[The Editors' Verdict] We Are Always at the Center of History

Reading the history of Europe, one is often surprised by the frequent marriages between royal families. And once again astonished by the fact that countries were inherited as if they were the personal property of kings. When a king passed away, the country could be inherited by another monarch or someone else, and sometimes other countries were inherited as well. Occasionally, such inheritances led to the birth of great empires.

Carlos I of Spain and Charles V of the Holy Roman Empire (1500?1558) were the same person, and the countries he inherited reflected this. Since the countries he inherited were different, his royal title varied depending on the country. By 1519, through inheritance, he came to rule Spain, the Netherlands, Burgundy, Germany, Austria, Bohemia, Hungary, and parts of Italy in succession. Alongside this, Spain actively pursued the conquest of the New World following Christopher Columbus's discovery in 1492. It was he who authorized Hern?n Cort?s and Francisco Pizarro to conquer the Maya and Inca civilizations, and Ferdinand Magellan's circumnavigation of the globe took place during his reign. When one thinks of the "empire on which the sun never sets," England usually comes to mind. However, the original was Spain.

In the 16th century, vast amounts of gold and silver flowed from the New World to Europe. These precious metals were concentrated in Seville, Spain. Seville housed the Casa de la Contratacion, a trade exchange that managed the trade of gold and silver. Through this, the gold and silver imported from the New World were distributed to various parts of Europe. The precious metals from the New World caused European prices to rise for nearly a century and are known to have been one of the important factors in capital accumulation, which became the foundation of capitalism.

The territories ruled by Carlos I surrounded France. There was no chance for good relations. At that time, Europe was ruled by formidable powers. Along with Carlos I, there was Fran?ois I, still the most beloved monarch among the French, and Henry VIII, who separated England from the rule of the Roman Catholic Church?absolute monarchs who did not get along easily. Therefore, wars were incessant for various reasons. There was also no way to avoid war with the rising Islamic power, the Ottoman Empire.

In 1556, Carlos I abdicated, dividing the empire: Spain, the Netherlands, and others went to his son Felipe II, while Germany, Austria, Hungary, and Bohemia of the Holy Roman Empire went to his brother Ferdinand I. He spent his remaining years in a monastery in Spain. What he passed on to his son was not only the divided empire but also massive national debt and fiscal deficits.

Felipe II himself was no less a passionate figure. Especially as a protector of the Catholic Church, he was hostile to the emerging Reformation religions that had grown significantly after Martin Luther. His oppression of the Protestant stronghold, the Netherlands, sparked the War of Independence, known as the long and protracted Eighty Years' War. The defeat of the Spanish Armada, sent to crush Protestant England, also occurred during his reign. Felipe II declared national bankruptcy in 1557, 1560, 1569, 1575, and 1596. At that time, when a king declared bankruptcy, creditors had no recourse. Spain declared bankruptcy six more times over the next 60 years and never regained the national prestige it had during the eras of Carlos I or Felipe II.

Observing the decline of Spain, a European great power, one realizes that governance must not be swayed by useless ideologies and emotions. We are always in the midst of history. There comes a time when it is too late to correct present mistakes. That is why it is frightening. Currently, we are in a war against the novel coronavirus disease (COVID-19). But how will we deal with the consequences of waging war through debt? Look up and see the very center of history where we stand.

Jo Jang-ok, Professor of Economics, Sogang University