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Chapter
Three: The Rise of the Merchant, Industrialist, and Capital Controller
From the fifteenth century on,
European soldiers and sailors carried the
flags of their rulers to the four corners of the globe, and European merchants established
their storehouses from Vera Cruz to Nagasaki. Dominatingthe sea-lanes of the world, these
merchants invaded existing networks of exchange and linked one to the other. In the
service of “God and profit” they located sources of products desired in Europe
and developed coercive systems for their delivery. In response, European craft shops,
either singly or aggregated into manufactories, began to produce goods to provision the
wide-ranging military and naval efforts and to furnish commodities to overseas suppliers
in exchange for goods to be sold as commodities at home. The outcome was the creation of a
commercial network of global scale.
—Eric Wolf, People Without
History
When I think of Indonesia—a
country on the Equator with
180 million people, a median age of 18, and a Moslem ban on
alcohol—I feel I know what heaven looks like.
—Donald R. Keough, President
of Coca Cola
At no other time
in human history has the world been a better place for capitalists. We live in a world
full of investment opportunities—companies, banks, funds, bonds, securities, and even
countries—into which we can put money and from which we can get more back. These
money-making machines, such as the Nike Corporation, have a ready supply of cheap labor,
capital, raw materials, and advanced technology to assist in making products that people
all over the world clamor to buy. Moreover, governments compete for their presence,
passing laws and making treaties to open markets, while maintaining infrastructures
(roads, airports, power utilities, monetary systems, communication networks, etc.) that
enable them to manufacture products or provide services cheaply and charge prices that
remain competitive with other investments. Nation–states maintain armies to protect
investments and see that markets remain open. Educational institutions devote themselves
to producing knowledgeable, skilled, and disciplined workers, while researchers at
colleges and universities develop new technologies to make even better and cheaper
products. Our governments, educational institutions and mass media encourage people to
consume more and more commodities. Citizens order their economic and social lives to
accommodate work in the investment machines and to gain access to the commodities they
produce. In return the investment machines churn out profits that are reinvested to
manufacture more of their particular products or that can be invested in other
enterprises, producing yet more goods and services.
But there are economic, environmental, and social
consequences of doing business and making money. We live in a world in which the gap
between the rich and poor is growing, a world that contains many wealthy and comfortable
people but also contains almost one billion hungry people, one-fifth of its population.
Then there are the environmental consequences of doing business: Production uses up the
earth’s energy resources and produces damaged environments in return. There are
health consequences as well, not only from damaged environments but also because those too
poor to afford health care often do without it. Finally there are the political
consequences of governments’ using their armed force to maintain conditions that they
believe are favorable for business and investors.
In the long view of human history these
conditions are very recent ones. For most of human history human beings have lived in
small, relatively isolated settlements that rarely exceeded three or four hundred
individuals. And until some ten thousand years ago virtually all of these people lived by
gathering and hunting. Then in some areas of the world, instead of depending on the
natural growth of plant foods and the natural growth and movements of animals, people
began to plant and harvest crops and raise animals themselves. This was not necessarily an
advance in human societies—in fact, in terms of labor, it required human beings to do
the work that had been done largely by nature. The sole advantage of working harder was
that the additional labor supported denser populations. Settlements grew in size until
thousands rather than hundreds lived together in towns and cities. Occupational
specialization developed, necessitating trade and communication between villages, towns,
cities, and regions. Political complexity increased; chiefs became kings, and kings became
emperors ruling over vast regions.
Then, approximately four or five hundred years
ago, patterns of travel and communication contributed to the globalization of trade
dominated by “a small peninsula off the landmass of Asia,” as Eric Wolf called
Europe. The domination by one region over others was not new in the world. There had
existed prior to this time civilizations whose influence had spread to influence those
around them—the Mayan civilization in Central America, Greek civilization of the
fourth millennium b.c., Rome of the first and second centuries a.d., and Islamic
civilization of the eighth and ninth centuries. But there was an important difference. The
building of these empires was largely a political process of conquest and military
domination, whereas the expansion of Europe, while certainly involving its share of
militarism, was largely accomplished by economic means, by the expansion and control of
trade.
Now let’s shift our focus to the development
of the capitalist—the merchant, industrialist, and financier—the person
who controls the capital, employs the laborers, and profits from the consumption of
commodities. This will be a long-term, historical look at this development, particularly
because if we are to understand the global distribution of power and money that exists
today and the origins of the culture of capitalism, knowledge of its history is crucial.
Assume for a time the role of a businessperson, a
global merchant, or merchant adventurer, as they used to be called, passing through the
world of the last six hundred years. We’ll begin searching the globe for ways to make
money in the year 1400 and end our search in the year 2000, taking stock of the changes in
the organization and distribution of capital that have occurred in that time. Because we
are looking at the world through the eyes of a merchant, there is much that we will
miss—many political developments, religious wars, revolutions, natural catastrophes,
and the like. Because we overlook these events does not mean they did not affect how
business was conducted—in many cases they had profound effects. But our prime concern
is with the events that most directly influenced the way in which business was conducted
on a day to day basis and how the pursuit of profit by merchant adventurers influenced the
lives of people all over the world.
Our historical tour will concentrate on three
areas:
1. An understanding
of how capital came to be concentrated in so few hands and how the world came to be
divided into rich and poor. There were certainly rich people and poor people in 1400, but
today’s vast global disparity between core and periphery did not exist then. How
did the distribution of wealth change, and how did one area of the world come to dominate
the others economically?
2. An understanding of the changes in
business organizations and the organization of capital, that is, who controlled the
money? In 1400, most business enterprises were small, generally family-organized
institutions. Capital was controlled by these groups and state organizations. Today we
live in an era of multinational corporations, many whose wealth exceeds that of most
countries. We need to trace the evolution of the power of capital over our lives and the
transformation of the merchant of 1400 into the industrialist of the eighteenth and
nineteenth centuries then into the investor and capital controller of the late twentieth
century. How and why did these transformations in the organization of capital come
about?
3. The increase in the level of global
economic integration. From your perspective as a merchant adventurer, you obviously want
the fewest restraints possible on your ability to trade from one area of the world to
another; the fewer restrictions, the greater the opportunity for profit. Such things as a
global currency, agreement among nations on import and export regulations, ease of passage
of money and goods from area to area, freedom to employ who you want and to pay the lowest
possible wage are all to your advantage; furthermore, you want few or no government
restrictions regarding the consequences of your business activities. How did the level
of global economic integration increase, and what were the consequences for the merchant
adventurer, as well as others?
With these
questions in mind, let’s go back to the world of 1400 and start trading.
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