From Florence to Houston

Below is an outline for the second chapter as represented in the table of contents for my projected book.

I've already done the same for the first chapter. We will focus here on the institution of lending money for a fixed rate of interest: this is "usury" or "riba" to its foes.

I. Renaissance Florence
A. Theology, Damnation, and Evasion
B. The Rise of the Medici

II. The North of Europe
A. Luther on usury
B. Calvin
C. Calvinism in the Lowlands
D. London and the Classical Economists

III. Colonies and States
A. Debt in the Colonies
B. Debt and the Founders
C. The Post-Classical Economics of Henry George

Here I will make in essence the points I sought to make in this blog on November 19, 2010.

D. Leverage, the Business Cycle, and Enron

The difficulties that arise when finance becomes too disconnected from the physical world, when an excess of liquidity gives rise to dreams of infinite leverage, are well illustrated in the rise and fall of the now infamous energy-trading firm, and it is a cautionary tale we should heed even this early in our study.

We have addressed thus far the fundamental ideas of speculation and leverage (i.e. debt). We need to introduce the final key idea from our subtitle, regulation: and we will do that in the next chapter.

Calvin & Hobbes

Presumably the names of the little boy and his stuffed tiger in the classic comic strip by Bill Watterson, come from the fiery Reformer on the one hand, and the gloomy philosopher of the Leviathan state on the other.

Aside from the background they provide for Watterson's imagination, though, do John Calvin and Thomas Hobbes have much in common? I suspect that they do, in that Calvin's notion of predestination on a spiritual level did help set the stage for the Hobbesian materialistic notion of determinism.

Calvin maintained, after all, that the damned can not really be said to be damned by any free act of their own, because God must have known forever that Hell would be their fate. He wrote, "Predestination we call the eternal decree of God, by which He hath determined in Himself what He would have to become of every individual of mankind. For they are not all created with a similar destiny; but eternal life is foreordained for some, and eternal damnation for others."

Hobbes also rejected the notion of free will. Freedom to him is simply the ability to do whatever you want. But your own will, or wants, are themselves determined by material/biological facts. Furthermore, freedom generally leads to trouble, the war of all against all, and is best abandoned.

So perhaps Calvin did help set the preconditions philosophically for Hobbes, though whether the creator of the cartoon had that in mind ... I have no idea.