Sapiens: A Brief History of Humankind

by Yuval Noah Harari

In 1717 the Mississippi Company, chartered in France, set out to colonise the lower Mississippi valley, establishing the city of New Orleans in the process. To finance its ambitious plans, the company, which had good connections at the court of King Louis XV, sold shares on the Paris stock exchange. John Law, the company’s director, was also the governor of the central bank of France. Furthermore, the king had appointed him controller-general of finances, an office roughly equivalent to that of a modern finance minister. In 1717 the lower Mississippi valley offered few attractions besides swamps and alligators, yet the Mississippi Company spread tales of fabulous riches and boundless opportunities. French aristocrats, businessmen and the stolid members of the urban bourgeoisie fell for these fantasies, and Mississippi share prices skyrocketed. Initially, shares were offered at 500 livres apiece. On 1 August 1719, shares traded at 2,750 livres. By 30 August, they were worth 4,100 livres, and on 4 September, they reached 5,000 livres. On 2 December the price of a Mississippi share crossed the threshold of 10,000 livres. Euphoria swept the streets of Paris. People sold all their possessions and took huge loans in order to buy Mississippi shares. Everybody believed they’d discovered the easy way to riches. 39. New Amsterdam in 1660, at the tip of Manhattan Island. The settlement’s protective wall is today paved over by Wall Street. A few days later, the panic began. Some specu...

Does anybody see the parallels with today's Corona, the Fed's seemingly unlimited money printing, and the stockmarket skyrocketing?

While the British could borrow money easily and at low interest rates, France had difficulties securing loans, and had to pay high interest on them. In order to finance his growing debts, the king of France borrowed more and more money at higher and higher interest rates. Eventually, in the 1780s, Louis XVI, who had ascended to the throne on his grandfather’s death, realised that half his annual budget was tied to servicing the interest on his loans, and that he was heading towards bankruptcy. Reluctantly, in 1789, Louis XVI convened the Estates General, the French parliament that had not met for a century and a half, in order to find a solution to the crisis. Thus began the French Revolution.

How can we square the consumerist ethic with the capitalist ethic of the business person, according to which profits should not be wasted, and should instead be reinvested in production? It’s simple. As in previous eras, there is today a division of labour between the elite and the masses. In medieval Europe, aristocrats spent their money carelessly on extravagant luxuries, whereas peasants lived frugally, minding every penny. Today, the tables have turned. The rich take great care managing their assets and investments, while the less well-heeled go into debt buying cars and televisions they don’t really need.

The world upside down.

If happiness is determined by expectations, then two pillars of our society – mass media and the advertising industry – may unwittingly be depleting the globe’s reservoirs of contentment.