Michael Hudson: Some myths about the origins of the corporation

Hi, Yves. This topic of the origins of corporations is more important than it seems. One of the ways neoliberals justify their policy positions is through various “natural” stories that commerce and the use of money arose naturally through private interactions. They imply that this alleged evolution means that unconstrained transactions are therefore virtuous. This post shows that in fact governments in ancient societies, i.e. palace departments, created money and private property rights.

Michael Hudson is an American economist, professor of economics at the University of Missouri-Kansas City, and a research fellow at the Levy Institute for Economics at Bard College. He is a former Wall Street analyst, political consultant, commentator, and journalist. For more on Hudson’s economic history, see At the ObservatoryProduced by Human Bridge

If a conference on early entrepreneurship had taken place in the early 20th century, most of the participants would have assumed that traders operated independently, bartering at prices determined by market equilibrium that naturally established itself in response to fluctuating supply and demand. According to Austrian economist Carl Menger, money arose when individuals and merchants engaged in bartering preferred silver and copper as a convenient means of payment, a store of value, and a standard by which to measure other prices. History does not support this individualistic scenario when it comes to how commercial practices developed in the areas of trade, money and credit, interest, and pricing. Money, credit, pricing, and investments aimed at making profits, charging interest, creating real estate markets, and even creating primitive bond markets (for temple priests) did not naturally arise as “barter and exchange” between individuals, but first appeared in the temples and palaces of Sumer and Babylonia.

The first mints were temples

From 3rd millennium Mesopotamia through antiquity, the casting of precious metals of specific purities was carried out by temples rather than by private suppliers. money It originates from the Temple of Juno Moneta in Rome, where Roman coins were minted. Monetized silver was part of a Near Eastern pricing system developed by large institutions to establish stable rates for financial management and future planning. Major price rates (including interest rates) were kept in fractions for ease of calculation.⁽¹⁾.

The palace forgave excessive debts

Far from discouraging enterprise, these controlled prices provided a stable environment in which it could flourish. The palace estimated the normal returns on the fields and other assets it rented out, and left it to the managers to either make a profit or take a loss when bad weather or other risks materialized. In such cases, any shortfall became a liability. But when losses grew large enough to threaten the system, the palace would waive the arrears on the farmland, allowing the entrepreneurial contractors in the palace economy (including the yellwomen) to start afresh with a clean slate. The aim was to keep them in business, not to ruin them.

Flexible pricing beyond the palace

There was no conflict between the large public authorities that controlled prices and commercial enterprises, but a symbiotic relationship. Mario Liverani⁽²⁾ Pricing is controlled by temples and palaces. Tamcalm Merchants engaged in foreign trade “had a role limited to initiation and completion only: the trading agents obtained silver and processed goods (mainly metals and textiles) from the central agents and had to bring back equivalent foreign products or raw materials six months or a year later. The economic balance between the central agents and the trading agents could only be regulated by fixed exchange values. However, the activities of merchants after they left the palace were quite different: they could trade freely, taking advantage of the different prices of different items in different countries, and in their free time they could use their funds for financial activities (loans, etc.) and make the greatest possible personal profits.”

Mesopotamian institutions encouraged the development of commerce

A century ago, the economic role of the state was thought to be limited to oppressive taxation and excessive regulation of markets, hindering commercial activity. That was the view of Michael Rostovtsev.⁽³⁾ He portrayed the Roman economy as oppressing the middle class. But A.H.M. Jones^(Four) pointed out that this is how antiquity ended, not how it began. Merchants and entrepreneurs first appeared in association with Mesopotamian temples and palaces. Mesopotamian institutions and religious values, rather than being autocratic and economically oppressive, tolerated the commercial leap that would eventually be thwarted in Greece and Rome. Archaeology confirms that elements of “modern” enterprise were already present, even dominant, in Mesopotamia in the 3rd millennium BC, and that the institutional context was conducive to long-term growth. As populations grew and material conditions of life improved, commerce expanded and wealth was built. What has surprised many observers, however, is how successful, fluid, and stable economic organization was as one goes back in time.

Ex Oriente Luxe

The growing awareness that the nature of the pursuit of gain had become economically predatory promoted a more sociological view of exchange and property in Greece and Rome (e.g., the French structuralist Leslie Kirk⁽⁵⁾ Sitta von Reden,⁽⁶⁾ and a more “economic” post-Polannian view of Mesopotamia and its Near Eastern neighbours. Morris and Manning⁽⁷⁾ Examine how approaches that have long separated Near Eastern and Mediterranean developments have been replaced by a more integrated view^{(8) (9)} Mythology, religion,^(Ten),(11) And a work of art.⁽¹²⁾ motto Exorientallux It is now thought to apply not only to art, culture, and religion but also to commercial practices.

Individualism was a symptom of the decline of the West.

For a century, Near Eastern developments were considered to be outside the Western continuum, defined as beginning with Ancient Greece around 750 BC. However, the origins of commercial practices are now seen to date back to Mesopotamian developments 2000 years before antiquity. But what was really new and “fresh” in the Mediterranean lands arose mainly from the fact that the Bronze Age world had collapsed in the Devastation that occurred around 1200 BC. The commercial and debt practices that Syrian and Phoenician merchants brought to the Aegean and southern Italy around the 8th century BC were adopted in the small-scale local environments without public institutions found throughout the Near East. Trade and usury enriched the chiefs much more than in the Near East, where temples and other public institutions were systematically separated for the mediation of economic surpluses, especially for the provision of credit. Since ancient societies emerged in this non-public and in fact oligarchic context, Western It has become synonymous with the private sector and individualism.

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⁽¹⁾ “Opening of an Old Babylonian Palace.” The interdependence of institutions and private entrepreneurs: Proceedings of the second MOS symposium (Leiden 1998).edited by ACVM Bongener, 1998, pp. 153-83; “Royal Decrees in the Babylonian Period – Structural Background.” Debt and Economic Recovery in the Ancient Near Eastedited by Michael Hudson and Mark van de Miloop, 2002, pp. 139-162.

⁽²⁾ “The Near East: The Bronze Age” Ancient Economies: Evidence and Modelsedited by J. G. Manning and Ian Morris, 2005, pp. 53-54.

⁽³⁾ Social and economic history of the Roman Empire1926.

^(Four) The Late Roman Empire, 284-610: A Social, Economic, and Administrative Overview1964.

⁽⁵⁾ Coins, Bodies, Games, and Money: The Politics of Meaning in Ancient Greece1999.

⁽⁶⁾ Exchanges in Ancient Greece1995.

⁽⁷⁾ Ancient Economies: Evidence and Modelsedited by J. G. Manning and Ian Morris, 2005.

⁽⁸⁾ The Mediterranean and the Mediterranean World under Philip II Fernand Braudel (author), Sian Reynolds (translator), 1972.

⁽⁹⁾ “Did the Phoenicians introduce the concept of interest to Greece and Italy? If so, when?” Greece between East and Westeditors: Gunter Kopcke and I. Tokumaru, pp. 128–143.

^(Ten) Walter Bürkert, The Oriental Period in Greek Religion and Literature (1984).

⁽¹¹⁾ The Eastern Face of Helicon: West Asian Elements in Greek Poetry and Myth M. L. West, 1997.

⁽¹²⁾ Eastern and Western Greece: 10th to 8th centuries BC (G.) Kopcke and (I.) Tokumaru, eds., 1992.