raghu wrote:
I take it then that you do not subscribe to the theory of sticky wages/prices? How do you explain the economic stimuli from the various Gold Rush episodes around the world?
Sure, wages and many prices were sticky at the time of the price revolution after Columbus invaded America. But a lot of this stickiness was solved by force (since the "market system" and capitalist-style property rights had not been well established). More crucially, I don't think that the magnitude of the stickiness was enough to explain much of the rise of capitalism in England. Most importantly, it seemed to me that Charles was suffering from money illusion. Now, there was a role for the gold in changing W. Europe. Whoever got the gold first was most likely to benefit. But in most cases, they didn't. At the time of the 1849 gold rush in California, it usually wasn't the miners who won (unless they found _a lot_ of gold). Rather, it was the merchants who controlled scarce goods who won, as prices rose skyward. Similarly, the direct beneficiaries of the gold (Spain) often didn't gain much at all. Rather, it was the English, Dutch, and French merchants who won. And they had to buy products from the manufacturers (which truly meant "hand work" at the time). Even they had to pay rising prices to suppliers of raw materials, who had to pay more for food. Gains from inflation tend to be transitory. -- Jim Devine / "Segui il tuo corso, e lascia dir le genti." (Go your own way and let people talk.) -- Karl, paraphrasing Dante.
