Mediaeval manuscripts were copied onto parchment, the skin of (usually) sheep or goats scraped free of hair and bumps. Parchment turned out to be extremely durable but took a lot of time to prepare and so was re-used. Monks would wash and scrape away an original text and copy another on top. If the original ink was tenacious, traces of the original text can be deciphered. These layered manuscripts are ‘palimpsests’ – ‘scraped again’. This is one of many insights into the business of books and texts from classical times to the 15th century that I picked up from the marvellous [amazon_link id=”022407878X” target=”_blank” ]The Swerve[/amazon_link] by Stephen Greenblatt.

This image of the layered manuscript came to mind as I read on through The Swerve. The books is – on its surface layer – about a specific historical episode, the discovery in a remote German monastery by Italian papal bureaucrat (and obsessive text-hunter) Poggio Bracciolini of De Rerum Natura ([amazon_link id=”0674992008″ target=”_blank” ]On The Nature of Things[/amazon_link]) by Lucretius, a long philosophical poem that had been unread for nearly a millennium. Greenblatt argues that the subsequent recirculation of Lucretius’ long-lost book had a cumulatively decisive influence on the course of history. De Rerum Natura sets out a fundamentally modern view of the world. That matter consists of atoms, that humans are not central to the universe, that there is no life after death, that religion is a cruel delusion, that nature experiments and life as we know it is the result of that trial and error, and so on. Lucretius also argued that there are absolutely unpredictable ‘swerves’ in the course of the movement of atoms, and those minimal motions set off entirely new chains of events, with ultimately large consequences. Poggio Bracciolini’s 1417 discovery triggered one such ‘swerve’ in the course of history.

This is a cracking story, as told by Prof Greenblatt. But I see another layer underneath. In recounting the loss of scholarship, and rise of Christian dogma, through the Dark Ages, and in setting out the random sequence of events that enabled the rediscovery of knowledge a thousand years later, the book offers a cautionary tale for our own times. Writing of the destruction of Alexandria as a great centre of learning, he writes:

“Libraries, museums and schools are fragile institutions; they cannot long survive violent assaults.” (p91)

Even in Poggio’s time, he and other humanist scholars combined their passion for ancient texts with mudslinging arguments that sounds just like the nasty polemics that now take place online between bloggers purporting to be engaging in public debate:

“The extravagance and bitterness of the charges …. discloses something rotten in the inner lives of these impressively learned individuals.”  (p146)

The Papal court was so corrupt that its own employees were openly scathing about it and evidently felt a high degree of self-disgust. As for On The Nature of Things, Greenblatt notes that very many people even now would contest its arguments even as they benefit from the ample fruits of scientific discovery. The Swerve ends with a strong sense of the fragility of learning, and an implicit but urgent moral for our own rather bitter and rotten times. He writes of the poem:

“It survived because a succession of people, in a range of places and times and for reasons that seem largely accidental, encountered the material object – the papyrus or parchment or paper, with its inky marks attributed to Titus Lucretius Carus – and then sat down to make material copies of their own.” (p261)

The Swerve has been widely reviewed – see for example The Guardian, The Washington Post, The Telegraph. They are all a bit sniffy, suggesting Greenblatt is over-straining the scholarly argument to focus on one text, even if this provides a good device for a popular book. I’m neither a literary nor Renaissance scholar, so one of the hoi polloi as far as the eminent critics are concerned. So perhaps I’m reading far too much into the (sub-)text, but I enjoyed this cautionary tale more than any other history book I’ve read recently.

[amazon_image id=”022407878X” link=”true” target=”_blank” size=”medium” ]The Swerve: How the Renaissance Began[/amazon_image]

This story is

My current book is completely absorbing, a surprising statement perhaps about a book whose subject is the early 15th century discovery of a copy of an ancient document, [amazon_link id=”0140447962″ target=”_blank” ]De Rerum Natura[/amazon_link] by Lucretius. The book is [amazon_link id=”0393064476″ target=”_blank” ]The Swerve: How the World Became Modern[/amazon_link] by Stephen Greenblatt. (There seems to be a different subtitle on some editions – I have the US one.)

I find it literally difficult not to turn the page and carry on reading. Every sentence brings something interesting or surprising or thought-provoking. Among the many enjoyable nuggets is a description of how the Roman book trade worked. There was a distinction between librari, or copyists, and scribes, scribae. The latter were free citizens who were bureaucrats or personal secretaries. The former were slaves who copied books. Booksellers had shops around the Forum. Books could be mass produced by having one slave read out the text to be copied to a whole room full of librari. Even better, there was a print-on-demand option: a customer could pitch up and request a specific copy, which the copyist would duly produce.

Greenblatt adds that authors made nothing from book sales, and copying was freely done. Wealthy patrons supported writers, an arrangement that survived, he notes, until the 18th century.

[amazon_image id=”0393064476″ link=”true” target=”_blank” size=”medium” ]The Swerve: How the World Became Modern[/amazon_image]

[amazon_image id=”0140447962″ link=”true” target=”_blank” size=”medium” ]The Nature of Things (Penguin Classics)[/amazon_image]

There is a new edition of Michael Wickens’ graduate macro text, [amazon_link id=”0691152861″ target=”_blank” ]Macroeconomic Theory: A Dynamic General Equilibrium Approach[/amazon_link]. Given that the previous edition was published in 2008 and therefore written before the financial crisis, I was keen to see the update. There are two substantial new chapters, one on ‘Banks, financial intermediation and unconventional monetary policy’, and one on ‘Unemployment’, which covers search theory, efficiency wage theory and wage stickiness.

Mike Wickens is a staunch advocate of DGSE modelling, arguing that the critics who blame it somehow for the crisis are missing the point. As he puts it in the preface to this new edition, it would be a retrograde step to give up on the ambition of integrating micro and macroeconomics, and the possibility of considering the complete picture of the economy. He argues against the ad hoc tradition of time series econometrics, saying that it leads to an over-emphasis on ‘goodness of fit’ and under-emphasis on macro theory.

Who can argue with the principle that everything is connected? But I disagree with Mike. I used to be one of those time series econometricians, and when working on my PhD thesis in the early 1980s decided to introduce the economic theories of the kind set out in the Unemployment chapter here (search theory, efficiency wage models and wage/price stickiness) to meet industry-level data. It turned out that

a) the equilibrium models are simply not consistent with the data – one has to ditch either the theory or the evidence, and I’m on the side of the evidence. Therefore until we do have a better theory (and anyway, what could be more ad hoc than wage stickiness as a model?), I prefer the traditional time series approach of careful but non-theoretical investigation of the data, which Mike Wickens rejects.

b) individual sectors of the economy are so different from each other in their time series properties that it is clear any general macro theory needs to address aggregation and industry-specific factors, which are probably institutional. That seemed much too hard, and I set off on a voyage towards microeconomics instead.

People who teach macroeconomics in universities need a textbook to teach from, and I’m sure that this is one of the best around. (It’s graduate level, being moderately technical although not too hard for a student who has got her mind around the basic differential calculus, and the text explains the equations pretty clearly.) But I find it depressing that more than 20 years after my generation of graduate students found in our research that what then became the DGSE approach had no evidential foundation, and in the wake of such a dramatic macroeconomic dysfunction, this is still the approach the textbooks take. (One more reason to regret that the academic journals won’t publish negative results – there were lots of 1980s theses reporting that the equilibrium modeling approach didn’t work.)

Publishers, lots of macroeconomists would now like to teach a different kind of macro course – humbler, more eclectic, more institutional, and including some entirely novel modelling approaches. Please can they have a textbook?

[amazon_image id=”0691152861″ link=”true” target=”_blank” size=”medium” ]Macroeconomic Theory: A Dynamic General Equilibrium Approach (Second Edition)[/amazon_image]

I’ve thoroughly enjoyed reading [amazon_link id=”1780320140″ target=”_blank” ]The Global Minotaur: America, the True Origins of the Financial Crisis and the Future of the World Economy[/amazon_link] by Yanis Varoufakis. (An aside: I also quite like this trend towards long and chatty subtitles, a return to a much older style.) However, although I agree strongly with certain points the author makes, it’s essentially a conspiracy theory view of the world. At times it felt a bit like wearing a pair of glasses with slightly the wrong prescription, so that the scene is recognisable but subtly distorted. I’m not a conspiracy theorist – I believe problems are much harder to solve than that perspective implies.

You can tell Prof Varoufakis is a proper, crunchy economist. He recounts this anecdote:

“A friend of mine once complained that he could not sell his stunning holiday home. I offered him $10 to make the pedantic (but not inconsequential) point that it was not that he could not sell it, but rather that he could not sell it at a price of his choosing.”

The book also makes a lot of proper, crunchy points about the financial crisis and how it came about. He sets out the evidence on the failure of the great majority of Americans to see increases in their real incomes despite huge productivity gains – all of which went to the profit share of national income. That was unsustainable, and is in the process of no longer being sustained, although we do not yet know how the politics will play out. He describes the multiple contributory factors to the growth of toxic derivatives transactions.

The book’s central argument is that the huge transfers of capital from current account surplus countries to the United States, year after year, were the main reason for the collapse. Hence his metaphor of the Minotaur, needing constant tribute from the rest of the world. This is not exactly controversial, albeit told in a very readable way – I like an economist who can cite Classical myths and literature. Martin Wolf, for example, has made the same argument.

However, Varoufakis superimposes on the conventional economic account a political story – that the emergence of the American minotaur and the global recycling of capital was a deliberate strategic plan on the part of the US authorities. I’m really not convinced. The book does not make enough detailed reference to works of political history to lend this argument credibility. There’s one specific point on which I know it’s at least over-confident and probably wrong – a note claims Harry Dexter White was hounded to his death by false allegations that he was a Soviet spy. The hounding was real, but he almost certainly was a Soviet agent, it emerged in the Mitrokhin archive (see Christopher Andrews, [amazon_link id=”0465003109″ target=”_blank” ]The Sword and the Shield[/amazon_link] –  although this IMF paper of 2000 argues the case is unproven). A few quotations are offered (Paul Volcker referring in a 1978 speech to the ‘controlled disintegration of the world economy’). The political history is selective – Jimmy Carter, for example, does not rate a mention; we jump straight from Nixon to Reagan. And finally, my own minor brushes with the inner workings of government make the cock-up theory of history profoundly more credible than the conspiracy theory.

So in the end, although I always find it interesting to get a completely different perspective, and although I certainly think it’s useful to think about the crisis in the context of longer-term geopolitical and global economic trends, and although this is a very enjoyable read, I wouldn’t recommend it unless you want your own conspiracy theory taste buds tickled. And it’s a shame Professor Varoufakis has been devoured by his own Minotaur metaphor, because the reality is shocking enough without interpreting it in the light of a supposed 50-year conspiracy by the American elite.

[amazon_image id=”1780320140″ link=”true” target=”_blank” size=”medium” ]The Global Minotaur: America, The True Origins of the Financial Crisis and the Future of the World Economy – Economic Controversies[/amazon_image]

As his new novel [amazon_link id=”0571234607″ target=”_blank” ]Capital [/amazon_link]is published, John Lanchester has written a nice essay (‘Show Me The Money’) in this morning’s Financial Times about the curious lack of interest modern literature has in business – a striking contrast to many writers of the 19th century. In fact he names only one modern exception, Jay McInerney’s marvellous [amazon_link id=”0747584850″ target=”_blank” ]Brightness Falls[/amazon_link].

There are a few others I can think of. [amazon_link id=”0099541270″ target=”_blank” ]Bonfire of the Vanities [/amazon_link]of course. David Lodge wrote a campus novel, [amazon_link id=”0099554186″ target=”_blank” ]Nice Work[/amazon_link], that specifically addressed the chasm between the humanities and the world of business – a much greater chasm actually than between the humanities and the sciences. A while ago I wrote a post (The economist as hero) about a batch of novels about economists, notable rarities.

As Lanchester points out, genre fiction has shown more interest in the business world. He mentions Arthur Hailey, or recently Robert Harris’s terrific thriller, [amazon_link id=”0091936969″ target=”_blank” ]The Fear Index[/amazon_link]. And in a funny way, crime fiction is often quite business-focussed, albeit the illicit business of the illegal drugs trade or underworld bosses.

There’s a similar lacuna in film and TV, once you set aside criminal enterprise. [amazon_link id=”B000679PWG” target=”_blank” ]Dallas[/amazon_link] had the oil business. There was [amazon_link id=”B000JLTE6G” target=”_blank” ]The Brothers[/amazon_link]. My all-time favourite, though, was [amazon_link id=”B000MGB0XS” target=”_blank” ]The Onedin Line[/amazon_link], which was sharply focused on trade and commerce, and even better was set Up North. As for movies, [amazon_link id=”B00347A32G” target=”_blank” ]Wall Street[/amazon_link], of course, and its [amazon_link id=”B003IHUHZU” target=”_blank” ]sequel[/amazon_link]. [amazon_link id=”B00004SPVI” target=”_blank” ]Bonfire of the Vanities[/amazon_link], the movie. No doubt there are others, but they don’t leap to mind, which perhaps proves the point about their scarcity.

The Onedin Line