[38] Bas van Bavel — How Markets Captured Societies

The “Golden Age” during the seventeenth century was a period of unparalleled power, wealth, and splendour in the Netherlands. It was made possible by the maritime trade with Asia and the economic growth the East India Company brought to the country. But it carried the seed of its downfall. As the rich grew richer they not only speculated with tulips, but they increasingly bought themselves political power and became an oligarchy. Bas van Babel is an economic historian and researcher who looks at the fascinating relationship between markets and societies. We speak about how the Black Death shaped Europe, how important Church Law was for the development of a middle class, the different development of eastern and western Europe, and about the beginnings of capitalism. In fact, we have so much to talk about that we will have to speak about Bas’s present work in a part two!

Transcript

Copy Transcript Copied

SPEAKER_00 0:01

Blomcast. Turning points in history. Welcome to the Blomcast, the podcast that looks at turning points in history. And today my guest is Bus van Bael, an economic historian who has taken his historical expertise into the present and perhaps even into the future, and we'll be talking a little bit about that. Bus, welcome and thank you for being on the Blomcast.

SPEAKER_02 0:35

Thank you for having me, Philo.

SPEAKER_00 0:37

Bus, um we are looking in this podcast usually at moments when history changes, when something new happens. And well, as we are living at the probably biggest changing point in history that humanity has ever undergone, a lot of what I what we are talking about is present tense and is politics. But with you, we can delve a little bit back into history. You've looked a lot about a very interesting interaction, which I always come back to in my work. Also, of course, on the time that interests you in history, on the golden age, and the beginning of modernity, and perhaps with authors like Carl Polanyi and his analyses. And that is the interaction between markets and societies. And especially in your case, later capitalist markets and societies. But this is a fascinating relationship because one shapes the other. And one cannot exist without the other. Tell us about the moment when that when this dynamic shift came into this world that was in a medieval world a very strongly controlled world of markets where prices were set and standards were set by professional associations, and there was no free market as such as we would know it today. But then something really momentous happened in the Renaissance and in the 17th century. Tell us a little bit about that.

SPEAKER_02 2:18

So I would even go a little bit further back in time, and I would say that a lot of the societies in Western Europe in the Middle Ages were rather characterized by a feudal order. The order of a small, dominant elite, a noble elite, that had a strong authority, even personal authority over people. People that were to a large extent unfree. So there were no markets at all. There was little freedom to move for people, there was little social mobility. People were fixed, were tied to the land, were tied to the manor as serfs, being half unfree. So that was the situation in large parts of Western Europe in the Middle Ages, up to, I would say, 12th, 13th centuries. And then something momentous happened. And this happened before the rise of markets, that is important. That is exactly the organization of ordinary people in associations, in communities, in organizations.

SPEAKER_00 3:38

So why did that happen?

SPEAKER_02 3:40

Why, yeah, why? Yeah, but that is a very big question. I I I would like to answer it, but that is really a very big question. Um I think one of the main reasons was the role maybe counterintuitive of the church. So the church in the 11th and 12th centuries also aimed to free itself from feudal control, from the control of feudal noblemen and the emperor, kings and emperors. The church wanted to be free, independent, and particularly the organizations of the church wanted to be free and independent of feudal control. The monasteries, for instance, or the cathedral churches wanted to be free. And the church proclaimed that people could organize themselves into independent organizations. So a monastery is an association of people, of monks in this case, being independent of feudal control. And then started next the organization of hospitals with their fraternities of universities. The university is also formed in this period under the protection of the church, universities, schools, but also village communities and town communities. And the interesting thing is a town community, and we talk about the town as something abstract, but the town community is an association of people, of burghers. What about guilds? And the guilds are also an example of this, the professional guilds. The water management organizations are in the Netherlands, very, very important. Yes.

SPEAKER_00 5:40

But in the Netherlands, incidentally, this story has a very interesting spin, which already makes something deeply Dutch in history, which is that the water management organizations then need a head, a deckhaf, the the the guy who runs the whole thing, and he is in fact elected. And he is not from the hereditary nobility, but he has a lot of power, but this power is given by election.

SPEAKER_02 6:11

Right. That is the point. So these are largely, you could say, democratically organized groups of people, which is very particular seen in the light of the earlier medieval history of Europe, but also in the light of what is happening in other parts of the globe. And of course, China was very highly developed in the earlier Middle Ages. The Middle East, too, with Iraq, all great civilizations, but they did not have the opportunity of ordinary people to organize independently of the elite. This did not exist. And this is an invention of the church of having legal bodies, because that is the point. These are legal, unnatural persons. They are not natural persons, they are organizations, but they possess legal personhood.

SPEAKER_00 7:08

This is really interesting because I mean this as you describe it, this is also a product of the rivalry between the aristocracy and the church. Who is really in power? And of course, one of the step the factors in that is the idea of celibacy, because that means that you break the power of the big families to inherit big estates, and these estates have to go to the church. But this right of association is also something that is effectively the product of a power struggle.

SPEAKER_02 7:39

Yes, it is. It is what some would call the product of elite division. In order to change something for ordinary people, you need the elite to be divided. A united elite cannot be defeated. That I think is a big lesson from history. So you need a divided elite, and the elite was divided between the secular feudal nobility on the one hand and the ecclesiastical leaders on the other hand.

SPEAKER_00 8:11

In fact, the elite was self-dividing. Self-defining in a way. Are there any historical echoes in this today?

SPEAKER_01 8:19

Now you're jumping to the today.

SPEAKER_00 8:21

I don't want to jump yet, but um, you know, self-dividing elites elites that it's an interesting subject.

SPEAKER_02 8:29

It is an interesting subject and it is very relevant for the situation today. And I can already say that I'm a little bit more pessimistic about today. In exactly in this respect, I think we're growing towards a very united elite instead of a divided elite. So to come back to the Middle Ages, so there was this division, this opened scope, opportunity, room for associational organization of ordinary people. That is well mainly the middle classes, that is, craftsmen, peasants, uh petty traders, also, of course, merchants, but mainly craftsmen, farmers, etc. ordinary people, they organized themselves and they made themselves free. So this was the period in which manorialism and serfdom were broken and people became free. And now we come to your question, Philip, because this freedom offered people the opportunity to freely trade in labor, in land and in capital. Because in this system of unfreedom, this was impossible. So in manorialism, and where you are a serf, then your labor is not free. You have to work and perform services to the Lord. You cannot rent out your labour power in the labour market, you cannot lease out your land, etc. etc. So land, labour and capital, the three factors of production, the building blocks of our lives, were embedded in a restrictive system. And when people became free and they broke this system, then they were able to trade land, labour and capital. Not as uh not in restricted markets, but in free markets that were controlled and used by ordinary people. And this is a very yeah, I would say exceptional development. We've only seen this a few times in history, and this took place first in the Middle Ages in Italy, 13th, 14th centuries, and then a little bit later, 15th, 16th centuries in the Low Countries.

SPEAKER_00 10:55

How important was uh one little event that lay between that, namely the Black Death for the development of this different culture?

SPEAKER_02 11:03

It's an interesting question. I would say in the past, historians thought the Black Death was a very important event that shaped history. I would say we do not believe this anymore. So we rather turn it around and say the way societies react to a big disaster as the Black Death was, and with the Black Death, something between a third and half of the European population died. Between a third and half of the European population died, a disaster. But how societies reacted to the Black Death was open, but it could lead to as in Eastern Europe, to more unfreedom, more coercion by the feudal elite. So in Eastern Europe, after the Black Death, labor power became scarce. And the feudal nobility that was still strong there reacted to this by further coercing people. And this is the start of what is called the Second Serfdom, which lasted up to the 19th, even beginning 20th century, in Poland, in the east of Germany, in the Ukraine and Russia.

SPEAKER_00 12:23

I've just done a podcast with Jörg Babarowski just about this. And he made a very interesting point, namely that this sort of mystical idea of a Russian people and of a Russian people's solidarity and of a shared fate had a lot to do with the Second Serfdom because it introduced collective responsibility of the farmers for the result of the serf labor or the hours they had to give, meaning that if a farmer buggered off and simply ran away because he didn't want to, the others had to pick up his work and his hours and deliver that in turn. And he so he said the villages became sort of places of micro-surveillance where everybody spied on everyone to make sure that nobody was holding anything back and nobody was thinking of leaving. And um so what became romanticized in the 19th century as a great community of people was actually a sort of spying ring of imprisoned people, in it way, as it were.

SPEAKER_02 13:37

And this developed out of the reaction of the feudal nobility after the Black Death, the loss of people, the loss of labor power, and this was their answer. In Western Europe, completely the opposite happened, completely the opposite. So the loss of people, the death of people, led to scarcity of labor, that was the same. But the reaction was that the bargaining power of people became bigger because they possessed something that was scarce, labor power. And they could do so because, in the previous centuries, I alluded to Italy in particular, but also the Low Countries, people had become free and independent because of their organization in associations and the way they have won their freedom, so the power of the feudal nobility was broken. And this then created room for to bargain about labor from a very favorable position. So the Black Death, in a way, created a divergence between Eastern Europe and Western Europe, and this shows that the Black Death in itself is not decisive. Decisive is the organization at a, I would say, the power balance within societies that decides how a society will respond to a great disaster such as the Black Death.

SPEAKER_00 15:04

I think that this contrast really fascinating. He has a book that I think I'll never write, but always really want to write: a book about the three Europe's the Protestant, the Catholic, and the Orthodox Europe, that sort of carry these conflicts into contrasts, into collective practice. And you know, you can still see the echoes of these different systems of belief and of communal organization in the secular states that have followed them today. But this contrast between the East and the West that breaks up in this time, that's a really fascinating thing. And as you say, it has a lot to do with the power of coercion. It also has to do with the immensity of the estates in Russia, which were in fact very difficult to administer and to control. And Western Europe also has this contrast because it has so much more population density. Um regions of dominance are so much smaller, and there's so much more competition between different powers.

SPEAKER_02 16:13

There's more competition, that is right. So there's also created more scope for organization of ordinary people. So if one ruler would try to coerce, then people could run away to another area where there was more freedom. So Western Europe took another path, and this is, as you already indicate, it's self-enforcing. So when you take a path a develop develop yeah, a development in a certain direction, then at a certain point it becomes self-reinforcing, and this happened in Western Europe. But still, so now we are after the Black Death, let's say in the 15th century, 16th century. There's more freedom, there's the development of markets. These markets function very well. They offer free exchange of land, labour, and capital. They uh generate um yeah a group of entrepreneurs, uh agrarian entrepreneurs and traders, merchants. Not yet a lot of industries, but agriculture, well, as you know, is the yeah, it's the most important sector of the economy. At least in the Middle Ages, I would say it's a disregarded sector even today, because without food we will have nothing as human beings. So agricultural entrepreneurs, merchants, um and they create uh yeah, economic growth. So now we see much more than in the past as historians, that economic growth is not something of the last two centuries, but already started in Italy, first 12th, 13th centuries, and then the low countries, 15th, 16th centuries. In the 17th century, the low countries had a GDP per capita. I do not know, it's not always a meaningful figure, but still it gives some idea that is comparable to, let's say, Latin American countries nowadays. Why is this important? It means that societies were able to escape from what is called the Maltusian trap. The Maltusian trap is that there's just sufficient food for people to stay alive. And the idea is if there's more food, then people will have more children, or less people will die, population will grow.

SPEAKER_00 18:46

John Malthus, the the the British, the British um economist, as he was, who uh made this law that you know a population must not outstrip its food supply. Um incidentally, you see what a huge difference technologies make, in this case, artificial fertilizers, of course, in the 19th century, and Malthus seemed to be out of the window. But that just in a little parenthesis. We are still back in the 17th century.

SPEAKER_02 19:13

Yeah, but I would say, Philip, that he was already out of the window when you look at the low countries in the 16th century, because already there societies were able to retain these surpluses and the surplus in food without having more children, without having huge population growth, so they economic growth is more labor productivity, more income per person, and they were already to able to generate this in the 16th, 17th centuries. So this is a very favorable development, and it ends this development in you already mentioned it, the golden age, the golden age of the Dutch Republic, 17th century, 17th century, the painters, uh the architecture, the great cities that developed, uh the literature, uh so fluorescence in all respects, not only economically but also artistically, a high point. But then something happened, and you could say this is a type of a turning point, but it's not a quick turning point, because at the beginning the process is slow, and maybe people did hardly notice it, but at a certain point the moment was reached, you could say a kind of a tipping point in society. A tipping point was reached. What happened? I mentioned these entrepreneurs and the merchants, they uh in free open markets generated profits, they bec they became wealthier, that's a natural process. And some people are successful or looking or looking and successful, and they become rich. That's fine. But what they started to do at a certain point when they became richer and richer, then they observed, and also this is very logical, that it was more profitable to invest their profits in acquiring political influence than in investing in the real economy. It's very obvious, and again there's a parallel to today. When you have a lot of money, hey, you have uh a million euros and you would invest it nowadays is the same in a new factory with great new technology. What would your returns be on the million euros you've invested? Three percent a year? Four percent a year? What would be the returns if you would invest your million euros in speculating in financial markets? Eight percent? Ten percent? Yeah. What would be the returns if you would be able to buy yourself in in a hedge fund? 12%? Fourteen percent? And now what would be your returns if you would be able to monopolize a sector in the economy? And lastly, what would be your returns if you could influence politics to change regulation in order to make your wealth you've already got your wealth more profitable? That is really then you hit the jackpot. For instance, uh I'll give a present example from the Netherlands. There were uh wealthy people who had invested in a fund to buy up land along the dunes along the coast, the protected coast of the Netherlands, to buy up land. It was cheap. You cannot build there, it's protected land. And next they started to offer money as donations to political parties in order to change regulation to open up the possibility to use these lands for building holiday homes and bungalows. Yeah, then you hit the jackpot. I think there's nothing mean to do this. It's not mean, it's not wrong, it's not illegal, it's clever. The problem is it creates a great risk for the openness of markets and for the openness of the political domain, because it leads to an increasing influence or leverage of wealthy people on politics on the political domain. Now, this was exactly what happened in the Dutch Golden Age in the 17th century. The few very wealthy families acquired dominance over first urban politics and then the politics of the Republic. They started to acquire dominance over the East India Company.

SPEAKER_00 24:38

And that was the economic motor of the Netherlands at the time. I mean, that was just to explain to people who may not have heard the term, the East India Company was supposedly the trading association that looked after trade with the East Indies so Asia. But in reality, it became the first arm of colonialism militarized, um, that made settlements that subjugated local populations, that extracted resources and brought them back to the Netherlands, and that money made these men enormously powerful.

SPEAKER_02 25:19

Yep, exactly. And it made them more powerful and more wealthy than they already were. No the point, because you stress, and very rightly so, the fact that the East India Company possessed the means of violence. The East India Company was authorized by Dutch government to use violence. It was sort of semi-state. A semi-state, right. And what is the main characteristic of a state? And people tend to forget this, particularly in Europe. In Europe I would say we are a little bit naive, but the main characteristic is control over the means of violence.

SPEAKER_00 26:02

The monopoly on violence, hopefully.

SPEAKER_02 26:05

The you the use of arms. So these very wealthy people by obtaining a grip over government, over political authority, and over state-like organizations like the East India Company, acquired a grip over the means of violence. They could again use these means to coerce other people. They coerced people overseas, you already mentioned it, and rightly so. People in East Asia that were made into serfs, that were coerced on plantations, etc. But also people within the Netherlands, Catholics in the Netherlands, were coerced to coerce poor people, to lock them in working houses.

SPEAKER_00 27:03

There's this beautiful example that I don't know whether it's actually whether it's apocryphal, but Simon Schammer writes about it. Um that is the drowning cell in the workhouse in Amsterdam, where people who were seen as notoriously lazy and wouldn't do any work were put in a cell that was filling with water and they had a pump. And now it was up to them whether they would live or not. That is, if not if it's not true, se non avere ben trovato. If it's not true, it's very well invented because it shows you the the the sort of heartless hardness of this mentality. On the one hand, very Protestant and very industrious, but on the other hand, there was no space for anything else.

SPEAKER_02 27:53

And I think the important point also in this anecdote is that this coercion was underpinned by a narrative. And the narrative was poor people are lazy. They are not poor because we dominate markets, we monopolize markets, and we take all the wealth. Now they are poor because of their own fault. They are lazy, and we've got to coerce them to work. To improve them, yes, okay, to improve them, yeah. So all these things, these forms of coercion were not present in the Netherlands, in the low countries in the 15th and 16th centuries. People had exactly broken the ties of serfdom, but they had made themselves free. There was no slavery, there was no serfdom, there was no coercion overseas. But this is something that came as the outgrowth of a slow process of first the growth of markets that at first were competitive, open and benevolent, then the acquisition of huge wealth by a few people, and then the translation of this wealth into political power and coercive power. So this is a process that took two, three centuries, it's a slow process, but at the point that economic wealth was combined with political power in the 17th centuries, that to me is the tipping point. Because then there's no way back anymore.

SPEAKER_00 29:42

Now you say it was a slow process that took two or three centuries. And funnily enough, that time is pervaded by these slow processes. You know, I've written about the Little Ice Age, and you see also societal responses to these changes in nature and to the necessary changes in the economy emerging over time. That is partly a function of the information regime of the time. Information didn't travel that fast and didn't travel that pervasively because fewer people could read. Now, fast forward a few hundred years, and you have a similar process of consolidation of economic power at the top, and of political power indeed, um, but with incredibly much faster and more pervasive information technology.

SPEAKER_02 30:36

I would say it doesn't make a very big difference, not a not a fundamental difference. It's a matter of scale. But if you can control the information that is spread. So I think uh what we observe at the moment is exactly an illustration of the same development. And the development I just described for the Low Countries has happened over the past two centuries again in what I would say the Northern Atlantic sphere. That is the United States, uh, Great Britain, uh Western Europe. And these three have grown into a new, let's say, market promoted, market-led uh development that they hold in common. And this development has generated first in the United States, but also in the UK and in Western Europe, a group of very, very wealthy individuals, a small group of very wealthy individuals, and they have conformed within the market system, but again you see first in the United States, how they then decide, and very wisely so from their perspective, to shift their wealth to the political domain to acquire political leverage. And of course, people that come then to mind are Elon Musk, for instance, and the other big IT uh tycoons. But this is a development that has a long pedigree that already started in the 20th century, at first was stopped, that is the time of the Rockefellers, etc. The big tycoons of the beginning of the 20th century, but then went on again after the Second World War. President Roosevelt, in I think around 1950, already warned for this process. That is how very wealthy people capture the political process. And this has happened under Republican presidents, under democratic presidents, likewise.

SPEAKER_00 33:12

Is it exaggerated to say that these post-war democratic societies have reconstructed their own form of an aristocracy?

SPEAKER_02 33:22

That is true. Unwillingly so.

SPEAKER_00 33:25

A class of people that you really have to be born into, because you have very little chance to ascend into it through your own work or through your own luck, and that has a disproportionate control of political processes, uh possibility to influence political decision-making that is paying different taxes, that has to obey to different laws, that has hugely different possibilities. Um it's quite an irony that we've managed to construct that in the high times of democracies and accountability.

SPEAKER_02 34:01

Right. I would fully agree. It's counterintuitive. Um, and we've also been naive in this respect. These are things that cannot happen in our democracies because we are able to vote, but it did happen, and in a very big consolidated democracy like the United States, first and foremost, but we should not be naive that things like that will not happen in Europe. I would like to add two small components to your analysis that I share. That is first, we also have a narrative in our Western democracies, that is, that we are merit-based. Merit-based. Yeah. So that is a bit comparable to the the story about the lazy people in the golden age. If you do not become wealthy, then yeah, it's because you do not have these merits, like working hard, uh, getting a good education, etc. etc. So this is also a very um effective narrative for use. And the second thing is that is very interesting because you say you do not then have the opportunity to become part of this group that is in a way become separated from ordinary people. I would also agree, and this is because another institution that is called inheritance. We value inheritance a lot, and inheritance taxes are quickly abandoned. And they are gone. We ha we did have them, first half of the 20th century, they are more or less gone. Very strange because inheritance is a key institution of the feudal order, the medieval order. When you say that your position in society is inheritable, it has nothing to do with democracy or the market. Adam Smith, the great thinker about markets, they he abhorred inheritance. It's an undeserved wealth, it's lazy wealth, but we have it.

SPEAKER_00 36:15

I just was thinking, you know, this this question of merit. I always find it entertaining on the one hand, but also actually for intellectual hygiene quite important to take these things back to their origins and which in this case are theological. I mean, this is Calvinism, this is the teaching of predestination. And you know, this may be an unexpected connection to make for many listeners, but I think it's quite an important connection to make, also if you want to understand how, for instance, the Netherlands, Switzerland, uh parts of the United States work. The idea being that there was a theological debate that if you can be a good person and that makes you go to heaven, then God is no longer free because you're effectively forcing him to take you into heaven. And the solution from some uh from Calvin and other theologians was: no, God has already before our birth decided who will go to heaven and who will not. It is already predestined, and therefore nobody can force God through living the way that they do to take him to heaven. But in order to show which people he has chosen, he gives them wealth. And therefore, the wealthy, of course, are on a different moral plane than the undeserving poor, which are obviously who are obviously there because they deserve to be poor. And it's very interesting to see how such a theological idea that seems so arcane and so silly when you when you say it like this, has a long afterlife in a secular culture where people still instinctively perceive people who are wealthy as more deserving, as meritocratic.

SPEAKER_02 38:10

You you are right. So, yeah, where where where did we end up now after two centuries, uh starting early 19th century, maybe even earlier in the United States, of market development that has been very productive. This has brought us a lot of economic growth, of course, also with ecological consequences, uh, important to mention. But economic growth and welfare, yes, but has now turned into creating, generating this group of very wealthy that is now able to capture the political domain and is able to influence the information sphere thanks to the control, and coming back to your previous point, thanks to the control that the same people have over the means of communication, of information. Where do we get our information from by way of the same communication means that are controlled, that are owned, privately owned, by the same billionaires. So that is why I said I'm a little bit pessimistic because we've seen how the economic dominance and political dominance grow together, grow together in one dominant group, one small dominant group, being able to control the rest of society both economically and politically.

SPEAKER_00 39:56

Now, Bus, I have a small problem, but it's a good problem to have. Um you have to teach, so we have limited time, and I'd love to explore this a lot a little bit more. On the other hand, you have very exciting ideas about and you're doing research about contemporary societies, and I really also wanted to dig dig into that with you. So the choice is yours. Either we pivot to now today, or we stay in the past a little bit more, and you come back for another episode in a few months, and we'll talk about uh today's societies and the research that you do there, which is one of the reasons that we are talking together, um, because it is really fascinating and really important research, and your historical research, as it were, lays the groundwork for that.

SPEAKER_01 40:51

Thank you. Thank you, Philip. I would be happy to do some.

SPEAKER_00 40:55

Well, then let's do that. I think that's a really exciting possibility because um, you know, there's a lot, I wouldn't want to just sort of spend a few, a little bit of time on your contemporary research on societies, on the good society. And, you know, I I taught you before we started recording that I want to quiz you about something called primate politics. That is also perhaps another way of thinking about how to build a good society, but that is then for the future. Um let's just let's just go back to history because you've described these processes of what are essentially modernization of societies. And modernization processes are always very rough on societies, and or at least on some members of those societies. Um whenever they happen, you can observe on the one hand technological progress, capitalist progress, but on the other hand, also a great amount of misery and a great amount of recalibrating of a society. Um one of the things that interests me very much, you've now described so much the development of markets as in literally markets where goods and services are exchanged. And that is partly because there's no yet, there's as yet no industry, because productivity is not yet scalable. We are working with water mills and windmills and animal muscle and human muscle, and you can't concentrate that productivity and make it and scale it up. So you can concentrate trade, but you can't yet concentrate labor. And that comes essentially with steam engines and with coal. And there you get a very different social constellation because in this first wave industrialization, coal-based, you need to have industry where the coal is. That gives the many people who work there a certain bargaining power, you get the rise of socialism. Um and you find this, get this transformation in the 20th century in European societies where basically the exploited proletarian workers become customers. Where you know there's a sort of understanding this works better and brings perhaps less chance for revolutions if we take our workers and make them their own customers. If they're not starving, if they have enough to buy products themselves, and if they're cut into the process, which also means a certain amount of democratization at this point. Do you think that is a completely wrong description of this development?

SPEAKER_02 43:56

No, it's not a wrong description. I would place the Emphasis a little bit differently. I and it has this has to do with the word modernization. I'm a little bit less fond of the word because it suggests a kind of a path towards something that is as it were predestined and good. Modern is good. Modern wealth, modern society. I would say this uh development as you describe it is correct, but I would tend to give more credit to place more weight on the role of again the organizational power of ordinary people. You mentioned Philip the organization within for instance within trade unions, political parties, but also farmers' associations, credit unions, cooperatives, again a wave of association which offered a counterweight against the economic plus political power of the big industrialists. So I would say so that I say I would place the emphasis a little bit differently is because I think this is not an automatic process, a natural process, but it is a process that only can be won, can be forced, as it were, by people by organizing themselves. And now I think this exactly leads us to the topic you said, Philip, to discuss the next time. What does it mean for now and for our future? Because this is something I would like to talk a little bit longer with you about, if this would be possible, and then we can maybe delve a little bit deeper into this.

SPEAKER_00 45:53

But I think I think it must be possible because I'd love to delve deeper into that. It's also something that I work on and write about. But it's particularly something that I always think is a good thing to bat about with intelligent people and to hear ideas that you haven't had yourself, or I haven't had myself yet. Let's just make a little resume of our conversation because here's something that I find very interesting and that I think you can see in this development, which is that markets are really important things for societies. They bring innovation, they bring new ideas, they bring exchange, they bring probably, I think the Dutch example, at least the historical shows, they bring tolerance. Because effectively, if you're making a contract with someone, your primary interest is not whether he believes in the right God or whether he sleeps with the right person, but whether he will fulfill his contract. So, you know, that at least the Holland of the Golden Age and perhaps the Netherlands until the late, the early 21st centuries were really marked by a very strong idea of tolerance. But there's also one thing about markets which is often underestimated, I think, and that is the fact that they have genuinely different goals from societies, quite legitimately different goals from societies. But that they are it is not their job to make people's lives better. It is not their job to make societies more cohesive or to work better as a society or to bring more social profit or more cultural diversity into societies. That's simply not what they are there for and what they're good at. And the interesting stuff only happens when societies and markets start talking to each other, or when societies perhaps decide we'd like to shape these markets in the way that they produce what we as societies need. Can you can you enlarge a little bit on this very different difficult relationship that you can already see in centuries back, but that is effectively the same mechanism? The the difficult marriage between markets and societies.

SPEAKER_02 48:21

I would agree with your summary and then expand it a little bit and say societies sometimes are naive in that they think they can let markets free and generate economic growth and then decide on using this economic growth for the benefit of society, of the people within society. That is the naive idea, because this cannot happen automatically. You have, as you say, you have as a society, as people within society, you have to shape markets, you have to tame markets, you have to make sure that the profits generated within markets are distributed for the well-being of people within society. But if you leave markets to operate on themselves, and think that there's a separation between the economic sphere dominated by markets, and the societal sphere dominated by politics, then you make a mistake. The thing is that what will happen then is that the market something we do not want, but is an endogenous result of market competition and the functioning of market, so it generates it from itself and by itself, that is the ultra-wealthy market tycoons. And even within economics, which has been uh rather I would say um I wanted to say narrow-minded, but I I would not no, I don't say that. I would say economics has for long not had have a lot of attention to this process. But within economics, it becomes ever more clear that the process of market competition almost automatically generates ultra-rich people.

SPEAKER_00 50:24

And monopolies already old Mr. Marx knew that.

SPEAKER_02 50:27

And then monopolies. And then at the process we talked about, if this wealth is translated to political power, then the market sphere enters the society, the social and political domain, and it starts to dominate society.

SPEAKER_00 50:48

Here's a very interesting thing that makes us circle back to the beginning of our conversation. In the beginning of the conversation, you were talking about free markets, and I found that very interesting because you used a very minimal definition of freedom, which was freedom from the diktat of the Lords, freedom to actually participate in a market. When we use today the idea of free markets, we mean something much bigger. We mean sort of entities that are completely divorced from states, that are left to do their own thing. And you need to let the markets do what they do best, and then they will shower their benefits on us. And I think there's a fundamental difference between these sort of minuscule free markets and the free markets in major letters, because the letter are a fiction. There has never been a free market. Market can only exist if there are laws that govern contracts, laws that are enforceable, that are made by a parliament, that are enforced by law by law courts and by the police. There need to be streets, there need to be educated people to participate in them, etc. etc. You see where this is going. I think it's a very important idea to realize these markets are made possible by a society. They're not free in that sense of having their own existence. They are free of being not interfered with actively.

SPEAKER_02 52:28

So what you describe is a clear link from society enabling markets. And now the issue is there's also it's a feedback loop. Markets generate something that feeds back into society. And the question is: will this be something good, broadly distributed well-being, or will it be something bad? Big wealth that starts to dominate politics and society. Well, and I think um this is something we will talk about later on. That is at least what I hope.

SPEAKER_00 53:04

We will. We will. I'm looking forward to that. We've beautifully brought ourselves to the end of part one, and part two will bring us into the present and perhaps a little bit into the future, especially it will bring us to possible futures because I think also a little bit theological, so much of our talk about the future is determined by dystopian ideas, by almost apocalyptic ideas, and I think that is just as much theology as the idea of free markets. So perhaps there's not an apocalypse waiting for us. Perhaps positive futures are possible. That's what we'll be talking about the next time. Bus van Babel, thank you very much for being on the Blomcast.

SPEAKER_02 53:46

Thank you, Philip. It was a pleasure.

SPEAKER_00 53:48

And that was it. That was the Blomcast about markets and societies part one. This was the historical part, the political and uh topical part will come in a few months. Stay tuned and recommend the Blomcast like Mad. Subscribe, subscribe, subscribe, and I'll see you soon.