International Trade and Institutional Change: Medieval Venice's Response to Globalization

In my article, I learned a lot of things about Venice, some of which was confusing, so I read even more about Venice from other sources. My brain is about 60% Venice at the moment. And I love it!

Happily kneeling before the chair of the doge in one of several council chambers

In my article, I learned a lot of things about Venice, some of which was confusing, so I read even more about Venice from other sources. My brain is about 60% Venice at the moment. And I love it!

I now know that at some point, Venice was in several ways an idealistic model of what capitalist systems strive to be. I would like to think that is what helped the republic survive for 1000 years. Although there was a lot of risk in the industry of international trade, it could make a commoner into a councilmember within a year. This was thanks to a type of trade agreement called the fellowship, one of many Venetian financial innovations. For a wealthy merchant, rather than taking the risk of transporting overseas himself or paying salaries for sailors and sellers who have just as much motivation to steal the wares as to sell them, it was best to form a contract with a commoner to have joint stock in the capital. Commoners, unlike wealthier merchants and sailors, have little to lose and everything to gain. So by ensuring them a small cut of the wealthy merchant's profits, traveling merchants could make significant jumps in income status if they sold high. The attention to detail meant every exchange was recorded, but usually, the strategy was up to the traveling merchants: what to buy, who to sell to, and even where to go was often left out of the fellowship contract. The stationary merchants were the ones who took all the risk if trading operated at a loss: this caused the kind of anxiety-inducing financial situations that you can see in The Merchant of Venice. However, eventually fellowship allowed anyone to invest, even commoners with investment values much like penny stocks today.

This kind of chaotic mobility caused stirring politics. The Venetian Republic was a democracy* (*with voting power restricted to noblemen). However, in Venice nobility was based on power in the community, which came from financial status. In the peak of the fellowship, commoners who became wealthy enough could be accepted into the Great Council, which at its peak had more than 2000 members.

However, nothing lasts forever, and it is probably not surprising that the rich guys became scared of the poor guys getting rich too. Because they might get richer than you, after all! So the lock-out, or Serrata, happened, which meant the number of the great council was limited and power was kept in the same families. The poor were no longer allowed to invest either. This eventually shifted the economy into less trade, because the number of people who we able to trade without the motivated commoners dwindled, and the fellowship was less efficient without a highly competitive market for traveling merchants. Venice at this time began specializing more and more in its manufacturing instead, because manufacturing jobs could support the lower class.

This story really seems like a model to me of how income mobility can be essential for a strong economy, and it makes me even more frustrated to see restrictions. It was mentioned by Alessio it is hard for young people to start new enterprises because the big families hold them back, and so the young people move away. I wonder what solutions I might learn about to approach these problems.

In conclusion, the Merchant of Venice makes a little more sense now, but it is still pretty anti-semitic. You might consider watching it anyway, for the economics part of it!