Tuesday, September 29, 2015

excerpts from How the West Won (subchapter on Venice)

from How the West Won: The Neglected Story of the Triumph of Modernity  by Rodney Stark


Venice


Shielded by remarkable natural barriers and with unimpeded access to the sea, Venice fended off all Lombard efforts to subordinate it and instead became a province of the Byzantine Empire. This gave the growing city many commercial advantages, such as being free from Byzantine tolls or customs in its trade with the East. That commerce became increasingly important as Islam developed a trading network throughout the region, including Spain, Sicily, the toe of Italy, and North Africa. In fact, Venice probably was the first society to live by trade alone.34 It also was a pioneer in the return of democracy. Distance, and growing Venetian sea power, made Byzantium’s sovereignty over Venice nominal at best.


And as time passed, the “people” became an increasingly inclusive group. Meanwhile, the power of the doge was gradually reduced as elected councils took greater authority, leading to what came to be known as the commune—made up of the body of citizens with voting rights and the executives and legislators elected by them.

In early days, participation in Venetian politics was limited to various elites, but as time passed, and especially as Venice became a major manufacturing center as well as a trading port, the franchise was extended. The principal mechanism by which this was accomplished was by the organization of guilds—associations of persons engaged in a specific craft or trade.


Capitalism was not invented in the Italian city-states, for all that they were fully developed capitalist centers by the end of the eleventh century. Weber was correct in asserting that capitalism had religious roots. It was not, however, originated by Protestants: capitalism first appeared in the great Catholic monastic estates back in the ninth century.


…having originated not as an economic concept but as a pejorative term used by nineteenth-century leftists to condemn wealth and privilege. To adapt the term for serious analysis is a bit like trying to make a social-scientific concept out of a reactionary pig.

Notions of the dignity of labor were incomprehensible in ancient Rome or any other precapitalist society. Traditional societies celebrated consumption while holding work in contempt. In China, for example, the Mandarins grew their fingernails as long as they could (even wearing silver sheaths to protect them from breaking) to make it evident that they did no labor. Capitalism required and encouraged a remarkably different attitude, one that saw work as intrinsically virtuous. Max Weber identified this as the Protestant ethic, so-called because he believed it to be absent from Catholic culture. But Weber was wrong. Belief in the virtues of work arose centuries before Martin Luther was born.

Although capitalism developed in the great monastic estates, it soon found a receptive setting in the newly democratic Italian city-states. In the tenth century these city-states emerged as the banking and trading centers of Europe. Subsequently they industrialized and began producing a large volume of manufactured goods for export across the Mediterranean and to northern Europe and the British Isles. For example, eyeglasses (for nearsightedness as well as farsightedness) were mass-produced by plants in both Florence and Venice, and tens of thousands of pairs were exported annually. Perhaps the most striking aspect of Italian capitalism was the rapid perfection of banking. The Italian bankers quickly developed and adopted double-entry bookkeeping. To facilitate trade, they invented bills of exchange, making it possible to transfer funds on paper rather than transporting coins or precious metal over long distances, which was both difficult and dangerous. Italian bankers also initiated insurance to guard against loss of long-distance shipments by land or sea. Perhaps the most important of all the Italian banking innovations was the perfection of modern arithmetic, based on the adoption of Hindu-Arabic numerals and the concept of zero.

The proximate cause of the rise of Italian capitalism was freedom from the rapacious rulers who repressed and consumed economic progress in most of the world, including most of Europe. Although their political life often was turbulent, these city-states were true republics able to sustain the freedom capitalism requires. Second, centuries of technological progress had laid the necessary foundations for the rise of capitalism, especially the agricultural surpluses needed to sustain cities and to permit specialization. In addition, Christian theology encouraged the idea of progress, which justified long-term investment strategies, and provided moral justifications for the business practices fundamental to capitalism.

If there is a single factor responsible for the rise of the West, it is freedom. Freedom to hope. Freedom to act. Freedom to invest. Freedom to enjoy the fruits of one’s dreams as well as one’s labor.


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