Tuesday, August 17, 2010

Swiss Revolutions II: French, German, and Italian

One of the marvels of the Swiss Federation is that the union growing out of the medieval city-states has produced a single nation with three different languages. I was thinking of this while continuing to read sections of the book by W. Fred Graham on Calvin, the reformed church, and economics (see the earlier posts). Unfortunately, what I was thinking about was why, it seems to me, that pastors and economists can be nominally of the same tongue and yet still seem to speak completely different languages. For someone that wants to have cross-fertilization between theology and economics, this can be a real problem.

The case in point was that I got to a section in Graham's book in which he discussed exactly the example I used in the earlier post: crop failures leading to increases in grain prices. Graham states the economic condition, then he interprets what he believes Calvin's position is, and then he produces the supporting language from Calvin. The problems are a) the economic distresses that Graham posits have little or nothing to do with the economic issues he considers, and then b) the supporting language from Calvin has little or nothing to do with how Graham frames the problem.

In the presence of a crop failure, as we have seen, prices will rise in a competitive market. This is a shift backward in the supply curve. But Graham says,"Perhaps because of the lack of abundance in basic grains, Calvin was particularly incensed at those who engaged in monopoly or speculation." Fair enough, but neither have anything in particular to do with Geneva having few farming lands in her sphere of influence. And, as we just noted, prices of grains rise and fall with agricultural conditions even if those markets are highly competitive. Graham also tags speculation, but as I will discuss in a follow-up post, while "speculation" may have a technical economic meaning, in popular discussions, where it is used negatively as here by Graham, it is almost always in an emotional and non-rigorous sense that has no real economic meaning.

Then Graham provides his quotes from Calvin's commentary on Amos. But the problem is, Calvin doesn't directly mention monopoly or speculation. Graham provides excerpts from Calvin, but to be fair I went online to an English translation of his commentaries on Amos. There's not much that Graham didn't quote, and again, there's nothing about monopolies per se nor about speculation. Instead, Calvin exposes three problems from the time of Amos. 1 ) Wealthy grain merchants were greedy. 2) Wealthy grain merchants were more than willing to allow starving people to sell themselves into slavery. 3 )Wealthy grain merchants committed fraud, selling chaff and waste mixed into the grain as the grain itself. All of these things are bad, they do match what is written in Amos, and Calvin was correct to criticize them. But they are not a general condemnation of either monopoly power or speculation.

Apple Corporation has gone through a period in which they had a type of market power on "iPods" and"iPhones" (although this is eroding).If you have bought anything from mutual fund shares to baseball cards because you hope to profit from reselling them (capital gains) then you have engaged in speculation. I don't see that either of these have anything to do with the conditions in the time of Amos, with wheat prices rising because of crop failures, or with Calvin's comments. (It goes without saying that I do see the implications in the other direction: greed, heartlessness, and fraud in any field of human endeavor are timeless, universal problems.) But maybe I'm a in a city state (Economicus?) that just doesn't speak the same language as pastors and theologians.

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