Knowledge, capital and labour – networks of exchange
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CORDIScovery podcast- Episode #49 - Knowledge, capital and labour – networks of exchange
This is an AI transcription.
00:00:16:03 - 00:00:46:23
Abigail Acton
Hello and welcome to this episode of CORDIScovery with me, Abigail Acton. As the words tariffs, economic growth, global trade and sanctions fly around us, the economy and how markets are interlinked is something we're all growing more aware of. What can antiquity tell us about the way networks of exchange evolve and the impact that has on inter-imperial economies, and can that shine a light on what we're experiencing now? From early economic activity along the Silk Road and beyond to modern day Brazil?
00:00:47:00 - 00:01:15:05
Abigail Acton
What are the unexpected impacts of a movement of labor, from agriculture to manufacturing? Along with exploring movements of capital and labor, we also consider the economic characteristics of one specific market, in this case, health care. Is it fair and equitable, and if not, why and how can that be improved? Here to talk about these questions and many other interesting topics are three researchers, all of whom have received EU support through science funding.
00:01:16:17 - 00:01:32:16
Abigail Acton
Sitta von Reden is Professor of Ancient History at the University of Freiburg in Germany. She runs an interdisciplinary graduate school on empires at Freiburg, and her main interests are the ancient economy, money and ancient world history. Welcome, Sitta.
00:01:32:22 - 00:01:36:06
Sitta von Reden
Hello, Abigail. Great to be here.
00:01:36:08 - 00:01:50:11
Abigail Acton
Great to have you. Paula Bustos is research professor at Pompeu Fabra University and affiliated professor of the Barcelona School of Economics. She conducts empirical investigations into economic development, guided by international trade theory. Hi, Paula.
00:01:50:17 - 00:01:52:22
Paula Bustos
Thanks, Abigail. Happy to be here.
00:01:52:24 - 00:02:14:18
Abigail Acton
Excellent. Susi Geiger is professor of markets, organizations and society at the College of Business, University College Dublin. Her research examines the organization of markets, particularly in healthcare and technology, and she thinks a lot about alternative ways of organizing these markets that could be better geared towards public value and the common good. Welcome, Susi.
00:02:14:24 - 00:02:16:23
Susi Geiger
Delighted to be here, Abigail. Thanks.
00:02:17:00 - 00:02:31:21
Abigail Acton
Sitta I'm going to turn to you first. The BaSaR project considered the role of inter imperial zones and small to medium sized regional networks of exchange in ancient trans Eurasia. I know you find the term the Silk Road a bit reductionist. Can you tell us why?
00:02:31:23 - 00:03:00:24
Sitta von Reden
Well, the Silk Road was first very important to understand, that the Afro Eurasian world from East Asia to Europe was connected in some way. And they were not just small cities, states and agricultural societies that lived their own lives. So it was a very important step towards world history. But I think we have made that step. And now, 100 years later, it looks as if we need to go move on from that.
00:03:01:01 - 00:03:28:09
Sitta von Reden
And that was exactly what we tried to do. Looking at how goods and people came to use routes across Eurasia, we also, realized that the term Silk Road is not a good idea because there are lots of routes that were not it was not just silk or not just even luxuries always moving along these routes. And also we realized how many ideological underpinnings this Silk Road has.
00:03:28:10 - 00:03:55:09
Sitta von Reden
We know that from the current Belt Road Initiative that's called the New Silk Road. But also when the, term was invented by a German geographer, Ferdinand von Richthofenn it was a bit of an idea that China could be colonized and where railway lines should be built. So we thought it's an ideologically difficult and also very simplistic concept because it doesn't tell us how people use it.
00:03:55:11 - 00:04:04:05
Abigail Acton
Right. It doesn't really indicate the complexity and the diversity of interactions. And it's a yes, as you say, simplistic. What period were you particularly interested in studying? Sitta, please.
00:04:04:08 - 00:04:30:13
Sitta von Reden
Well, we looked at 300 BCE, as we call it now, before the Common ERA and 300 CE of the Common ERA, because this, these 600 years were a period of particularly strong empire building. We had the Han Chin and Han Empire in China. We have the Central Asian empires after Alexander, we have the Mauryan Empire in Southern, in South Asia.
00:04:30:15 - 00:04:45:21
Sitta von Reden
And we have obviously the Hellenistic empires after Alexander and then the Roman Empire, after the Hellenistic Empire. So this was a curious, period of intense empire building and empires we felt were very important for this trans imperial exchange.
00:04:46:00 - 00:05:01:02
Abigail Acton
Sure. Clearly. And did you manage to establish whether this flow of commerce and this flow of ideas and, and people that were involved in this great exchange of trade had impact on the ways the Empire's functioned and were constructed?
00:05:01:05 - 00:05:28:00
Sitta von Reden
Yes. I think they have been very important for that, because, first of all, imperial courts like to consume exotic goods. The Han emperor one day wanted Rhinoceros from South Asia, so that had to be imported or the Caesar complained that the women in Rome, the elite women want silk dresses that are so through shining that they hardly seem to wear anything.
00:05:28:02 - 00:05:40:22
Sitta von Reden
And so there was a big, interest in these luxuries, not only because people wanted to distinguish themselves, but actually also to show as emperors that they had the power to get these things.
00:05:40:24 - 00:05:51:15
Abigail Acton
Okay, I'm kind of interested to know what your methodology was, and I'm also interested to know what that revealed, because I'm curious to see if the past can teach us anything about the present.
00:05:51:17 - 00:06:19:03
Sitta von Reden
Well, our explicit aim was to write a three volume handbook or a handbook so that people actually can connect ordinary people who don't know ancient Chinese language and, Latin and Greek and Sanskrit and, Parthian and all these dialects that were spoken in, in Asia so that people can read about Eurasia, in an easy language, it is..
00:06:19:03 - 00:06:37:23
Sitta von Reden
Not simple language, but an easy language in translation. And be able to compare these empires without having, been able or having to be able to, to, to know archeology and, and literary texts and so on. So that was our really main aim to make this big history accessible.
00:06:38:04 - 00:06:48:10
Abigail Acton
And what did the project actually do? So I mean, we, we know that these trade routes exist. What did you do to dig deeper and to find out what the influence of these trade routes were on local socio economics?
00:06:48:12 - 00:07:05:21
Sitta von Reden
We studied ancient texts, inscriptions, papyri, papyri, papyrus documents that have survived in dry conditions, such as the Egyptian desert and deserts and so on. Parchment skin, inscriptions, coins.
00:07:05:21 - 00:07:06:17
Abigail Acton
To look for, what?
00:07:06:21 - 00:07:31:17
Sitta von Reden
To look for, and the way people, the ways people interacted. And what dealings they had and with whom they interacted, what networks and that this is very one of our key terms, what networks they created and who the people were that created these networks with particular tools, as we called it, with particular instruments of interaction.
00:07:31:23 - 00:07:35:09
Abigail Acton
Oh, instruments of interaction. What would that be? A cash?
00:07:35:11 - 00:07:52:20
Sitta von Reden
For example, coins or for example, a pottery, fine pottery where some elites try to distinguish themselves by using it and, and buying it and also giving it to each other and so on. So that were tools of interaction.
00:07:52:20 - 00:07:53:04
Abigail Acton
Right. Lovely.
00:07:53:04 - 00:08:05:02
Sitta von Reden
But then states obviously had tools of interaction with taxing people or paying them for military service and so on. So everything how people get into into contact with each other.
00:08:05:07 - 00:08:13:06
Abigail Acton
Did you find anything that seemed to show that there was extreme tariffs in place to a certain point that then did impact the flow of goods at any time?
00:08:13:08 - 00:08:51:15
Sitta von Reden
Well, the Chinese felt that the Parthians taxed, the Parthians are the ones that lived in or ruled Iran, and they had a common border in what we now call Central Asia and Uzbekistan, Tajikistan, something like that. And, they felt the Parthians didn't let them in and wanted to keep all the, the trade for themselves. But that is very unlikely and seems to be a rather negative, perspective put on the Parthians by the Han when we see, for example, the Romans in the eastern desert in Egypt, where all the Indian Ocean trade came in and that was had huge value, they tax it very strongly, 25%.
00:08:51:20 - 00:09:14:10
Sitta von Reden
And it didn't stop that trade, from moving, and especially because also the people who were involved in this trade were, as we found out, were also very much involved in the, in the state as well, not as state actors, but because they had access to access to other imperial courts, because they were very well networked and so on.
00:09:14:16 - 00:09:28:16
Sitta von Reden
So they didn't really have to fight against the state. They acted as private. Yeah, people and got all the profits to themselves, but they probably didn't mind so much that, their stuff was taxed.
00:09:28:16 - 00:09:35:16
Abigail Acton
Right, so, so heavily. Right. It didn't seem to indicate that that that slowed down trade or stifled it in any way. It was still very well.
00:09:35:16 - 00:09:37:06
Sitta von Reden
Not in the Eastern Desert.
00:09:37:08 - 00:09:46:05
Abigail Acton
Lovely. It still thrived. That's excellent. Was there any, surprises that you came across? Anything that really stands out with regards to what you found after the project?
00:09:46:11 - 00:10:11:16
Sitta von Reden
Well, if I had not spoke to the specialist, I would probably say yes. Well, we knew that before, but what was really surprising how much the interaction between sedentary agrarian elites, on the one hand, and people from a nomadic background interacted with each other, and that this particular interaction was extremely fruitful and usually stimulated essentially or substantially transimperial trade.
00:10:11:20 - 00:10:43:24
Sitta von Reden
And the reason why that was, seems to us, is that the sedentary societies are very active and very good at creating value on the ground and where they are, they have cities and and yeah, cities are very productive places, but nomadic people are very mobile and, get over very long distances. And this kind of fusion of local intensity and less intense economic activity over long, long distances that seem to have been very fruitful.
00:10:44:13 - 00:10:52:16
Sitta von Reden
And we see that in Central Asia as being the clue to why some are come to a place like some account became so important on the Silk Road.
00:10:52:18 - 00:11:03:11
Abigail Acton
Right. It's really an underlying theme. Yeah. Fascinating. Thank you so much, Sitta. That was beautifully explained. Does anyone have any observations or comments to make to Sitta? Yes. Paula, what would you like to ask?
00:11:03:13 - 00:11:32:22
Paula Bustos
Yeah, I have a question. On, you know, the role of inequality on trade at this time, it appears to be the case that, you know, the formation of empires generated some, you know, wealthy elite that could demand these luxury goods. Was that like a necessary condition for these trade to flourish or where they are other goods that were traded and could be demanded by, you know, a larger share of the population outside from this elite?
00:11:32:24 - 00:11:34:06
Abigail Acton
That's a good question.
00:11:34:08 - 00:12:18:12
Sitta von Reden
It's a very interesting question. And obviously, this term sutra, suggests that it was always luxuries that moved along these road. And obviously the ones that we see at a distance, I mean, silk, Chinese silicon chimera or Chinese mirrors in a, in a step grave and at the Dom Valley, for example, or Roman, coins and Thailand. Yeah, these are obviously, I mean, gold coins and imitation of gold, luxuries and the ordinary things like grain and medicines and or medical products and things like that, we don't see in the archeological record, we can see it perhaps again in Palmyra, a very key place for this, for this research that there where we
00:12:18:12 - 00:12:36:03
Sitta von Reden
have a tariff of things that pass through the market and that we have expensive, oils and perfume oils and, and things like that. But we also see that, people bring in donkeys and that taxed for it and bring it in, grain and so on. So everything pass the market.
00:12:36:06 - 00:12:59:21
Abigail Acton
Perfect. Thank you very much. Excellent, wonderful. I'm going to turn to you, Paula actually. EDST project used evidence from Brazilian communities to understand the structural transformation that arises from the relocation of capital and labor across sectors. I think this is very interesting because now we're bringing this up to date, and we're looking at one specific place. I know that how economies grow also interested you.
00:12:59:21 - 00:13:04:00
Abigail Acton
So can you tell me what the debate is regarding growth in developing countries Paula?
00:13:04:02 - 00:13:33:01
Paula Bustos
Yes, thanks, Abigail. So a classic debate in developing economics, which inspired us, is whether developing countries can follow the same development path that European economies followed in the past. For example, many historians argue that before the Industrial revolution in England, technical improvements in agriculture reduced labor demand in rural areas and increase farmer income.
00:13:33:03 - 00:14:08:10
Paula Bustos
These generated both migration of rural workers into cities, demand for industrial products, and savings to finance industrial projects. However, this process has not taken off in several developing countries. One potential explanation is that in a global economy, land abundant developing countries such as those in Latin America or Africa can stay specialized in agriculture and export these agricultural goods, import manufacturing goods and export savings.
00:14:08:13 - 00:14:10:12
Abigail Acton
What do you mean by export savings?
00:14:10:14 - 00:14:35:06
Paula Bustos
This means that you can have income very concentrated in a few, you know, rich farmers or, you know, in the case of mining, the owners of the mines, and these money is not spent locally, or invested locally, but actually these savings are redirected to investments in the US or in other rich countries. They have more developed financial systems.
00:14:35:08 - 00:14:55:11
Paula Bustos
So one concern is that these positive links between agriculture, manufacturing and services that happened in, European economies in the past or in the US might not be operative in, in these developing countries due to this openness of both trade and financial markets.
00:14:55:11 - 00:15:19:02
Abigail Acton
So what we're saying is that historically the evolution from an agrarian economy through to more of a manufacturing based economy that we've seen in Europe and as you say in America too might not actually work in some developing countries. Right. And so, where did you focus on Paula when you were considering whether this could be applied as a model or whether it was not a one size fits all?
00:15:19:04 - 00:15:51:17
Paula Bustos
Yeah. So our purpose was to produce empirical evidence on these, on current, developing countries because we lacked high quality empirical evidence trying to find, you know, whether these links were operative today or not. And then to produce good empirical evidence, we had to find some natural experiment, which allowed us to compare a region adopting new agricultural technologies that increase their, productivity in that sector to similar regions that did not adopt those technologies.
00:15:51:19 - 00:16:21:08
Paula Bustos
And then we had the opportunity to study the recent adoption of GM crops, which was one of the largest innovations in agriculture in the world. And it produced a big boom in agricultural production in several Latin American countries. But to isolate this causal effect of this agricultural boom from other contemporaneous events, we had to compare areas affected by the boom to and affected areas that were very similar.
00:16:21:10 - 00:16:43:05
Paula Bustos
Brazil was a perfect country for that because, you could like, you know, because it's the same country. Many shocks are the same or changes for different areas, but it has a very different geography. So some areas, the new technology implied a very large increase in productivity, while in other areas the effects were not very large.
00:16:43:07 - 00:16:49:24
Abigail Acton
Oh that's great. So I mean, it's almost like a lab experiment in as much as you, you know, you have a consistent baseline.
00:16:49:24 - 00:16:50:20
Paula Bustos
Exactly.
00:16:51:00 - 00:17:02:10
Abigail Acton
Because it's the same country, but you can isolate the response to, to, as you say, to an increase productivity in one area. And what happens if you don't have that in another area? That's fantastic.
00:17:02:10 - 00:17:08:18
Paula Bustos
Exactly. So the idea is that the other areas could be a good control group. In a sense.
00:17:08:23 - 00:17:21:19
Abigail Acton
Yes, a control group exactly like the laboratory. Absolutely. And so, what were you actually looking at? What evidence you said empirical evidence. What what what evidence were you looking at to see what the differences were?
00:17:21:20 - 00:17:46:15
Paula Bustos
Yeah. So that the other advantage of Brazil is that it has high quality micro data. So we could directly observe all the variables of interest, and we could follow workers across different sectors of employment in regions. And we could also follow capital, because we could use banking data that allowed us to follow capital flows within the country, which was very unique.
00:17:46:17 - 00:17:50:20
Paula Bustos
So that was kind of the big advantage of of this study.
00:17:51:00 - 00:17:52:07
Abigail Acton
And what did all of this show you?
00:17:52:11 - 00:18:19:11
Paula Bustos
The first thing we found is that this technology was labor saving. This imply that although agricultural output increased, workers were released from rural areas and they found employment in the local industrial sectors, so they didn't leave to other regions, they stayed in the region and there was a big increase in industrial employment in those regions. So we found this positive link there in the data.
00:18:19:13 - 00:18:49:12
Paula Bustos
However, these workers that left agriculture were unskilled, which implied that the firms that hired them needed to hire high speed workers to manage them. And they poked these high skilled workers from the local high tech industries, which suffered, lost these high skilled workers and reduced innovation. So we had these, an increase in the size of the local industrial sector, but a reduction in its quality in terms of innovative activity.
00:18:49:14 - 00:18:50:15
Abigail Acton
Fascinating.
00:18:50:17 - 00:19:17:17
Paula Bustos
Yeah. So that was, you know, in terms of labor and then in terms of capital, the findings were very different in the sense that we found that this new technology increased agricultural profits a lot, made farmers very rich. And these farmers saved a lot of this money in the local banks. And then one of the positive links in the Industrial Revolution was this reinvestment in England was this reinvestment of savings into industrial projects.
00:19:17:19 - 00:19:45:04
Paula Bustos
But then when we looked at local lending, we found that this didn't happen in this case. So they did not lend it locally. So we thought that, you know, this was hopeless. But then we realized that a lot of the banks in Brazil have networks that span rural urban areas. So we follow the money across these networks and found that these banks redirected the savings towards urban areas in the coast.
00:19:45:06 - 00:20:04:07
Paula Bustos
There we could track them all the way towards firms, and they were investing in firms in the industrial and service sector. And these firms increased employment and increased wages. So this had a positive effect on, you know, development of these sectors. But in these, you know, far away regions.
00:20:04:07 - 00:20:22:22
Abigail Acton
It kind of reminds me of the notion of throwing a pebble into a pond and just watching the ripples go and go and go. I mean, there really, it's such a wide scale, impact. Yeah. And implications. Fantastic. So looking into the future a little bit, Paula, what do you think the implications are for your findings?
00:20:22:22 - 00:20:25:07
Abigail Acton
What does this tell us? What can we learn?
00:20:25:09 - 00:21:07:09
Paula Bustos
Yeah. Going back to the initial question on to what extent, nowadays developing countries, because they are open, they have the risk of specializing in agriculture and not transitioning. We did not find that we did find these positive links through labor markets, through capital markets. But I guess the finding for example, for the labor market, that there was this scarcity of skilled labor that reduced innovation implies that you need to couple, you know, this investment in agricultural technologies with investment in education so that, you know, you don't have this a worsening of the composition, in this key composition in the manufacturing sector and a reduction in innovation.
00:21:07:11 - 00:21:29:01
Paula Bustos
And then for a capital markets, we find that Brazil has a very integrated capital market. They have a lot of banks. They expand rural urban areas. But this is not the case in many other developing countries. So one lesson is that this capital market integration across regions, through banks that span, you know, that have both rural and urban branches is very good.
00:21:29:07 - 00:21:48:19
Paula Bustos
Brazil has always had an active policy to, you know, for farmers to receive loans from banks, etc.. So they forced banks to direct a percentage of their deposits towards rural loans. So some active policy in linking these rural areas through the banking sector also seems useful.
00:21:48:21 - 00:21:56:09
Abigail Acton
Yeah, that's wonderful. Thank you very much. Excellent. How interesting. Does anyone have any observations or questions to Paula? Yeah, Susi, what would you like to ask?
00:21:56:14 - 00:22:25:03
Susi Geiger
Yeah. Super fascinating, Paula. I especially love the way you had a natural experiment. Basically ready to go, including control groups and everything. But one of the issues that came to my mind when you were talking is, whether you control for multinational firms as well, because I imagine that there's a lot of multinational firms involved in Brazilian agriculture and that they would take the capital out of the country immediately.
00:22:25:05 - 00:22:48:05
Paula Bustos
Yes. So actually, you know, this is something that we were concerned about. The truth is that because of of that, we don't find the savings in the local banking system. So that's that was a first concern we had when we didn't find any local effects that this money was not lent locally. We were thinking, okay, this money is going to New York, is going somewhere else.
00:22:48:05 - 00:23:15:17
Paula Bustos
It's not staying in Brazil. So we were surprised to find, you know, that this stays there. So our findings imply that there's a large part of the of the gains that stay. And this is also related to land ownership because, you know, we don't find this kind of financial channel, but then because landowners don't reside locally in the areas of the boom, we don't find an increasing demand for non traded goods or services in those areas.
00:23:15:22 - 00:23:16:04
Paula Bustos
Okay.
00:23:16:04 - 00:23:39:12
Abigail Acton
So basically less impact from multinationals than you would have thought. And and and the cash actually staying within the country. Yes. Thank you very much. Okay. Super I'm going to turn to Susi. Susi MISFIRES opens up a new theoretical and empirical horizons for analyzing, innovating markets in which multiple interests, values and concerns all clash. So you took health care as your case study.
00:23:39:16 - 00:23:42:13
Abigail Acton
What drew you to this area of research Susi?
00:23:42:15 - 00:24:05:07
Susi Geiger
Yeah. So MISFIRES from the start was a passion project, really. I'm deeply passionate about promoting equality and access to medicines and medical services. My primary goal really, is to ensure that everyone around the globe can receive health care that they need, when they need it. Regardless of where they were born, really. But that's a vision that's still very far from being realized.
00:24:05:09 - 00:24:38:07
Susi Geiger
Governments now have to stretch their budgets across a greater number of people who live longer with more chronic diseases, and patients are often no longer able to access adequate health care, having to pay very high prices for it. This mission of figuring out how we can collectively deal with this situation, drives our research, as well as actually my involvement as an expert member at an W.H.O. advisory group on pharmaceutical pricing and my involvement with Access to Medicines Ireland, which is an NGO that advocates for have equity nationally and internationally.
00:24:38:13 - 00:24:43:03
Susi Geiger
So I see myself a little bit as an academic activist in this space.
00:24:43:05 - 00:24:56:21
Abigail Acton
Right.Excellent. Yeah. I thought it's a good thing to be Susi. Excellent. You know, an activist group with some academic creds behind you. But from the standpoint of the market, what do you identify as standing in the way of equitable access? What did your project uncover?
00:24:56:23 - 00:25:36:17
Susi Geiger
So it's patterns and pricing. That that wouldn't really surprise anyone who knows anything about this space. A patent system is actually, when you go back, not a lot of people realize that up to the mid 20th century and even later, a lot of countries didn't allow patents for pharmaceuticals. They just simply didn't accept that. And then in 1995, through World Trade Organization, we agreed collectively globally on a very infamous, trade agreement called TRIPS, which basically, imposed global patents, with the same length, etc., etc..
00:25:36:19 - 00:26:07:23
Susi Geiger
Every technology, in the globe, including pharmaceuticals. And that's basically, you know, one fell swoop decimated, Indian generic manufacturers who at that time were known to be the pharmacy of the developing world, as they were called. Now, a lot of low and middle income countries unnecessarily create markets for multinational pharmaceutical companies. But at the same time, the patents prevented, a lot of the time local manufacturers, to supply innovative medicines.
00:26:07:23 - 00:26:33:21
Susi Geiger
So that's one big thing. And we saw the consequences. Disastrous consequences of this gene, Covid 19, where, you know, we had huge vaccine inequities just simply because we couldn't produce enough vaccines. Yet, big issue is prices. And so we have price spirals that go up now easily into the millions of euros for one treatment per patient.
00:26:33:21 - 00:26:51:01
Susi Geiger
And we have a lot of these new medicines coming onto the market at these price points. And health systems simply can't afford these anymore. But there's a lot of evidence that you could actually produce these, even these very highly innovative high tech medicines for much cheaper.
00:26:51:03 - 00:27:04:04
Abigail Acton
But is the fact that the health systems can't afford this? And thinking about the economics of the situation, these companies are pricing themselves out of the market, aren't they? So won't they have to reduce the prices of data unaffordable to no one's buying?
00:27:04:04 - 00:27:25:06
Susi Geiger
Well, you you'd think so. But they essentially have a monopoly. Again through the patent system, they can just command an area and, we see it now, you know, one of the things during Covid, we have for the first time MRNA vaccines on the market. Now, that was a technology that had developed for decades, really.
00:27:25:06 - 00:27:52:20
Susi Geiger
And a lot of the time in public institutions, but show patterns that entire mRNA space was successively enclosed into private hands really. And, you know, now the future is almost already determined because we have a handful of companies that hold patents and what's called a platform technology. So you could imagine mRNA vaccines for HIV and for some cancers, etc..
00:27:52:20 - 00:27:57:01
Susi Geiger
So it's a hugely valuable technology in the hands of a few companies.
00:27:57:03 - 00:27:59:22
Abigail Acton
What can we do?
00:27:59:24 - 00:28:29:14
Susi Geiger
That’s a good question. I think, one of the things that a lot of activists would say, and that our research also pointed towards, is that we have to valorize public knowledge creation in this space much more. So make sure that the universities that use all these really, really fundamental, important research in pharmaceuticals, that those public institutions are actually adequately valued and paid for the knowledge that they create.
00:28:29:14 - 00:28:49:24
Susi Geiger
So either keep the knowledge to public patents inside the public system and don't outsource it to private payers. Or if you do, make sure that you put conditionalities on these patterns. For instance, you know, price ceilings that they have to observe. So there's various ways to do that actually.
00:28:50:01 - 00:28:57:19
Abigail Acton
Are you seeing any signs of anything actually being implemented? Are you seeing any shift in the current model towards that?
00:28:57:21 - 00:29:29:01
Susi Geiger
I mean, to be perfectly honest, pharmaceutical companies won't do that because their business model for them works very well. They're making a lot of money there. You know, they have a monopoly in a lot of, areas. So if they go to a state buyer saying we want €3 million for this, you know, gene therapy per patient, the public buyer has to pay that if they want to provide their population with these medicines and they hugely important medicines, especially for the rare diseases.
00:29:29:03 - 00:29:48:04
Susi Geiger
So the private companies aren't going to do it by themselves. So we have to really, I think as a public governments, activists, civil society academics have to work together to push them towards it and and to really demand, conditions on, on that.
00:29:48:06 - 00:30:00:11
Abigail Acton
And when we think of your project MISFIRES Susi, what was the one, well, maybe you've already said it, actually, but what was the one key takeaway you think is important as a result of your research? What should we bear in mind?
00:30:00:13 - 00:30:25:14
Susi Geiger
So we worked a lot with patient groups and access to medicines organizations, which is fantastic to do. And then also interacted with policymakers. And I now have a book coming out that's called Peak Pharma. And a Peak Pharma basically argues that we've reached peak concentration, peak pricing, peak financialisation, peak expansion in pharma, and that the system has to change.
00:30:25:14 - 00:30:50:24
Susi Geiger
There's simply too much value absorbed by the pharmaceutical industry and not enough left for other players. So we have to think about alternative pharmaceutical economies, really. And I'm working with the concept of pharmaceutical commons a lot, to see how we can make these resources a commonality. Really a common good.
00:30:51:01 - 00:31:05:09
Abigail Acton
So, Susi, when we think of the economics of, the pharma industry and the impact that that has on on healthcare, what do you think we need to consider with regards to the strengths and weaknesses of the system?
00:31:05:11 - 00:31:34:03
Susi Geiger
So when I think about economics, Abigail, I don't just think about capital flows or labor flows. I think primarily in terms of flow of information and knowledge, because I think that's the 3 big values that flow through our economy, every single market. And you can't just look at one side without looking at the other side. I am concern that capital might flow into one direction.
00:31:34:05 - 00:31:56:23
Susi Geiger
But and that's okay if information and goods etc. flow the other way, you know, if everybody gets their piece, of that value system, so to speak. I get concerned when capital flows one way and a lot of the knowledge flows the other way as well, flows that way as well. And if not enough, so to speak, comes back from that direction.
00:31:56:23 - 00:32:01:11
Susi Geiger
To what, especially to what the public and the public paying.
00:32:01:13 - 00:32:06:15
Abigail Acton
Fantastic. Thank you very, very much. Paula, I think you've got a question.
00:32:06:17 - 00:32:36:22
Paula Bustos
Yeah. And I think this is super interesting. You know what Susi is referring because it's very related to a broader trend in, in the economy, which is this trend towards concentration and larger markups that is not necessarily justified by increasing returns to scale. So I think this is a very good example of how there might be some activities that it's efficient that big companies do because they have increasing returns.
00:32:36:22 - 00:32:54:01
Paula Bustos
But these other ones, like, you know, personalized treatments could be on a smaller scale. So the fact that all this activity is done by these larger firms is a distortion to the optimal allocation in, in the market. So I don't know if that's a good interpretation of what you were discussing.
00:32:54:06 - 00:33:16:02
Susi Geiger
It is Paula. Absolutely. And one of the things that we're very concerned about in the pharmaceutical space is also the amount of capital that's being taken out and away from research and development and innovation and being paid back to shareholders, for instance. And we call that financialization. And I'm sure you see the same in the agrarian industries that you're looking at.
00:33:16:05 - 00:33:40:17
Susi Geiger
So there's less and less money left, really, to do the fundamental research and development. And we're lacking drugs in what we call neglected to thesis, which is a lot of the time, tropical diseases, where there's simply no lucrative market, to be perfectly honest. And again, that's where public innovation, for instance, can come in very strongly because pharma just doesn't do that very well on the data.
00:33:40:19 - 00:33:42:14
Susi Geiger
They're reluctant to do that.
00:33:42:16 - 00:33:58:23
Abigail Acton
Well, I think that's absolutely brilliant. Thank you so much. All of you. I mean really some fascinating insights, both historical, contemporaneous across one country, across one sector. So I think we've looked at it from very different angles and I've really enjoyed it. Many thanks for your time.
00:33:59:00 - 00:34:01:15
Susi Geiger
Thank you so much. I mean, it was lovely to be here.
00:34:01:17 - 00:34:02:22
Abigail Acton
It was a pleasure to have you, Susi.
00:34:02:22 - 00:34:05:07
Sitta von Reden
Thank you, to catch your interest in ancient history.
00:34:06:02 - 00:34:10:02
Abigail Acton
Yeah. I'm always interested in ancient history, as listeners to CORDIScovery probably realized by now.
00:34:10:03 - 00:34:10:13
Paula Bustos
Thanks Abigail.
00:34:11:01 - 00:34:13:02
Abigail Acton
You're very welcome, Paula. Thanks for your insights.
00:34:13:06 - 00:34:16:01
All
Good bye. Bye. All right. Bye.
00:34:16:03 - 00:34:41:17
Abigail Acton
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00:34:41:21 - 00:34:53:19
Abigail Acton
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This is an AI transcription.
00:00:16:03 - 00:00:46:23
Abigail Acton
Hello and welcome to this episode of CORDIScovery with me, Abigail Acton. As the words tariffs, economic growth, global trade and sanctions fly around us, the economy and how markets are interlinked is something we're all growing more aware of. What can antiquity tell us about the way networks of exchange evolve and the impact that has on inter-imperial economies, and can that shine a light on what we're experiencing now? From early economic activity along the Silk Road and beyond to modern day Brazil?
00:00:47:00 - 00:01:15:05
Abigail Acton
What are the unexpected impacts of a movement of labor, from agriculture to manufacturing? Along with exploring movements of capital and labor, we also consider the economic characteristics of one specific market, in this case, health care. Is it fair and equitable, and if not, why and how can that be improved? Here to talk about these questions and many other interesting topics are three researchers, all of whom have received EU support through science funding.
00:01:16:17 - 00:01:32:16
Abigail Acton
Sitta von Reden is Professor of Ancient History at the University of Freiburg in Germany. She runs an interdisciplinary graduate school on empires at Freiburg, and her main interests are the ancient economy, money and ancient world history. Welcome, Sitta.
00:01:32:22 - 00:01:36:06
Sitta von Reden
Hello, Abigail. Great to be here.
00:01:36:08 - 00:01:50:11
Abigail Acton
Great to have you. Paula Bustos is research professor at Pompeu Fabra University and affiliated professor of the Barcelona School of Economics. She conducts empirical investigations into economic development, guided by international trade theory. Hi, Paula.
00:01:50:17 - 00:01:52:22
Paula Bustos
Thanks, Abigail. Happy to be here.
00:01:52:24 - 00:02:14:18
Abigail Acton
Excellent. Susi Geiger is professor of markets, organizations and society at the College of Business, University College Dublin. Her research examines the organization of markets, particularly in healthcare and technology, and she thinks a lot about alternative ways of organizing these markets that could be better geared towards public value and the common good. Welcome, Susi.
00:02:14:24 - 00:02:16:23
Susi Geiger
Delighted to be here, Abigail. Thanks.
00:02:17:00 - 00:02:31:21
Abigail Acton
Sitta I'm going to turn to you first. The BaSaR project considered the role of inter imperial zones and small to medium sized regional networks of exchange in ancient trans Eurasia. I know you find the term the Silk Road a bit reductionist. Can you tell us why?
00:02:31:23 - 00:03:00:24
Sitta von Reden
Well, the Silk Road was first very important to understand, that the Afro Eurasian world from East Asia to Europe was connected in some way. And they were not just small cities, states and agricultural societies that lived their own lives. So it was a very important step towards world history. But I think we have made that step. And now, 100 years later, it looks as if we need to go move on from that.
00:03:01:01 - 00:03:28:09
Sitta von Reden
And that was exactly what we tried to do. Looking at how goods and people came to use routes across Eurasia, we also, realized that the term Silk Road is not a good idea because there are lots of routes that were not it was not just silk or not just even luxuries always moving along these routes. And also we realized how many ideological underpinnings this Silk Road has.
00:03:28:10 - 00:03:55:09
Sitta von Reden
We know that from the current Belt Road Initiative that's called the New Silk Road. But also when the, term was invented by a German geographer, Ferdinand von Richthofenn it was a bit of an idea that China could be colonized and where railway lines should be built. So we thought it's an ideologically difficult and also very simplistic concept because it doesn't tell us how people use it.
00:03:55:11 - 00:04:04:05
Abigail Acton
Right. It doesn't really indicate the complexity and the diversity of interactions. And it's a yes, as you say, simplistic. What period were you particularly interested in studying? Sitta, please.
00:04:04:08 - 00:04:30:13
Sitta von Reden
Well, we looked at 300 BCE, as we call it now, before the Common ERA and 300 CE of the Common ERA, because this, these 600 years were a period of particularly strong empire building. We had the Han Chin and Han Empire in China. We have the Central Asian empires after Alexander, we have the Mauryan Empire in Southern, in South Asia.
00:04:30:15 - 00:04:45:21
Sitta von Reden
And we have obviously the Hellenistic empires after Alexander and then the Roman Empire, after the Hellenistic Empire. So this was a curious, period of intense empire building and empires we felt were very important for this trans imperial exchange.
00:04:46:00 - 00:05:01:02
Abigail Acton
Sure. Clearly. And did you manage to establish whether this flow of commerce and this flow of ideas and, and people that were involved in this great exchange of trade had impact on the ways the Empire's functioned and were constructed?
00:05:01:05 - 00:05:28:00
Sitta von Reden
Yes. I think they have been very important for that, because, first of all, imperial courts like to consume exotic goods. The Han emperor one day wanted Rhinoceros from South Asia, so that had to be imported or the Caesar complained that the women in Rome, the elite women want silk dresses that are so through shining that they hardly seem to wear anything.
00:05:28:02 - 00:05:40:22
Sitta von Reden
And so there was a big, interest in these luxuries, not only because people wanted to distinguish themselves, but actually also to show as emperors that they had the power to get these things.
00:05:40:24 - 00:05:51:15
Abigail Acton
Okay, I'm kind of interested to know what your methodology was, and I'm also interested to know what that revealed, because I'm curious to see if the past can teach us anything about the present.
00:05:51:17 - 00:06:19:03
Sitta von Reden
Well, our explicit aim was to write a three volume handbook or a handbook so that people actually can connect ordinary people who don't know ancient Chinese language and, Latin and Greek and Sanskrit and, Parthian and all these dialects that were spoken in, in Asia so that people can read about Eurasia, in an easy language, it is..
00:06:19:03 - 00:06:37:23
Sitta von Reden
Not simple language, but an easy language in translation. And be able to compare these empires without having, been able or having to be able to, to, to know archeology and, and literary texts and so on. So that was our really main aim to make this big history accessible.
00:06:38:04 - 00:06:48:10
Abigail Acton
And what did the project actually do? So I mean, we, we know that these trade routes exist. What did you do to dig deeper and to find out what the influence of these trade routes were on local socio economics?
00:06:48:12 - 00:07:05:21
Sitta von Reden
We studied ancient texts, inscriptions, papyri, papyri, papyrus documents that have survived in dry conditions, such as the Egyptian desert and deserts and so on. Parchment skin, inscriptions, coins.
00:07:05:21 - 00:07:06:17
Abigail Acton
To look for, what?
00:07:06:21 - 00:07:31:17
Sitta von Reden
To look for, and the way people, the ways people interacted. And what dealings they had and with whom they interacted, what networks and that this is very one of our key terms, what networks they created and who the people were that created these networks with particular tools, as we called it, with particular instruments of interaction.
00:07:31:23 - 00:07:35:09
Abigail Acton
Oh, instruments of interaction. What would that be? A cash?
00:07:35:11 - 00:07:52:20
Sitta von Reden
For example, coins or for example, a pottery, fine pottery where some elites try to distinguish themselves by using it and, and buying it and also giving it to each other and so on. So that were tools of interaction.
00:07:52:20 - 00:07:53:04
Abigail Acton
Right. Lovely.
00:07:53:04 - 00:08:05:02
Sitta von Reden
But then states obviously had tools of interaction with taxing people or paying them for military service and so on. So everything how people get into into contact with each other.
00:08:05:07 - 00:08:13:06
Abigail Acton
Did you find anything that seemed to show that there was extreme tariffs in place to a certain point that then did impact the flow of goods at any time?
00:08:13:08 - 00:08:51:15
Sitta von Reden
Well, the Chinese felt that the Parthians taxed, the Parthians are the ones that lived in or ruled Iran, and they had a common border in what we now call Central Asia and Uzbekistan, Tajikistan, something like that. And, they felt the Parthians didn't let them in and wanted to keep all the, the trade for themselves. But that is very unlikely and seems to be a rather negative, perspective put on the Parthians by the Han when we see, for example, the Romans in the eastern desert in Egypt, where all the Indian Ocean trade came in and that was had huge value, they tax it very strongly, 25%.
00:08:51:20 - 00:09:14:10
Sitta von Reden
And it didn't stop that trade, from moving, and especially because also the people who were involved in this trade were, as we found out, were also very much involved in the, in the state as well, not as state actors, but because they had access to access to other imperial courts, because they were very well networked and so on.
00:09:14:16 - 00:09:28:16
Sitta von Reden
So they didn't really have to fight against the state. They acted as private. Yeah, people and got all the profits to themselves, but they probably didn't mind so much that, their stuff was taxed.
00:09:28:16 - 00:09:35:16
Abigail Acton
Right, so, so heavily. Right. It didn't seem to indicate that that that slowed down trade or stifled it in any way. It was still very well.
00:09:35:16 - 00:09:37:06
Sitta von Reden
Not in the Eastern Desert.
00:09:37:08 - 00:09:46:05
Abigail Acton
Lovely. It still thrived. That's excellent. Was there any, surprises that you came across? Anything that really stands out with regards to what you found after the project?
00:09:46:11 - 00:10:11:16
Sitta von Reden
Well, if I had not spoke to the specialist, I would probably say yes. Well, we knew that before, but what was really surprising how much the interaction between sedentary agrarian elites, on the one hand, and people from a nomadic background interacted with each other, and that this particular interaction was extremely fruitful and usually stimulated essentially or substantially transimperial trade.
00:10:11:20 - 00:10:43:24
Sitta von Reden
And the reason why that was, seems to us, is that the sedentary societies are very active and very good at creating value on the ground and where they are, they have cities and and yeah, cities are very productive places, but nomadic people are very mobile and, get over very long distances. And this kind of fusion of local intensity and less intense economic activity over long, long distances that seem to have been very fruitful.
00:10:44:13 - 00:10:52:16
Sitta von Reden
And we see that in Central Asia as being the clue to why some are come to a place like some account became so important on the Silk Road.
00:10:52:18 - 00:11:03:11
Abigail Acton
Right. It's really an underlying theme. Yeah. Fascinating. Thank you so much, Sitta. That was beautifully explained. Does anyone have any observations or comments to make to Sitta? Yes. Paula, what would you like to ask?
00:11:03:13 - 00:11:32:22
Paula Bustos
Yeah, I have a question. On, you know, the role of inequality on trade at this time, it appears to be the case that, you know, the formation of empires generated some, you know, wealthy elite that could demand these luxury goods. Was that like a necessary condition for these trade to flourish or where they are other goods that were traded and could be demanded by, you know, a larger share of the population outside from this elite?
00:11:32:24 - 00:11:34:06
Abigail Acton
That's a good question.
00:11:34:08 - 00:12:18:12
Sitta von Reden
It's a very interesting question. And obviously, this term sutra, suggests that it was always luxuries that moved along these road. And obviously the ones that we see at a distance, I mean, silk, Chinese silicon chimera or Chinese mirrors in a, in a step grave and at the Dom Valley, for example, or Roman, coins and Thailand. Yeah, these are obviously, I mean, gold coins and imitation of gold, luxuries and the ordinary things like grain and medicines and or medical products and things like that, we don't see in the archeological record, we can see it perhaps again in Palmyra, a very key place for this, for this research that there where we
00:12:18:12 - 00:12:36:03
Sitta von Reden
have a tariff of things that pass through the market and that we have expensive, oils and perfume oils and, and things like that. But we also see that, people bring in donkeys and that taxed for it and bring it in, grain and so on. So everything pass the market.
00:12:36:06 - 00:12:59:21
Abigail Acton
Perfect. Thank you very much. Excellent, wonderful. I'm going to turn to you, Paula actually. EDST project used evidence from Brazilian communities to understand the structural transformation that arises from the relocation of capital and labor across sectors. I think this is very interesting because now we're bringing this up to date, and we're looking at one specific place. I know that how economies grow also interested you.
00:12:59:21 - 00:13:04:00
Abigail Acton
So can you tell me what the debate is regarding growth in developing countries Paula?
00:13:04:02 - 00:13:33:01
Paula Bustos
Yes, thanks, Abigail. So a classic debate in developing economics, which inspired us, is whether developing countries can follow the same development path that European economies followed in the past. For example, many historians argue that before the Industrial revolution in England, technical improvements in agriculture reduced labor demand in rural areas and increase farmer income.
00:13:33:03 - 00:14:08:10
Paula Bustos
These generated both migration of rural workers into cities, demand for industrial products, and savings to finance industrial projects. However, this process has not taken off in several developing countries. One potential explanation is that in a global economy, land abundant developing countries such as those in Latin America or Africa can stay specialized in agriculture and export these agricultural goods, import manufacturing goods and export savings.
00:14:08:13 - 00:14:10:12
Abigail Acton
What do you mean by export savings?
00:14:10:14 - 00:14:35:06
Paula Bustos
This means that you can have income very concentrated in a few, you know, rich farmers or, you know, in the case of mining, the owners of the mines, and these money is not spent locally, or invested locally, but actually these savings are redirected to investments in the US or in other rich countries. They have more developed financial systems.
00:14:35:08 - 00:14:55:11
Paula Bustos
So one concern is that these positive links between agriculture, manufacturing and services that happened in, European economies in the past or in the US might not be operative in, in these developing countries due to this openness of both trade and financial markets.
00:14:55:11 - 00:15:19:02
Abigail Acton
So what we're saying is that historically the evolution from an agrarian economy through to more of a manufacturing based economy that we've seen in Europe and as you say in America too might not actually work in some developing countries. Right. And so, where did you focus on Paula when you were considering whether this could be applied as a model or whether it was not a one size fits all?
00:15:19:04 - 00:15:51:17
Paula Bustos
Yeah. So our purpose was to produce empirical evidence on these, on current, developing countries because we lacked high quality empirical evidence trying to find, you know, whether these links were operative today or not. And then to produce good empirical evidence, we had to find some natural experiment, which allowed us to compare a region adopting new agricultural technologies that increase their, productivity in that sector to similar regions that did not adopt those technologies.
00:15:51:19 - 00:16:21:08
Paula Bustos
And then we had the opportunity to study the recent adoption of GM crops, which was one of the largest innovations in agriculture in the world. And it produced a big boom in agricultural production in several Latin American countries. But to isolate this causal effect of this agricultural boom from other contemporaneous events, we had to compare areas affected by the boom to and affected areas that were very similar.
00:16:21:10 - 00:16:43:05
Paula Bustos
Brazil was a perfect country for that because, you could like, you know, because it's the same country. Many shocks are the same or changes for different areas, but it has a very different geography. So some areas, the new technology implied a very large increase in productivity, while in other areas the effects were not very large.
00:16:43:07 - 00:16:49:24
Abigail Acton
Oh that's great. So I mean, it's almost like a lab experiment in as much as you, you know, you have a consistent baseline.
00:16:49:24 - 00:16:50:20
Paula Bustos
Exactly.
00:16:51:00 - 00:17:02:10
Abigail Acton
Because it's the same country, but you can isolate the response to, to, as you say, to an increase productivity in one area. And what happens if you don't have that in another area? That's fantastic.
00:17:02:10 - 00:17:08:18
Paula Bustos
Exactly. So the idea is that the other areas could be a good control group. In a sense.
00:17:08:23 - 00:17:21:19
Abigail Acton
Yes, a control group exactly like the laboratory. Absolutely. And so, what were you actually looking at? What evidence you said empirical evidence. What what what evidence were you looking at to see what the differences were?
00:17:21:20 - 00:17:46:15
Paula Bustos
Yeah. So that the other advantage of Brazil is that it has high quality micro data. So we could directly observe all the variables of interest, and we could follow workers across different sectors of employment in regions. And we could also follow capital, because we could use banking data that allowed us to follow capital flows within the country, which was very unique.
00:17:46:17 - 00:17:50:20
Paula Bustos
So that was kind of the big advantage of of this study.
00:17:51:00 - 00:17:52:07
Abigail Acton
And what did all of this show you?
00:17:52:11 - 00:18:19:11
Paula Bustos
The first thing we found is that this technology was labor saving. This imply that although agricultural output increased, workers were released from rural areas and they found employment in the local industrial sectors, so they didn't leave to other regions, they stayed in the region and there was a big increase in industrial employment in those regions. So we found this positive link there in the data.
00:18:19:13 - 00:18:49:12
Paula Bustos
However, these workers that left agriculture were unskilled, which implied that the firms that hired them needed to hire high speed workers to manage them. And they poked these high skilled workers from the local high tech industries, which suffered, lost these high skilled workers and reduced innovation. So we had these, an increase in the size of the local industrial sector, but a reduction in its quality in terms of innovative activity.
00:18:49:14 - 00:18:50:15
Abigail Acton
Fascinating.
00:18:50:17 - 00:19:17:17
Paula Bustos
Yeah. So that was, you know, in terms of labor and then in terms of capital, the findings were very different in the sense that we found that this new technology increased agricultural profits a lot, made farmers very rich. And these farmers saved a lot of this money in the local banks. And then one of the positive links in the Industrial Revolution was this reinvestment in England was this reinvestment of savings into industrial projects.
00:19:17:19 - 00:19:45:04
Paula Bustos
But then when we looked at local lending, we found that this didn't happen in this case. So they did not lend it locally. So we thought that, you know, this was hopeless. But then we realized that a lot of the banks in Brazil have networks that span rural urban areas. So we follow the money across these networks and found that these banks redirected the savings towards urban areas in the coast.
00:19:45:06 - 00:20:04:07
Paula Bustos
There we could track them all the way towards firms, and they were investing in firms in the industrial and service sector. And these firms increased employment and increased wages. So this had a positive effect on, you know, development of these sectors. But in these, you know, far away regions.
00:20:04:07 - 00:20:22:22
Abigail Acton
It kind of reminds me of the notion of throwing a pebble into a pond and just watching the ripples go and go and go. I mean, there really, it's such a wide scale, impact. Yeah. And implications. Fantastic. So looking into the future a little bit, Paula, what do you think the implications are for your findings?
00:20:22:22 - 00:20:25:07
Abigail Acton
What does this tell us? What can we learn?
00:20:25:09 - 00:21:07:09
Paula Bustos
Yeah. Going back to the initial question on to what extent, nowadays developing countries, because they are open, they have the risk of specializing in agriculture and not transitioning. We did not find that we did find these positive links through labor markets, through capital markets. But I guess the finding for example, for the labor market, that there was this scarcity of skilled labor that reduced innovation implies that you need to couple, you know, this investment in agricultural technologies with investment in education so that, you know, you don't have this a worsening of the composition, in this key composition in the manufacturing sector and a reduction in innovation.
00:21:07:11 - 00:21:29:01
Paula Bustos
And then for a capital markets, we find that Brazil has a very integrated capital market. They have a lot of banks. They expand rural urban areas. But this is not the case in many other developing countries. So one lesson is that this capital market integration across regions, through banks that span, you know, that have both rural and urban branches is very good.
00:21:29:07 - 00:21:48:19
Paula Bustos
Brazil has always had an active policy to, you know, for farmers to receive loans from banks, etc.. So they forced banks to direct a percentage of their deposits towards rural loans. So some active policy in linking these rural areas through the banking sector also seems useful.
00:21:48:21 - 00:21:56:09
Abigail Acton
Yeah, that's wonderful. Thank you very much. Excellent. How interesting. Does anyone have any observations or questions to Paula? Yeah, Susi, what would you like to ask?
00:21:56:14 - 00:22:25:03
Susi Geiger
Yeah. Super fascinating, Paula. I especially love the way you had a natural experiment. Basically ready to go, including control groups and everything. But one of the issues that came to my mind when you were talking is, whether you control for multinational firms as well, because I imagine that there's a lot of multinational firms involved in Brazilian agriculture and that they would take the capital out of the country immediately.
00:22:25:05 - 00:22:48:05
Paula Bustos
Yes. So actually, you know, this is something that we were concerned about. The truth is that because of of that, we don't find the savings in the local banking system. So that's that was a first concern we had when we didn't find any local effects that this money was not lent locally. We were thinking, okay, this money is going to New York, is going somewhere else.
00:22:48:05 - 00:23:15:17
Paula Bustos
It's not staying in Brazil. So we were surprised to find, you know, that this stays there. So our findings imply that there's a large part of the of the gains that stay. And this is also related to land ownership because, you know, we don't find this kind of financial channel, but then because landowners don't reside locally in the areas of the boom, we don't find an increasing demand for non traded goods or services in those areas.
00:23:15:22 - 00:23:16:04
Paula Bustos
Okay.
00:23:16:04 - 00:23:39:12
Abigail Acton
So basically less impact from multinationals than you would have thought. And and and the cash actually staying within the country. Yes. Thank you very much. Okay. Super I'm going to turn to Susi. Susi MISFIRES opens up a new theoretical and empirical horizons for analyzing, innovating markets in which multiple interests, values and concerns all clash. So you took health care as your case study.
00:23:39:16 - 00:23:42:13
Abigail Acton
What drew you to this area of research Susi?
00:23:42:15 - 00:24:05:07
Susi Geiger
Yeah. So MISFIRES from the start was a passion project, really. I'm deeply passionate about promoting equality and access to medicines and medical services. My primary goal really, is to ensure that everyone around the globe can receive health care that they need, when they need it. Regardless of where they were born, really. But that's a vision that's still very far from being realized.
00:24:05:09 - 00:24:38:07
Susi Geiger
Governments now have to stretch their budgets across a greater number of people who live longer with more chronic diseases, and patients are often no longer able to access adequate health care, having to pay very high prices for it. This mission of figuring out how we can collectively deal with this situation, drives our research, as well as actually my involvement as an expert member at an W.H.O. advisory group on pharmaceutical pricing and my involvement with Access to Medicines Ireland, which is an NGO that advocates for have equity nationally and internationally.
00:24:38:13 - 00:24:43:03
Susi Geiger
So I see myself a little bit as an academic activist in this space.
00:24:43:05 - 00:24:56:21
Abigail Acton
Right.Excellent. Yeah. I thought it's a good thing to be Susi. Excellent. You know, an activist group with some academic creds behind you. But from the standpoint of the market, what do you identify as standing in the way of equitable access? What did your project uncover?
00:24:56:23 - 00:25:36:17
Susi Geiger
So it's patterns and pricing. That that wouldn't really surprise anyone who knows anything about this space. A patent system is actually, when you go back, not a lot of people realize that up to the mid 20th century and even later, a lot of countries didn't allow patents for pharmaceuticals. They just simply didn't accept that. And then in 1995, through World Trade Organization, we agreed collectively globally on a very infamous, trade agreement called TRIPS, which basically, imposed global patents, with the same length, etc., etc..
00:25:36:19 - 00:26:07:23
Susi Geiger
Every technology, in the globe, including pharmaceuticals. And that's basically, you know, one fell swoop decimated, Indian generic manufacturers who at that time were known to be the pharmacy of the developing world, as they were called. Now, a lot of low and middle income countries unnecessarily create markets for multinational pharmaceutical companies. But at the same time, the patents prevented, a lot of the time local manufacturers, to supply innovative medicines.
00:26:07:23 - 00:26:33:21
Susi Geiger
So that's one big thing. And we saw the consequences. Disastrous consequences of this gene, Covid 19, where, you know, we had huge vaccine inequities just simply because we couldn't produce enough vaccines. Yet, big issue is prices. And so we have price spirals that go up now easily into the millions of euros for one treatment per patient.
00:26:33:21 - 00:26:51:01
Susi Geiger
And we have a lot of these new medicines coming onto the market at these price points. And health systems simply can't afford these anymore. But there's a lot of evidence that you could actually produce these, even these very highly innovative high tech medicines for much cheaper.
00:26:51:03 - 00:27:04:04
Abigail Acton
But is the fact that the health systems can't afford this? And thinking about the economics of the situation, these companies are pricing themselves out of the market, aren't they? So won't they have to reduce the prices of data unaffordable to no one's buying?
00:27:04:04 - 00:27:25:06
Susi Geiger
Well, you you'd think so. But they essentially have a monopoly. Again through the patent system, they can just command an area and, we see it now, you know, one of the things during Covid, we have for the first time MRNA vaccines on the market. Now, that was a technology that had developed for decades, really.
00:27:25:06 - 00:27:52:20
Susi Geiger
And a lot of the time in public institutions, but show patterns that entire mRNA space was successively enclosed into private hands really. And, you know, now the future is almost already determined because we have a handful of companies that hold patents and what's called a platform technology. So you could imagine mRNA vaccines for HIV and for some cancers, etc..
00:27:52:20 - 00:27:57:01
Susi Geiger
So it's a hugely valuable technology in the hands of a few companies.
00:27:57:03 - 00:27:59:22
Abigail Acton
What can we do?
00:27:59:24 - 00:28:29:14
Susi Geiger
That’s a good question. I think, one of the things that a lot of activists would say, and that our research also pointed towards, is that we have to valorize public knowledge creation in this space much more. So make sure that the universities that use all these really, really fundamental, important research in pharmaceuticals, that those public institutions are actually adequately valued and paid for the knowledge that they create.
00:28:29:14 - 00:28:49:24
Susi Geiger
So either keep the knowledge to public patents inside the public system and don't outsource it to private payers. Or if you do, make sure that you put conditionalities on these patterns. For instance, you know, price ceilings that they have to observe. So there's various ways to do that actually.
00:28:50:01 - 00:28:57:19
Abigail Acton
Are you seeing any signs of anything actually being implemented? Are you seeing any shift in the current model towards that?
00:28:57:21 - 00:29:29:01
Susi Geiger
I mean, to be perfectly honest, pharmaceutical companies won't do that because their business model for them works very well. They're making a lot of money there. You know, they have a monopoly in a lot of, areas. So if they go to a state buyer saying we want €3 million for this, you know, gene therapy per patient, the public buyer has to pay that if they want to provide their population with these medicines and they hugely important medicines, especially for the rare diseases.
00:29:29:03 - 00:29:48:04
Susi Geiger
So the private companies aren't going to do it by themselves. So we have to really, I think as a public governments, activists, civil society academics have to work together to push them towards it and and to really demand, conditions on, on that.
00:29:48:06 - 00:30:00:11
Abigail Acton
And when we think of your project MISFIRES Susi, what was the one, well, maybe you've already said it, actually, but what was the one key takeaway you think is important as a result of your research? What should we bear in mind?
00:30:00:13 - 00:30:25:14
Susi Geiger
So we worked a lot with patient groups and access to medicines organizations, which is fantastic to do. And then also interacted with policymakers. And I now have a book coming out that's called Peak Pharma. And a Peak Pharma basically argues that we've reached peak concentration, peak pricing, peak financialisation, peak expansion in pharma, and that the system has to change.
00:30:25:14 - 00:30:50:24
Susi Geiger
There's simply too much value absorbed by the pharmaceutical industry and not enough left for other players. So we have to think about alternative pharmaceutical economies, really. And I'm working with the concept of pharmaceutical commons a lot, to see how we can make these resources a commonality. Really a common good.
00:30:51:01 - 00:31:05:09
Abigail Acton
So, Susi, when we think of the economics of, the pharma industry and the impact that that has on on healthcare, what do you think we need to consider with regards to the strengths and weaknesses of the system?
00:31:05:11 - 00:31:34:03
Susi Geiger
So when I think about economics, Abigail, I don't just think about capital flows or labor flows. I think primarily in terms of flow of information and knowledge, because I think that's the 3 big values that flow through our economy, every single market. And you can't just look at one side without looking at the other side. I am concern that capital might flow into one direction.
00:31:34:05 - 00:31:56:23
Susi Geiger
But and that's okay if information and goods etc. flow the other way, you know, if everybody gets their piece, of that value system, so to speak. I get concerned when capital flows one way and a lot of the knowledge flows the other way as well, flows that way as well. And if not enough, so to speak, comes back from that direction.
00:31:56:23 - 00:32:01:11
Susi Geiger
To what, especially to what the public and the public paying.
00:32:01:13 - 00:32:06:15
Abigail Acton
Fantastic. Thank you very, very much. Paula, I think you've got a question.
00:32:06:17 - 00:32:36:22
Paula Bustos
Yeah. And I think this is super interesting. You know what Susi is referring because it's very related to a broader trend in, in the economy, which is this trend towards concentration and larger markups that is not necessarily justified by increasing returns to scale. So I think this is a very good example of how there might be some activities that it's efficient that big companies do because they have increasing returns.
00:32:36:22 - 00:32:54:01
Paula Bustos
But these other ones, like, you know, personalized treatments could be on a smaller scale. So the fact that all this activity is done by these larger firms is a distortion to the optimal allocation in, in the market. So I don't know if that's a good interpretation of what you were discussing.
00:32:54:06 - 00:33:16:02
Susi Geiger
It is Paula. Absolutely. And one of the things that we're very concerned about in the pharmaceutical space is also the amount of capital that's being taken out and away from research and development and innovation and being paid back to shareholders, for instance. And we call that financialization. And I'm sure you see the same in the agrarian industries that you're looking at.
00:33:16:05 - 00:33:40:17
Susi Geiger
So there's less and less money left, really, to do the fundamental research and development. And we're lacking drugs in what we call neglected to thesis, which is a lot of the time, tropical diseases, where there's simply no lucrative market, to be perfectly honest. And again, that's where public innovation, for instance, can come in very strongly because pharma just doesn't do that very well on the data.
00:33:40:19 - 00:33:42:14
Susi Geiger
They're reluctant to do that.
00:33:42:16 - 00:33:58:23
Abigail Acton
Well, I think that's absolutely brilliant. Thank you so much. All of you. I mean really some fascinating insights, both historical, contemporaneous across one country, across one sector. So I think we've looked at it from very different angles and I've really enjoyed it. Many thanks for your time.
00:33:59:00 - 00:34:01:15
Susi Geiger
Thank you so much. I mean, it was lovely to be here.
00:34:01:17 - 00:34:02:22
Abigail Acton
It was a pleasure to have you, Susi.
00:34:02:22 - 00:34:05:07
Sitta von Reden
Thank you, to catch your interest in ancient history.
00:34:06:02 - 00:34:10:02
Abigail Acton
Yeah. I'm always interested in ancient history, as listeners to CORDIScovery probably realized by now.
00:34:10:03 - 00:34:10:13
Paula Bustos
Thanks Abigail.
00:34:11:01 - 00:34:13:02
Abigail Acton
You're very welcome, Paula. Thanks for your insights.
00:34:13:06 - 00:34:16:01
All
Good bye. Bye. All right. Bye.
00:34:16:03 - 00:34:41:17
Abigail Acton
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00:34:41:21 - 00:34:53:19
Abigail Acton
In our last 48 episodes, there'll be something there to tweak your curiosity. We're always happy to hear from you. Drop us a line editorial@cordis.europa.eu . Until next time.
Economic dynamics across sectors and time
As the words ‘tariffs’, ‘economic growth’, ‘global trade’ and ‘sanctions’ fly around us, the economy and how markets are interlinked is something we are all growing more aware of. What can antiquity tell us about the way networks of exchange evolve and the impact that has on inter-imperial economies – and can that shine a light on what we are experiencing now? What can we learn from the movement of capital and labour in rural Brazil, from the agricultural sector to manufacturing. Along with exploring movements of capital and labour, we also consider the economic characteristics of one market – healthcare. Is it fair and equitable – if not why? And how can that be improved? If these questions intrigue you, then our three guests may have some answers. Sitta von Reden(opens in new window) is professor of Ancient History at the University of Freiburg(opens in new window), Germany. She runs an interdisciplinary Graduate School on ‘Empires’ at the University, and her main interests are the ancient economy, money and ancient world history which she explored in the BaSaR project. Paula Bustos(opens in new window) is research professor at Pompeu Fabra University(opens in new window), and affiliated professor at the Barcelona School of Economics(opens in new window). She conducts empirical investigations in economic development, guided by international trade theory, and coordinated the EDST project. Susi Geiger(opens in new window) is professor of Markets, Organisations and Society at the College of Business, University College Dublin(opens in new window). Her research examines the organisation of markets, particularly in healthcare and technology. She focuses on alternative ways of improving public value and the common good. Geiger coordinated the MISFIRES project.
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