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Article 6
The Mystery of Capital:
A famous Peruvian economist, Hernando Desoto wrote a famous book on
economics, The Mystery of Capital: Why
capitalism triumphs in the West and fails everywhere else.
In the
book he explains his theory that private property is the foundation of a
progressive economy.
Essentially, he explains why many western countries
have such economic growth.
Here is another slant......
Desoto employed a crew of researchers who
sought out evidence from struggling economies around the
world to back up his
claims. He concluded that many third world countries still need to
establish and normalize the invisible network of laws that turn assets from
"dead capital" into "liquid capital."
Economists have now blamed poverty on everything from a country which lacks sellable assets,
lacks property rights, and even a non-entrepreneurial mindset. Basically
what Desoto meant is that third world countries lack legal, binding
support
systems to secure property rights, so vital for economic expansion. To
some, this seems like he
employed a team of researchers to finally re-discover the purpose of the
Magna Carta.
I have researched a lot of legal and political history even by
economists and leaders of industry.
I don't presume to be an expert in economics, but Desoto made a point.
When they say that ownership is important, surely a growing economy depends upon
protecting something which can as best as possible, guarantees privacy,
security, and an asset that is a protected priority. Even in the movies, a
soldier would
put his life in danger knowing that he was going to return to a country that is
going to make his future
home or piece of property a priority.
I really think he was onto something more. He mentioned turning dead capital into liquid capital. Maybe what he was saying was that society needs more trust, more advanced sales specialists, trusted, high principles, and more outlets for buying and selling. That way, if necessary, people will buy and sell property with more confidence, and less fear that their laws might have loopholes that work to their disadvantage.
You can understand more of the insights and the principles of economics by understanding some of the combined political and economics thoughts and ideas, mostly from of the 16th and 17th century British literary icons. But, you can save ten years or so and read another opinion. It's like a few hour long "Guide through market street" called IMM
____________________________________________
Two
hundred years before
Leonardo DaVinci there was Giotto
If we look at world trade over the ages we realize that industry is the precursor, the foundation of trade.
Take for example the great trading ports of Italy during the early the middle ages, Genoa, Rome, and
Venice.
Italy would
receive wool, food, iron, tin, minerals, and raw materials brought from England and
France, as well as manufacture some
of it's own goods also. Then Italian traders would trade these products
to the Middle East and Far East for spice, silk, and jewels.
Since the early middle ages, England did not have the trade expertise of Italy, so England had to
mine,
grow, and manufacture goods to make up for what they lacked with trading inexperience.
Incidentally, the Romans operated iron, and tin mines
across England and Wales since the time of
Caesar. Italy in the mean time grew rich on the trade, shipping, festivals,
fairs, and lending it became
accustomed to. Soon, they developed into a
somewhat artistic, cultural society resembling many of it's
Roman
achievements which had for the most part vanished, or been
repressed during the Dark Ages.
As they were coming out of the Dark Ages, Italy had a parallel event. Italy was very much into art
and crafts, which were supported by the wealthy at the time. The Popes and the rich aristocratic families
spent lavishly on buildings, art, and sculptor. Much of this art was the reward paid back into the communities which supported their businesses,
defense, trade, manufacturing, and finance. It was also an expression of
power, knowledge, and cultural heritage.
Trading was a dangerous and often tragic life for many, especially the shipping
merchants. In the Dark
ages small pockets of Europe had retained the Roman, Greek and Eastern Culture. But for the most part, especially in the northern, frozen countries, life was a struggle to survive, much less making a surplus for trade. The Land Barons and nobles of the era were always looking to promote industry. They needed industry,
because often, most of their
possessions were in land that they owned. Land could be used to mine,
grow, or produce tradable goods. In spite of cold, stormy winters, wolves, bears, and barbarians, the English
managed to grow some crops, and raise sheep.
The Nobles also knew that they needed money for defense.
Many Barons in England supported their own armies. For the most part the struggle to defend their land
and tend to there fiefdom left little spare time or money for arts and entertainment. It was a rough type of "mercantile" existence. Then, gradually, along came a new type of industry which was initially supported by the spare pocket change of the commoners, and more importantly by the
aristocrat traders and financiers. This new
industry was an offshoot of manufacturing, farming and mining. It was the
arts industry, crafts, acting and sports. The arts, acting and entertainment had always been around
even before Rome, probably before the Egyptians . It is just that they were not as
prevalent in the Dark Ages. In the Dark Ages, defense, and sustenance were the
priority. Land was often threatened on it's borders by a stronger more aggressive neighbor. Then during the 13th century when money started to flow
across Europe, the Renaissance was about to begin.
How will we know where we are, if we haven't seen where
we have been?
Maybe some have to get wet to get through the history jungle...
Giotto di Bondone ( 1267-1337) was an Italian Renaissance painter.
Over two centuries before Leonardo DaVinci, or even Michelangelo, in 1305 Giotto painted
amazing frescos and murals. He painted before Dante's time. Giotto was born in poverty near Florence, the
son of a peasant
shepherd. The legend says that at the age of 10, while tending his sheep, he used to draw on
the rocks with a chalk. Cimabue saw him drawing a sheep, and asked his father if he could bring Giotto with him
to let him study art.
Another story is that Giotto, while apprenticed to a wool merchant, frequented Cimabue's studio so much that he was finally allowed
to study painting.
Giotto would later go on to be recognized as the first genius of the art of the Italian Renaissance.
Giotto lived and worked at a time when people's minds and talents were first being
transformed from the clasp of medieval restraint and was the precursor of the explosion called the Italian Renaissance.
My theory on this is very much similar to modern times. Europe was
threatened more and more from the powers mounting in the east against Western
culture, financial and trade influence. The reaction to it was not to
become more humble and more conservative, but to become more outgoing and
flamboyant. Passions on both sides of the Western politics move
towards opposite boundaries. Some, like certain German conservatives, some
Prelates and Savonarola wanted reforms, and demanded moving society towards
constraint and self control. Others, including manufacturers,
financiers, merchants, poets and artists
valued openness and progress by not wanting constraints and expectations on
innovators, artists and thinkers. Both sides established followers and
even financial support with deep convictions for various reasons.
Sentiments were strong all across Italy favoring both sides, and the result was
a return to a massive spread of disunity across Europe.
The worst division throughout Europe began around the 1520's when Spain amassed huge fortunes of pious, "Screw-um all" money in the gold mines throughout the America's. That was a threat to all of Protestant Europe because of the strong Catholic sentiments. Like I explain in IMM, it really wasn't so much about race, or religion, but about intent, or threats against property, fortunes and one group having pious expectations others were not living up to. Occasional wars and battles among the super powers of Europe always existed. The power wars were the worst in the 1500's, lasting until the late 1590's with the destruction of the Spanish Armada, and the short return to artistic and political flamboyance in England.
Giotto dealt largely in the traditional religious subjects, and was also an
architect and sculptor. Vasari tells the story of how the Pope sent a messenger to him with a request for samples of his work. Giotto dipped his brush in red and with one continuous stroke painted a perfect circle. When the Pope saw it, he "instantly recognized that Giotto surpassed all of the painters of his time."
Cimabue(1240-1302) as mentioned had an art school, and was a Florentine painter and creator of
mosaics, and known as the artist who discovered Giotto. Cimabue painted
iconclastic, (Byzantine type)
paintings. From these two teachers came the artists who would
transform humanity. But if it were not for
trade and industry, many of these artists would never have been known. Manufacturing and technology
was the method by which
surplus goods were stockpiled and offered for trade. This trade and volume, then developed
into a surplus of money, which was reinvested into better technology,
banking, and industry.
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