Lecture 2: The prehistory of globalization,
1000 BC to 1500 AD
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Task: to get a handle on the contours of the
“global” economy before 1500 AD.
Rather than trying to encompass all the history of all the countries of the globe, we will look at some prominent examples.
Then, we will move on to consider some of the institutional underpinnings of trade
The prehistory of globalization
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Not the first instance of regional trade: obsidian in Asia Minor from 3000 BC;
Mesopotamia and Indus Valley in 2000 BC.
However, this is one of the best documented examples of an early trade network.
Full flowering of Greek trade took place somewhere between 600 to 300 BC.
Classical Greece
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Archaeological evidence suggests Greek trade goods in Northwestern Europe, Russia, Persia, and even India.
This network was also supplemented by the establishment of formal trading colonies, e.g.
Barcelona, Marseilles, Odessa, and Palermo.
Thus, a fairly wide orbit of Greek presence
Classical Greece
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Circa 550 BC
Classical Greece
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Classical Greece
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Thus, a highly developed inter-regional division of labor was formed: Black Sea and North Africa supply raw materials and Greece supplies products with higher value-added.
Consequently, the Greeks grew rich, allowing for their cultural outpouring and allowing for bitter conflict among city-states and against outsiders.
Classical Greece
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The chief of the successors being Rome which reaches its peak between 90 and 215 A.D.
The most important aspect of the Roman economy was its degree of geographical specialization.
Specialization predicated on a Mediterranean common market (“middle of the earth”).
The Roman Empire
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The Roman Empire
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Again, a fully developed regional division of labor, but much more extensive than in the past.
Trade spans Greek orbit but also penetrates deeper into hinterland with Rome always at the
“top” and peripheral areas at the “bottom”.
Network not to be seriously rivaled again until
1400 years later.
The Roman Empire
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Much of this was explainable by the fact that as the
Empire spread, it provided a uniform, coherent legal framework for commercial activity:
1.) well-defined (physical) property rights;
2.) impartial enforceability of contracts;
3.) full freedom of enterprise.
The Roman Empire
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We can also consider additional roles for:
1.) the development of transport infrastructure;
2.) uniform monetary and physical standards;
3.) the spread of Latin as a common language;
4.) the suppression of piracy at sea
The Roman Empire
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The fall of Rome: protracted civil wars and struggles for power—especially in the western half—along with external threats.
Trade disruption and implications for revenues: a self-reinforcing trajectory.
End game: extreme political fragmentation
The Roman Empire
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Circa 600 AD
The Roman Empire
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Starting from Mohammed’s migration to
Medina in 622 AD, successive cities and tribes fall before Arab armies.
The Rashidun Caliphate was able to extend outside of Arabia with territorial gains at the expense of the Sassanid and Byzantine Empires.
The Umayyad Caliphate
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The Umayyad Caliphate
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Apart from stunning military conquests which spanned Africa, Asia, and Europe, the caliphate also stimulated trade.
African gold, Arabian incense, Indian spices, and Persian textiles flowed freely across former borders…along with traders & the flow of ideas.
The Umayyad Caliphate
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As in the case of the Roman Empire, trade under the caliphs benefited from:
1.) well-developed commercial law;
2.) liberal commercial policy;
3.) the unification of linguistic, monetary, and physical standards.
The Umayyad Caliphate
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The pre-history of globalization was, of course, not only Occidental in nature.
The Silk Road which had existed for many centuries came into its heyday around 700 AD.
What explains the timing? Consolidation of simultaneous Chinese and Islamic empires.
“The Silk Road” as a misnomer
The Silk Road
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The Silk Road
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But its effects were obvious, helping present-day
Xian to reach a population of almost two million.
Similar developments in the famous oasis towns along the principle routes: Samarkand, Bukhara, and Bactria.
Passage of considerable economic interaction based on narrative evidence.
The Silk Road
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Also, a passage of immense social interaction, most notably:
1.) transmission of Buddhism to Central Asia and
China from India;
2.) transmission of Christianity/Islam/Judaism to
Central, East, and South Asia from the
Middle East;
3.) transmission of Manichaeism/Zoroastrianism to China/Middle East from Persia.
The Silk Road
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Significant disruptions occurred with Christian
Crusades (c.1000-1200 AD) and especially
Mongol conquest around 1200 AD.
With consolidation of power and a Pax
Mongolica (1215-1360 AD), the unification of overland routes spanning Eurasia emerges for the first and only time in history.
The Silk Road
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The Silk Road
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Eventually, the Silk Road and the cities which thrived along it faded into obscurity.
Primarily due to:
1.) disintegration of the Mongol empire;
2.) isolationism under the Ming dynasty;
The Silk Road
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Period after the Arabic conquest of Persia in 651
AD also saw the development of seaborne routes to rival the Silk Road.
A set of linked, but not fully integrated systems:
China & SE Asia; SE Asia & India; India & the
Middle East.
Marked by dominant ethnicities in each subsystem
The Indian Rim
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The Indian Rim
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Large displacement by European imperial powers following Vasco da Gama’s second voyage to
India of 1502/3.
The reasons lie with the superiority of European naval technology (as well as noted barbarity).
But where did this lead come from, given the
Chinese fleets of the 1420s?
The Indian Rim
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One might also be left wondering what had happened in Europe in the meantime.
With the fall of Rome, circa 500 AD, the continent was in shambles…
Around 1000 AD, the primary economic activity remains (low productivity) agriculture, but we begin to see islands of commercial activity.
The Commercial Revolution
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Standard economic theory generally stops at considering the political and maybe physical barriers to trade.
But there are further elements to be resolved:
1.) How does trade emerge or re-emerge?
The Commercial Revolution
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To most economists, the personal gains from trade would be enough to propel interested parties to engage in quid-pro-quo behavior.
But the real world does not work quite so smoothly because time elapses between the quid and the quo: market conditions change.
The Commercial Revolution
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Begs the question of how long-distance trade could emerge and be sustained in the face of:
1.) Uncertainty over the actual arrival and time of transit for the case of itinerant merchants, suggesting a big role for opportunity costs and price differentials in governing trade.
The Commercial Revolution
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This condition is known as the fundamental problem of exchange .
Individuals enter into mutually beneficial relationships:
1.) only if they recognize them as such
2.) and they have the ability or necessity
The Commercial Revolution
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Notice this implies a few critical elements:
1.) Information (but not necessarily perfect) about the potential gains from trade and/or market conditions;
Without both elements, trade—both now and then—will grind to a halt.
The Commercial Revolution
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Again, if we think about Europe (but actually, the entire world) in 1000 AD, we see:
1.) Poor communication→limited information.
2.) Domestically, lack of strong governments to enforce contractual obligations.
3.) Internationally, things appear even worse
The Commercial Revolution
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At the same time, trade did emerge again, and we are left with the question of how information flowed and incentives were formed.
Some see the development of institutions that overcame these problems of commitment and coordination as key to the process.
Examples include merchant guilds, the Law
Merchant, and trade networks (principal/agent relationships) like the Maghribi coalition.
The Commercial Revolution
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These are a set of constraints or rules for interaction which individuals adopt to foster
“order” without third-party enforcement.
Occur all over the globe and all over time:
Italian merchants in the 1500s; Chinese trade networks in SE Asia from 1700s to today;
Mexican traders in California in the early 1800s.
The Commercial Revolution
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To sum up, all of our examples from Greece to medieval Europe are notable for a few things:
2.) a definite fragility: underscores the diplomatic and institutional pre-conditions for long-distance trade, much less to say flows of capital and people.
Conclusions
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Also, any inter-continental trade was dominated by goods with high values relative to their weight, e.g. bullion, spices, and textiles.
Produced for and consumed by elites as status goods while everyday lives remain unaffected.
Conclusions
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