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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