probably now the kind: a 50-page framework agreement with 50 pages of annexes, and it just gives grounds for signing a case-specific agreement of 50 more pages etc. It is frequently practiced, yet good lawyers know there is a subtle razor edge in that game: if you go too specific, the contract can literally jam. You can get into a situation, when terminating the agreement or going to court are the only solutions logical on the grounds of the contractual wording, and yet completely illogical businesswise. A good contract gives some play to parties, so as they can adapt to the surprising and the unusual. Such flexibility can be created, e.g. through a system of contractual score points. If you buy goods from me, for at least $100 000 a month, I give you 2% of rebate, and if you go beyond $500 000 a month, I give you a rebate of 5% etc.

If we think about life in cities, it is all about social interaction. This is the whole point of living in a city: being in interaction with other people. That interaction is intense and is based on correlated coupling. People tend to flock to those cities, which offer that special kind of predictable freedom. Life in those cities is neither random, nor fixed in its ways. I start a business, and by observing other similar businesses I can nail down a business model that gives me reasonable confidence I will make reasonable money. I assume that when I drop into the social organism a relatively standardized droplet of information (advertising, sign over the door etc.), people will react.

Urban life allows figuring out a whole system of correlated coupling in human behaviour. I walk down the street and I can literally see it. Shop signs, traffic lights, cycling lanes, billboards, mobile apps pegged on digital beacons, certificates working as keys that open career doors: all that stuff is correlated coupling. Now, I want to connect the next dot: formation of new social roles. As I hinted the thing in ‘City slickers, or the illusion of standardized social roles’, I deeply, intuitively believe that social roles are much more individual, idiosyncratic ways of behaviour, rather than general categories. I think that I am much more the specific blogger than a general blogger.

Here I step in with another intuition of mine: technological change, such as we have been experiencing it over the period of time I can reasonably study, coincides with the multiplication of social roles. I am following two lines of logic. Firstly, the big generic technologies we have been developing allow growing individuation of social roles. Digital technologies are probably the most marked example thereof. Online content plays the role of semantic droplets, provoking more or less correlated coupling of behaviour in people located all over the planet. Personal electronics (smartphones, tablets, laptop computers) start working, for many of us, as some sort of super-cortex. Yes, that super-cortex can be slightly psychotic (e.g. comments on social media), and yes, it gives additional flexibility of behaviour (e.g. I can learn knew knowledge faster than before).

I frequently use patent applications as phenomenological manifestation of technological change. When I want to have my invention legally protected, I apply for a patent. Before the patent is granted, I need to file a patent application with the proper patent office. Then, I wait for said office to assess whether my invention is unique enough, and my patent application early enough to assume that I truly own truly novel a solution to an important problem. Patent applications are published, in case someone had two words to say about me having tapped into their earlier invention(s). At the aggregate level, the number of patent applications filed during a given window in time is informative about the number of workable and marketable inventions.

The World Bank, my favourite source of data (i.e. of numbers which allow me feeling confident that I have accurate knowledge about reality) provides two aggregates of patent applications: those filed by residents (https://data.worldbank.org/indicator/IP.PAT.RESD ), and those filed by non-residents (https://data.worldbank.org/indicator/IP.PAT.NRES ). A non-resident patent application is that filed by an entity located outside the jurisdiction of the corresponding patent office. I use these two aggregates, calculated for the world as a whole, as nominators, which I divide by the headcount of population, and thus I calculate coefficients of patent applications per 1 million people.

Of course, you could legitimately ask how the hell is it possible to have non-resident patent applications at the scale of the whole planet. Aliens? Not at all. When a Polish company applies for a patent to be granted in the territory of the United States, by the United States Patent and Trademark Office, it is a non-resident patent application, and it remains non-resident when summed up together with patent applications filed by the same Polish company with the European Patent Office. The global count of non-resident patent applications covers all the cases when applicant from country A files for a patent with the patent office of country B.

Good. I calculate the coefficients of patent applications per 1 million people on Earth, split into resident applications and the non-resident ones. The resulting trends in those two coefficients, calculated at the global scale, are shown in the graph below, entitled ‘Trends in the intensity of patentable invention’. Data regarding patent applications is available since 1985, thus its temporal window is shorter than that of urbanization-pertinent aggregates (since 1960). The general reading of the graph is that of an ascending trend. Our average million of people files for patenting more and more inventions. Their average million does the same.

However, as two separate trends are observed in, respectively, resident and non-resident patent applications per 1 million people, their ascent diverges in level and gradient. There have been systematically less non-resident patent applications that the resident ones. It indicates that the early marketing of science developed into tangible solutions takes place mostly in the domestic markets of the science in question. As for the gradients of change in both trends, they had been more or less similar until 2009 – 2010, and since then resident patent applications have taken off much more steeply. Domestic early marketing of developed science started to grow much more in intensity than the internationally played one. Interesting. Anyway, both trends are ascending in the presence of ascending urbanization and even more sharply growing density of urban population (see City slickers, or the illusion of standardized social roles’).

Both trends in patent applications per 1 million people are ascending in the presence of ascending urbanization and even more sharply growing density of urban population (see City slickers, or the illusion of standardized social roles’). I want to test that apparent concurrence, and, by the same occasion, I want to do the kind of intellectual stunt I love, which consists in connecting human behaviour with directly to mathematics. I intend to use the logic of mathematical correlation, and more specifically of the so-called Pearson correlation, to explain and explore correlated coupling between growing urbanization and growing intensity of patenting, in the global human civilization.

The first parachute I strap myself to, as I am preparing for that stunt, is the assumption that both urbanization and patenting are aggregate measures of human behaviour. The choice of living in a city is a pattern of behaviour, and spending 5 years in my garage, building that spaceship for going to Mars, and subsequently filing for a patent, is also a pattern of behaviour. My second parachute is statistical: I assume that change in behaviour is observable as deviation from an expected, average behaviour. I take a third parachute, by assuming that behaviours which I want to observe are numerically measurable as magnitudes on their respective scales. At this point, we enter the subtly foggy zone somewhere between individual behaviour and the collective one. The coefficient of urbanization, calculated as the percentage of humanity living in cities, is actually a measure of collective behaviour, indirectly informative about individual decisions. The same is true for all the other quantitative variables we commonly use in social sciences, including variables used in the present study, i.e. density of population in cities, and intensity of patenting. This is an important assumption of the swarm theory, when applied to social sciences: values observed in aggregate socio-economic variables represent cumulative outcomes of past human decisions.

Correlated coupling means predictable change in the behaviour of social entity B, as social entity A does something. Mathematically, correlated coupling can be observed as concurrent deviations in behaviours A and B from their respective, average expected states. Good. Assumptions are made. Let’s dance on the edge between mathematics and human behaviour. (Local incidence of behaviour A – Average expected behaviour A) * (Local incidence of behaviour B – Average expected behaviour B) = Local covariance of behaviour A and behaviour B. That local covariance is the way two behaviours coincide. In my next step, I generalize: Sum (Local covariances of behaviour A and behaviour B) / Number of cases (Local coincidence of behaviour A and behaviour B) = General covariance of behaviour A and behaviour B.

Covariance of two behaviours is meaningful to the extent that it is compared with the individual, endogenous variance of each behaviour taken separately. For that reason, it is useful to denominate covariance with the arithmetical product of standard deviations observable in each of the two behaviours in question. Mathematically, it goes like: (Local incidence of behaviour A – Average expected behaviour A)², i.e. square power of local deviation = local absolute variance in the phenomenon A. Elevating to square power serves to get rid of the minus sign, should the local incidence of behaviour A be smaller in magnitude than average expected behaviour A. Once again, I generalize: Sum (Local absolute variances in behaviour A) / Number of cases (Local incidence of behaviour A) = General variance in behaviour A.

Variance is the square power of something that really happened. Square powers are interesting, yet I want to get back to what really happened, and so I take the square root of variance: (General variance in behaviour A)^0,5, i.e. square root of its general variance = standard deviation in behaviour A.

Covariance (Behaviour A <> Behaviour B) / (Standard deviation in behaviour A * Standard deviation in behaviour B) = Pearson correlation between behaviour A and B, commonly symbolised as ‘r’. It is mathematically impossible for the absolute value of r to go above 1. What we can reasonably expect from r is that it falls somewhere inside -1 ≤ r ≤ 1. In statistics, it is assumed that – 0,3 < r < 0,3 is nothing to write home about, really. It is not a significant correlation. What we are interested in are the outliers of r, namely: -1 ≤ r ≤ -0,3 (significant negative correlation, behaviours A and B change in counter-step, in opposition to each other) and 0,3 ≤ r ≤ 1 (significant positive correlation, behaviours A and B fall nicely in step with each other).

Let’s have a look at the Pearson correlation between the metrics of urbanization, discussed in City slickers, or the illusion of standardized social roles’, and the coefficients of patent applications per 1 million people. Coefficients of correlation are shown in the table below, and they are really high. These are very strong, positive correlations. Covariances of patenting and urbanization mutually explain almost entirely their combined standard deviations. This is a very strong case of correlated coupling between behaviours that make cities, on the one hand, and behaviours that make iPhones and electric cars, on the other hand.

Table – Pearson correlations between the metrics of urbanization and the coefficients of patent applications per 1 million people

	Non-resident patent applications per 1 million people	Resident patent applications per 1 million people
Density or urban population (people per 1 km2)	0,97	0,93
Percentage of global population living in cities	0,98	0,92

I sometimes use a metaphor about my own cognition. I say that I am three: a curious ape, a happy bulldog, and an austere monk. Now, my internal bulldog kickstarts, and bites deeper into that bone. There are strong positive correlations, and therefore there is correlated coupling of behaviours which those statistical correlations are informative about. Still, I want to know how exactly that correlated coupling happens. The graph below, entitled ‘Urbanization and intensity of patenting’ presents three coefficients: % of humanity in cities, density of urban population, and total number of patent applications (resident and non-resident together) per 1 million people. All three are driven to a common scale of measurement, by transforming them into constant-base indexes. For each of them, the value observed in the year 2000 stands for 1, i.e. any other value is divided by that value from 2000. The index of urbanization (% of humanity living in cities), represented by the orange line marked with black triangles, is the flattest of the three. The blue line of indexed density in urban population is slightly steeper, and the red line, marked with green circles, representing indexed patent applications per 1 million people, is definitely the hastiest to ascend. Slight change in human decisions of moving to a city is coupled by correlation to human decisions to live in a progressively shrinking space in cities, and it looks like the former type of decision sort of amplifies the magnitude of change implied in the latter type of decision. That coupled correlation in collective behaviour, apparently working as a self-reinforcing loop, is further coupled by correlation with behaviours relative to developing science into something marketable, i.e. patenting.

Urbanization reinforces density of population in cities, through correlated coupling, and further reinforces the intensity of patenting. The density of population in cities grows faster than the percentage of humans living in cities because we need those cities to be kept in leash as for the territory they take. The more humans we are, the more food we need, whence the need for preserving the agricultural land that serves to make food. We invent more and more technologies, per 1 million people, that both allow those people to live in shrinking individual spaces, and allow people in the countryside to produce more and more food. Technological change that has been going on in our civilisation at least since 1960 is oriented on increasing urbanization of humanity, and more specifically on effective, rigid partition between urban areas and rural ones. That hypothesis seems to be holding.

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[1] Xie, X. F., Zhang, W. J., & Yang, Z. L. (2002, May). Dissipative particle swarm optimization. In Proceedings of the 2002 Congress on Evolutionary Computation. CEC’02 (Cat. No. 02TH8600) (Vol. 2, pp. 1456-1461). IEEE.

[2] Poli, R., Kennedy, J., & Blackwell, T. (2007). Particle swarm optimization. Swarm intelligence, 1(1), 33-57.

[3] Torres, S. (2012). Swarm theory applied to air traffic flow management. Procedia Computer Science, 12, 463-470.

[4] Stradner, J., Thenius, R., Zahadat, P., Hamann, H., Crailsheim, K., & Schmickl, T. (2013). Algorithmic requirements for swarm intelligence in differently coupled collective systems. Chaos, Solitons & Fractals, 50, 100-114.

City slickers, or the illusion of standardized social roles

MY EDITORIAL ON YOU TUBE

I am developing on the topic which I signalled in the update entitled Stress-tested by a highly infectious micro-organism, i.e. on the role of cities in our human civilization. A big, sharp claim comes to my mind: technological change that has been going on in our civilisation at least since 1960 is oriented on increasing urbanization of humanity, and more specifically on effective, rigid partition between urban areas and rural ones.

Against the background of that claim, which I consider as a general working hypothesis of my research, I want to dig deep into its phenomenological foundations. An observation has really stricken me as odd: the spatial structure of land use. Since 1960 through 2018, the percentage of urban population in the total population of the Earth passed from 33,6% to 55,3%, and the absolute number of people living in cities has grown from around 1 billion up to some 4,2 billion. Yet, as astonishing as it seems, it is really unclear what exact surface of urban land those people inhabit, and many sources, including the World Bank, indicate that the surface in question has been fairly constant over the last 20 years, around 3,6 million km².

Yes, as strange as it might seem, we don’t know for sure what is the exact surface that we, humans, use for living, like around in the world. There is a bit more clarity as for agricultural land, although that one is far from being clear, too. Fog starts to sort of hang around already when we ask how much land in general do we have exactly. Estimates of this kind are made on the basis of satellite readings, and satellites are apparently not too good at recognizing land elevated close to the sea level. Apparently, a satellite has hard times to distinguish land in depression (i.e. below the sea level, such as a significant part of Netherlands, for example) from the neighbouring sea. As regards this topic, I recommend getting acquainted with the resources available with the Center for International Earth Science Information Network (CIESIN), at the Columbia University

I found some readings which indicate that the total surface of urban land in the world has been growing for the last 20 years (e.g. Li et al. 2019 [1]), yet it is unclear where exactly the data cited there comes from. We are facing a paradox, when truly serious scientific projections allow expecting, in the near future, a dramatic growth in the surface of urban land on Earth, at the expense of agriculture and wildlife, yet there is no tangible evidence of such growth in the recent past.

Thus, apparently, urban people live in a consistently growing number within a fairly constant space. As there is more and more of us, in cities, what we are becoming really good at is increasing our density of population. I am trying to represent that phenomenon in the graphs below. We have two concurrent trends: growing a percentage of humanity living in cities and increasing density of population in those cities. The latter seems to have been progressing faster than the former. The question is: why? Why do we keep cramming ourselves more and more in cities? After all, it is possible – and even quite simple in terms of basic spatial geometry – to take any big city we know, like Paris, Tokyo, or my hometown, Krakow (Poland) – and sort of spread its current population onto a much bigger area. The resulting structure of settlement would look like a giant residential suburb, with people living in medium-sized houses, located on medium-sized plots of land. It would be even possible to associate small-scale agriculture with each such medium-sized real estate and thus have a food base. It is technically possible, but we don’t do it. Why?

We, humans, we can build incredibly complex social structures, yet we have at hand just a few building blocks for that complexity. We have the capacity to define social groups, and we define them by nailing down an appurtenance function. On the other hand, we define social roles inside the group. If we include into the definition of a social role the possible connections to other social roles in the group, then we have just two building blocks: groups and social roles. I am going to explore the connection between those basic building blocks, and the phenomenon of urbanization with growing a density of population in urban structures.

I have recently begun to develop on the intuition that each individual human being represents a distinct social role. In other words, we have as many social roles in a group as there are individual human beings. Now, it is arguable, even as an intuition. Logically, if I want to say that my social role is X, there must be a categorial set X and I should be inclusive into that set. In other words, the intuitive take on social roles is to see them as general categories rather than as individual instances. Yet, my experience with digital neural networks has taught me that the distinction between general categories and individual instances is much foggier than traditional logic would indicate. There is a category (hic!) of neural networks, designated as convolutional neural networks, used in deep learning, where not only does the network learn to optimize a variable, but also it learns to formulate the best function in the view of optimizing that variable.

I am mildly obsessed with the application of artificial intelligence to simulate the working of collective intelligence in human societies. In this specific case, the logic of AI suggests me that social roles in human societies are a good example of that foggy zone between general categories and individual instances. Instead of saying ‘my role in society belongs to category X’, I could rather say that ‘the category X is a generalisation drawn out of many different, individual social roles, mine included, and this generalisation is a purely cognitive construct’.

If I adopt this stance, then at least one obvious conclusion forms: the more people are there around, the more different social roles are being played. Just to show you the fundamental difference, I will use an example strongly referring to the current situation: consulting a medical doctor. This is precisely what we use to say: ‘I go to see a doctor’. A doctor, not the doctor. Still, if you have ever had the misfortune of suffering from anything more serious than a common cold, you could have noticed that consulting different doctors is like consulting different artists. Each good doctor, with good credentials, builds his or her reputation on digging on their own, into a specific field of medicine, and figuring out idiosyncratic methods. You can also recognize a good doctor by their capacity to deal with atypical cases.

Interesting: an accomplished social role is a clearly idiosyncratic social role. You can climb the ladder of social hierarchy precisely by developing a unique mix of skills, thus by shaping a highly individualized social role.

Now, imagine that individuation among doctors is prevalently recognized. Imagine a world where, instead of expecting a standardized treatment, and standardized skillsets in all the medical profession, patients commonly expect each physician to approach them differently, and therapeutic idiosyncrasy is the norm. What would public healthcare systems look like if we assumed such a disparity? How to calculate a standard price for a medical procedure, if every medical professional is assumed, by default, to perform this very procedure it their artistically unique manner?

As I occasionally delve into history books, an example of which you can read in my recent update entitled ‘Did they have a longer breath, those people in the 17th century?’, I discover that we are currently living an epoch of very pronounced social standardization. We have evolved those social systems – healthcare, pensions, police, adjudication – which, whilst being truly beneficial, require us to be very standardized and predictable in our personal demeanour. When I compare Europe today with Europe at the end of the 17^th century, it is like comparing someone in a strict uniform with someone dressed in a theatrical outfit. It is uniformity against diversity.

We could be living in an illusion of widely standardized social roles, whence, e.g. the concept of ‘career path’ in life. This is a useful illusion, nevertheless an illusion. I am deeply convinced that what we, individual homo sapiens, commonly do, is individuation. The more we learn, the more idiosyncratic our accumulated learning becomes. Ergo, once again, the more humans are there around, the more distinct social roles are there around. What connection with cities and urban life? Here comes another intuition of mine, already hinted at in ‘Stress-tested by a highly infectious microorganism’, namely that urban environments are much more favourable than rural ones, as far as creating new social roles is concerned. In the rural environment, agricultural production is the name of the game, which requires a certain surface of arable land and pasturage. The more people in the finite habitable space of our planet, the more food we need, and the more stringent we need to be on shielding agricultural land from other uses. This is the spiral we are in: our growing human population needs more agricultural resources, and thus we need to be more and more particular about partitioning between agricultural land and urban space.

I found an interesting passage in Arnold Toynbee’s ‘Study of History’ (abridged version: Somervell &Toynbee 1946[1]). In Section 3: The Growths of Civilizations, Chapter X: The Nature of the Growths of Civilizations, we can read: ‘We have found by observation that the most stimulating challenge is one of mean degree between an excess of severity and a deficiency of it, since a deficient challenge may fail to stimulate the challenged party at all, while an excessive challenge may break his spirit. […] The real optimum challenge is one which not only stimulates the challenged party but also stimulates him to acquire momentum that carries him a step farther […].

The single finite movement from a disturbance to a restoration of equilibrium is not enough if genesis is to be followed by growth. And, to convert the movement into a repetitive, recurrent rhythm, there must be an élan vital (to use Bergson’s term) which carries the challenged party through equilibrium into an overbalance which exposes him to a fresh challenge and thereby inspires him to make a fresh response in the form of a further equilibrium ending in a further overbalance, and so on in a progression which is potentially infinite.

This élan, working through a series of overbalances, can be detected in the course of the Hellenic Civilization from its genesis up to its zenith in the fifth century B.C. […] The disintegration of the apparented Minoan Society had left a welter of social debris – marooned Minoans and stranded Achaeans and Dorians. […] Would the rare patches of lowland in the Achaean landscape be dominated by the wilderness of highlands that ringed them round? Would the peaceful cultivators of the plains be at the mercy of the shepherds and brigands of the mountains?

This first challenge was victoriously met: it was decided that Hellas should be a world of cities and not of villages, of agriculture and not of pasturage, of order and not of anarchy. Yet the very success of their response to this first challenge exposed the victors to a second. For the victory which ensured the peaceful pursuit of agriculture in the lowlands gave a momentum to the growth of population, and this momentum did not come to a standstill when the population reached the maximum density which agriculture in the Hellenic homeland could support.’

I frequently like reading my readings from the end backwards. In this case, it allows me to decipher the following logic: urbanization is a possible solution to the general problem of acceptably peaceful coexistence between mutually competing, and demographically expansive social groups, in a lowland environment. Makes sense. Virtually all the big cities of humanity are in lowlands, or in acceptably fertile plateaus (which the Greeks did not have). There are practically no big cities in the mountains.

When distinct social groups compete for territories in a relatively flat and fertile terrain, there are two possible games to play in such a competition. The game of constant war consists in delineating separate territories and consistently maintain control over them, possibly striving for expanding them. Another game, the game of influence, consists in creating cities, as markets and political centres, and then rival for influence in those cities.

When the Western Roman Empire collapsed, in the 5^th century A.D., the ensuing partition of Western Europe into tribal states, constantly fighting against each other, illustrates the first type of game. Still, when we finally connected the dots as for highly efficient agriculture, in the 9^th and the 10^th centuries, the situation morphed progressively into the second type of game. I can find a trace of that logic in another favourite reading of mine, which I cite frequently, namely in Fernand Braudel’s ‘Civilisation and Capitalism’, Volume 1. Section 8 of this book, entitled ‘Towns and Cities’, brings the following narrative: ‘Towns are like electric transformers. They increase tension, accelerate the rhythm of exchange and constantly recharge human life. They were born of the oldest and most revolutionary division of labour: between work in the fields on the one hand and the activities described as urban on the other. “The antagonism between town and country begins with the transition from barbarism to civilization, from tribe to State, from locality to nation, and runs through the whole history of civilization to the present day”, wrote the young Marx.

Towns, cities, are turning-points, watersheds of human history. When they first appeared, bringing with them the written word, they opened the door to what we now call history. Their revival in Europe in the eleventh century marked the beginning of the continent’s rise to eminence. When they flourished in Italy, they brought the age of Renaissance. So it has been since the city-states, the poleis of ancient Greece, the medinas of the Muslim conquest, to our own times. All major bursts of growth are expressed by an urban explosion. […] Towns generate expansion and are themselves generated by it.

[…] The town, an unusual concentration of people, of houses close together, often joined wall to all, is a demographic anomaly. […] There are some towns which have barely begun being towns and some villages that exceed them in numbers of inhabitants. Examples of this are enormous villages in Russia, past and present, the country towns of the Italian Mezzogiorno or the Andalusian south, or the loosely woven clusters of hamlets in Java […]. But these inflated villages, even when they were contiguous, were not necessarily destined to become towns.’

Interesting. Urban structures are a demographic anomaly, and once this anomaly emerges, it brings written culture, which, in turn, allows the development of technology. This anomaly allows demographic growth (thus biological expansion of the human species) in the context of group rivalry for lowland territory. The development of cities appears to be more productive as alternative to constant war. Once this alternative is chosen, cities allow the development of culture and technology. This is how they allow forming a rich palette of social roles. I think I understand. We, the human species, choose to be more and more crammed in cities, because such a demographic anomaly allows us to transmute growing population into a growing diversity of skills. Good example of collective intelligence.

This is the mechanism which allowed Adam Smith to observe, in his ‘Inquiry Into The Nature And Causes of The Wealth of Nations’, Book III, Of The Different Progress Of Opulence In Different Nations, Chapter I, Of The Natural Progress Of Opulence’: THE GREAT COMMERCE of every civilized society is that carried on between the inhabitants of the town and those of the country. It consists in the exchange of rude for manufactured produce, either immediately, or by the intervention of money, or of some sort of paper which represents money. The country supplies the town with the means of subsistence and the materials of manufacture. The town repays this supply, by sending back a part of the manufactured produce to the inhabitants of the country. The town, in which there neither is nor can be any reproduction of substances, may very properly be said to gain its whole wealth and subsistence from the country. We must not, however, upon this account, imagine that the gain of the town is the loss of the country. The gains of both are mutual and reciprocal, and the division of labour is in this, as in all other cases, advantageous to all the different persons employed in the various occupations into which it is subdivided. The inhabitants of the country purchase of the town a greater quantity of manufactured goods with the produce of a much smaller quantity of their own labour, than they must have employed had they attempted to pre- pare them themselves. The town affords a market for the surplus produce of the country, or what is over and above the maintenance of the cultivators; and it is there that the inhabitants of the country exchange it for something else which is in demand among them. The greater the number and revenue of the inhabitants of the town, the more extensive is the market which it affords to those of the country; and the more extensive that market, it is always the more advantageous to a great number’.

It is worth noticing that urbanization is a workable solution to inter-group rivalry just in an ecosystem of fertile lowlands. In many places on Earth, e.g. large parts of Africa, there is rivalry for territories, there are tribal wars, and yet there is no citification, since there is not enough fertile agricultural land at hand. That brings the topic of climate change. If climate change, as it is now the most common prediction, brings a shortage of agricultural land, we could come to a point when cities will be no longer a viable condenser of social energy, and war can become more workable a path. Frightening, yet possible.

Another takeaway you can be interested in is ‘The Business Planning Calculator’, an Excel-based, simple tool for financial calculations needed when building a business plan.

Both the e-book and the calculator are available via links in the top right corner of the main page on https://discoversocialsciences.com .

[1] Royal Institute of International Affairs, Somervell, D. C., & Toynbee, A. (1946). A Study of History. By Arnold J. Toynbee… Abridgement of Volumes I-VI (VII-X.) by DC Somervell. Oxford University Press.,

[1] Li, X., Zhou, Y., Eom, J., Yu, S., & Asrar, G. R. (2019). Projecting global urban area growth through 2100 based on historical time series data and future Shared Socioeconomic Pathways. Earth’s Future, 7(4), 351-362.

Did they have a longer breath, those people in the 17th century?

My editorial on You Tube

In 1675, the publishing house run by Louis Billaine, located at the Second Pillar of the Grand Salle of the Palace, at Grand Cesar, published, with the privilege of the King, a book entitled, originally, ‘Le Parfait Négociant ou Instruction Générale Pour Ce Qui Regarde Le Commerce’. In English, that would be ‘The Perfect Merchant or General Instructions as Regards Commerce’. The author was Jacques Savary. By the way, the title I provided here above is the abridged one. The full title holds in 13 lines. Master Savary wanted to be precise, and indeed he was. On 829 pages, he covers very comprehensively a lot of practical topics.

I like reading books in a hermeneutic way. It means that I try to deconstruct the context, which the book had been written in. As we are talking 17^th century and French monarchy, the most important part of the context could very well be the King, and the king was the Sun King: Louis XIV of France. The second important thing in the context is d’Artagnan. Alexandre Dumas chose to put an end to his hero’s life in 1673, in a battle, identically to the death of the real d’Artagnan, or Charles de Batz de Castelmore d’Artagnan. As we are talking Louis the XIV, we are talking Jean-Baptiste Colbert, the famous minister of finance, and his active, capitalistic policies. We are talking about doing business in an environment strongly marked by the interests of the most powerful people being around. We are talking about the creation of Saint-Gobain, the manufacture of mirrors, today a global business. It was the time, when huge ambitions of the absolutist monarchy went hand in hand with a quick development of really big (I mean bloody big, really) capitalism. There were those first attempts, from the part of the Sun King, of issuing money in order to finance his military prowess. The money in question, later on disdainfully called ‘the Bernardines’, was a failure, but the idea took root.

So, two years after d’Artagnan’s last battle, and during the reign of the Sun King, Jacques Savary publishes that book about being a perfect merchant, in really mousquetaire-friendly an environment. How had he come up with the idea? He states it very frankly in the preface of his book: ‘For although I might have had sufficiently good a name, and sufficiently good a birth, to be employed at some higher profession, I admit that, having been destined for Commerce by my parents, it is the employment, which I occupied myself with for a long time, the care I gave it, the particular cognizance that I took of the most significant and the least things as regards it, the ventures I made with all kinds of Manufactures, the losses that I suffered there, those that I avoided, have given me enough enlightenment and enough experience for ignoring nothing that regards the Negoce’.

I am translating Master Savary’s words the best I can, yet the original is the original. Champagne is a good example. You can get your own PDF of Master Savary’s writing from www.gallica.bnf.fr , or Bibliothèque nationale de France. Anyway, before I go further in the wording of that preface, I go further hermeneutical with Master Savary. A few interesting things to notice in that first paragraph. ‘Commerce’ and ‘Negoce’ start with capital letters, so I gather it must be something important. Commerce was something slightly different than trade strictly spoken. We are in the world of capitalism based on debt, and more specifically on the bills of exchange. It will take more than an additional century (one and a half, as a matter of fact) to invent the institution of limited liability in a business. Someone could say: in there was no limited liability, it was better to rely on one’s own equity in doing business. Well, yes and no. Yes, because your own equity, contrarily to debt, will not give other people claims on you. No, because if you lose money in a venture, it is, on the whole, better to lose other people’s money than your own. Instead of chipping out of your own possessions, you can borrow money and lend money. The trick, and the art, was to find a balance between lending and borrowing, and it was mostly done with relatively liquid bills of exchange, traded by endorsement.

Those bills of exchange travelled much faster, and changed hands much more frequently than the stocks of goods they were more or less attached to. Commerce was the craft of trading both the goods, and the bills of exchange, at different speeds. Now, comes the subtle shade of Negoce in your Commerce. The merchant called ‘Negociant’ was a really big wholesaler, both in goods and in credit. The Negoce consisted in trading big amounts of goods and capital in a coordinated way. A Negociant could do business for years just by trading credit, without seeing a single barrel of rum or a single sack of corn, or, conversely, he could be an artist in recognizing, for example, good coffee, and making huge deals on it, after sniffing just one handful. A Negociant had to be good in law, in finance, in politics, occasionally in knife fighting, he must have been ready to travel frequently, and to shift elegantly between the crude conditions of an exploration trip and the splendours of Parisian parties. The life of a Negociant was capitalism with its teeth bare and a spark in the eye.

Master Savary says he was well born. He seems suggesting he could afford not to go into Negoce, and yet he did go that way. I guess he must have been the smart guy in the family, but probably not the first in line for inheritance. This is the probable reason why his parents destined him to be a merchant. So he had his teeth cut in doing Commerce, and he must have been really good at it, if, as he writes ‘The cognizance that I had acquired of the practice before being applied to Negoce, stepped from the fact that in the disputes arising ordinarily between Negociants, I endorsed a great number of arbitrages: the advantage I had derived from it is that in the study of evidence, books and personal conduct of those who had recourse to me in their disputes, I made myself sufficiently capable in all the matters the most important and the most difficult in Commerce’.

Yes, Master Savary must have been really quick on the uptake, and smart enough to conceal his speed of thinking a bit, just enough to appear as a steady, reliable arbiter. One thing that remains unclear in this short curriculum, is the order in time. Did he start as an apprentice with a Negociant and gradually became good at arbitrage? Or, maybe, he started as a lawyer and specialized in commercial arbitrage? I do not know. Anyway, he did not stay in the Negoce for ever. ‘The time came when the Commerce was so weakened and bankruptcies so frequent, that there was no security in playing one’s possessions, I judged then that I will do no bad deed by retiring and embracing another profession. An occasion presented itself, which confirmed me in this decision; for a Minister of His Serenissime Highness Monseigneur the Duke of Mantua came in France, who offered me the intendancy of his business in France and Charlville: which I accepted, and entered in the year 1660 to the service of His Serenissime Highness, in which I still am; […]’.

Right, let’s go hermeneutic once again. ‘Serenissime’ means kind of very calm in his ways. Noble born people, in the past, liked dropping this adjective in those long designations, half-name, half-social status that they used to introduce themselves. It probably meant that they wanted to appear cool and relax. ‘Peace, bro. See that Serenissime on my visit card? It means I am really calm, and I will have you executed only at your second mistake. Are we doing business?’. Thus, Master Savary went into the service of that Italian duke from Lombardy (this is where Mantua is). Being a duke was a good position. The difference between a duke and a prince is that the former is just the top dog in the feudal hierarchy, and the latter is of royal blood and waiting in line for sitting on the throne. Apparently, especially in Italy, being a prince was really unhealthy an occupation. You could have had those horrible hunting accidents, when a wild boar attacked you with five crossbows, and could even follow you home. Waiting in line for top offices is rough. Being a duke was safer, as you were the boss and it was kind of official and legally guaranteed. You just had to wait a few centuries, over some twelve generations, and you had that dukedom. Well, yes, you had to put your bets on the right prince, the one who didn’t get attacked frequently by wild boars with crossbows, or just had more crossbows secured on his side, together with the properly qualified labour force.

So, Master Savary started somehow (?) in the Commerce, then went into business arbitrage, which made him convinced he is really good at Negoce. He went into Negoce, did some business, earned some money, lost some money, and then decided it was not really calm an occupation. When a very calm (i.e. Serenissime) duke from Italy offered him a job, he accepted willingly. As he sketches the job in question, he says: ‘[…] in order to fulfil my obligations it was necessary for me to study the Ordinances and the Customs, as there was much business decisions based thereon; so as I committed myself to read them, and in that reading I made remarks on everything pertaining to Commerce, which served me usefully in the composition of this book. When His Majesty, willing to put a limit, by a Regulation, to the abuses that were being committed in the Negoce, had it ordered by circulating letters to Judges and Consuls, Guards and Communities of Merchants in the good towns of his kingdom to send him their memoirs on this subject, I believed it was my duty to work individually, too, in order to make my eagerness visible and the desire to serve the King and the public; this is why I composed two memoirs, one containing the abuses that were being committed in the Commerce, which I presented to Monseigneur Colbert at the end of August, 1670, the other was a bill of Regulation, which I composed in several chapters, where I proposed dispositions that I saw as just and proper to put a limit all the abuses I mentioned in the first memoire; I presented this bill to Monseigneur Colbert in the following September’.

Right, I am back into hermeneutics. Have you noticed, how long are the sentences in Master Savary’s writing? That was the style of the time, I guess. It survived until the first half of the 19^th century, when shorter sentences became definitely the fashion. Did those people, back in the days, have longer breath? Were they able to put more sound between two full stops? Or, maybe, they just have longer and more structured ideas, which they did not feel like truncating? Who knows, they are no longer here to tell us. Anyway, it appears that Master Savary was not really the perfect merchant he wrote about. He had some adventure in the Negoce, but, on the whole, he did not seem to like it. He was more of a bystander to business, who used to have views on business. He was an economist, just as I am. When I was young, I had serious plans for a legal career. In 1989, in Poland, the Big Swing came, everything fell apart, there was not much I could inherit, and so I went into business just in order to survive in the new reality. Doing business was interesting, only I just wasn’t prepared for it, and after fourteen years I decided, just as Master Savary did, to accept a job from a really calm duke. In my case it was a university. Comes the time, comes the calm duke.

Master Savary was an economist, only he did not know he was. The word ‘economist’ comes from the French ‘économiste’, and this was the label put on the followers of Francois Quesnay, the author of ‘The Economic Table’ (French: ‘Tableau économique’), published in 1758, a few years before Adam Smith published his ‘Enquiry Into The Nature and Causes of The Wealth of Nations’. The work by Francois Quesnay was probably among the first piece of macroeconomics officially published, together with ‘The Theory of Taxation’ (French: ‘La Théorie de l’Impôt’) by Marquis de Mirabeau. Initially, the term ‘économiste’ was a bit pejorative and meant some loonies obsessed with numbers. Economics, at the time, the time being the verge of the 18^th and the 19^th centuries, were ‘political economy’. It was only at the end of the 19^th century that any scholar could call himself seriously an economist.

I am summoning Master Savary from the after world of social sciences, and we start chatting about what he wrote regarding manufactures (Book II, Chapter XLV and XLVI). First, a light stroke of brush to paint the general landscape. Back in the days, in the second half of the 17^th century, manufactures meant mostly textile and garments. There was some industrial activity in other goods (glass, tapestry), but the bulk of industry was about cloth, in many forms. People at the time were really inventive as it came to new types of cloth: they experimented with mixing cotton, wool and silk, in various proportions, and they experimented with dyeing (I mean, they experimented with dying, as well, but we do it all the time), and they had fashions. Anyway, textile and garment was THE industry.

As Master Savary starts his exposition about manufactures, he opens up with a warning: manufactures can lead you to ruin. Interesting opening for an instruction. The question is why? Or rather, how? I mean, how could a manufacturing business lead to ruin? Well, back in the day, in 17^th century, in Europe, manufacturing activities used to be quite separated institutionally from the circulation of big money. Really big business was being done mostly in trade, and large-scale manufacturing was seen as kind of odd. In trade, merchants of the time devised various legal tools to speed up the circulation of capital. Bills of exchange, maritime insurance, tax farming – it all allowed, with just the right people to know, a really smooth flow of money, even in the presence of many-year-long maritime commercial trips. In manufacturing, many of those clever tricks didn’t work, or at least didn’t work yet. They had to wait, those people, some 200 years before manufacturing would become really smooth a way of circulating capital. Anyway, putting money in manufacturing meant that you could not recover it as quickly as you could in trade. Basically, when you invested in manufactures, you were much more dependent on the actual marketability of your actual products than you were in trade. Thus, many merchants, Master Savary obviously included, perceived manufacturing as terribly risky.

What did he recommend in the presence of such dire risk? First of all, he advised to distinguish between three strategies. One, imitate a foreign manufacture. Second, invent something new and set a new manufacture. Third, invest in ‘an already established Manufacture, whose merchandise has an ordinary course in the Kingdom as well as in foreign Countries, by the general consent of all the people who had recognized its goodness, in the use of fabric which have been manufactured there’. I tried to translate literally the phrasing of the last strategy, in order to highlight the key points of the corresponding business plan. An established manufacture meant, first of all, the one with ‘an ordinary course in the Kingdom as well as in foreign Countries’. Ordinary course meant a predictable final selling price. As a matter of fact, this is my problem with that translation. Master Savary originally used the French expression: ‘cours ordinaire’, which, in English, becomes ambiguous. First, it can mean ‘ordinary course’, i.e. something like an established channel of distribution. Still, it can also mean ‘ordinary rate of exchange’. Why ‘rate of exchange’? We are some 150 years before the development of modern, standardized monetary systems. We are even some 100 years before the appearance of paper money. There were coins, and there was a s***load of other things you could exchange your goods against. At Master Savary’s time, many things were currencies. In business, you traded your goods against various types of coins, you accepted bills of exchange instead of coins, you traded against gold and silver in ingots, as well, and finally, you did barter. Some young, rich, and spoilt marquis had lost some of its estates by playing cards, he signed some papers, and here you are, with the guy who wants to buy your entire stock of woollen garments and who wants to pay you precisely with those papers signed by the young marquis. If you were doing really big business, none of your goods has one price: instead, they all had complex exchange rates against other valuables. Trading goods with what Master Savary originally called ‘cours ordinaire’ meant that the goods in question were kind of predictable as for their exchange rate against anything else in that economic jungle of the late 17^th century.

What worked on the selling side, had to work on the supply side as well. You had to buy your raw materials, your transport, your labour etc. at complex exchange rates, and not at those nice, tame, clearly cut prices in one definite currency. Making the right match between exchange rates achieved when purchasing things, and those practiced at the end of the value chain was an art, and frequently a pain in your ass. In other words, business in 17^th century was very much like what we would have now if our banking and monetary systems collapsed. Yes, baby, them bankers are mean and abjectly rich, but they keep that wheel spinning smoothly, and you don’t have to deal with Somalian pirates in order to buy from them some drugs, which you are going to exchange against natural oil in Yemen, which, in turn, you will use to back some bills of exchange, which will allow you to buy cotton for your factory.

Now, let’s return to what Master Savary had to say about those three strategies for manufacturing. As he discusses the first one – imitating a foreign factory – he recommends five wise things to do. One, check if you can achieve exactly the same quality of fabric as those bloody foreigners do. If you cannot, there is no point in starting imitation. Two, make sure you can acquire your raw materials, in the necessary bracket of quality, in the place where you locate your manufacture. Three, make sure the place where you locate your operations will allow you to practice prices competitive as compared to those foreign goods you are imitating. Four, create for yourself conditions for experimenting with your product and your business. Launch some kind of test missiles in many directions, present your fabrics to many potential customers. In other words, take your time, bite your ambition, suck ass and make your way into the market step by step. Five, arrange for acquiring the same tools, and even the same people that work in those foreign manufactures. Today, we would say: acquire the technology, both the formal, and the informal one.

As he passes to discussing the second strategy, namely inventing something new, Master Savary recommends even more prudence, and, in the same time, he pulls open a bit the veil of discretion regarding his own life, and confesses that he, in person, had invented three new fabrics during his business career: a thick woollen ribbon made of camel wool, a thick drugget for making simple, coarse, work clothes, and finally a ribbon made of woven gold and silver. Interesting. Here is a guy, who started his professional life as a merchant, then he went into commercial arbitrage for some time, then he went into the service of a rich aristocrat ( see ‘Comes the time, comes the calm duke’ ), then he entered into a panel of experts commissioned by Louis XIV, the Sun King, to prepare new business law, and in the meantime he invented decorative ribbons for rich people, as well as coarse fabrics for poor people. Quite abundant a walk of life. As I am reading the account of his textile inventions, he seems to be the most attached to, and the most vocal about that last one, the gold and silver ribbon. He insists that nobody before him had ever succeeded in weaving gold and silver into something wearable. He describes in detail all the technological nuances, like for example preventing the chipping off of the very thinly pulled, thread size, golden wire. He concludes: ‘I have given my own example, in order to make those young people, who want to invent new Manufactures, understand they should take their precautions, not to engage imprudently and not to let themselves being carried away by the profits they will make on their first fabrics, and to have a great number of them fabricated, before being certain they will be pleasant to the public, as well as for their beauty as for quality; for it is really dangerous, and they will risk their fortune at it’.

Master Savary discusses at length a recent law: the Ordinance of 1673 or Edict of the King Serving as Regulation For The Business of Negociants And Merchants In Retail as well As In Wholesale. This is my own, English translation of the original title in French, namely “ORDONNANCE DE 1673 Édit du roi servant de règlement pour le commerce des négociants et marchands tant en gros qu’en détail”. You can have the full original text of that law at this link: https://drive.google.com/file/d/0B1QaBZlwGxxAanpBSVlPNW9LeFE/view?usp=sharing

I am discussing this ordinance in connection with Jacques Savary’s writings because he was reputed to be its co-author. In his book, he boasts about having been asked by the King (Louis the XIV Bourbon) to participate in a panel of experts in charge of preparing a reform of business law.

I like understanding how things work. By education, I am both a lawyer and an economist, so I like understanding how does the business work, as well as the law. I have discovered that looking at things in the opposite order, i.e. opposite to the officially presented one, helps my understanding and my ability to find hidden levers and catches in the officially presented logic. When applied to a legal act, this approach of mine sumps up, quite simply, to reading the document in the opposite order: I start with the last section and I advance, progressively, towards the beginning. I found out that things left for being discussed at the end of a legal act are usually the most pivotal patterns of social action in the whole legal structure under discussion. It looks almost as if most legislators were leaving the best bits for the dessert.

In this precise case, the dessert consists in Section XII, or ‘Of The Jurisdiction of Consuls’. In this section, the prerogatives of Judges and Consuls are discussed. The interesting thing here is that the title of the section refers to Consults, but each particular provision uses exactly this expression: ‘Judges and Consuls’. It looks as if there were two distinct categories of officers, and as if the ordinance in question attempted to bring their actions and jurisdictions over a common denominator. Interestingly, in some provisions of section XII, those Judges and Consuls are opposed to a category called ‘ordinary judges’. A quick glance at the contents of the section informs me that those guys, Judges and Consuls, were already in office at the moment of enacting the ordinance. The law I am discussing attempts to put order in their activity, without creating the institution as such.

Now, I am reviewing the list of prerogatives those Judges and Consuls were supposed to have. As I started with the last section of the legal act, I am starting from the last disposition of the last section. This is article 18, which refers to subpoena and summonses issued by Judges and Consuls. That means those guys were entitled to force people to come to court. This is not modern business arbitrage: we are talking about regular judicial power. That ordinance of 23^rd of March, 1673, puts order in much more than commercial activities: it makes part of a larger attempt to put order in adjudication. I can only guess, by that categorization into ‘Judges’, ‘Consuls’, and ‘ordinary judges’ that at the time, many parallel structures of adjudication were coexisting, maybe even competing against each other as for their prerogatives. Judges and Consuls seem to have been victorious in at least some of this general competition for judicial power. Article 15, in the same section XII, says ‘We declare null all ordinances, commissions, mandates for summoning, and summonses issued by consequence in front of our judges and those of lords, which would revoke those issued in front of Judges and Consuls. We forbid, under the sanction of nullity, to overrule or suspend procedures and prosecutions undertaken in the execution of their verdicts, as well as to bar the way to proceeding in front of them. We want that, on the grounds of the present ordinance, they are executed, and that parties who will have presented their requests to overrule, revoke, suspend or defend the execution of their judgments, the prosecutors who will have signed such requests, the bailiffs or sergeants who will have notify about such requests, be sentenced each to fifty livres of penalty, half to the benefit of the party, half to the benefit of the poor, and those penalties will not be subject to markdown nor rebate; regarding the payment of which the party, the prosecutors and the sergeants are constrained in solidarity’.

That article 15 is a real treat, for institutional analysis. Following my upside down way of thinking, once again, I can see that at the moment of issuing this ordinance, the legal system in France must have been like tons of fun. If anyone was fined, they could argue for marking down the penalty or at least for having a rebate on it. They could claim they are liable to pay just a part of the fine (I did not do it as such; I was just watching them doing!). If a fine was adjudicated, the adjudicating body had to precise, whose benefit will this money contribute to. You could talk and cheat your way through the legal system by playing various categories of officers – bailiffs, sergeants, prosecutors, lord’s judges, royal judges, Judges and Consuls – against each other. At least some of them had the capacity to overrule, revoke, or suspend the decisions of others. This is why we, the King of France, had to put some order in that mess.

Francois Braudel, in his wonderful book entitled ‘Civilisation and Capitalism’, stated that the end of the 17^th century – so the grand theatre where this ordinance happens – was precisely the moment when the judicial branch of government, in the more or less modern sense of the term, started to emerge. A whole class of professional lawyers was already established, at the time. An interesting mechanism of inverted entropy put itself in motion. The large class of professional lawyers emerged in dynamic loop with the creation of various tribunals, arbiters, sheriffs and whatnot. At the time, the concept of ‘jurisdiction’ apparently meant something like ‘as much adjudicating power you can grab and get away with it’. The more fun in the system, the greater need for professionals to handle it. The more professionals in the game, the greater market for their services they need etc. Overlapping jurisdictions were far from being as embarrassing as they are seen today: overlapping my judicial power with someone else’s was all the juice and all the fun of doing justice.

That was a general trait of the social order, which today we call ‘feudal’: lots of fun as various hierarchies overlapped and competed against each other. Right, those lots of fun could mean, quite frequently, paid assassins disguised in regular soldiers and pretending to fend off the King’s mousquetaires disguised in paid assassins. This is why that strange chaos, emerging out of a frantic push towards creating rivalling orders, had to be simplified. Absolute monarchy came as such a simplification. This is interesting to study how that absolute monarchy, so vilified in the propaganda by early revolutionaries, laid the actual foundations of what we know as modern constitutional state. Constitutional states work because constitutional orders work, and constitutional orders are based, in turn, on a very rigorously observed, institutional hierarchy, monopolistic in its prerogatives. If we put democratic institutions, like parliamentary vote, in the context of overlapping hierarchies and jurisdictions practiced in the feudal world, it would simply not work. Parliamentary votes have power because, and just as long as there is a monopolistic hierarchy of enforcement, created under absolute monarchies.

Anyway, the Sun King (yes, it was Louis the XIV) seems to have had great trust in the institution of Judges and Consuls. He seems to have been willing to give them a lot of powers regarding business law, and thus to forward his plan of putting some order in the chaos of the judicial system. Articles 13 and 14, in the same section XII, give an interesting picture of that royal will. Article 13 says that Judges and Consuls, on the request from the office of the King or from its palace, have the power to adjudicate on any request or procedure contesting the jurisdiction of other officers, ordinary judges included, even if said request regards an earlier privilege from the King. It seems that those Judges and Consuls are being promoted to the position of super-arbiters in the legal system.

Still, Article 14 is even more interesting, and it is so intriguing in its phrasing that I am copying here its original wording in French, for you to judge if I grasped well the meaning: ‘Seront tenus néanmoins, si la connaissance ne leur appartient pas de déférer au déclinatoire, à l’appel d’incompétence, à la prise à partie et au renvoi’. I tried to interpret this article with the help of modern legal doctrine in French, and I can tell you, it is bloody hard. It looks like a 17^th century version of Catch 22. As far as I can understand it, the meaning of article 14 is the following: if a Judge or Consul does not have the jurisdiction to overrule a procedure against their jurisdiction, they will be subject to judgment on their competence to adjudicate. More questions than answers, really. Who decides whether the given Judge or Consul has the power to overrule a procedure against their authority? How this power is being evaluated? What we have here is an interesting piece of nothingness, right where we could expect granite-hard rules of competence. Obviously, the Sun King wanted to put some order in the judicial system, but he left some security valves in the new structure, just to allow the releasing of extra pressure, inevitably created by that new order.

Other interesting limitations to the powers of Judges and Consuls come in articles 3 and 6 of the same section XII. Article 3, in connection with article 2, states the jurisdiction of Judges and Consuls over the bills of exchange. Before I go further, a bit of commentary. Bills of exchange, at the time, made a monetary system equivalent to what today we know as account money, together with a big part of the stock market, as well as the market of futures contracts. At the end of the 17^th century, bills of exchange were a universal instrument for transferring capital and settling the accounts. Circulation in bills of exchange was commonly made through recognition and endorsement, which, in practice, amounted to signing your name on the bill that passed through your hands (your business), and, subsequently, admitting (or not) that said signature is legitimate and valid. The practical problem with endorsement was that with many signatures on the same bill, together with accompanying remarks in the lines of ‘recognise up to the amount of…’, it was bloody complicated to reconstruct the chain of claims. For example, if you wanted to kind of sneak through the system, it came quite handy to endorse by signature, whilst writing the date of your signature kind of a few inches away, so as it looks signed before someone else. This detail alone provoked disputes about the timeline of endorsement.

Now, in that general context, article 2 of section XII, in the royal ordinance of March 23^rd, 1673, states that Judges and Consuls have jurisdiction over bills of exchange between merchants and negociants, or those, in which merchants or negociants are the obliged party, as well as the letters of exchange and transfers of money between places. Article 3, in this general context, comes with an interesting limitation: ‘We forbid them, nevertheless, to adjudicate on bills of exchange between private individuals, other than merchants or negociants, or where a merchant or negociant is not obliged whatsoever. We want the parties to refer to ordinary judges, just as regarding simple promises’.

We, the King of France, want those Judges and Consuls to be busy just with the type of matters they are entitled to meddle with, and we don’t want their schedules to be filled with other types of cases. This is clear and sensible. Still, one tiny little Catch 22 pokes its head out of that wording. There visibly was a whole class of bills of exchange, where merchants or negociants were just the obliged party, the passive one, without having any corresponding claims on other classes of people. Bills of exchange with obliged merchants and negociants involved entered into the jurisdiction of Judges and Consuls, and, in the absence of such involvement, Judges and Consuls were basically off the case. Still, I saw examples of those bills of exchange, and I can tell you one thing: in all that jungle of endorsements, remarks and clauses to endorsements and whatnot written on those bills, there was a whole investigation to carry out just in order to establish the persons involved as obligators. Question: who assessed, whether a merchant or negociant is involved in the chain of endorsement regarding a specific bill? How was it being assessed?

Now, I am reading, and translating on the go in English, what he wrote about the securitisation of contracts by the means of the so-called bills of exchange, or promissory notes. He starts discussing the issue when I would start, i.e. at the origins. ‘It is one thousand years since we learnt what bills of exchange and promissory notes are, an invention which came from the Jews, who, chased away from France, during the reigns of Dagobert the 1^st, Philippe Augustus, and Philippe the Long, in the years 640, 1181, and 1316, took refuge in Lombardy, and in order to retrieve money and other possessions that they left in France in their friends’ hands, necessity taught them to use letters and bills written in few words and containing little substance, as it is the case with letters and bills of exchange today addressed to their friends; and to that purpose they used the intermediary of travellers, pilgrims, and foreign merchants. This means allowed them to retrieve all their assets, but, as these people have mind infinitely what regards gain and profit, they paid attention to make themselves intelligent in the knowledge of the pure and the tarnish in currencies, so as not to mistake themselves at the evaluation and reduction of different alloys in coins, which was strongly variable at the time’.

The turn of phrase you could have just read is my personal translation. I made my best so as to keep the original spirit of the text, and, in the same time, make it intelligible. The linguistic niceties properly introduced, I can give that loaf of information to my internal bulldog, for economic analysis, just to see it happy. The passage mentions two distinct economic functions, somehow coinciding with the use of the bills of exchange: controlling distant assets, and setting the market price of capital goods.

Let’s move forward with Master Savary. A few paragraphs later, he writes: ‘The etymology of the word “letter of exchange” is easy to understand, for it means no other thing than changing the money that a Merchant has in one town, and giving it to another [Merchant], who has use for it, and who has no such sum in the town of his residence, where the letter has been drawn from. This exchange is equally advantageous to them both, for the one who will have money in a town without this commodity would have to have his money transported by messengers and carters, and the one who would have need it in the same town, for doing business, would have to have it carted from the place of his residence. Again, the word “change” comes from the fact that the interest, or profit, offered when drawing or offering letters of exchange is never the same: sometimes it is high, sometimes it is low, sometimes you lose on it, sometimes you gain, and sometimes it is just at par; it means that there is nothing to lose or to gain between the Changers: and so it is perpetual change, which is being encountered in the Commerce [done with] the letters of exchange’.

Language is intriguing. When we deconstruct the etymology of a word, we can find the function that it corresponds, too. Here, Master Savary explains us the etymology of ‘letter of exchange’, and, by the same occasion, unveils the social function behind. When some capital good, coined money in the case of Master Savary’s explanation, is pretty clumsy and costly to transport, homo sapiens invents ways to use just the information about said capital good. Information travels faster, cheaper, and less riskily than coined metal, so let’s use information as payment. Information has its price, too, and, in this case, the price of letters of exchange – thus their exchange value – was made as the local (i.e. in the given transaction) evaluation of how much exchangeable value I can acquire when accepting, as payment, a letter of exchange allowing to draw on that other gentleman’s metal money stored somewhere far (too far for transporting the money physically).

Thus, as soon as an acceptably stable legal system with acceptably reliable property rights emerged, that little idea emerged as well: what has the most bulk value are big things, hard to move around, like real estate, big stocks of metals, big stocks of food etc. They have value, those big things, but they have little velocity, so let’s give them a kick into more velocity by drawing more or less standardized legal deeds, embodying claims on parts of those big things.

If you read carefully Master Savary’s explanation, you will see that letters of exchange, which, centuries after their invention, turned into paper money, were initially options on the value of coined metal. I had money stored somewhere far from the place where I was currently doing business. I offered to other business people to pay them with letters of exchange, giving them claim on some amount of my far-stored money. Those business people weighed the practical value that having a claim on that money had, from their point of view, and proposed a price for those letters. It went (probably, more or less) like: ‘Good, so you want that cart of silk, and you want me to pay with a letter of exchange that gives me unconditional claim on your silver money, and let’s say – for the sake of convenience in those folks who will read it like in four hundred years from now – that silver money is 200 ducats. That money is stored 100 miles from here. I am pondering two things now. Firstly, I am going through the idea of going and physically claiming that money of yours. Secondly, I am thinking about, instead of doing the trip, to hand that letter of exchange over to another business person, who might be willing to go and claim the money, or to make the letter circulate further. I am anticipating both the for and against of claiming physically your money, and the odds that your letter of exchange will have any exchangeable value in itself. All in all, I propose you to buy this letter of exchange from you for the equivalent, in that silk you want to buy from me, of 200 ducats minus one fifth, thus 160 ducats’.

Complicated? Yes, certainly, and this is not all. There was another factor in the game of pricing the letters of exchange: the properties of the metal money they allowed claiming. Here, a little remark is due about the origins of coined money, and, by the same means, another deceased gentleman joins the conversation. Welcome Adam Smith. What Master Smith explained, in a book published 90 years after that by Master Savary, is that coined money emerged out of the necessity to evaluate the true value of metals used in exchanges. Copper, silver, and, less frequently, gold, were the main metal exchangeable, back in the days (many days). Somehow, people came to the idea that the purer is the metal offered in exchange, the more it is worth. The presence of other substances than silver, in your average pound of silver, decreased the exchange value of that pound of silver. I know, I know, from the today’s point of view it is not one hundred percent logical, yet it was what it was. People used small, portable scales to weigh the metal in exchange (this is where the scales held by Themis, the goddess of justice, might be coming from), but it was a bit slow to use. Besides, once the metal graded by weighing, the question of how precise was the weighing naturally came to the fore, possibly together with skilled labour force, equipped with tools proper for violence.

What the sovereigns (kings, princes, and whoever efficiently claimed to rule the land) came up with was the idea of minting. The local sovereign proposed the following deal to business people: ‘See, here I have that little facility, which I have just named “mint”. The people I employ at the mint will weigh your metal and grade it, and, in order to streamline the subsequent exchanges, will make it into small pieces of standard weight each, with my royal/ducal/whatever-I-am-currently stamp on them. My minting stamp will guarantee the exchangeable value of your metal. Isn’t it a tremendous improvement? Oh, there is that tiny little detail: as minting will take off your shoulders the burden of (some) transaction costs, you pay me a fraction of the exchangeable value in the metal being minted. Deal?’.

In the Europe of the past, which, fault of a better word, we call ‘feudal’, there were many sovereigns, living in really complicated, hierarchical combinations. Most of them used to run their mints, whence the presence of many minting stamps in the market. Ducats were metal stamped with ducal minting stamps, for example. A duke was the highest in rank in the feudal hierarchy, regarding the control over precise territories. Kings and their royal families were technically above that hierarchy, but, as regards the claim on territories, kings made themselves into dukes, frequently. You can find a trace of that legal trick in the today’s royal families, whose members, whilst being kings, queens, princes or princesses, are dukes or duchesses of something as well.

As I intellectually compile my notes on Master Savary’s writings, I notice an interesting pattern: the connexion between quantitative growth in markets, and the opportunity for investment. I compare ‘Le parfait négociant’ by Jacques Savary, published in 1675, with ‘An Inquiry Into The Nature And Causes of The Wealth Of Nations’ by Adam Smith, published in 1763. Adam Smith firmly stated that quickly growing markets offer the best opportunities for making profits. As a matter of fact, if you take into account the operational profits from current business, and the financial return on capital engaged in the corresponding assets, Adam Smith would say that only markets endowed with quick quantitative growth offer any chance of profits whatsoever. Master Savary, on the other hand, would much rather do business in stationary, predictable markets. Question: what has changed, between the end of the 17^th century, and the end of the 18^th, so as to provoke such a change in approach?

Three factors come to my mind: demographic growth, standardization of monetary systems, and diversification of technologies. The 1670ies, in Europe, was a period of us, Europeans, sort of hesitating between demographic recession, and just a demographic slowdown. That hesitant frame of our collective approach to there being possibly more of us around turned into a firm ‘yes, more’ attitude precisely in the 1760ies, thus when Master Smith was observing society around him, and writing about it. You can find a fascinating description of that long process in

« La théorie de l’impôt » (1760) by Victor Riqueti, marquis de Mirabeau (yes, the same Mirabeau, I mean the revolutionary). Cold as finance – which it talks about – but a lot of facts to find inside.

Anyway, when Jacques Savary was writing, in 1675, that ‘it is an important thing to undertake manufactures, for it is nothing less that the entrepreneurs’ ruin, should (this undertaking) be not conducted with prudence and judgment’. This was a sketch against the background of a population on decline, and it married interestingly with technological diversity. In Master Savary’s times, the textile – garments and fabrics – was THE cutting edge of technology. When Adam Smith was writing his treaty, European population was on the rise again, and innovation was taking place across the board, really, financial instruments included.

Here comes the third factor: cash. Jacques Savary was operating in a world where money was diverse, a bit obscure and largely dependent on local sovereigns’ caprice. Adam Smith was observing a different context, where monetary systems were progressively tending towards standardization, although it required one more century to become effective.

That little digression serves me just to show my students in management the fundamentals of growing a business: you need a growing market, you need generally innovative an economic environment (when you are the only one to innovate, it sucks), and you need to have cash secured.

Another takeaway you can be interested in is ‘The Business Planning Calculator’, an Excel-based, simple tool for financial calculations needed when building a business plan.

Both the e-book and the calculator are available via links in the top right corner of the main page on https://discoversocialsciences.com .

A man walks into a bar, and then comes the calm duke

It’s summertime. Politicians are on holiday, hopefully, at least some of them. That’s a good thing, ‘cause when they come to work, like daily, you need to watch them constantly. You turn your back for a second, just for one second, and they come up with something. They are always up to something, those politicians, and so it is good to know what exactly are they up to.

That paragraph, I mean the one above, is an acceptably shitty attempt at the introductory joke for the study of political systems. I do research about political systems, I write serious books about them, and I lecture about them, and I did some blogging about them as well in the past, and so I think I can do some blogging about them now.

Right, so I go on with shitty jokes. A man walks in to a bar, orders a drink, and starts talking to the barman. The man is new in that particular neighbourhood. Such blokes use to ask stupid questions to barmen. This one is no exception to the rule. He goes: ‘Hi, man. Do you have any political system, here?’. The barman is an experienced on. He knows stupid questions, and he is ready to respond. ‘Yes, we do.’ He answers ‘We have a constitution. It proves we have a political system’. ‘You have a constitution? Wow, nice. But, just tell me, how do you know YOU HAVE a constitution? I mean, I understand that part about the constitution as such, but how do you know it is your constitution and not someone else’s constitution?’.

The atmosphere becomes a little tense. What did you expect, man? You ask a man who is serving you drinks how can he know the constitution he thinks is his is really his own. This is bound to raise some eyebrows. Still, the barman holds his ground. ‘This constitution has a rule, written in it, that it is in force in the territory of our country, for one. Besides, it had been enacted, way back in the days, by our Parliament, for two. It all proves it is our constitution, man. Still, good attempt, bravo.’.

‘Yeah, you’re right. If it says it is in force in your territory, it must come from here and be your own. Stands to reason. Good point. But, tell me’ – the man doesn’t give up easily – ‘isn’t it the constitution itself that defines the territory of your country? I mean, it says it is in force in the territory it says is the national territory, doesn’t it? And the Parliament, it is your Parliament because the constitution says so, and the constitution is supposed to be your constitution because it has been enacted by the Parliament it says is the proper Parliament, right? Bit of a conundrum, here, don’t you think?’.

The barman gives up. ‘Look, man. It is nice chatting with you, but I have other customers to attend. See that doorframe over there, on the right? This is Dead Brains’ Room. Go there and ask for Alex. He will tell you more about political systems’.

‘Alex? Alex what?’

‘De Toqueville. Just go there and ask. The bloke is a fundamentalist, just like you. You should get along well.’

‘A fundamentalist? Me?’

‘Yes. You like asking fundamental questions. C’mon, man. Just go there and talk to Alex’.

The Dead Brain’s Room is a strange collection of people. All kinds of styles, you would say, as if taken from different epochs and places. After asking around, the fundamentalist man finds a slender gentleman with black hair cut into that interesting, like 19^th century fashion, where hair on the sides of the head seem to form half-open wings of a bird ready to take flight. He is Alexis de Toqueville. When asked about political systems, he goes into a strange tirade: ‘Amongst the novel objects that attracted my attention during my stay in the United States, nothing struck me more forcibly than the general equality of conditions. I readily discovered the prodigious influence which this primary fact exercises on the whole course of society, by giving a certain direction to public opinion, and a certain tenor to the laws; by imparting new maxims to the governing powers, and peculiar habits to the governed. I speedily perceived that the influence of this fact extends far beyond the political character and the laws of the country, and that it has no less empire over civil society than over the Government; it creates opinions, engenders sentiments, suggests the ordinary practices of life, and modifies whatever it does not produce. The more I advanced in the study of American society, the more I perceived that the equality of conditions is the fundamental fact from which all others seem to be derived, and the central point at which all my observations constantly terminated’.

The fundamentalist man tries to understand. He asked this de Toqueville guy about political systems, and, as an answer, he heard something about equality, course of society, public opinion, laws, governing powers, habits of the governed, the Government with a capital ‘G’, opinions, and sentiments.

The fundamentalist man asks Alexis de Toqueville a few more questions, just to check the background, and here it comes. Now, it makes more sense. Alexis de Toqueville made a long trip to North America, in 1831. He was supposed to visit prisons there, on the request of the French king. So, the guy went to a country completely different from his own, namely the post-Bonapartist France, and he got hooked. Fascination comes from the experience of difference. He became so fascinated with that society under construction, in the early United States of America, that he made a detailed account of the whole system.

Probably without being aware of what he was doing, de Toqueville did an exemplary study of a political system: he started with a historical sketch, just to show how the whole thing came into being, and then he intuitively focused on those aspects of the aspects of the political order. That historical nerve is probably what I appreciate the most in de Toqueville writing. You can notice, by the way, that I have just let go the joke story about that man who walked into a bar, and I am returning to my basic narrative style. That’s the thing, man: you drag a joke over too long a way, and it stops being funny at all.

Anyway, what I like about de Toqueville is his attachment to history, which is even more noticeable given the fact that history, as a real scientific discipline, needed like 2 or 3 decades more to start emerging in the intellectual landscape of Europe. I appreciate the historical approach because I am strongly attached to the idea that social structures in general, political systems included, are very largely made of habits. It is arguable to what extent those habits last over time. The French historical school is, I think, the best at showing how those habits pile up to the point of becoming dysfunctional, and then the social structure shakes off and starts accumulating new habits.

Societies are like hamsters. Each institution, developing over time in the social system, is like another grain of corn that the hamster, i.e. the government, puts in its cheek-bags. Is the hamster stupid? No, not at all. What is does is a very sensible strategy, but it has its limits. Sensible strategies usually do. The limit is the capacity of the hamster’s cheeks. They are not likely to burst, by the way. If you have ever had a hamster, you could see the incredible capacity of that little animal. It can stuff itself up to an insane volume, with that food stored for later. What comes before bursting is impediment in the hamster’s movements. The more you carry in your cheek-bags, the slower and less agile you are, hence the less able to collect new grains. This has been nicely explained by a German mathematician, Reinhard Selten. He was Nobel Prized in economics, together with John Nash and John Harsanyi, and his specific contribution was the theory of games with imperfect recall (see, for example: Selten 1975[1]; Hammerstein, Selten 1994[2]).

Reinhard Selten studied social games played over long periods of time. The law is one of such games. These games have a special trait: the set of players is being changed without interrupting the game. New players come in, and old players drop out. It has to alter the rules of the game, as new players bring with them a word or two about how the game should be played, or, elegantly, they bring new strategies. Now, we have a paradox. Either the coming of new players with new strategies does not change much to the game, in which case we have a rigid social game with not much adaptability, or the game adapts usefully and the new ones alter it with their ideas, but then, the game is not quite the game it used to be. There is a span of time, that Selten used to call as the span of recollection, over which the rules of the game can accommodate both the old players and the new ones. This span is limited. When the discrepancy in expectations and strategies between players who joined at different times reaches a critical point, some old rules naturally drop off the game. Social games played over long periods of time have imperfect recall, because their rules and equilibriums cannot be unequivocally traced back to the hypothetical beginning of the game.

The funny thing about political hamsters is that they like attributing their heritage to things that don’t exist and have never existed. Take the classical partition of three powers, in a government. The legislative should be separate from the executive, and both of them should be accompanied by an independent judicial power. Most people who know a bit of political theory would immediately trace this distinction back to Charles de Secondat, Baron de Montesquieu and his book ‘The Spirit of Laws’. The interesting thing is that when you read that book really carefully, you will not find any mention whatsoever of that principle of division of powers. Montesquieu made a typology of governments, but he did not postulate the division of powers. Who did, then?

Who knows? The separation of the judicial power seems to be of the earliest date, probably due to the progressive emergence of the highly specialized legal profession, century after century. The separation between the executive and the legislative, on the other hand, seems to be an American invention, and to have its roots in the executive offices established in the early British colonies in North America. Read Alexis de Toqueville on that one.

I am getting back to that embarrassing question the fundamentalist man asked to the barman: how can we know we have any political system at all? Is the presence of a constitution a sufficient premise? In general, yes, I agree. Still, there are exceptions. Take Great Britain, for example. Technically, they have a lot of constitutional law without having a written, enacted constitution in the strict sense of the term. I know, I know, there is Magna Charta Libertatum, or The Great Chart of Liberties, from 1215. I know it feels great to trace the roots of your nation’s constitutional backbone back to the 13^th century, but just think of that hamster from the preceding paragraphs. Just how big the cheek-bags of the British political system would have to be in order to carry the institutions collected over more than eight centuries?

Same thing for New Zealand: there is no one, single, compound document called ‘The Constitution of New Zealand’. Still, New Zealand, just as Britain, seems to work quite smoothly, as political systems come. As a matter of fact, I am a huge fan of New Zealand’s political order. They have things, over there, which look really revolutionary, in the positive sense of the term. They have that thing, for example, that the Parliament can vote a budget it has billed like on its own, without any bill from the executive branch.

On the other hand, let’s suppose there is a constitution, but one or more political actors just don’t care, and free ride on the tide of political power. Does it mean there is no political system? Certainly not. If this is not necessarily and strictly speaking the constitution that makes a political system, then what is it? Although the constitutional track is not 100% correct, it gives an insight. Constitution is law, and this law puts order in the intricate network of hierarchies present in the given social structure. Political systems are observable through the lens of laws they enact into force, and through the predictability of behaviour in people who clearly wield power.

Law and predictability of behaviour are connected. Law is made of rules, and, generally, law is law. Still, as you dig deeper, there are two layers in law. In the first place, there is that sort of structural, framework law: the constitution, or, in the absence thereof, the rules regarding the way government should be organized, the civil code, and the criminal one as well, as we talk about codes. You know, that solid stuff that lawyers mean when they tell you in Latin, or almost: ‘Sorry, dude, but ignorantia iuris nocet’ (you get in trouble when you don’t know your law). This layer of law makes the frame of the political system. The presence, and the content, of those laws gives gravitas and predictability to what politicians do.

On the other hand, there are laws oriented on the achievement of a clear purpose, like a plan. Let’s take a case like from real life. Always embarrassing, to stick close to real life, but always instructive, as well. Recently, Australia has enacted new regulations against espionage, allegedly with the purpose to counter the Chinese interference in the Australian political system. I followed that lead a bit, and I am focusing now on one particular print, namely on the Foreign Influence Transparency Scheme Act 2018 No. 63, 2018. Someone could ask: ‘You are Polish, Mr Wasniewski, so why the hell aren’t you writing about the Polish political system, and instead, you take on those poor Australians?’. Yeah, babe, that’s the thing about writing about political systems. It is frequently safer to write about other countries than about your own. Especially now, in Poland.

Anyway, that second layer of law expresses policies, thus what the political system does. Not all policies are enacted, but many do. It depends on how flexible they are supposed to be, and what about of budgetary money they need. You want a flexible policy that does not necessarily require to divert the stream of taxpayers’ money? You keep it executive, like those presidential proclamations that President Donald Trump uses to impose tariffs on imports. You want to implement a costly policy, which requires fiscal effort, and you don’t really expect to back off in three months from now? In that case you are likely to push some bill through the legislative.

The fundamentalist man enters our bar and asks again: ‘Do you have any political system? How do you know you have any?’. Now, we, the barman, can answer in a little bit more corkscrewed a manner: ‘It depends what kind of political system you fancy, man. If you want something well hinged, sort of regular, with basic legal frame and at least some policies enacted as law, yes, we have plenty. If, on the other hand, you are thinking about something less stringent, rather something sort of like a no-holds-barred game, sorry, we are short of. You can call by that other bar, down the street, with the big « Revolutionary Republic of We Know Better » sign over their door. They should have that second kind on stock, right now. This is probably why you can hear gunshots from there, every now and then’.

All that thinking about political systems made me think of reposting a bit of my writing from last year. It is because I am deeply fascinated with the 17^th century in Europe. I have sort of a gut feeling that we are leaving the peaceful world of standardized political systems, which started to build up by the end of the 18^th century, and we re-enter the fascinating maze of intertwining social hierarchies of the world, which, fault of a better word, we use to label ‘feudal’. In 1675, the publishing house run by Louis Billaine, located at the Second Pillar of the Grand Salle of the Palace, at Grand Cesar, published, with the privilege of the King, a book entitled, originally, ‘Le Parfait Négociant ou Instruction Générale Pour Ce Qui Regarde Le Commerce’. In English, that would be ‘The Perfect Merchant or General Instructions as Regards Commerce’. The author was Jacques Savary. By the way, the title I provided here above is the abridged one. The full title holds in 13 lines. Master Savary wanted to be precise, and indeed he was. On 829 pages, he covers very comprehensively a lot of practical topics.

So, two years after d’Artagnan’s last battle, and during the reign of the Sun King, Jacques Savary publishes that book about being a perfect merchant, in really mousquetairy an environment. How had he come up with the idea? He states it very frankly in the preface of his book: ‘For although I might have had sufficiently good a name, and sufficiently good a birth, to be employed at some higher profession, I admit that, having been destined for Commerce by my parents, it is the employment, which I occupied myself with for a long time, the care I gave it, the particular cognizance that I took of the most significant and the least things as regards it, the ventures I made with all kinds of Manufactures, the losses that I suffered there, those that I avoided, have given me enough enlightenment and enough experience for ignoring nothing that regards the Negoce’.

I am translating Master Savary’s words the best I can, yet the original is the original. Champagne is a good example. You can get your own PDF of Master Savary’s writing from www.gallica.bnf.fr , or Bibliothèque nationale de France. Anyway, before I go further in the wording of that preface, I go further hermeneutical with Master Savary. A few interesting things to notice in that first paragraph. ‘Commerce’ and ‘Negoce’ start with capital letters, so I gather it must be something important. Commerce was something slightly different than trade strictly spoken. We are in the world of capitalism based on debt, and more specifically on the bills of exchange. It will take more than an additional century (one and a half, as a matter of fact) to invent the institution of limited liability in a business. Someone could say: in there was no limited liability, it was better to rely on one’s own equity in doing business. Well, yes and no. Yes, because your own equity, contrarily to debt, will not give other people claims on you. No, because if you lose money in a venture, it is, on the whole, better to lose other people’s money than your own. Instead of chipping out of your own possessions, you can borrow money and lend money. The trick, and the art, was to find a balance between lending and borrowing, and it was mostly done with relatively liquid bills of exchange, traded by endorsement.

Right, let’s go hermeneutic once again. ‘Serenissime’ means kind of very calm in his ways. Noble born people, in the past, liked dropping this adjective in those long designations, half-name, half-social status that they used to introduce themselves. It probably meant that they wanted to appear cool and relax. ‘Peace, bro. See that Serenissime on my visit card? It means I am really calm, and I will have you executed only at your second mistake. Want a sniff?’. So, Master Savary went into the service of that Italian duke from Lombardy (this is where Mantua is). Being a duke was a good position. The difference between a duke and a prince is that the former is just the top dog in the feudal hierarchy, and the latter is of royal blood and waiting in line for sitting on the throne. Apparently, especially in Italy, being a prince was really unhealthy an occupation. You could have had those horrible hunting accidents, when a wild boar attacked you with five crossbows, and could even follow you home. Waiting in line for top offices is rough. Being a duke was safer, as you were the boss and it was kind of official and legally guaranteed. You just had to wait a few centuries, over some twelve generations, and you had that dukedom. Well, yes, you had to put your bets on the right prince, the one who didn’t get attacked frequently by wild boars with crossbows, or just had more crossbows secured on his side, together with the properly qualified labour force.

I am an economist, which, due to the work of intellectual titans of the past, is no more equivalent to being a looney obsessed with numbers. Science can help, and this is why I do science.

I am consistently delivering good, almost new science to my readers, and love doing it, and I am working on crowdfunding this activity of mine. As we talk business plans, I remind you that you can download, from the library of my blog, the business plan I prepared for my semi-scientific project Befund (and you can access the French version as well). You can also get a free e-copy of my book ‘Capitalism and Political Power’ You can support my research by donating directly, any amount you consider appropriate, to my PayPal account. You can also consider going to my Patreon page and become my patron. If you decide so, I will be grateful for suggesting me two things that Patreon suggests me to suggest you. Firstly, what kind of reward would you expect in exchange of supporting me? Secondly, what kind of phases would you like to see in the development of my research, and of the corresponding educational tools?

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[1] Selten, Reinhard. “Reexamination of the perfectness concept for equilibrium points in extensive games.” International journal of game theory 4.1 (1975): 25-55.

[2] Hammerstein, Peter, and Reinhard Selten. “Game theory and evolutionary biology.” Handbook of game theory with economic applications 2 (1994): 929-993.

[3] Sombart, W., 1911-2001, The Jews and Modern Capitalism, translated by M.Epstein, First published 1911, edition 2001 published by Batoche Books Limtied

Quite abundant a walk of life

My editorial

I have just finished writing an article about the link between energy and human settlement. You could have noticed that I have been kind of absent from scientific blogging for a few days. I had my classes starting, at the university, and this was the first reason, but the second one was precisely that article. On Wednesday, I started doing some calculations, well in the lines of that latest line of my research (you can look up ‘Core and periphery’ ). Nothing very serious, just some casual dabbling with numbers. You know, when you are an economist, you start having cold turkey symptoms when you are parted with an Excel spreadsheet. From time to time, you just need to do some calculations, and so I was doing when, suddenly, those numbers started making sense. It is a peculiar feeling when numbers start making sense, because usually, you just kind of feel that sense but you don’t exactly know what it actually is. That was exactly my case, on Wednesday. I started playing with the parameters of that general equilibrium, with population size on the left side of the equation, and energy use, as well as food intake, on the other side. All of a sudden, that theoretical equilibrium started yielding real, robust, local equilibria in individual countries. Then, something just fired off in my mind. My internal happy bulldog, you know, that little beast who just loves biting into big, juicy loafs of data, really bit in. My internal ape, that curious and slightly impolite part of me, went to force the bulldog’s jaws open, but it got fascinated. My internal austere monk, that really-frontal-cortex guy inside of me, who walks around with the Ockham’s razor ready to slash into bullshit, had to settle the matters. He said: ‘Good, folks, as you are, we need to hatch an article, and we do it know’. You don’t discuss with a guy who has a big razor, and so all of me wrote this article. Literally all of me. It was the first time, since I was 22 (bloody long ago), that I spent a night awake, writing. The result, for the moment in the pre-editorial form, is entitled ‘Settlement by energy – can renewable energies sustain our civilisation?’ and you can read it just by clicking this link.

Anyway, now I am in a post-article frame of mind, which means I need to shake it off a bit. What I usually do in terms of shaking off is having conversations with dead people. No, I don’t need candles. One of my favourite and not-quite-alive-anymore interlocutors is Jacques Savary, a merchant and public officer, who, in 1675, two years after both the real and the fictional d’Artagnan had been dead, published, with the privilege of the King, and through the industrious efforts of the publishing house run by Louis Billaine, located at the Second Pillar of the Grand Salle of the Palace, at Grand Cesar, a book entitled, originally, ‘Le Parfait Négociant ou Instruction Générale Pour Ce Qui Regarde Le Commerce’. In English, that would be ‘The Perfect Merchant or General Instructions as Regards Commerce’. And so I am summoning Master Savary from the after world of social sciences, and we start chatting about what he wrote regarding manufactures (Book II, Chapter XLV and XLVI). First, a light stroke of brush to paint the general landscape. Back in the days, in the second half of the 17^th century, manufactures meant mostly textile and garments. There was some industrial activity in other goods (glass, tapestry), but the bulk of industry was about cloth, in many forms. People at the time were really inventive as it came to new types of cloth: they experimented with mixing cotton, wool and silk, in various proportions, and they experimented with dyeing (I mean, they experimented with dying, as well, but we do it all the time), and they had fashions. Anyway, textile and garment was THE industry.

Tag: history

A man walks into a bar, and then comes the calm duke

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Quite abundant a walk of life

My editorial

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