An Island Tale

Are markets and economics a recent Western innovation?

Before John Keynes, before Alexander Hamilton, before Adam Smith, markets flourished around the world. They did so because some people were good at some things, and others were good at other things. In Europe, British iron ore was traded for Italian wine; in Africa gold from Mali was traded for salt from Chad. And in the Pacific Islands fish from the coastal areas was traded for breadfruit and produce from the uplands.

For all of human history people have exchanged goods that they had in surplus for other things that they wanted or needed. And they were better off for it. In the Pacific their diet was incomplete—protein from fish needs to be supplemented with starches, fruits, and greens. If they didn’t trade, they wouldn’t be healthy.

It’s like that with economies. The most open economies, the ones that encourage trade with other nations and other people, tend to be the healthiest. During the classical period all roads led to Rome. At its height the Roman economy achieved a standard of living that was not equaled in more than a millennium. In Europe the British Empire was built upon trade. Admittedly, the model of royal monopolies and mercantilism was flawed and inefficient, but it was better than the alternative: a closed system shut up in its own poverty.

Trade has always been foundational to human prosperity. When trade increases, generally, economic growth accelerates. For the past 20 years we have been enjoying the growth boom brought about by the fall for the Iron Curtain. As China and India open their economies, the world’s economy is set to benefit again.

Trade isn’t limited to one culture or one time-frame. But as it expands, we all benefit.

Leave a Reply

Your email address will not be published. Required fields are marked *