The Birth of Western Economy, Robert Latouche
Based on this book by Robert Latouche, I have previously written about the fall of Rome and thebeginnings of medieval society. Latouche next moves on to various aspects of the decentralized monetary and economic system of Merovingian society (described as “anarchy” by Latouche), and the transition toward centralization attempted by Charlemagne – a transition that, fortunately for those who favor decentralization, did not last for long after his death.
This story is a shining light on a successful period of anarchy – not Rothbard’s anarchy, but certainly the absence of a centralized state acting as sovereign. This possibility was realized as Rome fell, and was reborn after the attempts toward centralization of Charlemagne and the Carolingian Empire.
As previously noted, Latouche is favorable toward state-centralization – both regarding Rome and later Charlemagne. Although I disagree with his conclusions, I find his approach helpful; he has clearly distinguished periods of state-governance from decentralized governance. In any case, his factual observations of the economic landscape are priceless.
In the Merovingian period that came after Rome and that preceded Charlemagne, Latouche notes changes in the monetary systems. During this time, money for daily use moved from gold toward silver:
The theory that the Merovingians kept to the gold standard and that the Carolingians replaced it by an exclusively silver coinage is incorrect and altogether too flattering to the Merovingians. The reality was less simple.
It seems to me that the issue has nothing to do with flattery, but recognition of market forces at work in a less developed economy, as was the case after Rome. During Merovingian time, silver became more prominent as the money metal. Most important, this was not by decree of any king – the Merovingian currency was not controlled by public authorities. Latouche describes this lack of central control as negligence – in reality it was something more like an open market.
Through the negligence of the kings, coining in the Frankish kingdom became the monopoly of coiners.
There were multiple coiners; how could this be a monopoly? It is the fact that coinage was by non-state actors that concerns the author. Latouche recognizes no government authority outside of state authority. The Merovingian period was a time of individual and community governance, based on sacred oath and with the Church as a constant backdrop. There was government; it just wasn’t government by a state.
After listing the several areas where the Merovingian kings did not exercise sovereign authority, instead granting “the privilege of immunity” to “influential laymen,” the author laments…
Never in our history has the conception of the state known so complete an eclipse. Numerous churches obtained privileges of immunity; many enjoyed that of minting money….
That first sentence brings such a smile to my face! Latouche goes on to identify several churches that held such a privilege of immunity.
What is meant by “immunity”? Gary North recently wrote on this subject:
The issue is immunity from state sovereignty. A declaration of such immunity is a declaration of legitimate sovereignty.
North cites Robert Nisbet:
So-called diplomatic immunities are but the last manifestation of a larger complex of immunities which once involved a large number of internal religious, economic, and kinship authorities.
This was a normal feature of political life in the Middle Ages. Again, from North:
Which rights were protected by medieval institutions, and which were not? Remember, “rights” mean “legal immunities from governments.” It means the right of self-government.
The people of the Early Middle Ages before and after Charlemagne recognized and enjoyed such rights.
Returning to Latouche: he decries the varying weights and quality of the coinage produced by these multiple Churches – but isn’t this an expected and natural process of a market? Multiple producers compete on price and quality. Further, isn’t this to be expected in a market that, at the time, was quite local – with little need for commonality from region to region? Eventually, it seems to me, the market would move naturally toward commonality for the sake of efficiency as markets developed.
The author describes the evolution from gold coinage to silver that occurred under the Merovingians:
Under the Merovingians, silver was minted earlier and on a larger scale than has previously been thought; nor was it the shortage of gold which finally established its supremacy, but the preferences of the northern peoples and the requirements of internal trade.
Gold was hoarded. Given the relatively low value of the traded goods, this would seem to be reasonable. Silver sufficed for the trade of the time. It appears the transition was driven by the market.
This liking for silver coinage marks an evolution which was taking place during the late seventh century. The gold solidus and even thetriens were on the way out.
Charlemagne and the Push Toward Centralization
Charlemagne, unlike his Merovingian predecessors, had a powerful desire to unite an empire. The author praises the centralizing and law-giving activities of the Carolingian kings.
Pepin the Short, then Charlemagne, and their counselors, must be given credit for their efforts to reform the economy at its roots by starting with a purification of the coinage. …the Carolingian monetary system…was monometallic, the silver denier, of good weight and alloy…. This reform was not empirical but systematic and the rulers imposed it on their peoples by a series of hard-hitting Capitularies.
The system was “imposed” by “hard-hitting Capitularies.” This seems rather coercive….
The basic and most vital feature of these reforms was the generalization of the silver standard which was made compulsory.
It is interesting to note: Charlemagne attempted to take advantage of the consolidation toward silver that was already occurring naturally in the marketplace. The market was moving in this direction anyway:
In actual fact things had been moving in that direction for more than a century past, for the percentage of gold in the solidus and thetriens had become so insignificant that these coins were discredited and almost wholly supplanted in circulation by the Merovingian denier.
The state only took over what the market had previously created.
Charlemagne’s great merit lay in legalizing the existing situation and giving it his blessing….
The market seemed to be doing just fine, without the “blessing” of a usurper. What glory can be rightly claimed in a transition that was already occurring? The market was not developed sufficiently to require gold as money.
…it would have been absurd to put large quantities, or even quite a small amount, of gold into circulation to supply markets which were essentially agrarian and handled only modest transactions.
But of course the market figured this out already. Charlemagne’s coercion in the coin was not necessary, at least not for market reasons.
The Carolingians strove to maintain its legal weight and percentage of pure silver in order to prevent it from becoming a mere token money, a coinage of inflation, and took vigorous, even unpopular, steps to impose it on their subjects and encourage its circulation.
If the Carolingian coin was superior (not “mere token money”), why did Charlemagne have to “impose” this on the people? Why was the coinage unpopular? Is it possible that these people of the Middle Ages understood the danger of sovereign control over the coin?
Further Capitularies were issued in the period 794 to 864 (extending past Charlemagne’s reign); these forced subjects to accept payment in the state’s coinage – legal tender laws. However, offenders were numerous, as evidenced by the multitude of instructions given to the public in hope of breaking down the resistance to the coinage. Of course, state violence for violations was introduced:
If the offender was a free man, the fine was 15 solidi; the fine was a beating if the offender was a serf.
Nothing changes – the powerful get a slap on the wrist, the meek get many slaps.
This lamentable reversion [after the demise of the Carolingian Empire] to the mistakes of the Merovingian era were all the easier since both Charlemagne, with all his prestige, and also his immediate successors, had great difficulty in getting these currency reforms accepted. The unpopularity of the measures showed itself in an obdurate suspicion and refusal to accept the new coins put into circulation.
But if the measures were so great, why weren’t these embraced? Why would the people choose to revert to so-called “mistakes”? Were they merely ignorant barbarians? Or did they know to hide from the state?
Charlemagne was determined to keep the monopoly of coining exclusively for the Palace Mint and right up to his death persisted in his resolve…. He failed in his aim, and his successors were too weak to follow up his plan successfully.
A market-derived and accepted system will survive any one individual’s demise – the market is far greater than any one man. It does not require force. It does not require strong political leaders. It merely requires a market.
More Central Planning
Charlemagne’s attempts at control through coercion were not limited to the coin. In 789, Charlemagne published the Admonitia generalis, of which Clause 81 offers further economic controls:
It concerns the Sabbath rest and gives a list of menial tasks forbidden on Sundays….Nor are women to do any work connected with cloth….The list is significant….
He was determined to have an inventory of the assets owned by the many great estates (the better to tax you with, my dear):
On several occasions he ordered an inventory to be made of these estates, and the Capitulary known as the Brevium exempla, only a fragment of which has been preserved, shows us how personal property and real estate were to be catalogued.
Further centralization and control was attempted in other areas of economic life:
‘Throughout the whole of the realm’ [Charlemagne] wrote, ‘weights and measures must be identical and accurate.’
The aim was ambitious; different provinces had different measures. Why would uniformity across an entire empire be necessary in an agrarian, localized economy? The author provides his answer:
…the human reason which lay behind this decree [was] to prevent those who sold from cheating or robbing those who bought.
Is this really so? The economy was primarily local – everyone knew each other in the local trade, neighbor knew neighbor. If an individual cheated, sanction was sure to follow, up to and including expulsion from the community – tantamount to a death warrant in that society.
It is doubtful Charlemagne was concerned about cheating. It is more likely he wanted uniformity to make taxing easier. In any case, the people did not easily submit.
Wait, There is More
For those who call for a banning of interest, you will find in Charlemagne a hero:
Christian and even clerical inspiration are plainly discernible in the rigorous measures taken by Charlemagne and his successors to forbid the lending of money at interest. It had been practiced in the Merovingian period.
The banning of interest: one of many monetary crank theories only possible through the power of state coercion. The Biblical basis for the banning of interest was not (and most certainly is not) a settled matter; Gary North, to name the one person who has more thoroughly studied the Bible for economic principles, proposes no such ban (see chapter 7). The Bishop of Verdun, apparently, saw no problem with interest either:
This bishop regarded the payment of interest as the natural accomplishment of the loan, and as an ordinary transaction which was obviously fair and above-board.
The Church forbade clerics to engage in the practice, however Charlemagne was the first ruler to extend the practice to laymen. Such a change could only be implement by degrees: first that the ban should apply to laymen, but with no punishment attached; then, a short time later, and in a time of famine, the term usury was defined in significant detail, through the Capitulary of Nijmegen in 806; and further tightened the clauses in a famine of 809. Finally, in an undated Capitulary (presumably written after these others), a heavy fine is outlined:
‘We wish no one’, he declares, ‘to exact any further interest in any circumstance whatever. Anyone who does so will be made to pay the fine laid down for breaking the ban.’ This fine amounted to 60 salidi.
While not a good reason to disallow a private transaction for charging interest, it should be kept in mind that in the time of the Early Middle Ages, there was no heavy industry or large-scale trade – lending was not typically for the purpose of large capital formation. Primarily, lending occurred in the need of purchasing current foodstuffs – the borrower was starving and without alternatives for survival.
In addition to making illegal the means by which a starving man might be able to acquire foodstuffs, Charlemagne enacted price controls in an attempt to keep prices at lower levels (note, price controls came coincident with the issue of his new coins):
That was why, at the Synod of Frankfurt in 794, Charlemagne, who had just issued his new deniers, fixed in agreement with the Fathers of the Council the maximum retail price for the main corn crops.
These price controls covered crops such as oats, barley, rye, and wheat – eventually on bread as well. Charlemagne, in an act described as kindness and as setting a good example, sold his crop at prices even lower than the maximum price. Of course, another way to look at this is that he was bankrupting the competition, something he could afford to do given the control he had over the economy….
The price controls were in place both in ‘normal’ times and in times of famine. You can imagine the result.
On the pretense of ensuring that transactions were carried out in an honest manner, Charlemagne, in the Capitulary of 803…
…forbids the sale of gold vases, silver, slaves, pearls, horses, and other animals at night-time and insists on such purchases being made in public.
One might view this as an attempt to kill the black (night-time) market.
It’s ALWAYS About War
The author suggests the reason behind Charlemagne’s actions – the Church!
In the sphere of economics, as in all others, his line of conduct was determined by the Holy Scripture and of the Church Fathers…. It would therefore be pointless to look for an original economic or political programme in his Capitularies.
But would it be “pointless” to look beyond the Church for a reason behind Charlemagne’s actions? Well, no; it isn’t pointless. The author himself spills the beans, making irrelevant his comment about being pointless to look for a program:
Side by side with the requirements of Christian morality went military necessities.
Whoops! Did the author really mean to write this? Where’s Laurence Vance? The church and the military, side by side!
The Carolingian economy was a war economy. Each year of Charlemagne’s reign was marked by a campaign the preparations for which made heavy demands on the imperial economy…. It is interesting to note that many of the Capitularies were introduced in the Spring, obviously with an eye to the summer campaign, and they were intended partly to put the inhabitants of the Empire into a state of readiness.
North, quoting Nisbet:
If there is any single origin of the institutional State, it is in the circumstances and relationships of war. The connection between kinship and family, between religion and the Church, is no closer than that between war and the state in history.
War. It’s always about war.
After the Fall: The Return of Anarchy
This story comes with a happy ending. Carolingian control over markets died, thankfully, not long after Charlemagne died – his Empire broke up less than a half a century after its creation. The author lauds the intent and accomplishments of this Emperor:
The experiment was in fact an interesting one…a reorganization based on sound Christian morals and not altogether divorced from military considerations, an economy which was clerical in inspiration, a war economy from which capitalism was quite deliberately banished by the general veto on lending at interest.
Sound Christian morals in concert with military considerations. I really, really need to find Laurence Vance!
Latouche bemoans this anarchic quality of the period before and after Charlemagne. He describes the term “anarchy,” and explains his view of the time:
The word anarchy is here used in its strict etymological sense: absence of authority and the bankruptcy of the sovereign state. It was an evil which had been undermining Gaul and Western Europe ever since the Great Invasions, and which Charlemagne and the early Carolingians did not succeed in curing. The responsibility for it must be placed fairly and squarely on the Merovingian rulers.
As regards the bankruptcy of the sovereign state, Latouche is quite correct. However, is the sovereign state the only source for governance? Referring again to North:
Is civil government the only true government? Does it alone possess legitimate sovereignty? Defenders of the modern state insist that this is the case, and that it should be the case.
Latouche is one of these defenders, answering affirmatively. He does not recognize the sovereignty as exercised during the Merovingian period before and (through its close relative) after the fall of Charlemagne – a sovereignty exercised at decentralized levels of society, but not a sovereignty that would look completely familiar to advocates of free-market anarchy today. For example, there was little concern of individual rights. Again, from North:
Then what of individual rights? This was not a major concern in the medieval era. Why not? Because the individual’s rights were defended by institutions other than the civil government.
Then, quoting Nisbet:
In the medieval world there was relatively little concern with positive, discrete rights of individuals, largely because of the differences of political power and the reality of innumerable group authorities. But when the consolidation of national political power brought with it a destruction of many of the social bodies within which individuals had immemorially lived in taken refuge, when, in sum, law became a more centralized and impersonal structure, with the individual as its unit, the concern for positive, constitutionally guaranteed rights of individuals became urgent. European governments may have sought often, and successfully prolonged periods, to resist claims of individual right, but it is hard to miss the fact that states (England, for example) which became the most successful, economically as well as politically, had the earliest constitutional recognition of individual rights, especially property. In retrospect, however, we see that it was the sheer impact of the State upon medieval custom and tradition, with the consequent atomizing and liberating effects, that, more than anything else, precipitated the modern concern with positive individual rights.
Today we look back to the political philosophies underpinning written constitutions as liberating, when in fact these were the result of – and ensured the longevity of – the state as the sole sovereign entity to which man, on earth, could appeal. The Magna Carta is heralded as a milestone toward liberal society, when in fact it represented the loss of the limited sovereignty of other, competing institutions.
When there is only the individual against the state, individual rights become paramount. However, in an environment of multiple and competing sovereignties the need is not so great.
Latouche looks at the issue of immunities granted by the king – immunities that captured this diverse, decentralized sovereignty, represented by these competing institutions:
The practice of immunity, the essential aim of which was exemption from taxation, became widespread and this serious abdication of responsibility reached such vast proportions that it soon went far beyond the realm of finance. Vast tracts of the kingdom were completely outside the jurisdiction of the central authority, since the king expressly forbade his officials to enter the immunists’ domains for the purposes of carrying out their administrative duties.
Did the king grant immunity against his well-being? Not likely. In many ways, the king was equal to the nobles – the king had no higher position in the law than did the nobles. The basis for society was individual, based on sacred oath and grounded in the teaching of the Church. There was respect for property. Rights were defined and respected based on this. The king had no power to act outside of the old, good law. He was king of a decentralized society, one not governed solely by a state but by entities based on family, community, and Church.
Again, from North:
What is the meaning of sovereignty? It is the lawful, legitimate authority to invade all rival institutions, and to be immune to invasion by them. In modern thought, it is possessed only by the State. In this sense, the state possesses what in earlier eras in the West would have been identified with God. But God’s sovereignty was assumed to be delegated to legitimate institutions: the family and the church. It is also delegated to the individual. The state’s sovereignty is not delegated, except under stress.
The people of the Early Middle Ages, both before and after Charlemagne, understood this. They would cringe in horror at the barbarity of the modern state. From North again, citing Walter Lippmann, who wrote in 1929:
A state is absolute in the sense which I have in mind when it claims the right to a monopoly of all the force within the community, to make war, to make peace, to conscript life, to tax, to establish and disestablish property, to define crime, to punish disobedience, to control education, to supervise the family, to regulate personal habits, and to censor opinions. The modern state claims all of these powers, and, in the matter of theory, there is no real difference in the size of the claim between communists, fascists, and Democrats.
This definition, so true today, is completely alien to the world of the Middle Ages – the so-called Dark Ages. For those looking for an example in history where state sovereignty was minimal to non-existent, and where life functioned well and in many cases in a more classically-liberal fashion(including attitudes toward women and slavery) than in almost any period under state control, the Merovingians of the so-called Dark Ages and their post-Carolingian philosophical descendants offer a shining example.