Author: William Bernstein
NYT Review:
In 2006 the world’s countries exported $11.8 trillion in goods and services, far above the gross domestic product of any single country except the United States, which itself exported over $1 trillion worth. World trade has nearly doubled in less than a decade, and its increase since World War II is simply staggering.
The world is knit together as never before with a cat’s cradle of trade, which has already had immense consequences and will have many more. But while global trade has been much in the news lately, especially during this election year, it has an extremely long history. As William J. Bernstein makes clear in his entertaining and greatly enlightening book “A Splendid Exchange,” it has been a major force in driving the whole history of humankind.
Adam Smith explained in “The Wealth of Nations” that humans, and humans alone, are endowed with “a propensity to truck, barter and exchange one thing for another.” Equally important, skills and talents are not evenly distributed across the human landscape, nor are the world’s resources equally distributed across the natural one. Since humans also have a propensity to bash in one another’s skulls, we have always traded for what we wanted or raided for it. Mr. Bernstein’s book is a history of the first option, a refreshing view, to say the least.
Ancient Mesopotamia was richly endowed with fertile soils and water from the Tigris and Euphrates rivers, but it lacked stone and wood for building, and metals like copper for tools and weapons. The Sumerians, however, had surplus food to trade, so they could bargain for stone from near the headwaters of the rivers, wood from what is now Lebanon and metal from Sinai, Cyprus and elsewhere.
The scope of ancient trade was immense. A single Bronze Age shipwreck around 1350 B.C. near Bodrum, a Turkish coastal town, yielded no less than 10 tons of copper and a ton of tin ingots along with other merchandise like ivory. (The ideal ratio of copper to tin for making bronze is 10 to 1.)
By Roman times vast armadas ferried Egyptian grain, Greek wine, Spanish copper and silver, and a hundred other commodities around the Mediterranean. India has yielded rich troves of Roman coins that reached that subcontinent to pay for spices the Romans coveted, especially pepper. Chinese silk — literally worth its weight in gold — traveled through the heart of Asia on the Silk Road to reach markets in the West.
As the West collapsed at the end of antiquity, so did its long-distance trade. Few Roman coins dating later than A.D. 180 are found in India, as the Roman economy began to run out of gold and silver. The Arabs came to dominate the major trade routes of the Indian Ocean after the rise of Islam. And as Western Europe revived economically, a lively trade developed between rising powers in Venice and the Middle East. (Venice supplied slaves from the Crimea and Caucasus in exchange for spices and sugar.)
When the Ottoman conquest of Constantinople slammed shut the sea route to the Crimea, Europe began seeking other routes to reach the resources of the East and eliminate the middleman. Columbus sailed west in 1492 and stumbled onto the New World. Vasco da Gama reached India in 1498, having rounded the southern tip of Africa. The modern world began, thanks to trade.
The history of global trade is so long and so vast that Mr. Bernstein could have easily produced a toe-breaker of a book. Happily he has not. By treating many aspects thematically rather than strictly chronologically, he shows in fewer than 400 pages of readable type how people and nations have faced the same problems over and over and often solved them the same way.
The poor soil and scant rain of ancient Greece, for instance, meant that the terrain’s ability to grow grain was limited, but grape vines and olive trees grew in abundance. To export its wine and olive oil, Athens developed a pottery industry to supply the jars in which those products were transported. As Greek trade, and colonies, flourished across the length and breadth of the Mediterranean and the Black Sea, naval power was needed to suppress piracy. To control choke points like the Dardanelles and Bosporus, which led to the rich grain lands of what is now Ukraine, the Athenian empire developed.
This succession of trade, colonies, naval power and empire repeated itself with the Venetians and Genoese, the Portuguese, the Dutch and the British. Even the strategic bottlenecks have stayed the same: Suez; the Strait of Hormuz leading to the Persian Gulf; the Strait of Malacca leading to East Asia; the Bosporus and Dardanelles. Only now, instead of slaves and spices flowing through them, it is oil.
Mr. Bernstein is a fine writer and knows how to tell a great story well. And he has many in this book, from Francis Drake’s voyage around the world (which repaid its backers, including Queen Elizabeth I, £50 for every one invested) to the Black Death that remorselessly followed the trade routes as it worked its devastating way through Europe and the Middle East. But he never loses sight of his overall goal: to show how trade shaped the world in the past and will shape the world in the future, whether we like it or not.
“A Splendid Exchange” is a splendid book.
Reviewer John Steele Gordon is the author of “An Empire of Wealth: The Epic History of American Economic Power” (HarperCollins, 2004).
Review: BW
Where would the history of man be without trade? Nowhere, according to William J. Bernstein's sparkling new work, A Splendid Exchange: How Trade Shaped the World. The urge to buy and sell has been a key factor in war, exploration, and geopolitics since long before the written word, Bernstein writes. One of today's prickliest issues—whether to open borders to trade—has been puzzled over for centuries.
The overarching observation that today's troubles are nothing new could easily sink a book. After all, who wants to wade through 385 pages of text (excluding footnotes) only to hear news that's as old as the pyramids? But A Splendid Exchange is saved from any possible tedium by its feast of contrarian conclusions, its broad historical sweep, and, especially, its vivid characters. Open trade does create losers, Bernstein concludes, and there is good reason to ease their financial pain. In the U.S., the losers include skilled laborers forced to accept a reduced standard of living when their jobs migrate overseas. Yet starting in the 20th century, there have been fewer victims than winners, the author writes, and free trade is the best policy in an imperfect world.
Bernstein starts five millennia back with an imagined account of the launch of the weapons trade. Marauding Sumerian herders obtained copper from Sinai Desert traders and used it to make plated helmets. That gave the herders more protection as they stole grain from the region's farmers. The victims in turn obtained their own copper, which they used to fashion more-lethal maces. And the arms race was on.
One freewheeling historical passage follows another. For example, according to Bernstein, East-West trade was fundamental to the rapid spread of Islam across the Middle East and Central Asia beginning in the 7th century. One of Mohammed's dictums protected Muslim traders from traditional Arab raids, but non-Muslims had no such religious protection and were exposed to robbery. Hence any trader and any city that wished to retain their assets had an incentive to accept Islam. In a few short centuries, Mohammed's followers "had knitted almost the entirety of the known world into a vast emporium in which African gold, ivory, and ostrich feathers could be exchanged for Scandinavian furs, Baltic amber, Chinese silks, Indian pepper, and Persian metal crafts."
Although difficult to imagine now, until around the 16th century, the West made little that Arabs and Asians coveted, putting Europe in a decidedly inferior bargaining position. The Chinese, the Arabs, and the Indians certainly didn't desire European cloth, which was terribly rough on the skin compared with silk or Indian cotton. The most sought-after goods in the medieval centuries were spices such as cinnamon and nutmeg, found in abundance in Sri Lanka and the Spice Islands. Profit on their sale was so huge that it created fabulous kingdoms, including opulent Venice, making spices "as critical as oil and palladium are in the 21st century," Bernstein writes.
So how did the product-impoverished West come by spices? Bernstein points out that eventually Western buyers were able to bargain with silver. Between 1200 and 1500, however, Italian merchants exported slaves, many from the northern Caucasus region of current Russia. The expanding Muslim armies needed soldiers and gladly accepted slaves in return for the much-desired spices.
In Bernstein's account, trade becomes the backdrop for the often bizarre antics of Athenians, Romans, Mongols, Spaniards, English, and so on, all of them on the march for profit. For instance, one 16th century Portuguese colonial, Jorgé de Menese, livid because of a no-show supply boat on the northern Moluccan island of Ternate, cut off the hands of an innocent local, then sicced dogs on him. The man didn't go down easy: He ran into the sea and drowned the pursuing dogs one by one by gripping them between his teeth and holding them under. In the end, though, the victim drowned, too.
Bernstein enjoys a cult following among value and index investors owing to his previous books on investing and economics, including The Birth of Plenty. But if there is a flaw in the book, it is that Bernstein's personality can get in the way. He cannot resist taking swipes at public figures—President George W. Bush is a target, for example. Bernstein also doesn't seem to trust his reader. Again and again he stops the narrative, as if to nudge the reader on the shoulder and say: Dear reader, this event is similar to that front-page story you read today. After the umpteenth interruption, one wishes he would loosen up and allow readers the delight of noticing historical parallels for themselves. Yet that is a small blemish on so rich a book.
Bernstein concludes with vigorous and well-argued chapters on the current state of free trade. Over time, the right to buy and sell freely has not only brought "a bounty of material goods" and intellectual and cultural riches but also has helped to make the world a less violent place, he says. The drop in violence, Bernstein writes, is because of "the increasing realization that neighbors are more useful alive than dead."
