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Home > Key Themes > Two
 

Key Theme Two: Economic Networks and Exchange


This Key Theme is concerned with the role of networks of economic exchange in history. It has to do with the ways in which people have exchanged ideas and goods, sometimes over great distances, and how networks have provided the basic framework on which the present-day world economy has been built.

Most of us tend to take the world economy for granted. We jog in shoes made in Indonesia, wear shirts manufactured in Guatemala, and listen to world music CDs on a Walkman made in Korea. We consume Columbian coffee, Argentinian beef, Australian sugar, and Senegalese peanuts without reflecting on the webs of exchange that brought those products to our local stores. Most of us think the world economy is a recent creation.

In fact, it has a deeper history than we might imagine. Ancient networks of commerce connecting the river valley civilizations of Egypt, Mesopotamia, and the Indus valley gradually linked with other regional networks, eventually interlocking most of Afroeurasia. Well before Europe became economically important on the world scene, China, India, and the Middle East routinely traded with one another by way of both the Eurasian silk roads and the maritime routes of the Indian Ocean. American Indians, Pacific Islanders, and other peoples were also involved in long-distance trade. European desire to gaindirect access to Asian pepper and spices fueled their voyages of discovery of the fifteenth and sixteenth centuries.

Older patterns of exchange greatly changed in the aftermath of these voyages, which involved European conquest and settlement in the Americas. For the first time in about 12,000 years, humans established sustained links between the Eastern and Western Hemispheres, making possible a truly global system of exchanges. These developments also altered the place of Europe in the world economy. Spain and Portugal had access to previously unimaginable quantities of silver just at a time when the global system of exchange, which was centered on Asia, began to demand a much greater volume of that commodity.

The history of exchange networks involves at least three interrelated stories:

  • One is the story of how networks became more and more complex. Over time, exchanges have become cumulatively deeper, denser, and more intricate, linking more and more people over greater and greater distances. Exchanges on these networks has also taken place at greater and greater velocity. The size of networks has of course been related to the growing numbers of humans on the planet, which is the subject of Key Theme 1.
  • From a second perspective, economic exchange may be viewed as traffic in all kinds of information. We may think of all objects of exchange as potentially containing information-about the origin of a product, the techniques that produced it, and the uses to which it might be put. 1 Seen in this way, the history of commerce has involved the exchange of increasingly complex kinds of cultural and material information, from spear point design to gunpowder technology to web site data.
  • Third, economic exchange is linked to expanding webs of communication. By communication we mean not only physical transport but also languages, writing systems, and all means of conveying things or ideas from one group of people to another. As communication systems have become more stable, reliable, and widely accepted, they have greatly enhanced human capacity for collective learning. In this way they have contributed to both the exchange and intricacy of information.

Why did humans trade with one another? They did it for many reasons, but first of all to acquire goods that they could not easily find locally. The fact that different groups have lived in diverse ecological zones has encouraged exchange networks to develop. For example, peoples who lived along the great bend of the Niger River in West Africa and depended upon fishing for their livelihood traded with forest-dwellers to the south, who produced iron goods, and with Saharan peoples to the north, who mined and sold salt. In China, the Grand Canal linked the moist, rice-producing regions of the south with the wheat-producing regions of the drier north.

We may distinguish different methods of exchanging goods.

  • Barter involves the direct and reciprocal exchange of goods and services of supposed equal value, for example farmers and pastoralists exchanging grain for animals. This method was often sufficient for local trade, but for long-distance exchange it was cumbersome.
  • On the regional and interregional levels the exchange of tokens of various sorts facilitated trade. The materials used depended on the historical circumstances. For example, cowrie shells were a medium of exchange in West Africa. Wampum belts were used among Native Americans. In the first millennium BCE., merchants who moved goods long distances across Eurasia started using gold and silver as the preferred method of reckoning accounts. The natural scarcity of these metals, together with the physical characteristics that made them "workable" by artisans, suited them well as tokens of exchange. Here was the origin of money. The earliest record we have of the use of gold or silver coins in trade comes from the kingdom of Lydia in Anatolia (modern Turkey) in the seventh century BCE.

In the history of exchange, individual cities, regions, and ethnic groups have tended to specialize in providing particular commodities or manufactured goods. Sometimes states and empires have sought to take advantage of this situation by controlling the lines of trade among different cities or groups. At other times city-states (like Venice and Genoa in Italy or Kilwa on the East African coast) have traded on their own account.

Groups sharing language and culture have sometimes established trade diasporas. These were ethnically linked communities of merchants who dispersed themselves across wide distances and who specialized in developing, managing, and profiting from long-distance trade. The word diaspora means "scattering." Here are three examples:

  • The Phoenicians, whose homeland was a cluster of cities at the eastern end of the Mediterranean, wove together a trade diaspora in the early first millennium B.C.E. that extended to the far western end of that sea.
  • Scatterings of Chinese merchants established themselves in cities of the Indian Ocean region long before Europeans arrived there in the fifteenth century.
  • Networks of French-, English-, and Indian-speaking groups moved furs from one trading post to another across the northern regions of North America in the seventeenth and eighteenth centuries.

Key Themes 2

We might think of networks of economic exchange as made up of three levels nested in one another-local regional, and long-distance:

  • Everyday commodities and products with relatively low value and high bulk provided the basis of local exchanges between towns and the agricultural regions around them. Goods such as grain, dried fish, timber, or iron ore were relatively cheap to transport if the distances were not too great. As a general rule, moving bulk goods by water was cheaper than transporting them along roads or trails.
  • Regional networks featured the exchange of more costly products, for example, moving textiles, pottery, or metal wares between a market town and its farming hinterland or between one city and another within a region.
  • Finally, long-distance trade knitted together cities widely distant from one another to exchange high value, low bulk commodities like rugs, spices, gold, silk, or fine ceramics. Over the long term of history up to 1500 CE, the long-distance networks that united societies of Afroeurasia tended to become longer, stronger, and denser. In the Americas, economic networks expanded as well, though mainly within regions such as Mesoamerica or the Andean highlands. Finally, it is important to note that until about 1500 Afroeurasian and American networks of exchange had no sustained contact with one another. In the sixteenth century, however, all major regions of the world became interconnected, laying the basis for a truly global economy.

Ruins

Ruins of the city of Sijilmasa on the northern edge of the Sahara Desert in southern Morocco. This city, founded as early as the ninth century CE, was an important commercial town and a staging center for camel caravans crossing the desert to West Africa. The journey from Sijilmasa to the Niger River in today's Mali took about three months.

Spices

An American buys spices at a market stall in Erfud, a town
near the ruins of Sijilmasa in southern Morocco.

Economic exchange networks have always faced limits.

  • One has been the level of technology. The efficiency with which humans have produced both goods and information has always been connected to the worth of their technology. For example, a small group of people might take a day or more to cut down a big tree with stone axes, but one person might do the job in a few hours using a steel axe. Advances in technology made it possible for people to increase their output of manufactured goods. As that happened, the volume of commercial exchange over the networks tended to go up as well.

  • Another limit has been the amount of energy that humans have been able to tap to increase production and exchange. The energy that humans could produce with muscle power, animal traction, wind, flowing water, or the heat of burning wood was limited. The fossil fuel revolution of the eighteenth century, however, allowed humans to burst through that energy ceiling. The steam engine, for example, gave humans the ability to extract vast amounts of energy contained in coal, natural gas, and petroleum. Electrical and, more recently, nuclear power have had similar consequences. Therefore, production of goods and information and their exchange round the world has increased immensely. Even though commerce has always had ups and downs, that is, phases of expansion and shrinkage, we can scarcely imagine what the upper limits of the volume and variety of worldwide exchange might be in the future.

Why Do We Need to Understand This Key Theme?

  • Throughout most of the past 200,000 years, humans have lived in small groups that largely fed, clothed, and sheltered themselves. They traded with neighbors or strangers only for things they could not produce themselves. Today, by contrast, self-sufficient societies are almost unknown. Even the hundreds of millions of families in various parts of the world that continue to grow food for themselves depend on market exchanges for many of their needs. In the United States, only a tiny minority of families produces its own food. Most of us are dependent on the market for virtually all our material desires and needs. We also rely more and more on it for vital, useful, or entertaining information. Most of the goods and information we consume originate from producers we will never see or know. Many of them live thousands of miles away. We will better understand the ever-changing world economy, and our place in it, if we have knowledge of its long development.

  • The things we consume reach us by way of complex systems of communication and transport that we are scarcely aware of. As either working teenagers or fully employed adults, most of us contribute something to this global economy. We usually do it, however, in narrowly specialized ways, serving hamburgers, for example, or selling life insurance. Also, fluctuations in production, finance, and trade in distant parts of the world may seriously affect our income, employment chances, and career plans.

  • How did we become so dependent on the global economy, and how might that dependence affect the direction of our lives? Answers to these questions require a world-historical perspective, not only the "globalizing" developments of the past few decades but the long-term trends that transformed trade from a secondary human economic activity to one that none of us can do without.

Questions for Classrooms

Diagram

Landscape and Closeup Teaching Units that Emphasize Key Theme 2:

[In Development]

Footnotes:

1 The idea of information networks is discussed in Christopher Chase-Dunn and Thomas D. Hall, Rise and Demise: Comparing World Systems (Boulder, CO: Westview Press, 1997).