Friday, July 31, 2020

Darkness that illuminated the world: Italy by Braudel

Fernand Braudel wrote several smaller (in size) books that dealt with his favorite themes of capitalism and the Mediterranean. One of them is “Out of Italy” (or in the French original, “Le modèle italien”). Neither title is ideal because it does not convey what the book is really about. It is about the leading role that the “Italian” culture, architecture, trade, banking, poetry, music and science played in Europe between 1450 and 1650. “Italian” has to be put between quotes because it includes not Italy, a political unit which of course did not exist then, but cities like Venice, Genoa, Florence, Naples, Pisa, Rome, Milan. What the French call, “le génie italien”.

About three quarters of the book is a description of an incredible efflorescence of the Italian cities that, by exporting their savoir-faire from banking to opera transformed Europe and the world. Braudel details the Italian intellectual hegemony over Europe, especially so in architecture and painting. A discussion of how the baroque “out of Italy” came to dominate Europe is minute, replete with hundreds of names (or which I think I  knew at best 10 percent), and encompasses history of Europe from England to Cyprus. One gets the feeling that Braudel is at times writing a tedious homework whose objective is to persuade every doubting Thomas of the extraordinary cultural rayonnement of Italy. It is not the part of the book that plays to Braudel’s strengths.

There are parts that, depending on one’s interests, the reader is likely to find either more or less interesting, boring or exciting. I was overwhelmed (or bored) by architectural details or developments in painting; but I found the description of the evolution of the “commedia dell’arte” fascinating. Other readers might feel exactly the reverse.

But Braudel, the economic historian, comes to his own territory only in the last fifty pages where he addresses, alas too briefly, two big questions: why did Italy decline after 1650, and what is the relationship between economic success and cultural rayonnement?

Braudel dismisses the explanation of the Italian “demise” that is based on the success of Counter-Reformation. According to this view, the battle to contain Protestantism needed all energy possessed by the Papacy and Italy, and the external success in damming the forces of Lutheranism had to be paid for by stifling the internal forces of “reason” as shown by Galileo’s trial, Giordano Bruno’s execution, and the first practice of book burning. Italy was the victim of its Catholicism. This is somewhat akin to what many autocratic regimes do: destroy domestic dissent in order to solidify its own ranks and win external victories. Braudel rejects this explanation by claiming that North European approach to free thinking was not more tolerant than that of Italian Catholics. He is similarly dismissive of Max Weber’s attempt to establish a link between Protestantism and capitalism. Capitalism existed from at least the 13th century Venice and Genoa. It was not invented by Calvinists.  

The root of the Italian “demise”, according to Braudel,  was in “decadence” where sturdier, hungrier, more hard-working, poorer Northerners, the Dutch, and later the British, encroached first on the Italian city-states’ monopoly of the Mediterranean trade and afterwards displaced Italian traders from the Atlantic. In Braudel’s reading of history, this was not a “natural” displacement driven by Northern European better geographical position vis-à-vis the Americas. One could travel from Genoa to the Americas as easily as from Amsterdam. But the Dutch outplayed the Italians and the Spanish, especially after they obtained the control of the shipping routes between the Mediterranean and the North Sea, in the same way in which the Italians outplayed the Arabs earlier. Arabs too were richer, but grew conceited and self-absorbed, and their trading posts in the Mediterranean were taken one by one by the Italian city-states. Similar was the fate of Italy five centuries later at the hands of North Europeans.

As they were losing a shipping battle, the Italian city-states were also losing the industrial battle: “What happened to Italy was a long, catastrophic industrial crisis followed on the heels of a long, catastrophic shipping crisis” (p. 266). But Italian bourgeoisie was wealthy: what did they do? They invested: “money was taken out of national circuits to be invested in whatever foreign government loans looked promising” and in the agricultural production in nearby lands. Rich Italians became gentlemen farmers and rentiers, no longer merchants and industrialists. As Bas van Bavel has recently argued in “The Invisible Hand?” (reviewed here), the financialization of the economy spelled the doom of Italy. It was wealthy but it was producing less and less, its fleets shrinking, its industrial output declining.

Braudel asks the question: suppose that an economist from the 21st century with full knowledge of what happened between 1650 and now had to advise Italian city-states of the 17th century what to do. He could have never convinced “the Venetian patricians to go back into shipping when they were making profits of 100 percent of their agricultural land” and similarly on lending. “The learned [economic] doctor would have been treated to the gales of laughter” (p. 267).

Similarities with today’s heavily financialized and “outsourced” economies of the Northern America and Western Europe are glaring. Braudel does not mention them, perhaps out of good taste, or perhaps because the book was written in the early 1980s when the roulette economy of the West was not as prominent as today.

How about Braudel’s original theme of cultural influence and intellectual grandeur? He sees them as being spawned by economic decadence. The stages of economic decline produce cultural flowering.  As his last sentence in the book says, “night fell at least twice in Italy, first in about 1450, then again in about 1600. The sky of the whole of Europe was lit by it.”

Friday, July 10, 2020

Is citizenship just a rent?

The modern idea of citizenship, after the French Revolution, is based on two pillars:  one is voluntary or compulsive participation in the political life of a community, the other is the physical “grounding” in that political community. The participation means, in democratic settings, that a citizen has a voice, the right to air opinions, to vote for those who represent or lead him, and to be himself elected. In non-democratic or not fully democratic settings, political participation is often not only desirable but is required: citizens of the Soviet Union, Nazi Germany, Francoist Spain were encouraged, or where necessary compelled, to take part in mass public celebrations of the state whose citizens they were. “Groundness” means that citizens live in own countries (as their political participation in the affairs of the country implies), earn most of their income in own country, and spend most of it domestically.  

The growth of the welfare state in the second half of the 20th century, in the West and in the communist countries of Eastern Europe, has added another facet to citizenship: the right to a number of benefits, from pensions to unemployment benefits that are available only to contributors (i.e. citizens who work in their countries) or to citizens as such without any contributory quid pro quo (as, for example, family allowances or social assistance). The existence of the welfare state in a world of enormous income differences between the countries has drawn a wedge between citizens of rich countries that enjoy these benefits and citizens of poor countries that do not. It has created a “citizenship rent” for those who are lucky to be citizens of the rich countries; and “citizenship penalty” for others. Two otherwise  identical citizens of France and Mali will have entirely different sets of income-generating rights which stem from their citizenships alone.

Moreover, the citizenship premium, as I show most recently in “Capitalism Alone”, carries over to other incomes: our French and Malian citizens can be equally educated, experienced, and hard-working, but their wages will differ by a factor of 5 to 1, or even more, simply because one of them works in a rich and another in a poor country. In fact, around 60% of our lifetime incomes is determined by country of citizenship.

In a globalized world composed of countries with vastly unequal mean incomes citizenship has thus acquired an enormous, and well appreciated, economic value. This is evident not only from the examples listed above but from the freedom to travel without visa or any other permission (luxury of the rich countries, as Zygmunt Bauman called it), support that one can expect from his country offices abroad and the like.

But while the citizenship rent element has been reinforced in the modern globalized capitalism, the other two pillars of citizenship (political participation and groundness) have been radically weakened.  Citizenship has thus been effectively reduced to financial rent alone.

Groundness is sill common among many citizens. But its importance fades as people move permanently or for long periods of time to other countries: in some cases they migrate to richer countries to make more money there (as migrants from Africa to Europe, or from Mexico to the United States do), and in other cases, migrants from rich counties move to other, also rich countries, as Americans do when they move to France (the latter category is often adorned with the title of “expatriates”).  

As they move to other countries they work there, make income there, spend money there, and their financial sustenance gets “delinked” from their country of citizenship. All sources of income can become degrounded: both those of labor and capital. To see how ultimately the  “degrounding” will work in a fully globalized world, assume an elderly American expatriate who lives in France. A part of his income may come from the work he does in France; another part, in the form of US social security, may come from the US. But income behind that  social security check may be earned from US investments in China. Thus both physically and in terms of the origin of his income, the American citizen will be “degrounded”. Or take a Philippine citizen who works in the US. Similarly, his income would be earned in a foreign country. If he is eligible for some citizenship-related income as a Philippine, money earned to pay such benefits may in effect be earned by other Philippine citizens working abroad, remitted back to their families in the Philippines, and then taxed by the government.

Fully globalized country may be such that its capital income comes from investments in foreign lands, its labor income from remittances sent by its workers abroad, and most of its citizens be living abroad—and yet receiving social and other benefits of citizenship.

Political participation in modern capitalism also wanes. With a much more competitive society where one’s success is measured in terms of economic power (wealth), people do not have enough free time or interest to be the idealized citizens concerned with the political life of their city or nation. Hard work for money takes most of their time. The rest of the waking time is taken by social media, entertainment, family chores, or meetings with friends. Under normal circumstances, time that they can devote to political issues is minimal. Electoral turnouts in most developed democracies, by themselves a minimal requirement of participation, cheap in effort and time, confirm that. They are low, especially so among the youth. American presidential elections where people elect a person with quasi regal powers have not once brought to the polling stations 60% of the electorate in the past half-century. Elections for the EU parliament manage to bestir about one-half of the eligible voters. This is not the product of apathy only, but of busyness.

The decline in political participation and increasing degroudness imply that the two modern-era pillars of citizenship have largely been eroded. The only remaining meaning of citizenship is the stream of income and advantages that one receives if lucky to have been born or become citizen of a rich nation. Citizenship has become an “ideal” category, a right devoid from the need to be physically present in own country or to be interested in it: it  physically incarnated in a script, a passport or in an ID; it is a simple physical proof that one can aspire to its manifold advantages.

Countries that sell citizenship, from EU members to the small Caribbean nations, do not make a mistake. Nor do their purchasers do. No one expects the new citizens to either live much of their time in their new countries (Chinese and Russians who buy Portuguese citizenship are required to spend there one week per year), nor to participate in its social life. Not even to know the language, much less history. Countries are exchanging an ideal category (citizenship) that provides a set of rights over time against an amount of money now, equal to the net present value of the bundle of these future advantages.

The fact that citizenship has become a Polanyian “fictitious commodity” has several implications that I discuss more fully in “Capitalism, Alone”. First, we must move from the binary version of citizen-no citizens by introducing more intermediary categories distinguished by the amounts of rights and duties they provide (as indeed is already happening with permanent residents who are not fully-fledged citizens). Second, migration can be seen as one of these intermediate positions that do not automatically lead to full citizenship. Third, we should reconsider the wisdom of giving electoral rights to people who do not live in a country for whose leaders they vote, and who hence neither benefit nor suffer from the choices they make. But all of these are topics for another piece.