We live in a market society. You could think "Oh well, nothing special about that. Haven't there been markets all the time?"
Of course, the answer is "yes'. Exchanging and trading goods is of all ages.
Both mammoth hunters of the Russian steppes and the Cro-Magnon hunters in CentralFrance were found to have shells from the Mediterranean sea that they should have acquired through trade.
We 'll find all through history, from the Ancient Greek till the 16 century examples of trade and markets. Economy in those days looks like to have a market structure.
But there is a fundamental difference between these traditional markets and the market society we live in today.
The markets in antiquity were not the means for communities in those days to solve their fundamental economic problems.
The local market was based mainly on barter, mutual exchange of good. Money played hardly a roll there. The barter was embedded in reciprocity relations between people who knew each other.
Such markets were only complementary to the other economic activities in a subsistence economy and in that sense not the precursors of our market society.
It will be clear that the Church, who dominated life in the Middle Ages, was suspicious about trade and market.
The profession of merchant was closely related to greed and lust, which were two of the Deadly Sins. Therefore merchants were in really low regard. Clergy and nobility looked down on merchants.
In the 18th century there still was a law in France that declared that every noble person who wanted to become a merchant had to abandon his title.
From a philosophical perspective you could say that economic thinking in those days was dominated by the concept of "the just price" of a product.
Finding its origin in the "Ethica" of Aristotle (384 BC – 322 BC) through Thomas Aquinas (1225 – 1274) this concept became even part of religious thought.
"If someone would be greatly helped by something belonging to someone else, and the seller not similarly harmed by losing it, the seller must not sell for a higher price:
because the usefulness that goes to the buyer comes not from the seller, but from the buyer's needy condition." — Thomas Aquinas, Summa Theologiae,
This is really an amazing anti - market statement. , where our market is controlled by a pricing based on supply and demand and making profit.
When in the 17th century Europe developed more and more stronger national states, there also grew what you could call national markets.
The government tried to control the national economy in those days. Mercantilism, as it was called, was rejected by Britain and France by the mid-19th century.
The British Empire embraced free-trade and used its power as the financial center of the world to promote the same.
When Clobert (1665–1683), Minister of Finances in France asked the Silk merchants of Lyon what he could do to increase their production, they answered "Laissez faire!"
In other words, mind your own business, cancel all your rules and regulations that restrict trade etc. Let the market be the truth.
The idea of the just price was slowly replaced by the idea of the market price. When by eliminating "unnatural" government intervention the free market you let take its course, there will spontaneously emerge the truth.
And thus we discovered the Utopia of the Free Market.
[13:21] herman Bergson: Thank you ㋡
[13:22] herman Bergson: If you have any questions or remarks...the floor is yours
[13:22] Debbie Dee: and the truth shall set us free?
[13:22] Mick Nerido: how does lending money fit into this?
[13:23] herman Bergson: Well..that is a complex matter
[13:23] herman Bergson: first of all it has to do with early use of money....
[13:23] herman Bergson: I'll discuss that in the next lecture....
[13:23] Debbie Dee: How did we miss the fact that the strong get rich, and the poor get screwed in this utopian ideal?
[13:24] herman Bergson: but the point is....
[13:24] herman Bergson: I'll come to that Debbie..
[13:24] herman Bergson: How was money used.....
[13:24] herman Bergson: in an economy based on interchange of goods and services....
[13:25] herman Bergson: the basic Idea is that I need a pair of shoes.....but not right now....soon....
[13:25] herman Bergson: but the other fellow wants my grain....
[13:25] herman Bergson: now
[13:26] herman Bergson: The next step is that you can buy shoes for 10 shells... for instance...
[13:26] herman Bergson: then we have to bargain how much grain the other gets for 10 shells....sothat I later can buy shoes
[13:27] herman Bergson: Then the next step.....
[13:27] herman Bergson: the shells symbol for a good become a goal in themselves...
[13:27] herman Bergson: And here we come to Mick's question...
[13:28] herman Bergson: Mick needs shoes, but has nothing to offer in return....
[13:28] herman Bergson: I have 10 shells and offer then to Mick...
[13:28] herman Bergson: In return he must give me 12 shells later.....for my helping out him now
[13:29] Bejiita Imako: and so an idea of the banks was born
[13:29] herman Bergson: Believe me...this is a tricky story which we'll discuss next this day too
[13:29] Bejiita Imako: the
[13:29] herman Bergson: Yes something like that bejiita......
[13:30] herman Bergson: and all based on greed.....
[13:30] Mick Nerido: wasn't charging interest forbidden by the Church?
[13:30] Bejiita Imako: thats exactly the principle the banks use
[13:30] herman Bergson: Yes Mick as it is still by the Islam if I am not mistaken
[13:30] herman Bergson: that is the point....
[13:30] Fred123 Aiten: are you saying that paying interest is bad
[13:30] herman Bergson: Next lecture I'll discuss the birth of greed with you...
[13:31] herman Bergson: no Fred
[13:31] Mick Nerido: Only Jews in Europe could charge interest...
[13:31] herman Bergson: I dont know whether it is good or bad....
[13:31] herman Bergson: It is just part of the economic system.....making money with money.....
[13:31] Fred123 Aiten: assuming there is inflation there has to be interest
[13:32] Debbie Dee: interest is inflationary...
[13:32] Mick Nerido: perhaps interest causes inflation
[13:32] herman Bergson: I am not an economist......
[13:32] Bejiita Imako: ah
[13:33] herman Bergson: I don't even know how inflation comes in to being...
[13:33] herman Bergson: unless it is caused by people asking more money for goods and services out of greed
[13:33] Fred123 Aiten: supply & demand, as demand increases so do prices
[13:34] Bejiita Imako: and then payouts go up and so forth and the money loose their value
[13:34] herman Bergson: that happens,,,yes.....but is that a law of nature???
[13:34] Bejiita Imako: guess thats part of how it works
[13:34] herman Bergson: It is indeed ㋡
[13:34] herman Bergson: And we are tied to it by hands and feet
[13:35] herman Bergson: It is an amazing phenomenon...this financial world
[13:35] Fred123 Aiten: so there is a fixed price for everything so everyone makes the same profit
[13:35] Debbie Dee: In Zeitgeist - addendum - a movie about the banking system
[13:35] Fred123 Aiten: that reminds me of communism
[13:35] herman Bergson: Well in Atlas Shrugged by Ayn Rand they even had a funnier solution....
[13:36] Debbie Dee: they argue that for every loan, after payback the shortfall is the interest
[13:36] herman Bergson: What is the shortfall Debbie?
[13:36] Debbie Dee: so each loan creates a debt, that is not covered by increased production - causing inflation
[13:36] Debbie Dee: well, you borrow 100$, pay back 110
[13:37] herman Bergson: I see, yes, that sounds logical
[13:37] Bejiita Imako: ah
[13:37] Debbie Dee: so every transaction generates a 10$ requirement
[13:37] Mick Nerido: Why would anyone lend money if not for interest?
[13:38] Fred123 Aiten: you need compensation for the risk
[13:38] herman Bergson: Ask the Credit Card companies Mick ㋡
[13:38] herman Bergson: Yes Fred....the person who took the loan could die to early ㋡
[13:39] Fred123 Aiten: or the asset on which the loan is secured plummets in value
[13:39] herman Bergson: Like you take a life insurance when you take a mortgage, to protect your heirs from financial disaster
[13:39] Bejiita Imako: the banks want everyone to go over to card but there is some problems cause they take a fee for every transaction small buys make the stores go with loss
[13:39] Mick Nerido: A loan of money is like a lone of a horse
[13:39] Bejiita Imako: so they don't want to take cards for small buys but the baks try force them
[13:40] herman Bergson: Hello Clerisse
[13:40] Mick Nerido: u return the horse plus a little of what u got with the horse...
[13:41] Clerisse Beeswing: Sorry I am late professor
[13:41] Bejiita Imako: hi Clerisses
[13:41] herman Bergson: I think we are doing pretty well on basic economic principles ^_^
[13:41] Clerisse Beeswing: hello Bejiita
[13:41] Fred123 Aiten: what if you got nothing with the horse
[13:41] Fred123 Aiten: the lender loses
[13:41] Bejiita Imako: as the banks do here that would mean you cant sell low cost small items any longer cause the stores loose money when they sell them
[13:41] Bejiita Imako: cause of the bank fees
[13:42] Bejiita Imako: the cash less society
[13:42] herman Bergson: Taking interest is for covering risks as Fred said...
[13:43] herman Bergson: Sounds reasonable...
[13:43] herman Bergson: but there you see how complex everything has become...
[13:43] herman Bergson: for how to establish the price of that risk
[13:43] Mick Nerido: Credit ratings
[13:44] herman Bergson: Oh yes...there are a lot of systems at work...
[13:44] Mick Nerido: Fred what did u borrow my horse for?
[13:44] herman Bergson: In the Netherlands for instance the housing market has come to a complete standstill
[13:44] Fred123 Aiten: to gather wheat in from my field
[13:45] herman Bergson: because the banks calculate the risks of new mortgages in a certain way
[13:45] Mick Nerido: so u give me a little wheat..
[13:45] Fred123 Aiten: sorry, it poured with rain on the day of harvest and the entire crop was ruined
[13:45] Debbie Dee: So, why can't you give mick some wheat in return?
[13:45] Fred123 Aiten: no wheat I'm afraid
[13:45] Debbie Dee: lol
[13:46] Fred123 Aiten: mick took a risk by lending me his horse and he lost out
[13:46] Mick Nerido: u r headed for debter's prison lol
[13:46] herman Bergson: I think this was very instructive with regards to basic economical ideas.....
[13:46] Fred123 Aiten: lol
[13:47] Bejiita Imako: haha
[13:47] herman Bergson: I'd suggest to continue this discussion next Thursday when I'll discuss Aristotle on economics and greed....
[13:47] Mick Nerido: Thanks everyone gotta go
[13:47] herman Bergson: Ok Mick....
[13:47] Debbie Dee: Thanks Herman....
[13:47] herman Bergson: Class dismissed ㋡
[13:47] Bejiita Imako: some more interesting stuff
[13:47] Fred123 Aiten: thanks Herman
[13:47] Mick Nerido: rides off into the night...
[13:47] Bejiita Imako: oki time to get back to the pool party
[13:48] Debbie Dee: Food for thought...
[13:48] Bejiita Imako: cu soon
[13:48] Clerisse Beeswing: Thanks professor it was interesting sorry I am late again
[13:48] Fred123 Aiten: bye everyone
[13:48] Mick Nerido: thanks herman
[13:48] Debbie Dee: Hi Clerisse
[13:48] Clerisse Beeswing: hello Framdor
[13:49] herman Bergson: what a timing.....
[13:49] Debbie Dee: Oh well, off to bed.
[13:49] herman Bergson: Just crashed
[13:49] Debbie Dee: lucky. Bye prof :0
[13:50] herman Bergson: Ok...see you on Thursday ㋡
[13:50] Debbie Dee: yes :)
[13:50] Debbie Dee: bye annie
[13:50] Annie Brightstar: bye Debbie