Since 2007, the subprime mortgage crisis in the United States has triggered a new round of global financial crisis, prompting people once again to examine the flaws in the financial system and the insufficiency of modern economic and financial theories.

Voices that financial destruction of modern civilization are incessant.

Renowned economic historian, Yale University Professor of Finance and Management, and Director of the International Center for Finance, William N. Goetzmann, has proposed a completely different view: it is finance that makes the progress of civilization possible.

While promoting the development of human civilization, William Goetzmann does not deny that finance has brought a series of problems such as bubbles, destructive crises, exploitative companies, and income inequality, but he also points out that essentially, finance is just a way of doing things.

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This is what he emphasized in his conversation with the editors of "Peking University Financial Review", "The nature of finance is not inherently good or bad, we should more regard finance as a kind of technology or tool, and not always consider whether it is good or bad."

"The nature of finance is not inherently good or bad" In the 1950s, Hyman Minsky, unlike mainstream economic theories, gave another perspective on the causes of financial crises, that is, the market itself is unstable.

During the economic expansion period, prosperity itself contains instability.

Since 2007, the new round of global financial crisis triggered by the subprime mortgage crisis in the United States has prompted people once again to examine the flaws in the financial system and the insufficiency of modern economic and financial theories.

For the outbreak of the crisis, many people call it "Minsky Moment".

This "Black Swan" event not only destroyed people's wealth and work, but also eroded the banking and even the government system.

In the two months after Lehman Brothers filed for bankruptcy, the financial crisis quickly spread from the United States to other regions: Fortis Bank in Belgium, the largest mortgage bank in the UK, was forced to be rescued by the government or merged by other institutions, and Iceland even made the country on the verge of bankruptcy due to the over-expansion of the banking industry.

At that time, the voices that finance destroyed modern civilization were incessant.

However, the famous economic historian, Yale University Professor of Finance and Management, and Director of the International Center for Finance, William N. Goetzmann, has proposed a completely different view: it is finance that makes the progress of civilization possible.

William Goetzmann is a world-renowned senior scholar in the mainstream field of finance.

In the history of China and many countries in the world, especially in the history of finance and art, he is also one of the few authorities in the world.

In his view, modern finance has gone through several crises, but not only has there been no crisis that has cut off the relationship between human society and finance, but every time it has increased the dependence of countries and regions around the world on modern finance, and further transformed the economic competition between countries into a system competition, and the system competition is ultimately reflected in the financial development of each country.

As William Goetzmann mentioned in his book "A Thousand Years of Financial History" (Money Changes Everything: How Finance Made Civilization Possible), although in the hearts of ordinary people, finance is an abstract concept that occasionally attracts attention due to dramatic crises, in fact, finance is an indispensable part of human social development in the past five thousand years, and has deeply influenced the formation of the first cities, the rise of various ancient empires, and human exploration of the entire world.

For example, in modern Europe, financial activities have given birth to a tradition of using mathematical methods to quantify and analyze risks, making the unprecedented era of navigation and geographical discoveries possible.

The new financial organizational structure of "companies" emerged to meet the needs of capital gathering for trade in Asia and America.

While promoting the development of human civilization, William Goetzmann does not deny that finance has brought a series of problems such as bubbles, destructive crises, exploitative companies, and income inequality, but he also points out that essentially, finance is just a way of doing things.

This is what he emphasized in his conversation with the editors of "Peking University Financial Review", "The nature of finance is not inherently good or bad, we should more regard finance as a kind of technology or tool, and not always consider whether it is good or bad."

Finance is a "time machine" In the book "A Thousand Years of Financial History", William Goetzmann describes finance as a "time machine" built by humans themselves, through which people can achieve the flow of value across time and space, which has completely changed the way people think and plan for the future.

He believes that although finance cannot move our bodies on the track of time, it can move money.

For example, mortgage loans discount the future currency of homebuyers, and for lenders, mortgages also convert currency into the future; similarly, a person who is worried about the future of life after retirement can purchase the future livelihood at a higher discount rate at present.

The significant expansion of humans and urban society in the past 5,000 years has proved a fact, that is, finance has greatly enhanced the ability of humans to reduce survival risks and allocate resources across time to promote growth.

Goetzmann said that finance has made human creativity more effective.

Without finance, only those who have accumulated wealth can start a business.

Finance makes it possible for people without original wealth accumulation to become entrepreneurs, and finance allows capital to be invested in projects with high potential returns without considering whether the operators are rich or not.

In this sense, finance has widely released the economic advantages of wealth - it makes productive capital convenient and popular, eliminating the natural constraints on financing productive projects.

Therefore, Goetzmann has refined the key of finance into four aspects: reconfiguring resources in time, reconfiguring risks, reconfiguring capital, and expanding the channels and complexity of resource allocation.

Loans are the simplest financial contracts.

For example, equity or partnership mechanisms provide a reward measure for corporate ownership, rather than a simple expected fixed return; insurance and option contracts provide a future payment based on a specific fact or situation.

And the reconfiguration in time means that financial contracts must overcome the obstacle of "separating the present from the future."

After financial contracts expose the inherent risks in the time dimension and allocate them among different participants, they can then reconfigure capital.

For example, capital flows into high-efficiency enterprises through the stock market, and banks lend to enterprises with profit potential.

From here, it can be seen that finance is a technology that promotes economic growth.

At the same time, in the development process of finance, it has provided a series of increasingly rich choices about the possibilities of intertemporal contracts.

This increasingly complex phenomenon and trend in the financial field essentially reflects the complexity of the society that produces such contracts.

Goetzmann even feels that sometimes this complexity is almost close to the limit that written language can describe.

For example, a modern security collateral contract may be as long as 900 pages, covering all kinds of extremely complex details, such as conditions, rights, and responsibilities.

The advantage of such complexity is to expand the contracting "space" of the parties to the contract.

In his view, without this multi-dimensional contracting freedom, many fundamental and transformative civilization activities in human society would not be possible.

Goetzmann believes that the basic trend of technological innovation is mainly upward, and will continue to rise.

Although sometimes the problems caused by finance are very serious, from the perspective of the entire globalized society, human society is making progress in the process of dealing with various problems.

An important argument of the book "A Thousand Years of Financial History" is that financial technology has made more complex political systems possible, increased social mobility, and promoted economic growth, which is a symbol of civilization in a complex society.

The two generations of Goetzmann's inheritance William N. Goetzmann's strong interest in history comes from his father, William H. Goetzmann (1930-2010).

Old Goetzmann was born in Washington in 1930 and grew up in St. Paul and Houston.

After obtaining a bachelor's and doctoral degree from Yale University, he taught here from 1955 to 1964.

In 1956, Xiao Goetzmann was born in the Yale campus.

He was influenced by the humanities spirit of Yale since he was a child, and after growing up, he also followed his father's footsteps and studied undergraduate and doctoral degrees at Yale University, which further deepened his enthusiasm for history and humanities.

Old Goetzmann was a professor of archaeology and history at Yale University.

His book "Exploration and Empire: Explorers and Scientists in the Victory of the American West" combines a large number of diaries, reports, monographs, and academic research, comprehensively showing the "programmed" information collection of the American government in his eyes.

This book won the Pulitzer Prize in 1967 and the Francis Parkman Award awarded by the American Historical Association.

Historian David Lavender wrote in a book review for the New York Times that the author "achieved a feat of historical discovery."

In the 50 years after the publication of "Exploration and Empire," Old Goetzmann published a large number of articles and works, becoming a leading historian in the United States, with research areas including the history of thought, culture, art, science, and philosophy, including "When the Eagle Screams: The Romantic Horizon of American Diplomacy from 1800 to 1860" (1966), "Beyond Revolution: A History of American Thought from Paine to Pragmatism" (2009), "New Continent, New People: America and the Second Age of Discovery" (1987), etc.

He also created a series of documentaries about Western art "The Imaginary West," which was broadcast by the American Public Broadcasting Service in 1986.

In the same year, he and his son Xiao Goetzmann published a book of the same name.Since 1964, Gozman the Elder taught at the University of Texas at Austin until 1980, making it his academic mission to open up the study of American history to women, African Americans, and Hispanics.

In the late 1960s, as the head of the history department, he invited external experts to give lectures on black history and appointed the university's first black faculty members in the humanities; he also established the university's first course on women's studies—Intellectual Women in America—and a course on the study of Hispanic Americans.

Until his retirement, Gozman the Elder continued to advocate for the recruitment of minorities.

According to his friends, Gozman the Elder once designed a graduation poster featuring a large photograph of women dressed in comfortable black clothing, holding a flag that read "Vote for Women."

William N. Gozman, a "China enthusiast," had an office that was almost an art gallery and financial museum, with collections ranging from classical works like "Guanzi" to Chinese Shang and Zhou coins, Ming Dynasty paper money, and genuine currency, bonds, stocks, and options from different periods of other countries.

Rather than seeing Gozman's "A Thousand Years of Financial History" as a book written for European readers, it is more accurate to say it was written for Chinese readers.

Gozman believed that most financial historians focused their attention on the specific civilizations they specialized in, and crossing the boundaries created by language and academic traditions made them uncomfortable.

However, he himself was rarely limited by such constraints.

Through cross-narratives between the East and the West, he compared and contrasted the paths of financial evolution of both, analyzed the connections between the East and the West established through the Silk Road, and demonstrated to readers the immense contributions China has made to the development of global finance.

Previously, in an exclusive interview with "First Financial Daily," Gozman said he had recorded a lot of content about financial innovations in Chinese history, "a fact that most Chinese readers might not expect: China is a financial innovator, especially during the late Qing Dynasty in the 19th century."

In this era, China quickly learned and absorbed financial tools and technologies, and Shanghai rapidly became a financial center.

In Shanghai, Chinese financiers learned how to use financial instruments, such as mastering how to raise funds through stock issuance for national financial development, and raising capital for transportation infrastructure, defense, mining, and urban modernization.

This innovation was not a simple imitation of the British approach but adapted it to China's political structure.

They created a unique form of corporate financing that encouraged government participation, to meet the country's needs for infrastructure construction, ultimately allowing capital to be used to promote China's transition to modernization.

In fact, China's early financial innovations included a variety of paper securities such as coinage, paper money, bills, and even financial mathematics, which did not appear in Europe until several centuries later.

For example, during the Song Dynasty, foreign merchants would exchange their coins for paper money at border areas, which was a completely new financial concept for them, exchanging metal for paper money.

Gozman speculated that Europeans at the time must have been very panicked, as they had to give up actual hard currency to use something that seemed similar to today's cryptocurrencies.

Gozman traveled to China early in his career, and his trip was quite significant.

He visited the most influential financial leaders in Chinese politics, academia, and business, shared ideas with managers, entrepreneurs, bankers, lawyers, and other intellectuals from various industries, and saw important geographical landmarks in the history of finance: from the Bund in Shanghai to Zibo, the hometown of the world's earliest financial theorist, Guan Zhong.

He couldn't help but sigh: "Cultural heritage and historical sites remind us that culture is an interconnected, multi-generational endeavor with themes that span centuries.

Visiting historical sites connects you with the lives of those who have had a significant impact.

By learning from history, we can understand the rise and fall."

Dialogue with Gozman, "Peking University Financial Review": For the first question of this interview, we would like to extend from your representative work "A Thousand Years of Financial History."

Our understanding of the core idea of this book is: "Finance has guided the course of history, a force that has long shaped human civilization."

In the era of artificial intelligence, how do you view the impact of artificial intelligence on the financial system?

Will it make the power of finance greater?

William Gozman: That's a great question.

I've been using artificial intelligence in my research for some time, and I believe everyone in the financial system who deals with information is doing the same thing.

I see it as an information tool.

The market itself has a process of aggregating information into prices, and my first thought on this issue is that artificial intelligence will help with this price discovery process.

My guess is that its application will make the price discovery process more efficient, which is beneficial for everyone.

The downside of artificial intelligence is that it only reflects our existing knowledge and past culture, as well as most of what has been recorded, rather than what is implied in our cultural exchanges and interactions.

For example, the difference between me emailing you to answer questions and us having a face-to-face conversation is like the difference between artificial intelligence and humans.

At this point, AI is very simple; it currently does not allow people to obtain an implicit sense of communication, but no one knows whether it will enter more complex interactive communication fields in the future.

"Peking University Financial Review": After watching Nolan's new film "Oppenheimer," we feel that on the one hand, modern science has brought us into a new era, but on the other hand, it also comes with uncertainty, destruction, and ethical dilemmas.

To some extent, the development of finance is also like this.

We see economic crises, financial bubbles, income inequality, so how do you view the duality of finance?

William Gozman: Since the earliest evidence of finance, it has always been criticized.

For example, when borrowers cannot repay their loans, it creates a difficult situation, which can be traced back at least 4,000 years.

I prefer to see finance as a technology, or a set of tools, which you can use positively or negatively.

Therefore, instead of focusing on whether finance is good or bad, it is better to see it as a way of doing things, or a way to achieve goals.

I think it is best to distinguish the "emotions" of most people towards finance from its actual role.

This is because demonizing finance is an easy thing to do.

Perhaps capitalism is a system that creates all these problems, but finance and capitalism are not the same thing.

You can see capitalism as a social structure, not a financial structure.