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In a city like New York, where everything is superlative, who exactly is middle class?

“My niece just bought a home in Atlanta for $85,000,” she said. “I almost spend that on rent and utilities in a year.

“Housing has always been one of the ways the middle class has defined itself, by the ability to own your own home. But in New York, you didn’t have to own.” There is no stigma, he said, to renting a place you can afford only because it is rent-regulated; such a situation is even considered enviable.

“It’s overwhelmingly housing — that’s the big distortion relative to other places,” said Frank Braconi, the chief economist in the New York City comptroller’s office. “Virtually everything costs more, but not to the degree that housing does.”

The average Manhattan apartment, at $3,973 a month, costs almost $2,800 more than the average rental nationwide. The average sale price of a home in Manhattan last year was $1.46 million, according to a recent Douglas Elliman report, while the average sale price for a new home in the United States was just under $230,000.

New Yorkers also live in a notably unequal place. Household incomes in Manhattan are about as evenly distributed as they are in Bolivia or Sierra Leone — the wealthiest fifth of Manhattanites make 40 times more than the lowest fifth, according to 2010 census data.

There is no single, formal definition of class status in this country. Statisticians and demographers all use slightly different methods to divvy up the great American whole into quintiles and median ranges. Complicating things, most people like to think of themselves as middle class. It feels good, after all, and more egalitarian than proclaiming yourself to be rich or poor. A $70,000 annual income is middle class for a family of four, according to the median response in a recent Pew Research Center survey, and yet people at a wide range of income levels, including those making less than $30,000 and more than $100,000 a year, said they, too, belonged to the middle.

“You could still go into a bar in Manhattan and virtually everyone will tell you they’re middle class,” said Daniel J. Walkowitz, an urban historian at New York University.

The price tag for life’s basic necessities — everything from milk to haircuts to Lipitor to electricity, and especially housing — is more than twice the national average.

If the money you live on is coming from any kind of investment or dividend, you are probably not middle class, according to Mr. Braconi.

Without the clear badge of middle-class membership — a home mortgage — it is hard to say where a person fits on the class continuum. So let’s consider the definition of “middle class” through five different lenses.

If you live in Manhattan and you are making more than $790,000 a year, then congratulations, you are the 1 percent.

“Understanding who is middle class, in New York, but especially Manhattan, is all about when you got into the real estate market,” he said. “If you bought an apartment prior to 2000, or have long been in a rent-stabilized apartment, you could probably be a teacher in Manhattan and be solidly middle class. But if you bought or started renting in a market-rate apartment over the last 5 or 10 years, you could probably be a management consultant and barely have any savings.”

By the same formula — measuring by who sits in the middle of the income spectrum — Manhattan’s middle class exists somewhere between $45,000 and $134,000.

But if you are defining middle class by lifestyle, to accommodate the cost of living in Manhattan, that salary would have to fall between $80,000 and $235,000. This means someone making $70,000 a year in other parts of the country would need to make $166,000 in Manhattan to enjoy the same purchasing power.

Using the rule of thumb that buyers should expect to spend two and a half times their annual salary on a home purchase, the properties in Manhattan that could be said to be middle class would run between $200,000 and $588,000.

On the low end, the pickings are slim. The least expensive properties are mostly uptown, in neighborhoods like Yorkville, Washington Heights and Inwood. The most pleasing options in this range, however, are one-bedroom apartments not designed for children or families.

“There’s no room for the earlier version of the middle class,” Mr. Walkowitz said. Firefighter, police officer, teacher and manufacturing worker all used to be professions that could lift a family into its ranks. But those kinds of jobs have long left people unable to keep up with soaring real estate prices.

Positions that would nudge a family into the upper class elsewhere — say, vice president or director of strategy — and professions like psychologist are solidly middle class in Manhattan.

The same holds true for jobs in higher education, a growth sector for the city. The average tenured university professor at New York University or Columbia makes more than $180,000 a year, according to a 2012 survey by The Chronicle of Higher Education. Sweetening the deal for those looking to buy, N.Y.U. has offered mortgage assistance and discounted loans, while qualified Columbia faculty are eligible for a subsidy of up to $40,000 a year. Some faculty members benefit from university housing that rents well below the market rate, in prime locations on the Upper West Side and in Greenwich Village.

Because her building is owned by Columbia, her rent, about $1,800 a month, is manageable on an associate professor’s salary, which averages about $125,000. A similar market-rate apartment on the Upper West Side costs about $6,000 a month,

One way to stay in Manhattan as a member of the middle class is to be in a relationship. Couples can split the cost of a one-bedroom apartment, along with utilities and takeout meals. But adding small roommates, especially the kind that do not contribute to rent, creates perhaps the single greatest obstacle to staying in the city.

Only 17 percent of Manhattan households have children, according to census data. That is almost half the national average, making little ones the ultimate deal-breaker for otherwise die-hard middle-class Manhattanites.

By one measure, in cities like Houston or Phoenix — places considered by statisticians to be more typical of average United States incomes than New York — a solidly middle-class life can be had for wages that fall between $33,000 and $100,000 a year.

“The only artists I know now who are still in Manhattan,” she said, “either made it big and bought, or are still in the rent-controlled studios they landed in 1976, and will leave in a coffin.”

People define class as much by association and culture as they do by raw numbers — a sense, more than anything, of baseline financial security garnished by an occasional luxury like a vacation, and a belief that things can get better through hard work and determination.

In the last decade, the percentage of people who are paying “unaffordable rents” (defined as more than 30 percent of their income) has increased significantly, according to a report issued in September by the city’s comptroller.

The only young people she sees moving in around her are often buoyed by parental support, given an apartment at graduation the way she was given a Seiko watch. As her own friends and neighbors age or die out, she wonders, “who is going to take our place?”

Stiglitz has made the case that the rise in inequality in the US, far from being the natural outcome of market forces, has been profoundly shaped by “our policies and our politics,” with disastrous effects on society and the economy as a whole. In a recent report for the Roosevelt Institute called Rewriting the Rules, Stiglitz has laid out a detailed list of reforms that he argues will make it possible to create “an economy that works for everyone.”

his entire career in academia has been devoted to showing how markets cannot always be counted on to produce ideal results. In a series of enormously important papers, for which he would eventually win the Nobel Prize, Stiglitz showed how imperfections and asymmetries of information regularly lead markets to results that do not maximize welfare.

He also argued that this meant, at least in theory, that well-placed government interventions could help correct these market failures

in books like Globalization and Its Discontents (2002) he offered up a stinging critique of the way the US has tried to manage globalization, a critique that made him a cult hero in much of the developing world

Stiglitz has been one of the fiercest critics of the way the Eurozone has handled the Greek debt crisis, arguing that the so-called troika’s ideological commitment to austerity and its opposition to serious debt relief have deepened Greece’s economic woes and raised the prospect that that country could face “depression without end.”

For Stiglitz, the fight over Greece’s future isn’t just about the right policy. It’s also about “ideology and power.

Stiglitz argues, what we’re stuck with isn’t really capitalism at all, but rather an “ersatz” version of the system.

The Great Divide is somewhat fragmented and repetitive, but it has a clear thesis, namely that inequality in the US is not an unfortunate by-product of a well-functioning economy. Instead, the enormous riches at the top of the income ladder are largely the result of the ability of the one percent to manipulate markets and the political process to their own benefit.

Inequality obviously has no single definition. As Stiglitz writes:There are so many different parts to America’s inequality: the extremes of income and wealth at the top, the hollowing out of the middle, the increase of poverty at the bottom. Each has its own causes, and needs its own remedies.

his preoccupation here is primarily with why the rich today are so much richer than they used to be.

the main reason people at the top are so much richer these days than they once were (and so much richer than everyone else) is not that they own so much more capital: it’s that they get paid much more for their work than they once did, while everyone else gets paid about the same, or less

while incomes at the top have risen in countries around the world, nowhere have they risen faster than in the US.

One oft-heard justification of this phenomenon is that the rich get paid so much more because they are creating so much more value than they once did

as companies have gotten bigger, the potential value that CEOs can add has increased as well, driving their pay higher.

Stiglitz will have none of this. He sees the boom in the incomes of the one percent as largely the result of what economists call “rent-seeking.”

from the perspective of the economy as a whole, rent-seeking is a waste of time and energy. As Stiglitz puts it, the economy suffers when “more efforts go into ‘rent seeking’—getting a larger slice of the country’s economic pie—than into enlarging the size of the pie.”

The work of Piketty and his colleague Emmanuel Saez has been instrumental in documenting the rise of income inequality, not just in the US but around the world. Major economic institutions, like the IMF and the OECD, have published studies arguing that inequality, far from enhancing economic growth, actually damages it. And it’s now easy to find discussions of the subject in academic journals.

. After all, while pretax inequality is a problem in its own right, what’s most destructive is soaring posttax inequality. And it’s posttax inequality that most distinguishes the US from other developed countries

All this rent-seeking, Stiglitz argues, leaves certain industries, like finance and pharmaceuticals, and certain companies within those industries, with an outsized share of the rewards

Most importantly, the financial industry is now a much bigger part of the US economy than it was in the 1970s, and for Stiglitz, finance profits are, in large part, the result of what he calls “predatory rent-seeking activities,” including the exploitation of uninformed borrowers and investors, the gaming of regulatory schemes, and the taking of risks for which financial institutions don’t bear the full cost (because the government will bail them out if things go wrong).

This isn’t just bad in some abstract sense, Stiglitz suggests. It also hurts society and the economy

It alienates people from the system. And it makes the rich, who are obviously politically influential, less likely to support government investment in public goods (like education and infrastructure) because those goods have little impact on their lives.

More interestingly (and more contentiously), Stiglitz argues that inequality does serious damage to economic growth: the more unequal a country becomes, the slower it’s likely to grow. He argues that inequality hurts demand, because rich people consume less of their incomes. It leads to excessive debt, because people feel the need to borrow to make up for their stagnant incomes and keep up with the Joneses. And it promotes financial instability, as central banks try to make up for stagnant incomes by inflating bubbles, which eventually burst

exactly why inequality is bad for growth turns out to be hard to pin down—different studies often point to different culprits. And when you look at cross-country comparisons, it turns out to be difficult to prove that there’s a direct connection between inequality and the particular negative factors that Stiglitz cites

This doesn’t mean that, as conservative economists once insisted, inequality is good for economic growth. In fact, it’s clear that US-style inequality does not help economies grow faster, and that moving toward more equality will not do any damage

Similarly, Stiglitz’s relentless focus on rent-seeking as an explanation of just why the rich have gotten so much richer makes a messy, complicated problem simpler than it is

When we talk about the one percent, we’re talking about two groups of people above all: corporate executives and what are called “financial professionals” (these include people who work for banks and the like, but also money managers, financial advisers, and so on)

The emblematic figures here are corporate CEOs, whose pay rose 876 percent between 1978 and 2012, and hedge fund managers, some of whom now routinely earn billions of dollars a year

Shareholders, meanwhile, had fewer rights and were less active. Since then, we’ve seen a host of reforms that have given shareholders more power and made boards more diverse and independent. If CEO compensation were primarily the result of bad corporate governance, these changes should have had at least some effect. They haven’t. In fact, CEO pay has continued to rise at a brisk rate

So what’s really going on? Something much simpler: asset managers are just managing much more money than they used to, because there’s much more capital in the markets than there once was

that means that an asset manager today can get paid far better than an asset manager was twenty years ago, even without doing a better job.

there’s no convincing evidence that CEOs are any better, in relative terms, than they once were, and plenty of evidence that they are paid more than they need to be, in view of their performance. Similarly, asset managers haven’t gotten better at beating the market.

More important, probably, has been the rise of ideological assumptions about the indispensability of CEOs, and changes in social norms that made it seem like executives should take whatever they could get.

It actually has important consequences for thinking about how we can best deal with inequality. Strategies for reducing inequality can be generally put into two categories: those that try to improve the pretax distribution of income (this is sometimes called, clunkily, predistribution) and those that use taxes and transfers to change the post-tax distribution of income

he has high hopes that better rules, designed to curb rent-seeking, will have a meaningful impact on the pretax distribution of income. Among other things, he wants much tighter regulation of the financial sector

t it would be surprising if these rules did all that much to shrink the income of much of the one percent, precisely because improvements in corporate governance and asset managers’ transparency are likely to have a limited effect on CEO salaries and money managers’ compensation.

within those companies, the rewards tend to be concentrated as well, thanks to what Stiglitz calls “abuses of corporate governance that lead CEOs to take a disproportionate share of corporate profits” (another form of rent-seeking)

The redistributive policies Stiglitz advocates look pretty much like what you’d expect. On the tax front, he wants to raise taxes on the highest earners and on capital gains, institute a carbon tax and a financial transactions tax, and cut corporate subsidies

It’s also about investing. As he puts it, “If we spent more on education, health, and infrastructure, we would strengthen our economy, now and in the future.” So he wants more investment in schools, infrastructure, and basic research.

The core insight of Stiglitz’s research has been that, left on their own, markets are not perfect, and that smart policy can nudge them in better directions.

Of course, the political challenge in doing any of this (let alone all of it) is immense, in part because inequality makes it harder to fix inequality. And even for progressives, the very familiarity of the tax-and-transfer agenda may make it seem less appealing.

the policies that Stiglitz is calling for are, in their essence, not much different from the policies that shaped the US in the postwar era: high marginal tax rates on the rich and meaningful investment in public infrastructure, education, and technology. Yet there’s a reason people have never stopped pushing for those policies: they worked

4 of the 10 most expensive housing markets in the country — San Francisco, San Mateo, Santa Clara and Marin counties — are in the greater Bay Area. Even Oakland, once a cheaper alternative to the city, saw average rent surge 11 percent in 2012 over the previous year.

Those lucky enough to live in rent-controlled apartments say they fear that they can never afford to move. Those who are not so lucky say the rent increases have left them with little choice but to leave the city.

Melissa Jensen, said she recently moved from Los Angeles where she paid less than $2,000 for a one-bedroom in a nice neighborhood. “To get that same space in San Francisco I’m realizing I’m going to have to pay twice that much,”

ut a seemingly insatiable demand for luxury condos in Miami, created in part by wealthy Latin Americans, has caused land prices to soar, making affordable housing projects harder to build anywhere close to downtown. Moving farther out is cheaper, but the cost savings on housing can be quickly wiped out by transportation costs. A 2012 study by the Center for Housing Policy found that Miami was the most expensive metropolitan area in the country when housing and transportation costs were combined.

n many markets, buying a home is considerably cheaper than renting, and Miami is no exception. But many people are shut out of buying because their income is too low, they don’t qualify for a mortgage or they are burdened by other debt. In 2008, a quarter of rental applicants were still paying off student loans, according to CoreLogic, but as of last fall half of them were doing so.

A majority of homeowners in America are baby boomers — a group at heightened risk from the coronavirus. If many of them have been reluctant to move out and downsize over the past year, that makes it hard for other families behind them to move in and upgrade.

“Every additional home that gets pulled off the market incentivizes someone else to not sell their house,” Mr. McLaughlin said. “That’s a self-reinforcing cycle.”

Add all of this up, and for every tale of someone who ran off and bought in the suburbs or paid all-cash sight unseen in some far-flung town, the larger story of the pandemic is this: Americans have been staying put.

The last decade has also been a period of relatively low interest rates. That incentivized many homeowners to stay in their homes longer than they would have in the past, clinging to cheap mortgages.

“We’re all looking for a unified field theory for what’s going on,” said Mark Zandi, the chief economist at Moody’s Analytics. “We have all these disparate pieces of information.

Right now, in a number of metro areas, home prices and rents aren’t just drifting apart; they’re moving in opposite directions. Prices are rising while rents are falling.

“I don’t think we’ve seen a housing market quite like this one,” said Jenny Schuetz, a researcher at the Brookings Institution. “And other recessions looked a little bit different, so that makes it hard to know what’s going on.”

Recent research by Arpit Gupta at N.Y.U. and colleagues suggests that rents have fallen the most in close-in urban neighborhoods.

The ratio of home prices to rents in many metros is now as high as it has been since the housing bubble — but it has spiked during the pandemic in part because rents have fallen, not solely because prices have soared.

The pandemic will also eventually subside, and people will gain more certainty about remote work, and more confidence about having strangers in their homes. But for anyone waiting for the typical spring surge in inventory, these reasons for optimism may not materialize in time.

“People up and down the country are having to make impossible decisions on whether to cut back on food for their family or heat their home just to make up the shortfall between their benefit and rent,” she said.

Rather than provide housing for the homeless, cities offer showers, day care centers and bag checks.

We have decided to live with the fact that some of our fellow Americans will die on the streets.

“There’s a cruelty here that I don’t think I’ve seen,” Leilani Farha, then the United Nations special rapporteur on adequate housing, said after a 2018 visit to Northern California.

“I’ve never seen anything like it, and I’ve done outreach on every continent,” Dame Louise Casey, who directed homeless policy for several British prime ministers, said after touring homeless encampments in San Francisco, Los Angeles and other American cities.

almost 40 percent of workers in households making less than $40,000 a year have lost work. Women in Need NYC, which runs shelters, warned this week that New York faces a “mass increase” in homelessness

Countries confronting homelessness with greater success than the United States, including Finland and Japan, begin by treating housing as a human right

the first law of real estate applies to homelessness, too: Location, location, location. The nation’s homeless population is concentrated in New York, the cities of coastal California and a few other islands of prosperity.

Well-educated, well-paid professionals have flocked to those places, driving up housing prices. And crucially, those cities and their suburbs have made it virtually impossible to build enough housing to keep up.

The government calculates $600 is the most a family living at the poverty line can afford to pay in monthly rent while still having enough money for food, health care and other needs. From 1990 to 2017, the number of housing units available below that price shrank by four million.

While there are roughly 80,000 homeless people in New York on any given night, more than 800,000 New Yorkers — more than 10 times as many people — are scraping by, spending more than half their income on rent.

According to one analysis, a $100 increase in the average monthly rent in a large metro area is associated with a 15 percent increase in homelessness.

In 2018, eight out of every 10,000 Michigan residents were homeless. In California, it was 33 per 10,000. In New York, it was 46 per 10,000.

in recent decades, wealth and homelessness have both increased — a stark illustration of the inequalities that pervade American life.

Having failed to address homelessness during the longest economic expansion in American history, the nation now faces a greater challenge under more difficult circumstances

Reframing the debate — asking what is necessary to end homelessness — is an important first step for New York and for other places that are failing this basic test of civic responsibility.

The program costs about $19 billion a year. Vouchers for all eligible households would cost another $41 billion a year

Where to get the money? Well, the government annually provides more than $70 billion in tax breaks to homeowners, including a deduction for mortgage interest payments and a free pass on some capital gains from home sales. Let’s end homelessness instead of subsidizing mansions.

Without a significant expansion in the supply of housing, adding vouchers would be like adding players to a game of musical chairs without increasing the number of chairs.

Market-rate construction can help: More housing would slow the upward march of housing prices. New York and San Francisco are the nation’s most tightly regulated markets for housing construction,

Tokyo, often cited as an international model for its permissive development policies, has expanded its supply of homes by roughly 2 percent a year in recent years, while New York’s housing supply has expanded by roughly 0.5 percent a year. Over the last two decades, housing prices in Tokyo held steady as New York prices soared.

In California, for example, construction of a five-story apartment building that meets minimum standards costs an average of $425,000 per unit,

Without public aid, the apartments would need to be rented for several times more than the $600 a month affordable to a family living at the poverty line.

Proposals for a big increase in affordable housing construction inevitably call to mind the troubled public housing projects of the mid-20th century. They offer one clear lesson: Avoid housing that concentrates poverty

there is a solution — to build subsidized housing as part of mixed-income developments and to spread the developments out, putting them not just in cities but also in the surrounding suburbs.

Helsinki, Finland, a city of just 600,000 people, builds about 7,000 units of mixed-income housing a year. That’s a big reason Finland is the rare European country where homelessness is in decline.

Extending this approach to the entire homeless population would be expensive. To take one example, King County, which encompasses Seattle, would need to increase annual spending on homelessness to roughly $410 million from $196 million to help each of the county’s 22,000 homeless families, according to a study by McKinsey. That’s about $19,000 per family.

Even if the cost per person were twice as high, the nation’s homeless population could be housed for $10 billion a year — less than the price of one aircraft carrier.

there is worse to come. Homelessness rises during recessions, the federal funding is temporary and state and local governments face huge drops in tax revenue.

The federal government already provides housing vouchers to help some lower-income families. The families pay 30 percent of their monthly income toward rent; the government pays the rest. But instead of giving vouchers to every needy family, the government imposes an arbitrary cap. Three in four eligible families don’t get vouchers.

Americans must decide whether we are willing to let elementary school students spend nights in guarded parking lots

We must decide whether it’s worth spending just a little of this nation’s vast wealth to ensure that no 60-year-old woman needs to sleep on the same bench in downtown Santa Monica

the signs of a crisis that looks like the Great Depression are impossible to hide. In Anaheim, Calif., home to Disneyland, cars formed half-mile-long lines in two different directions, waiting to pick up free food. In San Antonio, 10,000 cars waited for hours to receive food from a food bank. Even still, Republicans balk at expanding access to food stamps while hunger is on the rise. Nearly one in five children 12 and younger don’t have enough to eat.

That “way of life” may also begin to look like mass homelessness. Through the first five days of April, 31 percent of tenants nationwide had failed to pay their rent

Forty-three million households rent in the U.S., but there is no public rental assistance for residents who lose the ability to afford their rent.

Many elected officials in the Republican Party have access to Covid-19 testing, quality health care and the ultimate cushion of wealth to protect them. Yet they suggest others take the “risk” of returning to work as an act of patriotism

While the recent stimulus bills doled out trillions of dollars to corporate America and the “financial sector,” the smallest allocations have provided cash, food, rent or health care for citizens. The gaps in the thin membrane of a safety net for ordinary Americans have made it impossible to do anything other than return to work.

This isn’t just malfeasance or incompetence. Part of the “American way of life” for at least some of these elected officials is keeping workers just poor enough to ensure that the “essential” work force stays shows up each day

In place of decent wages, hazard pay, robust distribution of personal protective equipment and the simplest guarantees of health and safety, these lawmakers use the threat of starvation and homelessness to keep the work force intact.

In the case of the meatpacking industry, there is not even a veil of choice, as those jobs are inexplicably labeled essential, as if life cannot go on without meat consumption

The largely immigrant and black meatpacking work force has been treated barely better than the carcasses they process. They are completely expendable. Thousands have tested positive, but the plants chug along, while employers offer the bare minimum by way of safety protections, according to workers. If there were any question about the conditions endured in meatpacking plants, consider that 145 meat inspectors have been diagnosed with Covid-19 and three have died.

Discipline in the U.S. has always included low and inconsistent unemployment and welfare combined with stark deprivation. Each has resulted in a hyper-productive work force with few benefits in comparison to America’s peer countries.

if the social distancing and closures were ever going to be successful, it would have meant providing all workers with the means to live in comfort at home while they waited out the disease. Instead, they have been offered the choice of hunger and homelessness or death and disease at work.

The governor of Iowa, Kim Reynolds, made this painfully clear when she announced that not only was Iowa reopening, but that furloughed workers in private or public employment who refused to work out of fear of being infected would lose current unemployment benefits. She described these workers’ choices as a “voluntary quit.”

This is exacerbated by the reluctance of the Trump administration to bail out state governments. That the U.S. government would funnel trillions to corporate America but balk at sending money to state governments also appears to be part of “the American way of life” that resembles the financial sector bailout in 2008.

These are also the bitter fruits of decades of public policies that have denigrated the need for a social safety net while gambling on growth to keep the heads of U.S. workers above water just enough to ward off any real complaints or protests.

During the long and uneven recovery from the Great Recession, the warped distribution of wealth led to protests and labor organizing. The crisis unfolding today is already deeper and much more catastrophic to a wider swath of workers than anything since the 1930s. The status quo is untenable.

First and foremost, the climate was changing. Sound familiar? Medieval Europe benefitted from several centuries of warmer weather, which boosted crop yields, but by the 14th century, the world was entering the so-called Little Ice Age

As the population grew, increasingly marginal land was turned over to agriculture, with diminishing returns, resulting in lower yields per capita and pushing the population dangerously close to subsistence levels. This left little slack in the economy to absorb a significant shock, and the 14th century would soon bring one shock after another.

From AD 1000, Europe's population doubled or even tripled, and the economy became increasingly commercialized, underwritten by an increasingly sophisticated financial system, as new cities and towns emerged, universities were founded across the continent, and the magnificent Gothic cathedrals surpassed the Great Pyramid at Giza as the tallest man-made structures in the world.

At the same time, Europe entered a prolonged period of heightened geopolitical conflict, during which a dizzying array of kingdoms, principalities, sultanates and city-states waged innumerable wars, both large and small.

beginning in 1311, Europe began to experience a series of crop failures across the continent in what became known as the Great Famine. Reaching a peak in northern Europe in 1315-1317, the Great Famine may have killed 5 to 10% of Europe's population

Cooler and wetter weather depressed agricultural yields, at a time when there was already very little slack in the food supply. This contributed to a broader economic slowdown, as yields declined and prices rose, but it also brought Europe to the edge of famine.

These conflicts inhibited trade between northern and southern Europe and between western Europe and the eastern Mediterranean, further slowing the European economy and incurring a massive fiscal burden that would soon ruin the European financial system and provoke uprisings in both France and England

Northern Italy was the heart of the financial system at this time, and a small number of very large Italian banks, often referred to as "super-companies," were lending huge sums of money across Europe

All available money was loaned out or tied up in investments, leaving the banks severely under-capitalized and vulnerable to insolvency in the event of a sudden large withdraw or a major default on their loans.

war broke out between England and France in 1294, prompting King Edward I to withdraw huge sums of money from the Riccardi of Lucca, approximately equivalent to several billion dollars today. The Riccardi simply did not have the money, and Edward seized whatever assets he could. Then, over the following decades, three more super banks, the Frescobaldi, the Bardi and the Peruzzi, all of Florence, were each ruined by successive English kings who refused to pay their debts.

Meanwhile, the Catholic Church, the cultural and epistemological bedrock of Medieval Europe, was facing the most significant legitimacy crisis in centuries

It was in the midst of this spiritual, economic and geopolitical crisis that the Black Death arrived, sweeping through Europe in 1347-1353 and upending the balance of power, almost overnight

We might compare this crisis of faith with the current legitimacy crisis of science in the United States. Like the scientific method, the Church was a shared way of knowing — a pathway to common understanding, which was essential to the social order of Medieval Europe.

he King's men attempted to arrest the elderly Pope, inadvertently killing him. Shortly thereafter, in 1305, a Frenchman, Clement V, was chosen to be the next pope, and the papacy was relocated to Avignon, France. This understandably cast a long shadow over the Holy See, and the Avignon Popes were widely disliked and distrusted. The crisis only deepened in 1378 when a second pope was elected in Rome and a third pope was briefly elected in 1409 before all three were deposed in 1417.

This, combined with the soaring fiscal burden of near-constant war, set off a series of uprisings, most notably the French Jacquerie of 1358 and the English Peasants' Revolt of 1381. The aristocracy responded with force wherever they could, but they could not turn back the clock.

Both of these developments substantially benefitted commoners, at the expense of the elite, particularly in England.

The archetypal serf was not paid for their work in the lord's fields — that was their obligation to the lord in exchange for the use of the lord's land. The modern equivalent would be if your landlord was also your boss, and in order to live in your apartment, you had to sign away your freedom and that of your children, in perpetuity.

Not only that, the medieval lord was also the primary unit of legal, civic and military power, often serving as the first stop for legal matters and the first defense against brigands and rival kingdoms.

With perhaps half the population gone, there were simply not enough peasants to work the land, and the average income of the English lord declined significantly. In response, the lord's wheat fields were increasingly turned over to livestock, or rented out to tenant farmers, who would pay the lord a fixed rent, keeping the agricultural produce for themselves.

The ambitious commoner could now acquire sizable tracts of land, and with the agricultural product of that land entirely at their disposal, commoners were incentivized to maximize the productivity of their land and sell the surplus at market for a profit. This transition is often referred to as the birth of Agrarian Capitalism.

In the wake of the Black Death, plague doctors were among the first to believe they had surpassed the knowledge of the Greek and Roman world; ironically, they were wrong, but the lower mortality of later outbreaks led many doctors to proclaim they had cured the disease, which instilled a new faith in scientific progress

Sumptuary laws, which restricted what commoners could wear and eat, also became common during the 14th and 15th Centuries. However, these laws do not appear to have been effective, and tensions continued to mount between the aristocracy and the wider populace, who were increasingly impatient for change.

Urban laborers and craftsmen also benefitted from rising wages. The average lifespan increased, and standards of living improved across the board. The shortage of skilled tradesmen even created new opportunities for urban women

starting in the 14th century, infantry units comprised of commoners, like the Swiss pikemen and English longbowmen, began to win a series of decisive victories against mounted knights, revolutionizing military tactics and hastening the obsolescence of the feudal aristocracy.

a new intellectual spirit was taking root across western Europe. Influential thinkers like John Wycliffe and Marsilius of Padua began to question the worldly authority of both the Church and the state, arguing that power rested ultimately with the populace rather than the ruler, and the unworthy ruler could lose their right to govern

the economic effects of the plague were nothing short of earthshattering. By killing perhaps 50% of the labor force, the Black Death drastically altered the supply of labor, land and coin. Wages skyrocketed, as labor was in short supply, and rents declined, as the plummeting population density created a surplus of land

seven-hundred years later, what, if anything, can we learn from this — what can the crises and consequences of the 14th century tell us about our own pandemic and the impending aftermath?

There will be no labor shortage in the wake of the coronavirus; quite the opposite, there will likely be a labor surplus, due to the ensuing economic contraction. As for rents, the housing market is essentially frozen as people shelter in place, and housing prices are likely to decline in a recession, but the real cost of housing relative to income is unlikely to see the kind of seismic shift experienced after the Black Death.

most presciently for our own time, Europe was headed for a climate catastrophe, and regardless of the Black Death, the continent would have almost certainly faced a series of demographic shocks, like the Great Plague, until considerable changes were made to the existing socio-economic system.

The lesson we should take from this today is not the differences between the coronavirus and the Black Death, but rather the broader similarities between the 14th century and the 21st century

war between China and the US still looms ever larger, socio-economic inequality is reaching record levels, trust in institutions and our established epistemology is waning, and as we enter the worst depression since the 1930s, climate change once again threatens to throw us back into the Middle Ages

if we continue business as usual, what happens next is likely to be much worse. The calamitous 21st century is just getting started, and a more apt parallel for the Black Death is probably yet to come

The Senate is expected to amend the House bill on the $1,400-per-person stimulus payments to tighten eligibility.

Individuals earning less than $75,000 a year and married couples earning less than $150,000 will receive $1,400 per person, including children. That will get money to about 90% of households.

The checks will phase out faster than previous rounds, completely cutting off individuals who earn more than $80,000 a year and married couples earning more than $160,000 -- regardless of how many children they have.

Unlike the previous two rounds, adult dependents -- including college students -- are expected to be eligible for the payments

In an effort to combat poverty, it would expand the child tax credit to $3,600 for each child under 6 and $3,000 for each child under age 18. Currently, qualifying families can receive a credit of up to $2,000 per child under age 17.

Out-of-work Americans will start running out of Pandemic Unemployment Assistance and Pandemic Emergency Unemployment Compensation benefits in mid-March, when provisions in December's $900 billion relief package begin phasing out. The $300 enhancement also ends in mid-March.

The parliamentarian ruled in late February that increasing the hourly threshold does not meet a strict set of guidelines needed to move forward in the reconciliation process, which would allow Senate Democrats to pass the relief bill with a simple majority and no Republican votes.The House legislation would increase the federal minimum wage to $15 an hour by 2025 in stages. It would also guarantee that tipped workers, youth workers and workers with disabilities are paid the full federal minimum wage.

The legislation would provide $350 billion to state and local governments, as well as tribes and territories. States and the District of Columbia would receive $195.3 billion, while local governments would be sent $130.2 billion to be divided evenly between cities and counties. Tribes would get $20 billion and territories $4.5 billion.

The House plan would extend the 15% increase in food stamp benefits through September, instead of having it expire at the end of June.It also contains $880 million for the Special Supplemental Nutrition Program for Women, Infants, and Children, known as WIC, to help increase participation and temporarily improve benefits, among other measures. Biden called for investing $3 billion in the program.

The legislation would send roughly $19.1 billion to state and local governments to help low-income households cover back rent, rent assistance and utility bills. About $10 billion would be authorized to help struggling homeowners pay their mortgages, utilities and property taxes. It would provide another $5 billion to help states and localities assist those at risk of experiencing homelessness.

Some senators were looking to make some changes to the House bill, including reducing the federal boost to unemployment benefits to $300 a week and extending the duration of pandemic jobless programs by another month. But these efforts have not progressed.The House bill calls for extending two key pandemic unemployment programs through August 29. It would also increase the federal weekly boost to $400, from the current $300, and continue it for the same time period.

Unlike Biden's proposal, the House bill would not reinstate mandatory paid family and sick leave approved in a previous Covid relief package. But it does continue to provide tax credits to employers who voluntarily choose to offer the benefit through October 1.

The bill would provide nearly $130 billion to K-12 schools to help students return to the classroom. Schools would be allowed to use the money to update their ventilation systems, reduce class sizes to help implement social distancing, buy personal protective equipment and hire support staff. It would require that schools use at least 20% of the money to address learning loss by providing extended days or summer school, for example.

The House bill now includes nearly $40 billion for colleges. Institutions would be required to spend at least half the money to provide emergency financial aid grants to students.

The bill would also provide $39 billion to child care providers. The amount a provider receives would be based on operating expenses and is available to pay employees and rent, help families struggling to pay the cost, and purchase personal protective equipment and other supplies.

Enrollees would pay no more than 8.5% of their income towards coverage, down from nearly 10% now. Also, those earning more than the current cap of 400% of the federal poverty level -- about $51,000 for an individual and $104,800 for a family of four in 2021 -- would become eligible for help.

The bill would provide $15 billion to the Emergency Injury Disaster Loan program, which provides long-term, low-interest loans from the Small Business Administration. Severely impacted small businesses with fewer than 10 workers will be given priority for some of the money. It also provides $25 billion for a new grant program specifically for bars and restaurants. Eligible businesses may receive up to $10 million and can use the money for a variety of expenses, including payroll, mortgage and rent, utilities and food and beverages.

The House bill provides $14 billion to research, develop, distribute, administer and strengthen confidence in vaccines. It would also put $46 billion towards testing, contact tracing and mitigation, including investing in laboratory capacity, community-based testing sites and mobile testing units, particularly in medically underserved areas.It would also allocate $7.6 billion to hire 100,000 public health workers to support coronavirus response.The legislation also provides $50 billion to the Federal Emergency Management Agency, with some of the funds going toward expanding vaccination efforts.The President's plan called for investing $20 billion in a national vaccination program.

The government’s $525 billion Paycheck Protection Program gave more than 5 million businesses a one-time cash injection to pay workers and other expenses, including rent, but most recipients have now spent the money.

By August, collections had rebounded to nearly 80 percent, but some tenants, like movie theaters, clothing retailers, hair salons and gyms, were much further behind.

He hadn’t paid his full rent for months, but he had reached out to his landlord, the Falls Investors, hoping to discuss options. Instead, he got a letter in late July telling him payment in full was due in five days. When he missed that deadline, his landlord locked him out.

Per real estate company Redfin, rent prices jumped a record 15 percent year over year in January. 

He tries to break free of narrow specialization and cross the boundaries between scientific disciplines. Expeditions beyond economics’ borders and its connection to history, philosophy, psychology, and ancient myths are not only refreshing, but necessary for understanding the world of the twenty-first century.

Reality is spun from stories, not from material. Zdeněk Neubauer

“The separation between the history of a science, its philosophy, and the science itself dissolves into thin air, and so does the separation between science and non-science; differences between the scientific and unscientific are vanishing.”

The study of the history of a certain field is not, as is commonly held, a useless display of its blind alleys or a collection of the field’s trials and errors (until we got it right), but history is the fullest possible scope of study of a menu that the given field can offer.

History of thought helps us to get rid of the intellectual brainwashing of the age, to see through the intellectual fashion of the day, and to take a couple of steps back.

That is the reason for this book: to look for economic thought in ancient myths and, vice versa, to look for myths in today’s economics.

stories; Adam Smith believed. As he puts it in The Theory of Moral Sentiments, “the desire of being believed, or the desire of persuading, of leading and directing other people, seems to be one of the strongest of all our natural desires.”

“The human mind is built to think in terms of narratives … in turn, much of human motivation comes from living through a story of our lives, a story that we tell to ourselves and that creates a framework of our motivation. Life could be just ‘one damn thing after another’ if it weren’t for such stories. The same is true for confidence in a nation, a company, or an institution. Great leaders are foremost creators of stories.”

contrary to what our textbooks say, economics is predominantly a normative field. Economics not only describes the world but is frequently about how the world should be (it should be effective, we have an ideal of perfect competition, an ideal of high-GDP growth in low inflation, the effort to achieve high competitiveness …). To this end, we create models, modern parables,

I will try to show that mathematics, models, equations, and statistics are just the tip of the iceberg of economics; that the biggest part of the iceberg of economic knowledge consists of everything else; and that disputes in economics are rather a battle of stories and various metanarratives than anything else.

Before it was emancipated as a field, economics lived happily within subsets of philosophy—ethics, for example—miles away from today’s concept of economics as a mathematical-allocative science that views “soft sciences” with a scorn born from positivistic arrogance. But our thousand-year “education” is built on a deeper, broader, and oftentimes more solid base. It is worth knowing about.

is a paradox that a field that primarily studies values wants to be value-free. One more paradox is this: A field that believes in the invisible hand of the market wants to be without mysteries.

mathematics at the core of economics, or is it just the icing of the cake, the tip of the iceberg of our field’s inquiry?

we seek to chart the development of the economic ethos. We ask questions that come before any economic thinking can begin—both philosophically and, to a degree, historically. The area here lies at the very borders of economics—and often beyond. We may refer to this as protoeconomics (to borrow a term from protosociology) or, perhaps more fittingly, metaeconomics (to borrow a term from metaphysics).

The more important elements of a culture or field of inquiry such as economics are found in fundamental assumptions that adherents of all the various systems within the epoch unconsciously presuppose. Such assumptions appear so obvious that people do not know what they are assuming, because no other way of putting things has ever occurred to them, as the philosopher Alfred Whitehead notes in Adventures of Ideas.

I argue that economic questions were with mankind long before Adam Smith. I argue that the search for values in economics did not start with Adam Smith but culminated with him.

We should go beyond economics and study what beliefs are “behind the scenes,” ideas that have often become the dominant yet unspoken assumptions in our theories. Economics is surprisingly full of tautologies that economists are predominantly unaware of. I

argue that economics should seek, discover, and talk about its own values, although we have been taught that economics is a value-free science. I argue that none of this is true and that there is more religion, myth, and archetype in economics than there is mathematics.

In a way, this is a study of the evolution of both homo economicus and, more importantly, the history of the animal spirits within him. This book tries to study the evolution of the rational as well as the emotional and irrational side of human beings.

I argue that his most influential contribution to economics was ethical. His other thoughts had been clearly expressed long before him, whether on specialization, or on the principle of the invisible hand of the market. I try to show that the principle of the invisible hand of the market is much more ancient and developed long before Adam Smith. Traces of it appear even in the Epic of Gilgamesh, Hebrew thought, and in Christianity, and it is expressly stated by Aristophanes and Thomas Aquinas.

This is not a book on the thorough history of economic thought. The author aims instead to supplement certain chapters on the history of economic thought with a broader perspective and analysis of the influences that often escape the notice of economists and the wider public.

Progress (Naturalness and Civilization)

The Economy of Good and Evil

from his beginnings, man has been marked as a naturally unnatural creature, who for unique reasons surrounds himself with external possessions. Insatiability, both material and spiritual, are basic human metacharacteristics, which appear as early as the oldest myths and stories.

the Hebrews, with linear time, and later the Christians gave us the ideal (or amplified the Hebrew ideal) we now embrace. Then the classical economists secularized progress. How did we come to today’s progression of progress, and growth for growth’s sake?

The Need for Greed: The History of Consumption and Labor

Metamathematics From where did economics get the concept of numbers as the very foundation of the world?

All of economics is, in the end, economics of good and evil. It is the telling of stories by people of people to people. Even the most sophisticated mathematical model is, de facto, a story, a parable, our effort to (rationally) grasp the world around us.

idea that we can manage to utilize our natural egoism, and that this evil is good for something, is an ancient philosophical and mythical concept. We will also look into the development of the ethos of homo economicus, the birth of “economic man.”

The History of Animal Spirits: Dreams Never Sleep

Masters of the Truth

Originally, truth was a domain of poems and stories, but today we perceive truth as something much more scientific, mathematical. Where does one go (to shop) for the truth? And who “has the truth” in our epoch?

Our animal spirits (something of a counterpart to rationality) are influenced by the archetype of the hero and our concept of what is good.

The entire history of ethics has been ruled by an effort to create a formula for the ethical rules of behavior. In the final chapter we will show the tautology of Max Utility, and we will discuss the concept of Max Good.

The History of the Invisible Hand of the Market and Homo Economicus

We understand “economics” to mean a broader field than just the production, distribution, and consumption of goods and services. We consider economics to be the study of human relations that are sometimes expressible in numbers, a study that deals with tradables, but one that also deals with nontradables (friendship, freedom, efficiency, growth).

When we mention economics in this book, we mean the mainstream perception of it, perhaps as best represented by Paul Samuelson.

By the term homo economicus, we mean the primary concept of economic anthropology. It comes from the concept of a rational individual, who, led by narrowly egotistical motives, sets out to maximize his benefit.

the Epic of Gilgamesh bears witness to the opposite—despite the fact that the first written clay fragments (such as notes and bookkeeping) of our ancestors may have been about business and war, the first written story is mainly about great friendship and adventure.

Even today we live in Gilgamesh’s vision that human relations—and therefore humanity itself—are a disturbance to work and efficiency; that people would perform better if they did not “waste” their time and energy on nonproductive things.

is a story of nature and civilization, of heroism, defiance, and the battle against the gods, and evil; an epic about wisdom, immortality, and also futility.

But it is in friendship where—often by-the-way, as a side product, an externality—ideas and deeds are frequently performed or created that together can altogether change the face of society.19 Friendship can go against an ingrained system in places where an individual does not have the courage to do so himself or herself.

started with Babylonians—rural nature becomes just a supplier of raw materials, resources (and humans the source of human resources). Nature is not the garden in which humans were created and placed, which they should care for and which they should reside in, but becomes a mere reservoir for natural (re)sources.

To be human seems to be somewhere in between, or both of these two. We

The entire history of culture is dominated by an effort to become as independent as possible from the whims of nature.39 The more developed a civilization is, the more an individual is protected from nature and natural influences and knows how to create around him a constant or controllable environment to his liking.

The epic captures one of the greatest leaps in the development of the division of labor. Uruk itself is one of the oldest cities of all, and in the epic it reflects a historic step forward in specialization—in the direction of a new social city arrangement. Because of the city wall, people in the city can devote themselves to things other than worrying about their own safety, and they can continue to specialize more deeply.

“The chief thing which the common-sense individual wants is not satisfactions for the wants he had, but more, and better wants.”47

If a consumer buys something, theoretically it should rid him of one of his needs—and the aggregate of things they need should be decreased by one item. In reality, though, the aggregate of “I want to have” expands together with the growing aggregate of “I have.”

the Old Testament, this relationship is perceived completely differently. Man (humanity) is created in nature, in a garden. Man was supposed to care for the Garden of Eden and live in harmony with nature and the animals. Soon after creation, man walks naked and is not ashamed, de facto the same as the animals. What is characteristic is that man dresses (the natural state of creation itself is not enough for him), and he (literally and figuratively) covers52 himself—in shame after the fall.53

Nature is where one goes to hunt, collect crops, or gather the harvest. It is perceived as the saturator of our needs and nothing more. One goes back to the city to sleep and be “human.” On the contrary, evil resides in nature. Humbaba lives in the cedar forest, which also happens to be the reason to completely eradicate it.

Symbolically, then, we can view the entire issue from the standpoint of the epic in the following way: Our nature is insufficient, bad, evil, and good (humane) occurs only after emancipation from nature (from naturalness), through culturing and education. Humanity is considered as being in civilization.

The city was frequently (at least in older Jewish writings) a symbol of sin, degeneration, and decadence—nonhumanity. The Hebrews were originally a nomadic nation, one that avoided cities. It is no accident that the first important city57 mentioned in the Bible is proud Babylon,58 which God later turns to dust.

is enough, for example, to read the Book of Revelation to see how the vision of paradise developed from the deep Old Testament period, when paradise was a garden. John describes his vision of heaven as a city—paradise is in New Jerusalem, a city where the dimensions of the walls(!) are described in detail, as are the golden streets and gates of pearl.

Hebrews later also chose a king (despite the unanimous opposition of God’s prophets) and settled in cities, where they eventually founded the Lord’s Tabernacle and built a temple for Him. The city of Jerusalem later gained an illustrious position in all of religion.

this time Christianity (as well as the influence of the Greeks) does not consider human naturalness to be an unambiguous good, and it does not have such an idyllic relationship to nature as the Old Testament prophets.

If a tendency toward good is not naturally endowed in people, it must be imputed from above through violence or at least the threat of violence.

If we were to look at human naturalness as a good, then collective social actions need a much weaker ruling hand. If people themselves have a natural tendency (propensity) toward good, this role does not have to be supplied by the state, ruler, or, if you wish, Leviathan.

How does this affect economics?

us return for the last time to the humanization of the wild Enkidu, which is a process we can perceive with a bit of imagination as the first seed of the principle of the market’s invisible hand, and therefore the parallels with one of the central schematics of economic thinking.

Sometimes it is better to “harness the devil to the plow” than to fight with him. Instead of summoning up enormous energy in the fight against evil, it is better to use its own energy to reach a goal we desire; setting up a mill on the turbulent river instead of futile efforts to remove the current. This is also how Saint Prokop approached it in one of the oldest Czech legends.

Enkidu caused damage and it was impossible to fight against him. But with the help of a trap, trick, this evil was transformed into something that greatly benefited civilization.

By culturing and “domesticating” Enkidu, humanity tamed the uncontrollable wild and chaotic evil

Enkidu devastated the doings (the external, outside-the-walls) of the city. But he was later harnessed and fights at the side of civilization against nature, naturalness, the natural state of things.

A similar story (reforming something animally wild and uncultivated in civilizational achievement) is used by Thomas Aquinas in his teachings. Several centuries later, this idea is fully emancipated in the hands of Bernard Mandeville and his Fable of the Bees: or, Private Vices, Publick Benefits. The economic and political aspects of this idea are—often incorrectly—ascribed to Adam Smith.

Here the individual does not try anymore to maximize his goods or profits, but what is important is writing his name in human memory in the form of heroic acts or deeds.

immortality, one connected with letters and the cult of the word: A name and especially a written name survives the body.”77

After this disappointment, he comes to the edge of the sea, where the innkeeper Siduri lives. As tonic for his sorrow, she offers him the garden of bliss, a sort of hedonistic fortress of carpe diem, where a person comes to terms with his mortality and at least in the course of the end of his life maximizes earthly pleasures, or earthly utility.

In the second stage, after finding his friend Enkidu, Gilgamesh abandons the wall and sets out beyond the city to maximalize heroism. “In his (…) search of immortal life, Gilgamesh

The hero refuses hedonism in the sense of maximizing terrestrial pleasure and throws himself into things that will exceed his life. In the blink of an eye, the epic turns on its head the entire utility maximization role that mainstream economics has tirelessly tried to sew on people as a part of their nature.81

today remember Gilgamesh for his story of heroic friendship with Enkidu, not for his wall, which no longer reaches monumental heights.

the eleventh and final tablet, Gilgamesh again loses what he sought. Like Sisyphus, he misses his goal just before the climax

The very existence of questions similar to today’s economic ones can be considered as the first observation. The first written considerations of the people of that time were not so different from those today. In other words: The epic is understandable for us, and we can identify with it.

We have also been witnesses to the very beginnings of man’s culturing—a great drama based on a liberation and then a distancing from the natural state.

Let us take this as a memento in the direction of our restlessness, our inherited dissatisfaction and the volatility connected to it. Considering that they have lasted five thousand years and to this day we find ourselves in harmony with a certain feeling of futility, perhaps these characteristics are inherent in man.

with the phenomenon of the creation of the city, we have seen how specialization and the accumulation of wealth was born, how holy nature was transformed into a secular supplier of resources, and also how humans’ individualistic ego was emancipated.

For small acts (hunting together, work in a factory), small love is enough: Camaraderie. For great acts, however, great love is necessary, real love: Friendship. Friendship that eludes the economic understanding of quid pro quo. Friendship gives. One friend gives (fully) for the other. That is friendship for life and death,

less a civilized, city person is dependent on nature, the more he or she is dependent on the rest of society. Like Enkidu, we have exchanged nature for society; harmony with (incalculable) nature for harmony with (incalculable) man.

human nature good or evil? To this day these questions are key for economic policy: If we believe that man is evil in his nature, therefore that a person himself is dog eat dog (animal), then the hard hand of a ruler is called for. If we believe that people in and of themselves, in their nature, gravitate toward good, then it is possible to loosen up the reins and live in a society that is more laissez-faire.

For a concept of historical progress, for the undeification of heroes, rulers, and nature, mankind had to wait for the Hebrews.

Because nature is not undeified, it is beyond consideration to explore it, let alone intervene in it (unless a person was a two-thirds god like Gilgamesh). It

As early as the “dark” ages, the Jews commonly used economic tools that were in many ways ahead of their time and that later became key elements of the modern economy:

Gilgamesh’s story ends where it began. There is a consistency in this with Greek myths and fables: At the end of the story, no progress occurs, no essential historic change; the story is set in indefinite time, something of a temporal limbo.

For a nation originally based on nomadism, where did this Jewish business ethos come from? And can the Hebrews truly be considered as the architects of the values that set the direction of our civilization’s economic thought?

PROGRESS: A SECULARIZED RELIGION One of the things the writers of the Old Testament gave to mankind is the idea and notion of progress. The Old Testament stories have their development; they change the history of the Jewish nation and tie in to each other. The Jewish understanding of time is linear—it has a beginning and an end.

The observance of God’s Commandments in Judaism leads not to some ethereal other world, but to an abundance of material goods (Genesis 49:25–26, Leviticus 26:3–13, Deuteronomy 28:1–13) (…) There are no accusing fingers pointed at

There are no echoes of asceticism nor for the cleansing and spiritual effect of poverty. It is fitting therefore, that the founders of Judaism, the Patriarchs Abraham, Isaac and Jacob, were all wealthy men.12

about due to a linear understanding of history. If history has a beginning as well as an end, and they are not the same point, then exploration suddenly makes sense in areas where the fruits are borne only in the next generation.

however, the idea of progress itself underwent major changes, and today we perceive it very differently. As opposed to the original spiritual conceptions, today we perceive progress almost exclusively in an economic or scientific-technological sense.

Because care for the soul has today been replaced by care for external things,

This is why we must constantly grow, because we (deep down and often implicitly) believe that we are headed toward an (economic) paradise on Earth.

Only since the period of scientific-technological revolution (and at a time when economics was born as an independent field) is material progress automatically assumed.

Jewish thought is the most grounded, most realistic school of thought of all those that have influenced our culture.17 An abstract world of ideas was unknown to the Jews. To this day it is still forbidden to even depict God, people, and animals in symbols, paintings, statues, and drawings.

economists have become key figures of great importance in our time (Kacířské eseje o filosofii dějin [Heretical Essays in the Philosophy of History]). They are expected to perform interpretations of reality, give prophetic services (macroeconomic forecasts), reshape reality (mitigate the impacts of the crisis, speed up growth), and, in the long run, provide leadership on the way to the Promised Land—paradise on Earth.

REALISM AND ANTIASCETICISM Aside from ideas of progress, the Hebrews brought another very fundamental contribution to our culture: The desacralization of heroes, nature, and rulers.

Voltaire writes: “It certain fact is, that in his public laws he [Moses] never so much as once made mention of a life to come, limiting all punishments and all rewards to the present life.”21

As opposed to Christianity, the concept of an extraterrestrial paradise or heaven was not developed much in Hebrew thought.19 The paradise of the Israelites—Eden—was originally placed on Earth at a given place in Mesopotamia20 and at a given time,

The Hebrews consider the world to be real—not just a shadow reflection of a better world somewhere in the cloud of ideas, something the usual interpretation of history ascribes to Plato. The soul does not struggle against the body and is not its prisoner, as Augustine would write later.

The land, the world, the body, and material reality are for Jews the paramount setting for divine history, the pinnacle of creation. This idea is the conditio sine qua non of the development of economics, something of an utterly earthly making,

The mythology of the hero-king was strongly developed in that period, which Claire Lalouette summarizes into these basic characteristics: Beauty (a perfect face, on which it is “pleasant to look upon,” but also “beauty,” expressed in the Egyptian word nefer, not only means aesthetics, but contains moral qualities as well),

THE HERO AND HIS UNDEIFICATION: THE DREAM NEVER SLEEPS The concept of the hero is more important than it might appear. It may be the remote origin of Keynes’s animal spirits, or the desire to follow a kind of internal archetype that a given individual accepts as his own and that society values.

This internal animator of ours, our internal mover, this dream, never sleeps and it influences our behavior—including economic behavior—more than we want to realize.

Anthropology knows several archetypes of heroes. The Polish-born American anthropologist Paul Radin examined the myths of North American Indians and, for example, in his most influential book, The Trickster, he describes their four basic archetypes of heroes.

The Torah’s heroes (if that term can be used at all) frequently make mistakes and their mistakes are carefully recorded in the Bible—maybe precisely so that none of them could be deified.32

the Hebrew heroes correspond most to the Tricksters, the Culture Bearers, and the Twins. The divine muscleman, that dominant symbol we think of when we say hero, is absent here.

Undeification, however, does not mean a call to pillage or desecration; man was put here to take care of nature (see the story of the Garden of Eden or the symbolism of the naming of the animals). This protection and care of nature is also related to the idea of progress

For the heroes who moved our civilization to where it is today, the heroic archetypes of the cunning trickster, culture bearer, and sufferer are rather more appropriate.

the Old Testament strongly emphasizes the undeification of nature.37 Nature is God’s creation, which speaks of divinity but is not the domain of moody gods

in an Old Testament context, the pharaoh was a mere man (whom one could disagree with, and who could be resisted!).

RULERS ARE MERE MEN In a similar historical context, the Old Testament teachings carried out a similar desacralization of rulers, the so-called bearers of economic policy.

Ultimately the entire idea of a political ruler stood against the Lord’s will, which is explicitly presented in the Torah. The Lord unequivocally preferred the judge as the highest form of rule—an

The needs of future generations will have to be considered; after all humankind are the guardians of God’s world. Waste of natural resources, whether privately owned or nationally owned is forbidden.”39

Politics lost its character of divine infallibility, and political issues were subject to questioning. Economic policy could become a subject of examination.

44 God first creates with the word and then on individual days He divides light from darkness, water from dry land, day from night, and so forth—and He gives order to things.45 The world is created orderly— it is wisely, reasonably put together. The way of the world is put together at least partially46 decipherably by any other wise and reasonable being who honors rational rules.

THE PRAISE OF ORDER AND WISDOM: MAN AS A PERFECTER OF CREATION The created world has an order of sorts, an order recognizable by us as people,

From the very beginning, when God distances Himself from the entire idea, there is an anticipation that there is nothing holy, let alone divine, in politics. Rulers make mistakes, and it is possible to subject them to tough criticism—which frequently occurs indiscriminately through the prophets in the Old Testament.

Hebrew culture laid the foundations for the scientific examination of the world.

Examining the world is therefore an absolutely legitimate activity, and one that is even requested by God—it is a kind of participation in the Creator’s work.51 Man is called on to understand himself and his surroundings and to use his knowledge for good.

The Book of Proverbs emphasizes specifically several times that it was wisdom that was present at the creation of the world. Wisdom personified calls out: