Friday, July 20, 2012

Credit Alchemy!

… or the Alchemical Roots of the Financial Revolution. Not just alike in opacity and aim (gold from base material whether metal or sweat), credit and alchemy are  more connected historically, than you might imagine. 
When the philosopher Baruch de Spinoza received word of a successful transmutation of lead into gold in December of 1666, he quickly sought to quell his skepticism by personally visiting the adept, and the visit left him fully convinced of the veracity of the adept’s account.
Spinoza was just one of many seventeenth century intellectual luminaries who seriously engaged with alchemical thought and practice: others included John Locke, Robert Boyle and Isaac Newton. In England, confidence in the utility of alchemy was widespread. It was therefore unsurprising that metallic transmutation was pursued as a solution to the stubborn scarcity of money problem that had severely curtailed England’s commerce for decades. 
....Numerous ambitious projects were launched; some were undoubtedly motivated by personal enrichment, while others were designed to generate a more flexible money stock. Despite many reports of successful transmutations, efforts to find the lever that would give mankind control over the money stock failed to materialize. At this point, the same social reformers who had pursued alchemical transmutations switched their attention to the promotion of a generally circulating credit currency, authoring some of the first proposals for such a currency. The similarity between alchemy and credit was far from lost on them.... 
Casualties of Credit argues that there was indeed a link between alchemy and credit, but one that goes deeper than credit money replacing alchemy as the solution to the scarcity of money problem. I suggest that the new political economy that laid the foundation for the Financial Revolution was greatly influenced by the Scientific Revolution, which included alchemical, as well as, Baconian and probabilistic thinking.
What follows is Wennerlind's "brief account of the school of political economic thought prevalent during the first half of the seventeenth century." Closing with Newton's tenure at the Mint emphatically connects Scientific and Financial Revolutions, adding context to the the modern concept of credit. Read the rest of Carl Wennerlind's Credit Alchemy! at berfrois

About the Author:
Carl Wennerlind is an Associate Professor of History at Barnard College, Columbia University. Professor Wennerlind specializes in seventeenth- and eighteenth-century Europe, with a focus on intellectual history and political economy. He is particularly interested in the historical development of money and credit, as well as attempts to theorize these phenomena. 

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