[2025-06-17]

Pretty interesting and short read on credit development from the view of comparative economics history. Main argument, surprisingly, formed around the role of oligarchy in city/country states.

The economic branch of historical science is one of rather curious to me. For the cases where data exist - and its collection must be the most painful and long part of the research process, the outcomes are pretty convincing. I.e. if one is able to collect and organise the information on the government/public loans, it seems quite useful to compare the regions from their developmental perspective, and/or in addition with other features relevant for the given object or observation.

That’s basically what the author did here, however, more in a meta setup, with academically rigorous compilation of sources, some significant usage of regression analysis, and even a little bit of game theory.

When one will look less on the method, but on the content it’s a rather small set of new arguments that you learn, but with more examples and angles they were viewed from - in my opinion, presented rather convincingly. Those being - the gigantic difference on the path of economic development the city-states had vs. the country-states.

Throughout the book, we see many examples of differences not only in primary output metric - interest rate on debt, but others as well, i.e. executive branch efficiency (city assemblies gathered much more frequently), tax collection, information sharing, etc.

While much of it ‘looks obvious, it wasn’t to the people at the time (efforts to establish centralised tax/debt collection on long-distance provinces were mostly futile), nor it’s irrelevant to the modern world.

There’s still known variations of say investment efficiency on the distance (i.e. SV firms vs. NYC vs. LA, etc.), the same for the government efficiency and policy.

The contradictory part of the book highlights the cases with the smallest interest rates at the time, which were found in a) city-states, b) with assemblies with fiscal responsibilities (policy & collection) c) not actually representative, but oligarchical.

Last point in the explained setup is simple, but not that modernly intuitive. It goes with the argument that the low interest rates (i.e. responsible borrowing & payment) is more probable when people in power (i.e. merchants, oligarchy, etc.) also own a significant share of such public debt and have all the incentives to see it being paid.

So, if one translates it into the recommendation of having local and responsible fiscal policies, active representatio,n and actual financial transparency, then only incentivisation is left to put it towards a modern picture for most economies, which then seems quite sensible.