12
Jun
12

Medieval Economic History

I’ve been reading up on the history of Europe just for my own edification and it’s been pretty interesting. What’s always shocking to me personally is how important religion has been in shaping European identity even though in 2012, I feel like it plays almost no role in my life. Times change quick.

The other interesting thing that I’ve come across is the rise of merchants.

In the 1400s or so, merchants were people who hauled goods from one town to the next. Today, “merchants” do not exist, unless you count truck drivers. And therein lies an interesting question. Why was it that in old Europe, people who moved things around were an influential and elite social class, but today, the job of moving something from point A to point B is highly controlled and very ordinary as far as jobs go (not trying to take anything away from truck drivers, they’re a group of badasses and they help us all live more comfortable lives with their service)

The difference is that “things changed.” Of course they did, but how specifically?

The answer I think was communication technology. When merchants were important, information did move any fast than the people transporting goods. So merchants accumulated a huge amount of information that made their service very valuable. The book I’m reading (A History of the Modern World) makes this point. There was no way for a Persian rugmaker to contact nobles in Prussia and so they could the producers could not decide what to make and how much of it to make. So rugmakers relied on merchants from Prussia to say “O yea, so and so would definitely pay x for these 10 rugs.” Merchants moved at the speed of goods which also happened to be the speed of information. Lucky for them.

As communication technology improved (ships, telegraph, then phone and internet) though, merchants were slower than information. An English textile manufacturer could learn about the market in Italy without resorting to merchants and so change production accordingly. In today’s world, truck drivers don’t tell anyone about the price of anything. That has been worked out in advance. Correspondingly, their economic contribution is much less than it once was.

The trick though is that I’m still not exactly sure HOW merchants extracted more money from people due to their information. I guess they were able to arbitrage prices? They could take advantage of rising demand more quickly than producers themselves good. The rugmakers would never know about a rug shortage in Prussia so they would charge their usual price but the Merchants could turn around and command higher prices. If the rugmaker could deal with Prussian nobles directly and make a contract, they would be able to charge a higher price and reap the benefits themselves.

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