Nature's Evil

The conversion of natural riches, extracted by the efforts of many generations, into gold reserves is not an economic but a political phenomenon. Norway invests its profits from oil in shares in American and European companies. Some petro-states, for example Iran, spend their oil revenues on physical survival and armaments. But, in Russia, the exchange of oil for gold played a uniquely important role. Following the Russian model, in 2018 the president of Venezuela promised to create the second greatest gold reserve in the world; he didn’t succeed, and his country is suffering from hyperinflation. In the world of petro-states and sovereign funds, the strategy of the Russian authorities to convert oil revenues into gold is their special invention.

The Russian political economy is reproducing, either consciously or more likely not, the mercantilist policies of classical empires. Exploiting their colonial resources, the mercantilists believed that the main goal of state policy was a positive balance of trade – more exports than imports – which would lead to the accumulation of gold and silver in the treasury. The mercantile state was there not for the glory of the sovereign and not for the happiness of its subjects, but for the sake of gold in the treasury. Modern economic thought began with the criticism of these regimes, so that mercantilism today is considered as something known and obsolete but not quite intelligible. The mercantile system divided the world into ‘us and them’, and the relations between these two were considered along the lines of a zero-sum game or a tug-of-war: someone’s gain is always another’s loss. The mercantilists weren’t socialists; land, factories and commodities remained in private hands. But the state was always imposing new taxes, tariffs and excise duties on the merchants and entrepreneurs. The restraint of public consumption was a key element in this system. Subsistence farmers could consume whatever was locally available, but the import of foodstuffs or luxuries involved the spending of gold, and this had to be checked. Adam Smith’s ideas of free trade and Jeremy Bentham’s utilitarian principles turned mercantilism into an archaic apparition from the era of sugar islands, plantation slavery and the gold standard. In theory, mercantilism could not survive democracy: if people are empowered to pursue happiness, they want their state to spend funds, not to hoard them. In practice, some of the most powerful states in the world still practise – though they do not preach – mercantilism. But it is still true that excessive attention to gold reserves is a sign of imminent disaster.

Note

Notes

1   Herodotus, The History , p. 106. 2   Marx, Capital , Vol. 1, p. 47. 3   Appiah, ‘Is the post- in postmodernism the post- in postcolonial?’; Moore, ‘Is the post- in postcolonial the post- in post-Soviet?’. 4   Kant, ‘Conjectures on the beginning of human history’, p. 225. 5   Hume, Political Essays , p. 122. 6   Istoriya torgovli , Vol. 1, p. 29. 7   Breen,

The Age of Intoxication , p. 7. 8   For the concept of ‘public bads’, see Beck, The Metamorphosis of the World . 9   Berg, ‘From imitation to invention’. 10  Berg, ‘In pursuit of luxury’, p. 118; Daunton, State and Market in Victorian Britain . 11  Hume, ‘Of commerce’, in Political Essays , p. 102. 12  Daggett, The Birth of Energy

. 13  Hume, ‘Of money’, in Political Essays , p. 118. 14  Hume, ‘Of commerce’, pp. 93–104. 15  Hume, ‘Of refinement in the arts’, in Political Essays , p. 107. 16  Bentham, Emancipate Your Colonies , p. 21. 17 Etkind, Internal Colonization . 18  Innis,

The Fur Trade in Canada ; Allen, Global Economic History . 19  Podobnik, Global Energy Shifts ; Fischer-Kowalski et al., ‘Energy transitions and social revolutions’. 20  Krugman, Rethinking International Trade . 21  Toye and Toye, ‘The origins and interpretation of the Prebisch–Singer thesis’; Harvey et al., ‘The Prebisch–Singer hypothesis’. 22  Polanyi, Origins of Our Time: The Great Transformation

, p. 26; Arendt, The Origins of Totalitarianism , pp. 188, 199. 23  Mirkin, ‘Rost zolotogo zapasa v Rossii’. 24  Budnitskiy, Den’gi russkoy emigratsii . 25  Osokina, Zoloto dlya industrializatsii .

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