Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.Is it morally wrong to accumulate money? If you asked most westerners that question today, the answer would be “no”. The expansion of wealth is, after all, the raison d’être of modern finance, be that via hedge funds, pension plans or other investments.But seven centuries ago in Europe, the reply would have been different — as a new exhibition at New York’s Morgan Library lays out, by looking at what happened when money first entered widespread circulation in the west (first with coins, and then via the paper money concept, imported from China.) This technological leap triggered an “unprecedented” surge in trade and economic growth, “transform[ing] every aspect of medieval society”, says Deirdre Jackson, assistant curator of medieval and Renaissance manuscripts at the library. It was the 15th-century equivalent of the introduction of the internet.But this financialisation also sparked a “crisis of values”, Jackson adds, since money was considered intrinsically sinful by the Christian church. Thus artworks from that period, such as Hieronymus Bosch’s “Death and the Miser”, contained elaborate depictions of avarice.The only way for the rich to avoid damnation was to renounce luxury (as paintings of that era show St Francis of Assisi doing), or make donations to support art, education and religion. Economic capital was not admired for its own sake — not unless it was converted to “cultural” capital, to cite the concept developed by the French sociologist Pierre Bourdieu, and encompassed political, moral and social capital too.Eight centuries later, this might seem like mere historical trivia. But the message from the Morgan Library (originally the personal collection of Wall Street financier John Pierpont Morgan) is worth pondering today. Particularly at a time of rising political populism — and as Americans race to make tax-exempt charitable donations before the end of the year.In the last decade, debates about inequality have exploded in the economics community after a long hiatus, following the publication of the unlikely 2014 best-seller Capital in the Twenty-First Century by the French economist Thomas Piketty. This argued that inequality has inexorably increased in modern times because the returns on economic capital held by the rich keep outstripping growth — a view challenged last year in a book by Phil Gramm, Robert Ekelund and John Early (and most recently, in a new paper by Gerald Auten and David Splinter, who criticise Piketty’s methodology).But while this fight about the numbers is fascinating — and likely to intensify — it only captures part of the tale. As the economic historian Guido Alfani shows in his history of the rich in the west, there is also a striking story about cultural shifts. In some senses, the western political economy today retains faint echoes of the sentiments on display in the Morgan Library. Leftwing politicians continue to rail against excessive financialisation and extremes of wealth. And rich people continue to convert at least some of their economic capital into cultural, moral and political capital. Last year, for example, Americans made almost $500bn in philanthropic donations.However, Alfani identifies two notable differences between the past and the present day. First, the accumulation of money is more acceptable now (in the US at least) than it was when Bosch was painting financiers heading to hell. Just think of how the publication of annual “rich lists” sparks admiration and curiosity — as well as fury. Or the fact that when Donald Trump conducted his 2016 presidential campaign he specifically extolled his wealth as a mark of success. “So much seems to have changed since the Middle Ages when the rich were required not to appear to be wealthy . . . as this was considered intrinsically sinful,” Alfani writes. Alfani also argues there is less pressure for the wealthy today to redistribute their riches at times of crisis. “The rich are no longer playing what has been their main social role for many centuries,” he says, noting that while wealth taxes were common in the past, they are wildly controversial today. Instead, a legal ecosystem has emerged that enables the wealthy to minimise their tax bills. And the only occasion when significant redistribution occurred in the last century was after the violent shock of the second world war. On top of this, I would cite a third distinction (albeit one which Alfani does not stress): that the process of turning economic capital into cultural and political capital has become more morally contentious. In centuries past, when wealthy people made donations to artists, intellectuals, churches or social projects, it was assumed that they could control the institutions they patronised. Today, the rich continue to exert influence, but in a subtle manner: the idea that they could use donations explicitly to dominate politics, art or intellectual life is controversial. Just look at the backlash that occurred when wealthy American donors such as the financial titans Bill Ackman and Marc Rowan called for the dismissal of university presidents.Or to put it another way, one hallmark — and irony — of our modern western political economy is that while being rich is no longer considered intrinsically sinful, there is moral unease about the idea of using wealth overtly to control politics, culture or intellectual life. It is a paradox that might have made even John Pierpont Morgan chuckle. [email protected] More
