Dear Prof Lipsey

The point I took from Berkeley is one I would generalise, after this
fashion.  It is widely held that Chinese culture suffers from something like
a chronic democratic or political deficit in comparison to England, and
maybe Europe.  Terms like despotism etc are regularly used.  I think there
is some validity in this point, though it is often exaggerated.  What is
missed however is recognition of a corresponding, complementary chronic
economic deficit in European and especially English culture.  This deficit
comes out starkly when the coinage is examined – which of course is exactly
what Berkeley was talking about.  He and I are making the same point.  The
mass of the population in England and Europe were locked out of the market
system – unlike the Chinese - they were not given the coinage necessary to
join it

Regarding the development of money, it seems to me there probably never was
pure barter.  Shrewd Palaeolithic types would surely form judgements about
value on the basis of labour etc.  My guess is that ideas about money
increase in sophistication continuously over time.  Coinage however is a
step jump, dramatic in its occurrence and consequences.  Current thinking is
that the first coins were used in Lydia about 610 BC.  The practice spread
rapidly, as far west as Athens by about 550 BC.  It skipped Persia but
spread via Kabul to the Ganges by about 450 BC.  Coin use in China may be a
completely separate development, but it too seems to commence around 500 BC.
 Its introduction led directly to a kind of intellectual ferment everywhere
it happened.  I would call it the First Enlightenment, historically called
“pre-Socratic philosophy” in Greece, “the hundred schools contending” in
China, and recorded in the Upanishads in India.  Outside of economics there
is some partial recognition of these facts, I would cite Ure, Kurke and to
some extent Popper.  The phenomenon of the failure of the West to provide
“small change” has been recently, belatedly, noticed by a number of people
in economics: Sargent and Velde, Selgin etc, but it is not understood by
these writers (see Munro and Yeager on that)

Regarding Berkeley on Chinese manufacturing – I think the fact that he was
alive in 1737 lends its advantages.  His conclusions doubtless would rest on
the great imbalance in the trade in manufactured goods between East and West
at that time.  I have big doubts about trying to criticise this conclusion
on the basis of statistics taken from modern sources like Clark.  Even
concerning his best sources, the English economic statistics, Hatcher
correctly concluded Clark “grossly exaggerated” his conclusions.

Apologies for the complicated mail, but this matter seems to me a big,
chronic, root and branch problem.

Regards

Rob Tye, York, UK