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Global Trade
Past Mistakes, Future Choices
By Greg Buckman Zed Books Ltd
Copyright © 2005 Greg Buckman
All rights reserved.
ISBN: 978-983-2535-72-0
CHAPTER 1
A history of global trade
It is easy to take a given phenomenon and project backwards convincing oneself along the way that it has always been much as it is at present. It is particularly easy to do this with global trade, to kid oneself that today's highly integrated web of global trade must always have been much as it is at present. It is also easy to think that because high-income countries dominate today's world trade they must always have dominated global trade. But both impressions are a long way from the truth. Because these impressions are incorrect it is important to have an understanding of the evolution of global trade so one can have a proper context for the politics of it.
Although integrated global trade is a relatively new phenomenon, various forms of trade between different parts of the world have been in existence for a long time; in fact some types of global trade have existed for a very long time. Ivory from Africa has been discovered in Celtic graves in Britain. Volcanic glass mined in prehistoric times in present-day Turkey has been found throughout lands thousands of kilometres from the country. What is new is the highly integrated nature of today's global trade. Today all continents receive goods and services from all other continents but that is something that has only happened over the past few centuries — before that there were only limited trade connections between continents.
Early continental trade networks
European colonisation around the world, which began in the sixteenth century, was the force that first linked together all the world's regional trade networks, but before the sixteenth century all continents had their own trade and in some limited instances some continents traded with other specific continents well before Europeans arrived on the scene.
In Asia early trade across the continent was considerably enhanced by the rise of Islam in the seventh century. The spread of Islam meant that safe passage between strategic parts of the continent, such as between the Indian Ocean and the Mediterranean Sea, could be safely made for the first time since the fall of the Roman empire.
In Africa a trade route that crossed the Sahara desert from West Africa to the Mediterranean meant that a connection between Africa and other continents existed a long time before the sixteenth century. The trade route was considerably enhanced by the arrival of camels into Africa in the first century. Key commodities traded via this route were gold, slaves and salt.
In the Americas there was significant trade across its continents before the arrival of Europeans, although the trade was nowhere near as sophisticated as that in Asia, Europe or Africa. The Aztec and Mayan empires conducted trade from about present-day Mexico through to present-day Nicaragua but the trade was limited by the fact that it was conducted separately from local commerce. It tended to focus on luxury goods and was always conducted overland rather than by sea.
In Europe there was a limited amount of trade during the time of the Roman empire, which included the importation of a lot of grain from Egypt, but self-sufficiency was generally then the norm. What trade there was within the continent collapsed after the fall of the Roman empire in the fifth century; later it became divided between the Muslim Ottoman empire in the east and the Christian west, and within the west between the Mediterranean south and the Atlantic north. Trade flourished much more in the Muslim parts of Europe; in the Christian parts rural self-sufficiency still tended to dominate. Until the fifteenth century most European trade pivoted around the Mediterranean, but after that time it shifted to the Atlantic.
Early trade links between continents
For more than two millennia there was limited trade between Europe, Asia and Africa. Trade is likely to have occurred between the three continents, in fact, as early as prehistoric times: the discovery of luxury items and jewellery made from amber, coral and cowrie shells throughout all three continents suggests there was limited trading between them carried on a very long time ago.
Before the fourteenth century, trade contact between Europe and Asia mainly took place along the so-called Silk Road that was established in the third century and lasted through to the seventeenth century. Much of the development of the Silk Road was pushed along by the spread of Islam. Trade along the Silk Road mainly involved low-volume/high-profit luxury items such as jade, silk, porcelain and fine textiles. A complete journey along the Silk Road into China could take a long time — often requiring eighteen months to two years to complete. The trade route started to decline between the tenth and thirteenth centuries, and it went into terminal decline in the seventeenth century when the Ming empire in China collapsed. Its collapse stimulated an increase in long-distance maritime trade between the Middle East and India. The swing towards sea-based trade made ports such as Genoa and Venice powerful: Venice had become the commercial centre of Europe by the fifteenth century. Before this swing to Eurasian maritime trade, limited sea-based trade around the landmass had existed but only to a modest degree — as early as the first century the Mediterranean was linked to the Indian Ocean then later to South-East Asia. European ships would take goods to modern-day Egypt, or Israel, then Muslim traders would take them overland to the Red Sea or the Persian Gulf; they would then be shipped on again to ports in India or China.
Trade between Europe and Africa also stretches back a long way. By the eleventh century there were permanent international trading colonies in Syria, North Africa, Byzantium and Western Europe that linked the two continents. By the fourteenth and fifteenth centuries Mediterranean cities such as Barcelona, Venice and Genoa were regularly trading with eastern Mediterranean centres and there had long been trade across the Mediterranean that linked with the trans-Saharan trade route across Africa. The Ottoman empire was also a major conduit for trade between Africa and Europe.
Moves towards European international exploration and trade
During medieval times it seemed that the part of the world most likely eventually to link together all the world's separate continental trade networks was not Europe but China. Beginning in the tenth century the Chinese provinces of Guangdong and Fujian began to engage in a lot of international trade supported by an increasingly large and adventurous Chinese merchant fleet that was mainly based in the ports of Fuzhou, Quanzhou and Guangzhou. Throughout the fourteenth and fifteenth centuries Chinese merchants sailed as far as the east coast of Africa and, some believe, even rounded the Cape of Good Hope. The Chinese suddenly stopped their global exploration in 1433, however, partly because of internal disagreement about the wisdom of expansionism and partly because of the growing Mongol threat to their northern frontiers. In contrast to the Chinese adventurousness, the medieval merchants of Europe were fairly inward-looking and conservative and conducted little trade with the rest of world; it would have seemed unlikely, during those times, that they would ever come to dominate global trade. By the fifteenth century, however, the merchants and mariners of Europe had become much more outward-looking. A key element in their new daring was the development of a type of fully rigged ship that combined the square-rigged tradition of northern Europe with the triangular (lateen) rigged tradition of southern Europe. The new ships could sail closer to the wind, were faster, more manoeuvrable and more seaworthy than previous ships, and they required smaller crews. These ships were known as 'caravels' and were crucial in enabling European exploration of the Atlantic for the first time. When they were combined with better navigation techniques (which also combined northern and southern European traditions), and the establishment of maritime insurance, Europe was ripe to begin exploring the world. Advances in transport technology held the key to European exploration and, eventually, to the Europeans' establishment of a global trade network.
The Portuguese and the Spanish were particularly keen to begin exploiting the new potential that the improved ship design presented. By 1446 the Portuguese had colonised the Atlantic islands of Azores, Madeira, Cape Verde and Canary and were probing the Guinea coast of West Africa, establishing trading posts as they went that were particularly active in the trade of slaves and gold. (Pioneering though the Portuguese undoubtedly were, it is generally forgotten that a full 2,000 years before the Portuguese the Phoenicians had sailed right around Africa.) The Portuguese reached Sierra Leone in 1461, the Congo in 1483 then Bartholomew Diaz rounded the Cape of Good Hope in 1487. Five years later a navigator from Genoa, Christopher Columbus, left Europe, intending to open up a sea route to China and India. Having initially approached the Portuguese, but without success, Columbus was backed by the Spanish who were envious of the maritime success of the Portuguese. He reached Cuba and Haiti but thought he'd reached Japan. Whatever his delusions his 1492 voyage had monumental importance, beginning five centuries of European world domination via trade and colonisation. Six years after Columbus's voyage a Portuguese explorer, Vasco da Gama, reached the east coast of Africa and then India. Once da Gama set foot on the coast of India, Europe had closed its net around the Americas, Africa and Asia. Truly global trade now had the tentacles to reach every corner of the world. There was little doubt that the possibility of greater trade profits was a major motivator for the Portuguese and Spanish — authoritative records from the time make it clear that they would not sail to new lands unless they thought there was a good chance of making money.
A major global economic change that the Portuguese and Spanish discoveries helped to bring on — whose effect is still very much with us today — was the rise of the nation-state. Before the fifteenth century nations as we know them today were relatively insignificant and it was cities that wielded most political power, but after the fifteenth century a new national consciousness began to grow. Economic policies began to be based around the prosperity of nations instead of the prosperity of cities. The rise of nationalism brought with it the start of a trade philosophy known as 'mercantilism' which was a theory that thought it important for nations to secure a surplus of exports over imports.
European global exploration
There was never any humility either in Europe's approach to the new lands it reached or in the way it tried to take over pre-existing local trading networks. From the very start there was local hostility towards the new European trade presence. Arab traders in Mozambique opposed da Gama's attempts to trade along the east coast of Africa, whilst Persians and Arabs resisted his attempts to trade in India. The big advantage the Portuguese had over the Persians and Arabs, however, was their more sophisticated weaponry — an edge that Europe generally held over the rest of the world by the time of da Gama's voyage. Between the twelfth and fourteenth centuries European armaments had gone through quantum leaps in complexity and effectiveness through the development of weaponry such as the crossbow, the longbow and the pike as well as the reinvention of gunpowder (which had earlier been developed by the Chinese). European kings had also developed tax bases that enabled them to finance this more expensive weaponry. Major empires before the modern European empires, such as the Moghul, Ottoman and Ming empires of Asia, had not combined warfare with trade but the Europeans had no compunction about doing so. The result was that when West met East through da Gama's and Columbus's voyages the Europeans could always fall back on the power of the gun to force their way into local trading networks. In the sixteenth century the Portuguese decided to wage all-out war on the Muslim traders of the Indian Ocean. The same approach was later used by the Dutch and English who would often heavily fortify their trading settlements. No real attempt was made by the Europeans to trade on local terms and it was a given that trade-related violence was acceptable. K. N. Chauduri, author of Trade and Civilization in the Indian Ocean, argues: 'the principle of armed trading introduced by the Portuguese conquistadors in the Indian Ocean was taken over by the Dutch and English East India companies without any attempt to find an explicit justification for the practice'. The Spanish were no less violent in the Americas. The Europeans' forced domination of trade in Asia took longer to have the desired effect than their forced domination of trade in the Americas but in the end they won out in both continents. A large part of the reason why Asia took longer to conquer was the fact that Asians shared some of the same Eurasian disease pool as the Europeans and were not devastated by new diseases as the South Americans were; their organisational skills were also a better match for those of the Europeans. Basically, global trade has never been a meeting of equals and that remains as much the case today as it was in the sixteenth century.
World trade in the sixteenth and seventeenth centuries
By the end of the sixteenth century the Spanish dominated trade with the Americas, apart from Brazil, and the Portuguese dominated trade with Africa, Asia and Brazil. Global trade experienced a sharp rise between the mid-fifteenth century and the mid-seventeenth century largely powered by this Iberian domination of global trade links. But by today's standards the trade links were fairly tenuous. A voyage from Lisbon to the west coast of India could take anywhere from six to eighteen months, and no more than about a dozen Portuguese ships did the voyage each year. The voyage from Spain to the Americas only took about half that time, but in the early sixteenth century no more than about one hundred ships completed the voyage each year. Gold, slaves and pepper dominated trade with Africa while pepper, spices and drugs dominated trade with Asia; sugar and tobacco dominated trade with the Americas. Early in the sixteenth century the Spanish and Portuguese established sugar plantations in the Caribbean and South America; sugar growing is very labour-intensive and its establishment in the Americas was responsible for a sharp rise in the shameful importation of African slaves to the Americas. Roughly 20 million slaves were shipped out of Africa between the mid-fifteenth and mid-seventeenth centuries; about two thirds of those who reached the Americas were used to grow sugar. The Americas were less self-sufficient and more subservient to Europe than Asia was which resulted in European trade surpluses with the Americas but persistent European trade deficits with Asia. To finance the Asian trade deficits, the Spanish and Portuguese took a lot of gold and silver out of the Americas; in fact between 1500 and 1800 some 85 per cent of all the silver mined around the world, and 70 per cent of all the gold mined around the world, came out of the Americas with most of it ending up in Asia. The use of this gold and silver to finance European trade radically changed the face of global trade. Until the sixteenth century most global trade had been done by barter; the South American gold and silver monetarised world trade in a way it had never been before. From the very start Europeans turned their colonies into raw material suppliers and kept most of the value-adding in Europe — another characteristic still very much with us today.
The Spanish and Portuguese domination of Asian and American trade was shortlived. By the early seventeenth century, Spanish expansion throughout the Americas had stalled and Dutch and British traders had taken over much of Portugal's trade with Asia. Part of the reason for the Dutch and British takeover was the superior design of their ships which could move faster and perform better in battle than Spanish or Portuguese ships. The Dutch and British also had a more central geographical position in Europe than the Spanish and Portuguese.
One should not assume, however, simply because Europe dominated trade between continents in the sixteenth century that it was necessarily responsible for producing a lot of the world's traded goods and services. In the sixteenth century India had between 20 and 25 per cent of the world's population and its share of global trade was roughly the same. In fact India was probably the largest exporter in the world between 1500 and 1700.
(Continues...)
Excerpted from Global Trade by Greg Buckman. Copyright © 2005 Greg Buckman. Excerpted by permission of Zed Books Ltd.
All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
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