Understanding Finance – The tale of the Walletin Spectre

Norse giantsAdam Smith was a big proponent of free market economics. Some may say that he “invented” capitalism. But who invented Adam Smith? Clearly, saying that Smith invented capitalism would be a naive statement, and nobody invented Adam Smith, but it was the old tale of the Walletin spectre that scared him straight into supporting self interest and competition.

The Celtic tale of the Walletin spectre dates back centuries before Smith’s time to the 12th century when the Vikings raided Scotland like it was a set of 5 inexpensive hard disks. According to Norse mythology, the Valhallamr was a galley on which a communal group of giants lived. At night, they would disembark at various locations, plundering coastal villages and sharing the profits.

Centuries pass, and a number of the Norse settle in Scotland. One group of Norse emigrants established the town of Walletin, a rough Celtic translation of Valhallamr. These former Vikings vowed to stay true to the ways of Valhallamr galley and tried to establish a communal village. Unfortunately, the village of Walletin failed to survive its first winter as the settlers lacked any agrarian skills (skills vital for sustaining a commune), so they resorted to plundering other villages.

But the pickins were slim for the Walletins. No longer having the advantage of mobility offered by their galleys, the Walletins were unable to plunder. Neighboring villagers were generally smart enough to move away. Slowly, the plundering settlers died in the blistery Scottish winter.

By the 18th century, the story of the Walletin evolved into a folk story used by Scottish parents to scare their children. The Walletin became a starving spectre, or ghost, that would plunder at night with the intention of sharing profits with fellow Walletins. It was this story, the story of the Walletin Spectre, that convinced Smith that it was the idea of self-interest and competition, and not the profit sharing model of the Walletin, that would lead to economic prosperity. And now you know of the tale of the Walletin Spectre and the birth of modern economics. Do share your new wealth of knowledge with all that you know (much like the Walletins would after plundering it).

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