Thursday, August 28, 2008

David Hume, ‘Sancho Panza’ (Cervantes), Adam Smith and Karl Marx as Wine Critics?

Occasionally we can have a laugh, though the following is based on fact from their writings. But Cervantes’ immortal character, Sancho Panza, Squire to Don Quixote, tells a story about a wine critic (HERE):

“Sancho Panza and David Hume, the fathers of wine tasting?” (by Victor Ginsburgh, Journal of Wine Economics):

"But as our intention is to mingle some light of the understanding and the feelings of sentiment, it will be proper to give a more accurate definition of delicacy than has hitherto been attempted. And not to draw our philosophy from too profound a source, we shall have recourse to a noted story in Don Quixote (Cervantes, Don Quixote, Part II, chapter 13).

"It is with good reasons, says Sancho to the squire with the great nose, that I pretend to have judgment in wine: this is a quality hereditary in our family. Two of my kinsmen were once called to give their opinion of a hogshead, which was supposed to be excellent, being old and of a good vintage. One of them tastes it, considers it; and, after mature reflection, pronounces the wine to be good, were it not for a small taste of leather which he perceived in it. The other, after using the same precautions, gives his verdict in favor of the wine; but with the reserve of a taste of iron, which he could easily distinguish. You cannot imagine how much they were both ridiculed for their judgment. But who laughed in the end? On emptying the hogshead, there was found at the bottom an old key with a leathern thong tied to it."

David Hume, 1757, Of the standard of taste, in On the Standard of Taste and Other Essays. Indianapolis: The Bobbs-Merrill Company, 1965).”

Karl Marx, another wine economist?

"What is the link between Karl Marx and wine?

"The parents of Karl Marx owned a few vineyards in Mertesdorf in the nearby Ruwer valley. Karl Marx’ father was a lawyer and it was quite common for bourgeois families at the time to acquire vineyards either for their own wine consumption or as an investment for their old age security. The Marx family vineyards were located in the “Viertelsberg”, a medium quality vineyard near the renowned ‘Grünhaus’ (now known as Carl von Schubert’s Maximin Grünhäuser). The Marx family sold their vineyards in 1857. Today, the ‘Weingut Erben von Beulwitz’ produces a Spätburgunder wine (pinot noir) with the Karl Marx label. The grapes do not come from the exact Marxian vineyards but from the Eitelsbacher Marienholz, a parcel nearby.

However, this is not the only link between Karl Marx and wine. Marx had been fond of good wine from early an age on. In 1835, at age 17, Marx enrolled in the law program at the University of Bonn where he joined the Trier Tavern Club drinking society; he later served as the president of that society…

… After the defeat of Napoleon in 1815, the Mosel region became a Prussian province and as the only notable wine region within the empire it provided all of Prussia with wine. Since wines from non-Prussian Germany were heavily taxed Mosel wineries enjoyed a quasi monopoly. Wine prices were high and the Mosel wine business was booming. The area under vines was sustantially expanded and most Mosel wine makers were well off.. However, in 1834, Prussia established the German Tariff Union (Zollunion) with the southern German states -- all of which have a substantial wine production. All of a sudden southern German wine was exempt from any duties and non-Mosel wine flooded the Prussian market. As a result, wine prices fell dramatically and the wine producers at the northernmost frontier of professional viticulture -- that is, the Mosel – were in deep trouble. A rigid Prussian tax policy that referred to past profits instead of present losses and a series of bad (= cooler and wet) vintages added to the misery. Mosel wine makers fell into deep poverty.

In 1842, Marx began to write for the Cologne based Rheinische Zeitung (in the same year he also became the editor-in-chief of the Rheinische Zeitung). His articles were anonymous using the pseudonym the “++-Korrespondent von der Mosel.” Marx was appalled by the Prussian tax policy that imposed harsh and unjust hardship on the Mosel vintners. In January of 1843 he wrote a series of articles known as the “Justification of the ++-Correspondent from the Mosel” in which he vehemently criticized the Prussian government. This was the beginning of his new life. A few months later Marx had to leave Prussia and emigrated to Paris where he met another German fugitive, Friedrich Engels. Together they changed the world

Adam Smith: The Father of Wine Economics?

The foundation of Smith’s wine economics is laid out early in Wealth of Nations, Book One, Chapter 11: Of the Rent of Land. Here Smith tries to explain why some kinds of land earn more than other lands. Land suitable for viticulture earns higher rent, Smith said, and has long done so.

That the vineyard, when properly planted and brought to perfection, was the most valuable part of the farm, seems to have been an undoubted maxim in the ancient agriculture as it is in the modern through all the wine countries.

But viticultural profits were constantly threatened, Smith argued. Not by nature, although this could cause bad crops, and not by high taxes, although he argued against them. The chief threat (or perceived threat) to viticultural earnings was expansion to new lands. Old vineyards, as he called them, were threatened by New Vineyards — and would seek protection from them or to prevent their development. This section reads very well today if you change Old Vineyards to Old World wine and New Vineyards to New World Wine. Certainly New World Wines (and their vineyard, cellar and marketing practices) are seen by many Old World producers as a threat to their livelihood. Adam Smith understood why Old would seek by any means to prevent development of the New. You don’t have to have a Ph.D. in economics to already know that he did not approve.

Smith wrote about terroir, too. I can’t really say that Adam Smith invented terroir, the idea of a special taste of place that winemakers strive for, but I can say that he understood its economic value. Smith wrote that

The vine is more affected by the difference in soils than any other fruit tree. From some it derives a flavour which no culture or management can equal, it is supposed, upon any other. This flavour, real or imaginary, is sometimes peculiar to the produce of a few vineyards; sometimes it extends through the greater part of a small district and sometimes through a considerable part of a large province.

I note with interest that Smith recognized terroir and doubted the reality of its existence in the same sentence (”real or imagined”). It isn’t terroir that really matters to a wine economist, I suppose, it is only that people think there is terroir. Smith wrote at length about the economics of these special wines and, because of their limited quantities, the premium prices they could command. Any modern winemaker, upon reading this section, would immediately try to create an A.V.A. to cash in on the possibility of terroir by limiting supply.

The whole quantity of such wines that is brought to market falls short of the effectual demand, or the demand of those who would be willing to pay … The whole quantity, therefore, can be disposed of to those who are willing to pay more, which necessarily raises the price above that of common wine.

A small part of this higher price … is sufficient to pay the wages of the extraordinary wages bestowed upon their cultivation, and the profits of the extraordinary stock which puts this labor in motion

What an excellent Blog from the American Association of Wine Economists AAWE ( Apart from the above, there is a storming detailed account of Robin Goldstein sending a spoof wine and restaurant review for a Wine Spectator Award: Osteria L’Intrepido doesn’t exist, but it won an award for excellence.

But I am glad to see Adam Smith among the original wine critics and I assume his membership of Edinburgh's Oyster Club (an enlightened intellectual discussion and er, drinking and dancing club), enabled him to introduce many of his fellows to the produce of Bordeaux, where his close frend, Professor Joseph Black's father was a major Bordeaux negociant.

I was also intrigued to find out that the taxation and tariff changes of individual German states, which wiped out the smaller vineyards of Karl Marx's parents, were the probable cause of his lifetime’s hatred of markets and free trade.

Visit the American Association of Wine Economists blog and let a smile or two cross your face. Intrepid journalism like this is rare.

[Disclosure: as a non-drinker of alcohol – even the great wines of Bordeaux; diet coke is no substitute – I have no commercial or other interests, except perhaps nostalgia, for promoting wine. But I do enjoy the odd laugh about it.]


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