How Alchemy Led to the Modern Economy

How Alchemy Led to the Modern Economy

For a certain kind of economic conservative, the cardinal sin of modern governments is printing money whenever they please. Currency's value should be tied to something real, they say, as it was for Americans before 1971, when we were on the gold standard. Let there be a natural limit on the money supply! Let people have to work to create value! Alas, as Ron Paul once said, "too many politicians believed that a free lunch was possible and a new economic paradigm had arrived. But we’ve heard that one before — like the philosopher’s stone that could turn lead into gold. Prosperity without work is a dream of the ages." That line sprang to mind yesterday as I read this fascinating post by the economic historian Carl Wennerlind. It seems advanced thinkers in 17th-century England also thought creating money from nothing was like alchemy. They didn't mean it as a diss, though. They thought alchemy was great. They wanted to wreak alchemical wonders on the money supply, and if they hadn't succeeded, there'd be no modern world.


It's often said that hard-money financial conservatism is independent of social-values conservatism, but Wennerlind's historical delvings suggest that this distinction may be more a matter of emphasis than of essence. Social-values conservatism, after all, is premised on the idea that there are eternal truths about life that we cannot improve upon. Therefore what looks like "progress" to liberals is actually a falling away from an unchanging ideal.

That view of "social issues" sounds, to my ear at least, very like the view of economics propounded by mercantilists in the 17th century. Money, they believed, existed to sustain an unchanging and natural order in society, as Wennerlind explains in his description of their views: "When money plays its proper role as a measure of value and medium of exchange, society’s finite wealth flows to its appropriate place in the social hierarchy and the balance of power between different segments of society was maintained. When the proper balance is reached it is also possible to uphold the traditional social and moral order of the body politic." When the money supply was too tight, though, the nation's order was threatened. So the government should do everything it could to keep its gold and get more from other countries (for instance, by selling more to them and purchasing less).

After the Cromwellian revolution, though, a new philosophy of money arose in England, based, Wennerlind explains, on a different premise. Society, in the new view, wasn't constantly striving to keep itself in an unchanging perfect condition. Rather, it was expanding all the time—in knowledge, power, technical ability. The new thinkers didn't see a static nation whose economy needed a fixed amount of cash. Instead, they saw an economy that would just keep growing and growing and growing along with society. "The main challenge now," writes Wennerlind, "was to find a way to expand the money stock so that it could keep pace with the ever growing world of goods."

What to do, then, about the absolute limit on the amount of gold or silver or other valuable stuff in the world? The innovators' first notion of a solution, Wennerlind writes, was obvious: Make more gold and silver, by alchemy. This was, after all, long before alchemy was read out of the precincts of respectable science (many great intellects, including Baruch Spinoza, respected the craft and some, including Isaac Newton, even dabbled in it).

Long story short: Turning lead into gold didn't work out. So, writes Wennerlind, it was on to Plan B: Create money based on trust, rather than cold, hard metal. Metaphorical alchemy replaced the literal kind, and a good bank, in the words of one of these modernizers, would be "capable of multiplying the stock of the Nation, for as much as concernes trading in Infinitum: In breife, it is the Elixir or Philosophers Stone."

Wennerlind's point here is not simply that credit replaced alchemical voodoo as a means to create more currency without having to go mine gold. He's saying that, along with alchemy, many other ideas from the scientific revolution were essential to the birth of the modern economy. For example: When money is based on credit rather than stuff, people need to be sure they can trust the currency. The guarantees devised to solve that problem, were, according to Wennerlind, much the same as the guarantees scientists offered about the knowledge they were turning up in their experiments.

As scientists explained each step of their experiments, so banks would issue honest reports of their dealings, letting the public make its judgment based on shared facts. As scientists were expected to behave with aristocratic honor and integrity, so banks would be entrusted only to a virtuous elite. As scientists sought out fraud and punished it, so the banking system would root out counterfeiters, and punish them even more severely (generally, by hanging). This is why, Wennerlind said, 17th century intellectuals did not find it at all strange that Newton should take time away from his scientific pursuits to become, in 1696, the Warden of the Royal Mint.

A landslide is imminent and so is its tsunami

An open letter predicts that a massive wall of rock is about to plunge into Barry Arm Fjord in Alaska.

Image source: Christian Zimmerman/USGS/Big Think
Surprising Science
  • A remote area visited by tourists and cruises, and home to fishing villages, is about to be visited by a devastating tsunami.
  • A wall of rock exposed by a receding glacier is about crash into the waters below.
  • Glaciers hold such areas together — and when they're gone, bad stuff can be left behind.

The Barry Glacier gives its name to Alaska's Barry Arm Fjord, and a new open letter forecasts trouble ahead.

Thanks to global warming, the glacier has been retreating, so far removing two-thirds of its support for a steep mile-long slope, or scarp, containing perhaps 500 million cubic meters of material. (Think the Hoover Dam times several hundred.) The slope has been moving slowly since 1957, but scientists say it's become an avalanche waiting to happen, maybe within the next year, and likely within 20. When it does come crashing down into the fjord, it could set in motion a frightening tsunami overwhelming the fjord's normally peaceful waters .

"It could happen anytime, but the risk just goes way up as this glacier recedes," says hydrologist Anna Liljedahl of Woods Hole, one of the signatories to the letter.

The Barry Arm Fjord

Camping on the fjord's Black Sand Beach

Image source: Matt Zimmerman

The Barry Arm Fjord is a stretch of water between the Harriman Fjord and the Port Wills Fjord, located at the northwest corner of the well-known Prince William Sound. It's a beautiful area, home to a few hundred people supporting the local fishing industry, and it's also a popular destination for tourists — its Black Sand Beach is one of Alaska's most scenic — and cruise ships.

Not Alaska’s first watery rodeo, but likely the biggest

Image source: whrc.org

There have been at least two similar events in the state's recent history, though not on such a massive scale. On July 9, 1958, an earthquake nearby caused 40 million cubic yards of rock to suddenly slide 2,000 feet down into Lituya Bay, producing a tsunami whose peak waves reportedly reached 1,720 feet in height. By the time the wall of water reached the mouth of the bay, it was still 75 feet high. At Taan Fjord in 2015, a landslide caused a tsunami that crested at 600 feet. Both of these events thankfully occurred in sparsely populated areas, so few fatalities occurred.

The Barry Arm event will be larger than either of these by far.

"This is an enormous slope — the mass that could fail weighs over a billion tonnes," said geologist Dave Petley, speaking to Earther. "The internal structure of that rock mass, which will determine whether it collapses, is very complex. At the moment we don't know enough about it to be able to forecast its future behavior."

Outside of Alaska, on the west coast of Greenland, a landslide-produced tsunami towered 300 feet high, obliterating a fishing village in its path.

What the letter predicts for Barry Arm Fjord

Moving slowly at first...

Image source: whrc.org

"The effects would be especially severe near where the landslide enters the water at the head of Barry Arm. Additionally, areas of shallow water, or low-lying land near the shore, would be in danger even further from the source. A minor failure may not produce significant impacts beyond the inner parts of the fiord, while a complete failure could be destructive throughout Barry Arm, Harriman Fiord, and parts of Port Wells. Our initial results show complex impacts further from the landslide than Barry Arm, with over 30 foot waves in some distant bays, including Whittier."

The discovery of the impeding landslide began with an observation by the sister of geologist Hig Higman of Ground Truth, an organization in Seldovia, Alaska. Artist Valisa Higman was vacationing in the area and sent her brother some photos of worrying fractures she noticed in the slope, taken while she was on a boat cruising the fjord.

Higman confirmed his sister's hunch via available satellite imagery and, digging deeper, found that between 2009 and 2015 the slope had moved 600 feet downhill, leaving a prominent scar.

Ohio State's Chunli Dai unearthed a connection between the movement and the receding of the Barry Glacier. Comparison of the Barry Arm slope with other similar areas, combined with computer modeling of the possible resulting tsunamis, led to the publication of the group's letter.

While the full group of signatories from 14 organizations and institutions has only been working on the situation for a month, the implications were immediately clear. The signers include experts from Ohio State University, the University of Southern California, and the Anchorage and Fairbanks campuses of the University of Alaska.

Once informed of the open letter's contents, the Alaska's Department of Natural Resources immediately released a warning that "an increasingly likely landslide could generate a wave with devastating effects on fishermen and recreationalists."

How do you prepare for something like this?

Image source: whrc.org

The obvious question is what can be done to prepare for the landslide and tsunami? For one thing, there's more to understand about the upcoming event, and the researchers lay out their plan in the letter:

"To inform and refine hazard mitigation efforts, we would like to pursue several lines of investigation: Detect changes in the slope that might forewarn of a landslide, better understand what could trigger a landslide, and refine tsunami model projections. By mapping the landslide and nearby terrain, both above and below sea level, we can more accurately determine the basic physical dimensions of the landslide. This can be paired with GPS and seismic measurements made over time to see how the slope responds to changes in the glacier and to events like rainstorms and earthquakes. Field and satellite data can support near-real time hazard monitoring, while computer models of landslide and tsunami scenarios can help identify specific places that are most at risk."

In the letter, the authors reached out to those living in and visiting the area, asking, "What specific questions are most important to you?" and "What could be done to reduce the danger to people who want to visit or work in Barry Arm?" They also invited locals to let them know about any changes, including even small rock-falls and landslides.

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