🎓 On the origins of the merchant class

In which I brave the censure of econ nerds to explore the history of commerce

Epistemic status: unsure but game. I’ve got sources but I’m sure there are gaps where I’m missing context. Feel free to point them out! See also: my article about overcoming imposter syndrome.

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One of my big takeaways from The Civilizations of Africa by Christopher Ehret was that, before the rise of the Levantine seafaring traders, merchants generally acted on behalf of large landowners. Perhaps not always the king — but rulers and leaders seeking luxury goods to use for ostentatious displays. Exotic spices for fancy feasts, a thousand of the Eurasian steppe's fastest horses, wagons full of hand-woven silk — that sort of thing.

But about a thousand years before Augustus wrested control of the Roman territories from Antony and Cleopatra, interstate trade stopped being dominated by crown-sponsored trade expeditions (think Hatshepsut sending Egyptians to Ethiopia, or Columbus’ attempts to shorten the route to Africa being sponsored by the Spanish crown). Trade progressively got broader in scope, and the Phoenicians and Greeks began to ply the seas in search of profit — as opposed to political power. The thing about broadening the trading base out from elite landowners is that when traders didn't just have a single ruler to focus on, they obviously needed other clients — smaller clients. More diverse clients, who won't make or break a trader if they aren't individually happy, but who all want different things. That sort of thing leads to expanding trade networks, and more and different goods being traded. It's all downstream of merchants being motivated by profit, not position.

Sure, trade goods went to early towns — even before the rise of the merchant class, there was no ignoring of the size of the potential market a town represented, but they weren't commercial centers in their own right. It was more like... local produce was brought to town and traded. The “special” goods — ivory, precious metals, etc. — belonged to the ruler. Kings and chiefs had control of prestige goods, which were used to reinforce and enhance royal power. Sure, they sent agents to acquire those goods, but they weren't merchants. They didn't have financial capital to work with.

Before I read Civilizations of Africa, I didn’t really internalize the importance of merchant-driven trade for colonization. Perhaps I should have — even the Industrial Era colonization efforts were in many ways driven by things like the East India Company’s desire for profit. But I always sort of vaguely assumed that Greek colonization had more to do with overcrowding and population expansion than creating footholds for trade. But except in places like Polynesia, or the Eurasian grasslands, generally colonies were military and ethic outposts created for control of nearby territories.

Ehret claims that commercialization led to city-states — relatively small polities centered around a single commercially based city. I’m a little shaky on how exactly this was different from places like Babylon or Ur, though. He says that first cities along the Nile began as governing and ritual centers, then commerce grew into an equally and sometimes more important factor in the founding of cities — then urban centers began to emerge.

Perhaps I'm just shaky on the difference between an urban center and a "city" — perhaps there's some technicality to the term I'm not grasping. He offers these definitions:

town: center with a population between 1,000 - 6,000 people.
city: large urban center, greater than 5,000 people.
village: cluster of 100-1,000 people.
hamlet: cluster under 100 people.
local settlement: neighborhood of scattered homesteads between 100-1,000 people.

I mean, I know how Babylon and Ur are different from Rhapta and Carthage -- if nothing else, because they had wildly different leadership structures. Before the Commercial Revolution, kings and emperors kept trade mostly as a perq of power and position. Their subjects owed them labor and maybe tribute — which is somehow subtly different from a tithe or tax. After, rulers in the impacted regions shifted from controlling access to trade goods toward taxing them in exchange for providing security. This necessitated the creation and control of currency, which I’ve written about extensively:

On patterns of trade

Anyway, what I found particularly interesting about the treatment of commerce in Civilizations of Africa was how early the pattern of “commercial centers offer manufactured goods in exchange for raw or partially processed products” began. New areas of commerce provided new kinds (or new sources) of raw materials; wheat or myrrh or whatever in exchange for things like silk, or metal tools, or dye. Generally speaking, the first time the average student learns about that sort of trade is with the Triangle Trade: slaves → cotton & tobacco → manufactured goods and ‘round and ‘round again from Africa to America to Europe.

Maybe they learn about it in the context of the Age of Sail, when the Dutch educated all of their children — even the girls — in arithmetic and accounting, allowing husbands and wives to be real partners in many businesses.

But even then, expansive trade networks weren't really new, of course — it’s sometimes shocking to me how far pre-historic obsidian and copper managed to travel. Heck, we have evidence of humans mass-producing bone tools (presumably to trade) as far back as the Paleolithic era. Elephant long bones were systematically broken to make blanks appropriate for shaping tools in what amounts to a Neolithic factory efficient enough to drive Paleoloxodons to extinction. As Scott Alexander pointed out in his recent article about progress, humans are excellent at manufacturing things en masse.

But these far-reaching economic links mostly didn’t penetrate Africa until around 300 CE. Ironically, in Egypt — home of Hatshepsut’s famous expedition — there wasn’t an indigenous merchant class engaging in long-distance trade until at least 700 years after their neighbors. Egypt had a conservative kind of political economy compared to their neighbors. Famously the kings in surrounding regions would intermarry, their princesses serving as diplomats¹, but the Pharaohs kept their sisters and daughters firmly under royal control — it was the same with trade, thanks to the geography of the Nile.

It’s sort of weird to think of the breadbasket of Rome, the cultural powerhouse that is Egypt, as a political and economic backwater during the rise of Commerce, but apparently it was. Apparently the ancient Egyptians never even adopted cotton, sticking totally with linen, even as cotton spread all around them. Now, of course, it’s widely recognized as the premier producer of the stuff — supplying about a third of the world's long-staple cotton crop.

It wasn’t always like that; between 2006 and 2016, Egyptian cotton production fell 70% which ended up being another fascinating example of the tension in Egypt between government control and the desires of producers, as Egyptian regulations fluctuated wildly and farmers allowed their high-end cotton seeds to get adulterated. But I digress.

Latter-day Ages of Commerce

The trade links that came with the rise of coins and merchants weren’t just along the Mediterranean coast, of course. Pliny talked about cloves — probably from the Moluccas — around Augustus’ time as well. Chinese pottery made it to Banda. But the “Age of Commerce” in eastern Asia is mostly ranges from the 15th to 17th centuries. There was a huge increase in trade volume, sophistication, and complexity. The Spice Islands were plugged into this trade network, which enabled them to specialize; by the time the Age of Sail brought Europeans, basically no island that grew nutmeg also grew food. The islanders relied on nutmeg to trade for all their needs. Rice was imported from Java and Makassar, and fruit and sago from Seram. Food, cloth, metal-work and slaves were Banda’s top imports.

Before then, China was the real economic powerhouse, partly due to its natural geographical advantages. As

This is Water

points out in this 2022 article about the Opium trade and the foundations of American industrial capitalism, deserts, oceans, and mountains on its periphery protected it from most foreign invaders. China’s relative abundance of rivers also helped facilitate internal commerce and food production.

They still viewed trade through the lens of tribute, though. The Chinese government had absolutely no interest in allowing free trade between British merchants and their own people, not least of which because there was relatively little demand for British goods.

Hard currency flowed out of Britain and in return they received a consumable good. Their unquenchable thirst for tea would have driven Britain to bankruptcy… If it wasn’t for drugs. So the trade imbalance shifted from West to East.

I’ve always known that the Opium Wars were mostly about trading rights, but now I view them thru the lens of addiction vs addiction — tea vs opiates. A sort of tragic democratization of exotic goods, once reserved for the elite and now available to the masses. A downside of opening up trade to the masses, to be sure. One understands why the Chinese emperor had no interest in allowing it.

And, of course, why the Chinese, like the Egyptians before them, eventually had no choice. Profit brings a power all its own.

1. I wrote a bunch about the diplomatic role of princesses in Mesopotamia and Egypt back in 2021, if you missed it. We have records of some fascinating and relatable stories from that era, if you’ve got the time to dig deeper I recommend it.