Politique Internationale — Could you remind us of a few key dates in the history of risk?
François Ewald — It’s not easy, because the concept is so ambiguous between its philosophical and moral dimension – a way of questioning ‘responsibility’ – and its technical dimension – legal, financial, insurance and environmental. In fact, these two dimensions will continue to intersect.
The concept appeared in the Middle Ages to justify the fact that the banker, the lender, could claim that the borrower should give him back more than he had given. The moral dimension was framed by Catholic theology, which prohibited usury. The Franciscans brought the idea that the banker performed a useful social function – enabling society to commit itself to the future – and that this justified remuneration for his ‘risk’. Consequently, the remuneration of risk is legitimate only insofar as it is used to serve his social mission and not as a principle of personal enrichment. This moral and financial dimension of risk is still present today.
The insurance dimension comes from maritime trade and the first insurance practices: the shipowners of a port share the shipping risk among themselves so that a loss that would lead to ruin remains bearable. In this sense, risk does not refer exactly to an event, but to the monetary value attached to a potential loss linked to that event.
This is the purpose of the contract that shipowners enter into with each other for mutual protection. Much later, Leibniz would use this scheme to advocate compulsory municipal fire insurance.
A third dimension concerns the calculation of the value of risk. This mathematical dimension was based on games of chance, which were widespread in the seventeenth century. The theory of risk was then enriched by the work of the greatest mathematicians: Pascal, for example, formulated the rule of parties, the moral translation of which is found in the famous notion of ‘the bet’. Risk is interpreted on the basis of the calculation of probabilities. It is not a question of valuing the gambler’s taste for risk, but of using the calculation of odds to argue that, if he is a rational being, the atheist must bet on the existence of God and adapt his conduct accordingly.
A final dimension is linked, in the eighteenth century, to the progress of the democratic idea and to the philosophy of individual savings. This philosophy was at the root of the development of what we call ‘land-based’ insurance, in contrast to marine insurance: life insurance and fire insurance. Insurance became social in several respects: it became a way of running a good society – through mutuality and risk-sharing – as a means of covering risks for which everyone tended to be made responsible. Risk thus accompanied the birth of the ‘bourgeois’. It has very little to do with the risk of the knight who, in an act of pure expense, risked his life in battle. This is about being prudent in the modern sense of …