Back to 10,000 BC… or maybe 5,000 BC.
Real money as we know it arose along with marriage and the golden rule. These innovations allowed people to live together, peacefully, and to do business with one another. Trade, savings, investment, the division of labour – these are the bedrock innovations upon which modern capitalism rests.
For the first 195,000 years of his existence, man tended to engage in win-lose transactions. Wealth could not be readily increased. There was only so much hunting territory. And only so many women. The way to get more was to take something away from someone else. One person gained. The other lost. Naturally, the loser did not hand over his possessions without a fight. Typically, we guess, he was killed… or driven off.
This is not to say that most people did not live peacefully. And not to say that there weren’t nice people who did nice things. We don’t know. We weren’t there. But it is not hard to imagine that violence was as common as flint. Any major changes in the relative wealth, status or power of men – individual or groups – had to be achieved primarily by violence. There was just no other way to get ahead.
There is nothing particularly shocking about this. Primitive man’s conduct was little different from any other predatory animal. All lived by killing. The more they killed the more ‘prosperous’ they were.
Nor was man the only predator who targeted his own kind. Recent observations show that chimpanzees, in the wild, conduct murderous ‘wars’ against neighbouring groups – organising raids and ambushes to kill rival males.
Nor did the killing stop after civilisation had been introduced. Instead, it grew more sophisticated… with large, professional armies and some of the sharpest minds put to work on the challenges of military engineering and mass homicide.
But after civilisation evolved – and it is still evolving, of course – killing needed a false mustache. It had to be disguised as ‘patriotism’… or protecting the homeland… or a fight for ‘lebensraum’… or ‘manifest destiny’… or a ‘war against terror’… or the Monroe Doctrine… or making the world ‘safe for democracy’… or some such claptrap.
Meanwhile, the rate of return from fighting declined. You could still kill – nothing in pre-history probably came close to the death toll in the 1914-1945 period. But in the new, modern world homicide didn’t pay off as it used to.
Much of the fun and profit was removed. You could kill a man. But it was unseemly to take his property as your own, his wife into concubinage and his children into slavery. Instead, the rate of return went negative. You flattened an opponent – and you found yourself responsible for the care and maintenance of the widow! You had to come up with funds to rebuild your adversary’s economy. You had to provide police protection… and poll wardens.
America’s entire imperial enterprise has been a losing proposition. The Philippines, WWI, WWII, Korea, Vietnam, Afghanistan… the net return on investment was starkly negative, though probably none so deeply in the red as the war against Iraq, estimated to cost as much as $5 trillion, with no discernible off-setting gain of any sort.
But while the rate of return from violence declined, the rate of return from cooperation increased. The win-win deal did not simply transfer wealth; it added to wealth. This is, of course, the world that Adam Smith described in his “Wealth of Nations.” By specialising in what they can do best… and trading with others… individuals and nations grow richer. They increase the world’s total wealth, not just move existing wealth around.
More to come…
for The Daily Reckoning Australia