Economics of the Ancient World

[Jess A]

A merchant association might be called a compagnie (French) or a Hansa or Zuenft (German). In English, company will do fine. You should think of the word more like a company of mercenaries -- a group of people come together for a specific purpose. Mercantile companies were not at all like a modern corporation; they were a true association of participants, with the members buying shares of the overall enterprise. They were often formed to buy into a ship or even a fleet of ships. The company would exist for the duration of the voyage, then would split the profits (or losses) and then dissolve. On land, families tended to be the basis for commercial enterprises. See the Medici in Florence, the Fuggers or Welsers in Augsburg, the Paumgartners in Nuremberg, for examples.

The term "merchant adventurer" doesn't crop up until late 16thc ("adventure" here is in the sense of a venture). The term brotherhood was used as well, but that's more medieval and might confuse readers.

Definitely not a union.

Points taken. I had a book on the Medici somewhere. I need to dig it up. Also, Robin Hobb did a portrayal of merchants/traders (Liveship Traders) but it has been a long time since I read them. It'll be a big research point for me, because I like to work with detail and then change it to suit my world. Thanks again!

 

[skip.knox]

Peter Spufford, "Power and Profit: The Merchant in the Medieval World" is way more interesting and readable than it sounds, and it's the best work on the topic in the last thirty years. Being an academic work, it's grotesquely overpriced, but you might find it in used books or, if you may be able to get a copy from a library. It's probably not worth owning unless you're a historian, but it's most definitely worth a read. His book on medieval money is also a classic.

Economics is a great topic. It is, at its heart, the study of how we all make a living. How could that not be interesting? Oh, I remember. It gets taught by boring teachers who think economics is about theories and formulae rather than being about people. Yeah, I hated that version of economics, too!

 

[Jess A]

Peter Spufford, "Power and Profit: The Merchant in the Medieval World" is way more interesting and readable than it sounds, and it's the best work on the topic in the last thirty years. Being an academic work, it's grotesquely overpriced, but you might find it in used books or, if you may be able to get a copy from a library. It's probably not worth owning unless you're a historian, but it's most definitely worth a read. His book on medieval money is also a classic.

Economics is a great topic. It is, at its heart, the study of how we all make a living. How could that not be interesting? Oh, I remember. It gets taught by boring teachers who think economics is about theories and formulae rather than being about people. Yeah, I hated that version of economics, too!

Checked one of the University libraries - not there! A tad surprised since it has a great history section. I'll check some others, though. Thanks for the lead. Google Books also offers previews - sometimes you can get a lot of information from the few pages available for free.

 

[Devor]

First, I'll start with a post on some of the most essential basics: inflation and deflation. I'm starting with these because I find that macroeconomics--the economics of whole societies--is best understood by understanding money and how it is used.

You've got some good stuff here. The only thing I would add is that an economy isn't a single entity even though we often talk about it as such. If you for some reason have deflation in the slave market, for instance, you won't fix it by spending on wheat or stone. You've got to find a solution which targets the sector that's causing the problems. Making people ignore those kinds of details might be a good way to present corrupt or inept advisers, using everything as an excuse to spend on their pet projects instead of on addressing the real problems people face. You could also take a look at where the government gets the money from as a source of conflict - "printing money" could be difficult if you don't control the gold and silver mines. In some economies, inflation could happen just because new mines were discovered, and deflation because the population grows faster than the gold or silver supply.

Also, a lot of people don't understand the old-school economic principle of "Mercantalism." Essentially, people believed that every country had a fixed amount of resources, and the only way to get more is to acquire it from another country through trade or warfare. That's a big part of why we think of old kings as being obsessed with foreign affairs. Governments would co-own major companies and pass laws designed to boost their trading power. You'd also see governments protect trade guilds - groups of, say, purse makers that would go out of their way to make it difficult for anyone else to make a purse, which keeps down supply and props up the price. In parts of Asia, there might be laws requiring that all of a certain kind of porcelain be used only for export. They saw these foreign trade gimmicks as the best way to improve the state of their countries by giving them a bargaining chip with other nations. Usually it held them back because they weren't as focused on finding customers and increasing employment or education.

 

[ThinkerX]

Something else to keep in mind:

In ye olde pagan societies, trade (economic forces) were seen as being occult. Merchants and others were continually attempting to influence trade through magic. (Curse tablets aimed at enemies, seeking the aid of the gods, ect). Economics was seen through a sort of supernatural prism.

 

[skip.knox]

Do you have some examples of this, ThinkerX? I've not read anything about that. Seeking favorable signs before setting out on a voyage, yes, but I wouldn't classify that as using magic to influence trade. That was just praying for protection prior to undertaking something chancy. The same was done before sowing crops or setting out to war.

 

[Nameback]

You've got some good stuff here. The only thing I would add is that an economy isn't a single entity even though we often talk about it as such. If you for some reason have deflation in the slave market, for instance, you won't fix it by spending on wheat or stone. You've got to find a solution which targets the sector that's causing the problems. Making people ignore those kinds of details might be a good way to present corrupt or inept advisers, using everything as an excuse to spend on their pet projects instead of on addressing the real problems people face.

Well, I'd say that this depends. If we're talking about society-wide deflation or inflation, then the effects are beyond any one market. Also, spending in one market will often have an effect on other markets. Spending on wheat or stone, for example, would increase overall demand in the society, including for slaves. Certainly quarries and large farmers would want to buy more slaves to meet demand for stone and wheat. This would soak up the excess supply that's causing the deflation.

Now, if the deflation is caused by a change in preferences, then additional monetary demand might not solve the problem. If people are buying fewer slaves because there's a new religion that forbids slavery that's gaining prominence in the society, then giving people more money with which to buy slaves might not increase demand. But, for the most part, spending in one area of society will spread out to other sectors. This is the principle behind government infrastructure projects. When government spends money on roads and bridges, the construction workers and suppliers then spend their government paychecks on all manner of goods and services in the society--who in turn spend that money on still other things. So, spending in one sector will generally improve demand in all sectors. But you can be more or less efficient about it by targeting where the money goes.

You could also take a look at where the government gets the money from as a source of conflict - "printing money" could be difficult if you don't control the gold and silver mines. In some economies, inflation could happen just because new mines were discovered, and deflation because the population grows faster than the gold or silver supply.

Very true--just look at some of the inflation that happened in Spain after they colonized South America and began importing huge amounts of gold and silver. This was one of the pitfalls of using money based on a supply that the government doesn't explicitly control. However, this is correctable. If there is an influx of gold and silver causing inflation, then the government can undertake policy to make more goods available for purchase to bring prices down. Or they can just hoard the metals and not let anyone use them. Conversely, if population is expanding faster than the gold/silver supply, then the government should debase the currency. Instead of the standard coins being 75% silver, say, the government could make them only 60% silver. This allows them to print more coins with the same amount of precious metals.

Also, a lot of people don't understand the old-school economic principle of "Mercantalism." Essentially, people believed that every country had a fixed amount of resources, and the only way to get more is to acquire it from another country through trade or warfare. That's a big part of why we think of old kings as being obsessed with foreign affairs. Governments would co-own major companies and pass laws designed to boost their trading power. You'd also see governments protect trade guilds - groups of, say, purse makers that would go out of their way to make it difficult for anyone else to make a purse, which keeps down supply and props up the price. In parts of Asia, there might be laws requiring that all of a certain kind of porcelain be used only for export. They saw these foreign trade gimmicks as the best way to improve the state of their countries by giving them a bargaining chip with other nations. Usually it held them back because they weren't as focused on finding customers and increasing employment or education.

All good points. This was more common in the Early Modern era. Many ancient societies didn't adhere to these principles. Rome was a fairly free-market state, for the most part.

 

[Devor]

Well, I'd say that this depends. If we're talking about society-wide deflation or inflation, then the effects are beyond any one market. Also, spending in one market will often have an effect on other markets. Spending on wheat or stone, for example, would increase overall demand in the society, including for slaves. Certainly quarries and large farmers would want to buy more slaves to meet demand for stone and wheat. This would soak up the excess supply that's causing the deflation.

Well, I think that would be a poor solution compared to just buying slaves. If you're giving money to wheat and stone suppliers, you have no control over how they spend it or when. They could have excess supply on hand or excess capacity from their current slaves, or they may end up finding other ways to provide the extra wheat, like working the land themselves or by buying land, equipment and fertilizer.

But that's assuming they even want to supply more wheat. If they think the extra demand is temporary, in many cases they might just raise their prices, and the slave market won't be affected much at all. And if all you do is drive up the price of wheat, then you hurt everybody but the wheat suppliers, and there's no telling where they'll spend the extra income. You may even drive some people to buy their wheat from abroad.

Also, I was thinking about household slaves when I typed that example.

But, for the most part, spending in one area of society will spread out to other sectors. This is the principle behind government infrastructure projects. When government spends money on roads and bridges, the construction workers and suppliers then spend their government paychecks on all manner of goods and services in the society--who in turn spend that money on still other things. So, spending in one sector will generally improve demand in all sectors. But you can be more or less efficient about it by targeting where the money goes.

Only kind of - the theory about spending on infrastructure projects is that they're labor intensive, so you're giving money directly to consumers who spend it locally. It's still temporary, as it ends when the construction is over. The hope is that the spending works to jump start everything else. Sometimes that works, sometimes it doesn't. Sometimes it backfires and the area becomes dependent on outside funds that can't last. But if you spend money giving a grant to a giant research lab, you won't get the same result because they spend their money very differently. Very little of it may be spent locally, so the multiplier will be much lower.

But by and large you have to target the problem. A generic any-new-spending-is-going-to-help won't really fix anything, unless the problem is just "Nobody wants to spend so government will." But it usually isn't that simple.

 

[Ddruid]

Economics is a great topic. It is, at its heart, the study of how we all make a living. How could that not be interesting? Oh, I remember. It gets taught by boring teachers who think economics is about theories and formulae rather than being about people. Yeah, I hated that version of economics, too!

You nailed it buddy. You just nailed it.

And yeah, I don't think economics is boring at all now. Thanks for opening my eyes about that.

 

[Nameback]

You nailed it buddy. You just nailed it.

And yeah, I don't think economics is boring at all now. Thanks for opening my eyes about that.

Also, unlike when you learn basic Newtonian physics in phys101, econ teachers won't remind you that everything you're learning is a very rough approximation.

Like, sure, yes, that model works great in a world of perfect competition--but that's like trying to fly an airplane without accounting for air resistance. Of course you're not going to learn everything in a 101 course, but econ teachers present it as if it were gospel, when they should really be adding: "of course it almost never works this way in real life" to the end of almost every sentence in introductory courses.

 

[Devor]

Of course you're not going to learn everything in a 101 course, but econ teachers present it as if it were gospel, when they should really be adding: "of course it almost never works this way in real life" to the end of almost every sentence in introductory courses.

Yeah, I was thinking about the "fifth year for a master's" program they offered for a bit, and when I talked to people, several people said "What you learn in a Master's is that everything they taught you so far is wrong." There's just too many variables and second-third-fourth order effects to say much.

 

[Tevaras]

Good evening,

if the Egyptians are using grain as a form of 'currency' that got 'virtually' transferred between people, would not a major drought cause a problem?

I only did one unit of Economics, and have forgotten most of it :-(.

Thank you for an informative article.

Tevaras