Friday, October 27, 2023

Economics in Don Quixote, Part 3 (knights never paid for lodging or anything else plus some Schumpeter)

I just started reading the famous book by Cervantes. I don't know how many parts I will end up with but I will post excerpts from the book related to economics from time to time if I see more of them as I read.

Don Quixote thinks he does not have to pay anything for staying at the inn because he is a knight and knights never have to pay for anything. This reminds me of some ideas from economist Joseph Schumpeter. That passage is below the excerpt from Don Quixote.

This excerpt is from  THE HISTORY OF DON QUIXOTE, Vol. I., Part 6. (CHAPTER XVII. IN WHICH ARE CONTAINED THE INNUMERABLE TROUBLES WHICH THE BRAVE DON QUIXOTE AND HIS GOOD SQUIRE SANCHO PANZA ENDURED IN THE INN, WHICH TO HIS MISFORTUNE HE TOOK TO BE A CASTLE:

"As soon as they were both mounted, at the gate of the inn, he called to the host and said in a very grave and measured voice, "Many and great are the favours, Senor Alcaide, that I have received in this castle of yours, and I remain under the deepest obligation to be grateful to you for them all the days of my life; if I can repay them in avenging you of any arrogant foe who may have wronged you, know that my calling is no other than to aid the weak, to avenge those who suffer wrong, and to chastise perfidy. Search your memory, and if you find anything of this kind you need only tell me of it, and I promise you by the order of knighthood which I have received to procure you satisfaction and reparation to the utmost of your desire."

The innkeeper replied to him with equal calmness, "Sir Knight, I do not want your worship to avenge me of any wrong, because when any is done me I can take what vengeance seems good to me; the only thing I want is that you pay me the score that you have run up in the inn last night, as well for the straw and barley for your two beasts, as for supper and beds."

"Then this is an inn?" said Don Quixote.

"And a very respectable one," said the innkeeper.

"I have been under a mistake all this time," answered Don Quixote, "for in truth I thought it was a castle, and not a bad one; but since it appears that it is not a castle but an inn, all that can be done now is that you should excuse the payment, for I cannot contravene the rule of knights-errant, of whom I know as a fact (and up to the present I have read nothing to the contrary) that they never paid for lodging or anything else in the inn where they might be; for any hospitality that might be offered them is their due by law and right in return for the insufferable toil they endure in seeking adventures by night and by day, in summer and in winter, on foot and on horseback, in hunger and thirst, cold and heat, exposed to all the inclemencies of heaven and all the hardships of earth."

"I have little to do with that," replied the innkeeper; "pay me what you owe me, and let us have no more talk of chivalry, for all I care about is to get my money."

"You are a stupid, scurvy innkeeper," said Don Quixote, and putting spurs to Rocinante and bringing his pike to the slope he rode out of the inn before anyone could stop him, and pushed on some distance without looking to see if his squire was following him."

Sancho Panza, squire to Don Quixote, ended up getting assaulted by several men. After this, the innkeeper took Sancho's saddlebags (alforjas) as payment. Sancho was in such a hurry to leave that he did not notice.

Schumpeter said of capitalism that it has no "trace of any mystic glamour" and that "the stock exchange is a poor substitute for the Holy Grail." The bourgeois are "rationalistic and unheroic" and thus incapable of leading a nation. A knight searching for the Holy Grail will not care too much about money, like Don Quixote.

Here is a relevant passage from Schumpeter's book Capitalism, Socialism and Democracy:

"there is surely no trace of any mystic glamour about [the industrialist and the merchant] which is what counts in ruling men, [wrote Schumpeter in Capitalism, Socialism, and Democracy.] The stock exchange is a poor substitute for the Holy Grail. We have seen that the industrialist and merchant, as far as they are entrepreneurs, also fill a function of leadership. But economic leadership of this type does not readily expand, like the medieval lord’s military leadership, into the leadership of nations. On the contrary, the ledger and the cost calculation absorb and confine.

I have called the bourgeois [i.e, the businessman] rationalist and unheroic. He can only use rationalist and unheroic means to defend his position or to bend a nation to his will. [In other words, the businessman is not good at using or applying force, so he must use his wits, just as Pareto warned.] He can impress by what people may expect from his economic performance, he can argue his case, he can promise to pay out money or threaten to withhold it, he can hire the treacherous services of a condottiere or politician or journalist. But that is all and all of it is greatly overrated as to its political value. Nor are his experiences and habits of life of the kind that develop personal fascination. A genius in the business office may be, and often is, utterly unable outside of it to say boo to a goose—both in the drawing room and on the platform. Knowing this he wants to be left alone and leave politics alone."

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