Internalising the externalities

Stretching as far back as the Middle Ages, businessmen have tried to build up fabulous wealth then save their souls by giving much of it away. Francesco Datini, the 14th-century “Merchant of Prato” left behind hundreds of thousands of business and personal letters, ledgers and documents showing how he had made his fortune trading arms, spices and wine. As James O’Toole, a retired professor of business ethics, writes in his book “The Enlightened Capitalists”, they showed Datini to be an “astute, shrewd, ambitious, ruthless and greedy entrepreneur…filled throughout his life with constant anxiety”. But his cares got the better of him and before his death he left a fortune to endow a foundation for the benefit of the poor of Prato. It still exists over 600 years later.