Tuesday, November 9, 2010

Money, finance and an unexpected link in history

When you learn about finance, you do not exactly expect to find out new data about Florence in the Renaissance or about the Dutch revolt against the Spanish in the 16th century. But it just happened to me.

This morning I was continuing my listening in on the Berkeley Lecture series Geography C110. As I have written before, this is a course in economics with excursions in to history, geography and politics. For all who tend to shy away from economics - this might just be the course that is going to do it for you. And for all those who like geography; eventually this is geography, but there is a lot of economics to take. (feed) And then there is history...

The first few lectures had a lot of history and after that, we sort of reached the late modern era and the lecturer, Professor Walker, spent more time in laying out the economics and their geography as we experience them today. He systematically went through the economics of areas, from global capitalism all the way down to city economies and discussed production and labor and then reached finance. And finance is not the easiest part of the course, as money is eventually abstract and the mechanics of it are often counterintuitive and the terminologies inconsistent.

So you might as well skip finance. However, now that we live in a world with a financial melt-down, the interest is renewed and some of the shady mechanics are more self-explanatory as we have seen them in action (and fail). And where did this strange abstract world come from? Walker explains how it is thoroughly modern, but finds its roots in late medieval Europe. And then in lecture 19 throws a couple of statements about history that are worth pondering: The Medici family started out as bankers and financed the Florence government and this is how they got to control the city themselves. And: the bankers from the Netherlands (this includes nowadays Belgium) financed the Habsburgs and when the Habsburgs defaulted, the Dutch revolted.

The bit about the Dutch Revolt seems a bit off. I have read and listened to quite a lot about the Revolt and never found this bit. However, I wouldn't rule out that if the Habsburgs defaulted to banks in Antwerp this would have added to the grievances.
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