I mostly agree with
James concerning the quality of Carlos Marichal’s essay; although I expect we
would still disagree over monetary policy. The strengths here are the combination of a brief history
with a basic historiography. Some
of his weaknesses are likely related to the succinctness, in that he brings us
some histories without critiquing, for example Artur Attman’s balance of trade history.
But he also seems to miss out on
the quantity theory of money or not understand certain economic ideas. James also mentioned the possibility
for research on the decline of the Silver Peso; I wonder if the decline of
silver was in any way related to the short lived Latin Monetary Union.
Just as Marichal
misunderstands remittances, the joint introduction by Frank, Marichal and Topik
misuses ‘political economy,’ which they define as “the mix of politics and
economics.” This may derive from a
misconstruction of public choice theory.
‘Political economy,’ entails the study of economics where the country is
the base unit of analysis. Overall
this confusion dilutes the argument in the introduction. Effectively they are arguing against
‘political economy,’ by describing how histories that focus entirely on one country
tend to miss the global context.
Overall, From Silver to Cocaine is similar to The Social Life of Things, in the sense
that both books consist of non-economists trying to draw conclusions about the
interplay between culture and the market.
The difference is that From Silver
to Cocaine is largely successful, possibly because the academics writing in
The Social Life of Things tried to
write their works without any economic understanding. In some places From
Silver to Cocaine shows a lack of economic depth, for example on page nine
the authors say, “We see markets not as natural laws that impose themselves on
humans, but rather as human constructs that are determined by social and
political values and institutions.” Here they are setting up a straw man, but probably
do not realize it. Nonetheless, most
of the vignettes here are well founded and provide a much needed departure from
other works.
One way to look at the influx of silver into Europe is to compare it with a government that prints money. Printing money ultimately always leads to inflation. The government uses the newly printed money to pay off debts, and often to wage war. When individuals get the new money there has not been an increase in the goods one can purchase. Spain didn't increase its production of goods, the usual source of a rise in GDP. As silver became more and more available in Europe, prices in Europe rose. At the same time silver came into Europe new products like cacao and sugar were being imported. Europeans could use the new flows of money to purchase these new real goods. This offset inflation to some extent. But Spain's decline over the early modern period was a result of its failure to generate new internal production. Spain's windfall in silver was not as helpful as it initially might have seemed.
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