Archive for October 6th, 2017

Merchants and the Origins of Capitalism

October 6, 2017

Fascinating paper by Sophus A. Reinert and Robert Fredona. They point how the history of capitalism is defined by a sedentary merchants who managed businesses from their homes:

N.S.B. Gras, the father of Business History in the United States, argued that the era of mercantile capitalism was defined by the figure of the “sedentary merchant,” who managed his business from home, using correspondence and intermediaries, in contrast to the earlier “traveling merchant,” who accompanied his own goods to trade fairs. Taking this concept as its point of departure, this essay focuses on the predominantly Italian merchants who controlled the long‐distance East‐West trade of the Mediterranean during the Middle Ages and Renaissance.  

Until the opening of the Atlantic trade, the Mediterranean was Europe’s most important commercial zone and its trade enriched European civilization and its merchants developed the most important premodern mercantile innovations, from maritime insurance contracts and partnership agreements to the bill of exchange and double‐entry bookkeeping.

Emerging from literate and numerate cultures, these merchants left behind an abundance of records that allows us to understand how their companies, especially the largest of them, were organized and managed. These techniques can also be put in the context of premodern attitudes toward commerce and the era’s commercial‐political relations. The Commercial Revolution anticipated the Industrial Revolution by over half a millennium and laid the groundwork for today’s world of global business.  


Full form of CASH: Common Asset Smartly Handled?

October 6, 2017

In a conference on future of cash, one of the speakers Günter Ernst of GSA gives a full form of Cash:

Cash – C.ommon A.sset S.martly H.andled

  • Digitalisation influences the use of cash and changing volumes and values require higher efficiency.
  • New technologies enable higher productivity and security.
  • End-to-end processes in the cash cycle improve the business case of cash usage.

🙂 Interesting to see Cash expanded as smart…

There are  summaries of the other presentations as well. Quite interesting …

What can the governments do to destroy Bitcoin/digital currencies?

October 6, 2017

One just read this speech by IMF head Ms Lagarde who surprisingly supported digital currencies. Surprising because IMF was started as this global central bank which could provide emergency funds to countries in need.


Geofinance: the impact of geography on the geometry of finance….

October 6, 2017

Interesting speech by Sam Woods of Bank of England:

Supervisors of the world’s leading international financial centre have always had to juggle domestic and global risks. In between them, however, is a dynamic which is fundamental to retail and wholesale finance in the modern economy. It is a dynamic at play in the cliff-edge risks from Brexit and the differences of view between countries over Basel 3 finalisation.

I am thinking of the impact of borders, location and distance on the shape of banks, insurers and financial regulation. Put simply: the impact of geography on the geometry of finance, a dynamic we might call geofinance.

Hmm…Geofinance…a new term…

Here, we try and figure whether banks have to be regulated by the local regulator or not. What is the periphery of financial regulation?


Mahabharat continues to be the major reference in India’s political economy,,,

October 6, 2017

This blog often talks about the importance of history in figuring things around us. How key historic epics/events continue to shape country’s destinies until today is quite amazing.

In India’s context, Mahabharata plays such a role. It is amazing how it continues to remain so relevant in Indian life. The fact that lessons of Gita were a part of the epic just tells you its grand scale. Same is the case with Ramayana too but it does not have as many characters as Ramayana and is seen as too idealistic for today’s world. Mahabharata on the other hand has virtually everything and continues to resemble modern life amazingly. Thus, it is quite common to see people referring to events and incidents from the Mahabharata.

This it was not surprising to see Mahabharata characters entering Indian discourse yet again.

There has been fair bit of back and forth on Indian economy. Some say it is headed down and disagree over measures needed. Others inclusing government say all is well and nothing much is needed.

This debate  was particularly livened when the ruling party’s Yashwant Sinha spoke against the ailing economy. It led to several counters from the government and other experts. But most important was the Prime Minister himself who chose to speak on Indian economy in a recent talk.

Interestingly, he referred to Shalya, a character from Mahabharata who spread pessimism in the Kaurava camp:


Missed Opportunities: The Economic History of Latin America

October 6, 2017

There is a new book on Latin America by Beatriz Armendáriz and Felipe Larraín.

IMF interviews Prof Larrain. What sums up the missed opportunities in the region?

Latin America has vast natural resources and a talented population. Why has the region remained so poor compared with its northern neighbors?

Our book highlights five theories of why Latin America has lagged behind, some of which date back to the region’s colonial origins.

The first is geography. Over 70 percent of Latin America is in the tropics, which makes everything more difficult. The region is more exposed to disease—malaria, yellow fever, dengue, cholera, and others—and it is far from key markets.

Second, Latin America was exposed to civil law tradition after independence, as opposed to common law. A common law system—where judges have a more active role—is more conducive to economic growth and development.

Third is large-scale agricultural plantations in Latin America. In the North, there was more mixed farming centered on grains and livestock, and smaller units, which led to more democratic political institutions, a more robust protection of property rights, and a larger middle class.

Fourth, the region’s institutional legacy is a part of the story too, where institutional arrangements in the South are weaker as opposed to the North.

And finally, ethno-linguistic and cultural fragmentation in Latin America, which goes back to the colonial periods, have also held back the region, although the influence of this factor is much less important than in Africa, for example.

Hmm… How these factors continue to impact the region..


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