b. ㉣ Primitive Economy and Advanced Economy

㉣ Primitive Economy and Advanced Economy

 

Let me combine subsistence economy and barter economy and call them "primitive economy." Since currency has been used in everyday life for at least 2,500 years, it is not significantly inappropriate to call the economy before the use of currency a "primitive economy." Then, from the fact that the sophisticated economic system depends on the political order, it can be concluded that when the political order is destroyed, the economy retreats to a primitive economy.

 

During the severe crisis known as the "Crisis of the 3rd Century," which lasted for about 100 years from 192 to 284, the Roman Empire faced a decline in the quality of its currency, social and economic chaos due to pandemics, civil unrest, and invasions from the Germanic tribes. As a result, Rome's "commodity and currency economy transformed into a more natural economy," which is an example of retreating to a primitive economy. In 1916, during World War I, Russia also experienced inflation, and as farmers who produced food could hardly buy consumer goods in the market, the pattern of self-sufficiency in rural areas was reinforced. Just as society regresses to a state of war when facing social chaos or crisis and the political order is destroyed^[Tab.2.1]㉡, the economy also reverts to a primitive economy when civilization or the political order collapses.

 

The structure of economic development can be explained by combining it with the layers of Samjae capacities, the 1st law. Let me assume that there is an established political order, and economic activity takes place on top of it. Above the economic activity lies value-pursuing activities. These value-pursuing activities are diverse, but for understanding economic phenomena, you can focus on the pursuit of economic wealth as the central part of ideological value.

 

Examples of such ideological values include Calvinism, where making money and becoming wealthy is a way to confirm religious salvation, and a social atmosphere that heroizes successful entrepreneurs who make a lot of money. In this realm, political cohesion must be introduced to enable advanced economic activities at a higher layer. For example, economic phenomena such as corporate activities and financial activities can be analyzed as the 5th layer in a layered structure, as shown in [Diag.4.사.1].

 

The advantage of an advanced economy system is that it is efficient and helps the actors participating in economic activities with their survival.

 

Layer	Domain of Samjae capacities	Specific Content
5th floor	Advanced Economy	Corporate and financial activities
4th floor	Political Relationships	Networking and organizational structure among economic actors
3rd floor	Pursuit of Values	Increasing economic wealth is (also) a good thing
2nd floor	Primitive Economy Activities	Production, exchange, and consumption of goods
1st floor	Political Order	Security supported by military power, police force, etc.
Ground floor	Barbaric (war) state	Destruction, plunder, massacre

[Diag.4.F.1] Multi-layer Structure of an Advanced Economy

 

Examples such as the private financial institution Piaohao(票號) in China's Qing Dynasty in 1794 and the temporary joint-stock company in the 12th century demonstrate the process of advanced economy development. Piaohao was created to address the inconvenience of carrying large amounts of silver, which was the means of payment, as the total circulation of various goods surged. It also performed similar functions to modern banks, such as bills of exchange, deposits, and loans. The temporary joint-stock company seems to have originated in Genoa for conducting maritime trade with 12th-century Syria. It served as a means to "concentrate capital, expand individual activity spheres, and diversify investments to spread risk."

 

Advanced economies also enable more efficient use of political resources, allowing political members to incur lower costs and power structures to obtain more financial resources. In other words, since economic resources such as taxes can be easily collected, power structures can secure more economic capacity while spending less on their activities. Conversely, as the economy declines and regresses to a primitive economy structure, political waste increases. During the crisis of the Roman Empire from 192 to 284, known as the Crisis of the 3rd Century, "the collapse of the currency and commodity economies led to a financial crisis, which in turn led to a vicious cycle of military corruption and political intervention."