It is there, said Timothy Brook, Ph.D., that international legal frameworks that make capitalism possible were first hashed out by traders from the Netherlands, England, Portugal, and China.

In his March 8 lecture at Fordham’s Lincoln Center campus, Brook, a professor of history and the Republic of China Chair at the University of British Columbia, described what it was like for a 17th-century Englishman by the name of Edmund Scott to deal with competing cultural and legal norms in the city.

Brook’s lecture entitled “What to do When the Chinese try to Burn Down Your Warehouse?” dwelled on thorny legal cases that Scott faced while in Bantam.

The cases—the murder of a Dutchman, the warehouse fire referenced in the lecture title, and others—all brought to the fore questions about who had jurisdiction in the city, what the applicable law was, and who had authority to mete out punishment, he said.

In one case, the Dutch turned over a suspected murderer of one of their own to the king of Bantam. The king, realizing that the suspect was a slave of a Bantam aristocrat, gave him back to his owner, and ordered the owner to pay the Dutch a “bloodwit” of 100 pesos. The Dutch insisted that was insufficient, and a highly illuminating conversation ensued between them and the Bantam regent, said Brook.

When they were asked by the regent whose laws they obey while in a visiting country, they replied that when aboard their ships they were governed their own laws, but on shore they went under the laws of the country.

“The Dutch were acknowledging what we call territoriality—they are under the jurisdiction of the territory,” said Brook, author of Vermeer’s Hat: The Seventeenth Century and the Dawn of the Global Age, (Bloomsbury Press, 2014)

Brook said “bloodwits” had been phased out in Europe in the 13th century, so the Dutch refused to accept payment from the murder’s owner. They also had no standing to insist upon the death penalty for the murderer, so they asked instead for a written statement from the Bantam regent that would assure that an injury done to them would not go unpunished, despite their status as foreigners.

This last exchange, said Brook, exemplified the start of a long process of negotiation between different cultures, and the move toward “extraterritoriality—that is, the right to suspend the legal oversight of the place you’re in and deal with your own problems yourself.”

Extraterritoriality is the widely accepted maritime law today, he said.

“By the time you get to the 19th century, extraterritoriality has become the norm for Western colonial enterprises in Asia. The English in China and the Dutch in Java have their own courts and their own laws. They do not attend to the laws of the territories,” he said. “But if you go back to 1604, this is just starting to be formed and worked out.”

Having their own laws was key to Western merchants, he said, because for trade to flourish they needed to be able to predict what’s going to happen if someone from a territory tried to burn down their warehouse or kill their sailors.

“Capitalism may have emerged in Western Europe in one sense, but it emerged because Europeans were interacting with the rest of the world,” he said. “The turn of the 17th century is the pivotal point, because this is when the Asian and European economies start to link up.”

“Had capitalism stayed in Europe, it would not have become capitalism,” he said.

Brook’s appearance was part of the O’Connell Initiative on the Global History of Capitalism, an ongoing forum that includes guest lectures and research grants open to Fordham faculty and students.

]]> 65446 https://now.fordham.edu/business-and-economics/brexit-business-professor-answers-4-key-questions/ Fri, 24 Jun 2016 17:05:54 +0000 http://news.fordham.sitecare.pro/?p=49740 International finance expert James Lothian, PhD, the Distinguished Professor of Finance at the Gabelli School of Business and holder of the Toppeta Family Chair in Global Financial Markets, answers 4 key questions on Britain’s June 23 vote to withdraw from the European Union.

1) For the uninitiated, why is the future of the European Union such a big deal? Or is it?

As things have turned out, the E.U. is not that big of a deal. The initial impetus was good–get rid of barriers to trade in Europe. That was a big plus.

One major minus was that trade with the rest of the world remained inhibited by tariffs and other non-tariff barriers. Pick any consumer durable–say a TV, a computer or an electric drill–and you will pay at least 25 percent more in an E.U. country than in the United States.

The second was that the E.U. has become a big bureaucracy that grows like [wild] year in and year out. That bureaucracy does what bureaucrats do. They inflict costs on the rest of society in the form of taxes and regulations. All of these things have costs in terms of diminished productivity and real GDP growth. People are made worse off.

And they restrict human freedom. European bureaucrats could not give a fig about the common man and woman. Theirs is a power trip.

Washington is getting out of control in this regard. Brussels [the Belgian city the European Union calls home]is worse. It does, however, have one saving grace: more Michelin-starred restaurants than any city other than Paris. And guess who pays the expense account bills for that?

2) The European Union is obviously a huge economic entity, but with some obviously shaky partners such as Greece.  [Will the]  pullout by Britain, one of the largest members of the union, signal an imminent collapse of the EU?

No, but it [is] a wake up call. Some other countries may start thinking hard about costs vs. returns from membership in the E.U., and more importantly, the single currency.

3) What is the potential impact on the U.S. dollar and commerce?

A leave [will] be good for us, not huge but a positive. Trade between the U.K. and the United States, which is already considerable, [will] increase further. The E.U. has free trade within its bloc, but 20 percent tariffs on goods from the rest of the world.

4)  If there are [stock]losses, will they be short-term or long-term?

The idea underlying theme is that real GDP will plummet and that those declines will feed directly into stock prices. The fact is that the U.K.’s real GDP is more likely to increase. Correspondingly, spillovers abroad will be minimal. Trade will not come to an end. It very likely will increase on net. Income will not fall. It very likely will rise. The only losers on this deal are the bureaucrats and the protected industries in the E.U. that would have to compete with industries in the rest of the world.

–Interview conducted and edited by John Schoonejongen