The Rational Optimist (19 page)

So the typical Akkadian tamkarum or merchant was a businessman of the most surprisingly modern kind, who depended for his livelihood on freely exchanging goods for profit. Though there was no minted coinage, from the end of the fourth millennium
BC
there were silver-based prices, which fluctuated freely. The temple would act as a sort of bank, lending money at interest – and the Uruk word for high priest is the same as the word for accountant. By 2000
BC
, under the Assyrian empire, merchants from Ashur operated in ‘karum’ enclaves in the independent states of Anatolia as thoroughly modern entrepreneurs with ‘head offices, foreign branch-plants, corporate hierarchies, extra-territorial business law, and even a bit of foreign direct investment and value-added activity’. They bought gold, silver and copper in exchange for tin, goat-hair felt, woven textiles and perfumes shipped in on caravans of up to 300 donkeys. The profit margin was 100 per cent on tin and 200 per cent on textiles, but it had to be because the transport was unreliable and the risk of theft high. One such merchant, Pusu-Ken, operating in a tax-free zone in the Anatolian city of Kanesh, was to be found in 1900
BC
lobbying the king, paying fines for evading textile import regulations imposed by the assembly, and sharing profits with his investor-partners, sounding in other words every inch the modern chief executive. Such merchants ‘did not devote themselves to trading in copper and wool because Assyria needed them, but because that trade was a means of obtaining more gold and silver’. Profit ruled.

In these Bronze Age empires, commerce was the cause, not the symptom of prosperity. None the less, a free trade area lends itself easily to imperial domination. Soon, through tax, regulation and monopoly, the wealth generated by trade was being diverted into the luxury of the few and the oppression of the many. By 1500
BC
you could argue that the richest parts of the world had sunk into the stagnation of palace socialism as the activities of merchants were progressively nationalised. Egyptian, Minoan, Babylonian and Shang dictators ruled over societies of rigid dirigisme, extravagant bureaucracy and feeble individual rights, stifling technological innovation, crowding out social innovation and punishing creativity. A Bronze Age empire stagnated for much the same reason that a nationalised industry stagnates: monopoly rewards caution and discourages experiment, the income is gradually captured by the interests of the producers at the expense of the interests of the consumers, and so on. The list of innovations achieved by the pharaohs is as thin as the list of innovations achieved by British Rail or the US Postal Service.

The maritime revolution

Still, you cannot keep a good idea down. Around 1200
BC
, the power of both Egypt and Assyria waned, the Minoans fell, the Myceneans fragmented and the Hittites came and went. It was a dark age for empires, and like the later Dark Ages that followed the fall of Rome, this political fragmentation, perhaps aided by a population decline, caused a burst of invention as demand rose among free people. The Philistines invented iron; the Canaanites the alphabet; and their coastal cousins, the Phoenicians, glass.

It was a different Phoenician invention, the bireme galley, that truly created the classical world. The people of Byblos, Tyre and Sidon lived close to great forests of magnificent cedars and cypresses, the hard, aromatic planks of which made especially durable boats. With decks of pine from Cyprus and oars of oak from Jordan (says Ezekiel), the Phoenician boat was greater than the sum of its far-flung parts. There was of course nothing new about the boat as a concept: boats had been plying the Nile, Euphrates, Indus and Yellow rivers for centuries, and the coasts of Asia and the Mediterranean for almost as long. But, realising their comparative advantage in timber, the Phoenicians built ships of greater capacity, finer trim and more seaworthy mortise joints than any people before them. Eventually they were able to build ships so large that they needed two banks of oars to propel them. Oars, though, were used only for manoeuvring close to shore. These were sailing ships and the larger they were, the more they could amplify the work of their human operators. Using the power of the wind, a comparatively small crew could transport a heavy cargo hundreds of miles further, and much more cheaply, than a caravan of donkeys could ever hope to manage.

Suddenly, for the first time, a large-scale seaborne division of labour became a possibility: wheat from Egypt could feed the Hittites in Anatolia; wool from Anatolia could clothe the Egyptians on the Nile; olive oil from Crete could enrich the diets of Assyrians in Mesopotamia. The ships of what is now Lebanon could trade for profit and scour the seas for tempting products. Grain, wine, honey, oil, resin, spices, ivory, ebony, leather, wool, cloth, tin, lead, iron, silver, horses, slaves, or a purple dye made from a gland in the body of the murex shellfish – there was little the Phoenicians could not find for an ambitious pharaoh with a harem to pamper, or a prosperous Assyrian farmer with a fiancée to impress.

All around the Mediterranean, markets grew into towns and ports into cities. Travelling farther afield, the Phoenicians’ innovations multiplied: better keels, sails, navigational knowledge, accounting systems, log-keeping. Trade, once more, was the flywheel of the innovation machine. To the south, steeped in their religious obsessions, the Israelite pastoralists looked on in puritan horror at the explosion of wealth thus created. Isaiah cheerily anticipates Yahweh’s destruction of Tyre, the ‘market of the nations’, to humble her pride. Ezekiel vents his
Schadenfreude
when Tyre is attacked: ‘When thy wares went forth out of the seas, thou filledst many peoples; Thou didst enrich the kings of the earth with thy merchandise and thy riches ... Thou art become a terror; and thou shalt never be any more.’ To the west, the warring island farmers of the Aegean looked down in warrior contempt on the bourgeois traders who were suddenly appearing in their midst. Throughout both the
Iliad
and the
Odyssey
, ‘Homer’ displays a relentlessly negative attitude to Phoenician traders and hints that they must be pirates. Greek trade in the age of Homer was supposed to handle precious reciprocal gifts between elites, not workaday goods in demand among ordinary people. The snobbery of the elite towards trade has ancient roots.

The effect of the Phoenicians must have been to create a burst of specialisation all around the Mediterranean. Villages, towns and regions would have discovered their comparative advantages in smelting metals, manufacturing pottery, tanning hides or growing grain. Mutual dependence and gains from trade would have emerged in unexpected places. Redressing the natural inequality in the location of metal ores, for example, benefits everybody. Cyprus may have lots of copper and Britain lots of tin, but put them together and bring them to Tyre and you can make the much more useful bronze. Tyrian traders founded Gadir, present-day Cadiz, around 750
BC
not to settle the area but to trade with its inhabitants, in particular to exploit the silver ores of the Iberian hinterland – discovered, according to legend, when a forest fire caused rivulets of pure silver to pour from the hillsides. In doing so they must have turned the people of the region from largely self-sufficient peasants into producer-consumers. The Tartessian natives controlled the mining and smelting of the silver, selling it to the Tyrians at Gadir in exchange for oil, salt, wine and trinkets to charm the chiefs of the tribes farther into the interior. The Tyrians then took that silver (according to Diodorus, sometimes making silver anchors for their ships so as to squeeze a little more on board) east into the Mediterranean, exchanging it for staples and other luxuries.

No doubt just as the Tyrians could not believe their fortune at finding savages happy to give them so much silver for a little Cretan olive oil, so the Tartessians could not believe their luck at finding strange seagoing people prepared to give them such a convenient, storable, calorie-rich bounty for a mere metal. It is common to find that two traders both think their counterparts are idiotically overpaying: that is the beauty of Ricardo’s magic trick. ‘The English have no sense,’ said a Montagnais trapper to a French missionary in seventeenth-century Canada. ‘They give us twenty knives for this one beaver skin.’ The contempt was mutual. When HMS
Dolphin
’s sailors found that a twenty-penny iron nail could buy a sexual encounter on Tahiti in 1767, neither sailors nor Tahitian men could believe their luck; whether the Tahitian women were as happy as their menfolk about this bargain goes unrecorded. Twelve days later, rampant inflation had set in and sex now cost a nine-inch marlinspike.

Traders from Gadir even worked their way south along the coast of Africa, acquiring gold from the inhabitants by ‘silent trade’: leaving goods on the shore and retreating. Comparative Ricardo ruled the Phoenician world. Tyre is the prototype of the trading port, the Genoa, Amsterdam, New York or Hong Kong of its day. The Phoenician diaspora is one of the great untold stories of history – untold because Tyre and its books were so utterly destroyed by thugs like Nebuchadnezzar, Cyrus and Alexander, and Carthage by the Scipios, so the story comes to us only through snippets from snobbish and envious neighbours. But in truth, was there ever a more admirable people than the Phoenicians? They knitted together not only the entire Mediterranean, but bits of the Atlantic, the Red Sea and the overland routes to Asia, yet they never had an emperor, had comparatively little time for religion and fought no memorable battles – unless you count Cannae, fought by a mercenary army paid by Carthage. I do not mean they were necessarily nice: they traded in slaves, sometimes resorted to war and did deals with the piratical Philistine ‘sea peoples’ who destroyed coastal cities around 1200
BC
, but the Phoenicians seem to have managed to resist the temptations of turning into thieves, priests and chiefs better than most successful people in history. Through enterprise they discovered social virtue.

The virtue of fragmented government

The Phoenician diaspora teaches another important lesson, first advanced by David Hume: political fragmentation is often the friend, not the enemy, of economic advance, because of the stop which it gives ‘both to power and authority’. There was no need for Tyre, Sidon, Carthage and Gadir to unite as a single political entity for them all to prosper. At most they were a federation. The extraordinary flowering of wealth and culture around the Aegean between 600 and 300
BC
tells the same story. First the Milesians then the Athenians and their allies grew wealthy by trading among small, independent ‘citizen states’, not by uniting as an empire. Having copied the Phoenicians’ ships and trading habits, Miletus, the most successful of the Ionian Greek cities, sat ‘like a bloated spider’ at the junction of four trade routes, east overland to Asia, north through the Hellespont to the Black Sea, south to Egypt and west to Italy. But though it established colonies all over the Black Sea, Miletus was not an imperial capital: it was first among equals. The city of Sybaris, a preferred trading partner of Miletus on a fertile plain in the toe of southern Italy, grew to perhaps several hundred thousand people and became a byword for opulence and refinement before it was destroyed by its enemies and buried under the diverted river Crathis in 510
BC
.

The discovery of rich silver ores at Laurion in Attica in the 480s
BC
propelled the experimental democracy at Athens to the status of a regional economic superpower, not least by allowing it to finance a navy with which to defeat the Persians; but Athens too was
primus inter pares
. The Greek world depended crucially on finding gains from trade: grain from the Crimea, saffron from Libya and metals from Sicily swapped for olive oil from the Aegean itself. Modern philosophers who aspire to rise above the sordid economic reality of the world would do well to recall that this trade made possible the cross-fertilisation of ideas that led to great discoveries. Pythagoras probably got his theorem from a student of Thales the Milesian who learnt geometry on trade excursions to Egypt. We would never have heard of Pericles, Socrates or Aeschylus had there not been tens of thousands of slaves toiling underground at Laurion and tens of thousands of customers for Athenian goods all over the Mediterranean.

Yet as soon as Greece was unified into an empire by a thug – Philip of Macedon in 338
BC
– it lost its edge. Had his son Alexander’s empire lasted, it would undoubtedly have become as commercially and intellectually inert as its Persian predecessor. But because the empire fragmented on Alexander’s death, parts of it were reborn as independent city states that lived off trade, most notably Alexandria in Egypt, which reached a third of a million people living in a state of famous wealth under the comparatively benign rule of the book-collecting Ptolemy III. That wealth was based on new roads to bring cash crops of cotton, wine, grain and papyrus within reach of the river Nile for export.

This is not to say that democratic city states are the only places where economic progress can occur, but it is to discern a pattern. Plainly, there is something beneficial to the growth of the division of labour when governments are limited (though not so weak that there is widespread piracy), republican or fragmented. The chief reason is surely that strong governments are, by definition, monopolies and monopolies always grow complacent, stagnant and self-serving. Monarchs love monopolies because where they cannot keep them to themselves, they can sell them, grant them to favourites and tax them. They also fall for the perpetual fallacy that they can make business work more efficiently if they plan it rather than allow and encourage it to evolve. The scientist and historian Terence Kealey points out that entrepreneurs are rational and if they find that wealth can more easily be stolen than created, then they will steal it: ‘Humanity’s great battle over the last 10,000 years has been the battle against monopoly.’