At a lesson on Ancient Greece last week, Professor Robin Osborne was asked what were the main economic activities of the country in around the 5th century B.C. He mentioned silver mining and, of course, agriculture. But he also said that Greece was a trade centre and that there was a tax on imports and exports of only two per cent.
I wondered whether Greece, the foundation of European civilisation, was created by wealth resulting from relatively free trade and low taxation. He resisted the idea and mentioned the importance of good ship and cargo insurance systems for trade. But at the same time, he agreed he did not know what were the import and export tax rates in Spain or Egypt, for example.
He suggested that Greece was in a geographically advantageous position for trade. But I would have thought the same could be said for a number of other places, such as Malta and Sicily.
It is an intriguing thought: low taxationa and perhaps other circumstances favouring capitalist activity as the foundations of modern western civilisation.
Posted by James Bartholomew • Indexed in Tax and growth
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James is indeed hitting the target IMHO.
As for Miliband, it is (another) ploy by New Labour to expand the state. They seek to co-opt the voluntary sector and make them dependent on the State for handouts. This will make them beholden to central policy and remove one of the last truly democratic ways ordinary people can make the country better.
Posted by: Tim at March 9, 2006 01:24 PM
Of course the idea that the rise of Western civilization was a product of our greater embracing of capitalism and free enterprise is an old one. One of the greatest advocates of this model was, of course, Karl Marx himself!
Clearly there is a large amount of evidence to support the notion that nations and peoples who base their economies upon relatively free trade and enterprise tend to be more successful than those who don't. Seventeenth-century England, for example, formed the most impressive agrarian economy in Europe because her island status allowed the free movement of produce between regions. Sheer accident, of course, but one that worked through the efficiency gains of regional specialisation and comparative advantage.
At the same time, this market integration, the greater wealth and social security it created was a direct cause (though not, of course, the only one) of England's growing industrial and commercial wealth by the later eighteenth century.
So, 'capitalism' led to the rise of western civilization...
... or did it. The rise of the west also depended, to some extent, on slavery (the antithesis of real capitalism). It also depended on the protection of British markets by massive investment in the military public sector in the guise of the Royal Navy, and the use of that military power to force colonies into dependence on British manufactures. Not exactly textbook free trade!
Perhaps the best illustration of the ambiguous role of capitalism in the rise of western civilization lies in the archetypal modern industry: cotton.
In the eighteenth century a spirit of enterprise and innovation transformed an industry that also benefited from being largely free from government interference. Yet at the same time the massive increase in the production of cotton goods was also dependent on the exploitation of slave labour across the Atlantic, on a continent that provided European settlers with enough land to grow plenty of raw cotton for the simple reason that the original inhabitants had been wiped out in the sixteenth and seventeenth centuries by Old World disease.
Indeed, the final ascendency of British cotton was helped in no end by the chaos that beset its main rival: that of India, when European colonialism began to interfere.
History is a murky business, and business has a murky history!
Posted by: Jonathan Healey at June 3, 2006 07:22 PM
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No comments thus far on this topic so here goes.
It seems to me that the points made by James B in The Welfare State We're In are now 'hitting target'. But the cynic in me says 'So what?' There are macro issues of policy and micro issues of strategy and tactics to change the 'mind set' of members of the Flat Earth Society. We need a Flat Tax society and all that flows therefrom. Milliband is 'pitching' for leadership with his apparent conversion to localism etc. So...what's this all about? Can we move from 'expressing opinion' which now seems in agreement to 'doing something' to achieve the outcome which we all seek. For starters 'What is the outcome which we all seek?'
Peter Crombie
Posted by: Peter Crombie at February 27, 2006 08:37 PM