A Splendid Exchange: How Trade Shaped the World

by William J. Bernstein

(Cotton, though available from India and Egypt, was more difficult to produce, and thus likely more expensive, than even silk.)

Romans for thinking that silk was manufactured in two different nations—a northern one, Seres, reached by the dry route; and a southern one, Sinae, reached by water?

The sea route was cheaper, safer, and faster than overland transport, and in the premodern world had the added advantage of bypassing unstable areas.

Silk originally reached Europe via the land route, but the stability of the early Roman Empire increasingly made the Indian Ocean the preferred conduit between East ...

seasonal metronome of the monsoon winds drove the silk trade. The monsoons also dictated that at least eighteen months separated the embarkation of the fabric from south China and its arrival at Ostia or Puteoli.

For most of recorded history, the primary manufactured trade commodity was cloth.

mile for mile, ground transport was ten times more expensive than maritime transport.

Although world trade grew in tandem with the technological innovations of land and sea transport, political stability was even more important.

Stable countries are trading countries. Commerce between Rome and East Asia took off after Octavian’s victory at Actium and ushered in nearly two centuries of relative peace throughout the Mediterranean and Red Sea trade routes. While the Romans controlled, at most, the western third of the route between Alexandria and India, their influence was felt as far east as the Ganges.

After clearing Bab el Mandeb in late spring or late summer, the mariner headed east on the following wind. If his goal was the Indus basin (in present-day Pakistan), he might steer north, and if he was heading to the Malabar Coast in southwestern India, he might steer south. Midsummer, when storms were the fiercest, was generally avoided, and the Malabar route held the additional risk of passing south of the subcontinent, usually a fatal mistake. The return journey on the cool and relatively calm northeast monsoon was safer; missing the Bab el Mandeb by even a wide margin to the north or south could be more easily tolerated, since that took the sailor to shelter and supplies in either Arabia or east Africa.

(The timbers of early Arab and Indian vessels were stitched together with coconut fiber, which fell apart in rough seas.) Nailed hulls proved critical during the southwest summer monsoon, whose ferocious storms would occasionally tear apart even the most solidly bound vessels.

Until the nineteenth century brought the clipper ship and steam, the seasonal dance of the monsoons—southwest in summer, northeast in winter—would dictate the annual rhythm of trade in the Indian Ocean.

Without the domestication of the camel, the trans-Asian silk and trans-Arabian incense routes would have been impossible.

Native American seed stock, particularly potato and corn, changed the diet of Europe. Both crops produce far more calories per acre than wheat; the potato will grow in poor soils and in a wide variety of environments, from sea level to ten thousand feet. Corn is more fastidious, requiring rich soil and long stretches of hot weather, but it can grow in “in-between” climates too dry for rice but too wet for wheat. An impoverished swath of southern Europe stretching from Portugal to the Ukraine filled this bill precisely. By 1800 it had become one of the world’s largest corn growing regions.

Corn and potatoes not only allowed Europe to escape from the deadly jaws of the Malthusian trap but directly stimulated trade. At the dawn of the Industrial Revolution, these crops provided Europeans with excess food to exchange for manufactured goods and freed agricultural laborers for more productive manufacturing.

“Globalization,” it turns out, was not one event or even a sequence of events; it is a process that has been slowly evolving for a very, very long time.

The Birth of Plenty, dealt with the institutional origins of the global prosperity that occurred after 1820. Few readers found the book’s basic premise—that the recent wealth of the modern world was underpinned by the development of property rights, rule of law, capital market mechanisms, and scientific rationalism—at all controversial. The failure of the communist experiment and the current wealth and poverty of individual nations testify to the power of these critical institutions.

human well-being is affected not only by the mean (the prosperity of the average citizen) but also by the variance (the increasing dispersion between rich and poor).

the incentives and equal opportunity afforded by free trade simultaneously improve the overall welfare of mankind and increase socially corrosive disparities of wealth.

The political right embraces the mean, but rarely uses a different bit of jargon, the median—that is, the income or wealth at the fiftieth percentile, the “person in the middle.” When Bill Gates walks into a roomful of people, their mean income skyrockets while their median income changes hardly at all—a concept usually ignored by pro-market conservatives.

Each one of the nations in this system faced the basic “trilemma” of trade—to trade, to raid, or to protect.

First, trade is an irreducible and intrinsic human impulse, as primal as the needs for food, shelter, sexual intimacy, and companionship. Second, our urge to trade has profoundly affected the trajectory of the human species. Simply by allowing nations to concentrate on producing those things that their geographic, climatic, and intellectual endowments best enable them to do, and to exchange those goods for what is best produced elsewhere, trade has directly propelled our global prosperity.

Although sailors since Greek times knew how to measure latitude, accurate determination of longitude did not become possible until the eighteenth century. The constant companion of the medieval traveler on the open seas was terror.

The lack of scientific knowledge also fanned the flames of anti-Semitism and consigned Jews to man-made fates arguably worse than the disease itself. Theories abounded as to the source of the pestilence. Punishment for corporeal or theological sins was a perennial explanation, as were the evil eye and the “miasma” (poisoned, if colorless, air). But by far the most pernicious theory held that Hebrews were poisoning wells. This delusion ignited panic among Christians. As a result, thousands of Jews falsely confessed to this imaginary crime under torture and then were burned at the stake or broken on the wheel.

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Again, the modern reader may find the events leading up to the seventeenth-century arrival of the first Jews in New York disturbingly familiar: the sudden displacement of commodity production halfway around the planet, the inevitable calls for protection from the old centers of production, and the migration far from their native lands of those with specialized skills.