In this article, we seek to pick up some aspects of the birth of markets since antiquity, and in a collateral manner to argue that exchange is the main factor of man’s progress.
The earliest evidence for markets is mainly archaeological and comes from Babylon and the early empires of the Middle East and the Mediterranean. The interpretation of these very early sources has proved extremely controversial, as Karl Polanyi and his followers emphasized.
Substantial documentary evidence is available on the evolution of markets since the eleventh century. A complete set of written records (mainly letters) first appears in Western Europe when public markets were established and new cities were founded. Traditional explanations for market growth have hitherto been based on the argument that economic progress and urbanization had transformed primitive, local and fragmented outlets such as fairs, markets and street vendors into facilities large-scale, integrated and modern, and in fixed establishments.
The most successful markets were regulated by civil authorities to maintain a reputation for reasonable prices and quality control. Markets were located both in transportation centers and in consumer centers, even when they were very remote. However, as transport and communication costs declined, larger markets grew at the expense of many small markets that were disappearing.
Polanyi points out that the institution that allowed the exchanges between members of the community to be appreciated and assimilated were the equivalences, a system through which the quantities of assorted products that were considered as having the same value were regulated. Solidarity and the sense of community was one of the most crucial factors to be considered in the economic activities of the communities and, since an exchange based on equivalence implies that there were no winners in the exchange between equals, they protected the stability and the coherence of communities.
The arrival of the Greeks to Empúries (by way of example)
In addition to archeology, etymology and toponymy give us additional information. Let’s see:
Emporion is the name of the city that the Phocaeans founded (the Greeks from Phocaea) and which today is called Empúries and is also the origin of the name of the two regions in which Empordà is divided (from the Latin Emporitānu, adjective that, in turn, derives from Emporion). But the most interesting thing is to discover that Emporion means market.
The ancient Iberian merchants (indiketes in the Ampurdán) and the Carthaginians, Phoenicians, Greeks and Romans are the protagonists of this story. They took enormous risks in transporting valuable goods over great distances and doing business across borders, languages and cultures and overcoming the dangers of the sea, riots, pirates, inevitable corruption, betrayal and deception and wars that often punished the territories of the Mediterranean.
Emporion was a true trading center rather than a colony. The new city, in fact, was a Dipolis, a city with the same walled enclosure where Greeks and Indiketes cohabited, but separated from each other by another inner wall.
As Strabo says: “The Ampuritans formerly inhabited a small island off the coast that today is called Paliápolis, but today they already live on land. Emporion is a double city that is divided by a wall, before it had, as neighbors, some indiketes […]. But over time they came together in one state, composed of barbarian and Greek laws, as in many other cities “(Strabo, Geographica III, 4, 8).
So much commercial activity grew that at the end of the fifth century BC, the city began to mint its own currency, a sign of its importance.
Social exchanges, whether within a community, or between communities, can take many non-mutually exclusive forms. In addition to the commercial relationship in a market, which is the most impersonal of all, we can talk about exchanges, gift exchange, services exchange, shared goods, donations, assignments, usufructs, rents and exchanges of intangible goods.
Some of these exchanges, such as exchanging gifts, generate reciprocity, express feelings, nurture personal relationships, encourage economic exchanges, socialize children in relationships, and help to recognize and maintain hierarchical status and peaceful relations.
Until the development of markets, conduct related to the production and distribution of goods and services in tribal and “archaic” communities was linked to kinship, magic and religion. Who produced, how it was produced, and how material goods were distributed was a community decision based on status, acquired by birth, and determined by the position of the family and the place everyone occupies in it.
Markets will change behavior from the individual will of the people.
Relations are constructed at the same time on the three elements that are part of the exchange: people, places and things, and on these three elements are exchanged intangible aspects of culture, traditions, laws and other forms of order, ideas, values, technologies (for instance), art, rituals, and slaves (customary at the time of the founding of Emporion: from 600 to 575 BC).
This is so because the act of exchange is something social, symbolic, emotional, “ideational”, traditional, and sometimes even sexual and / or family relations, and therefore cross-cultural barriers of languages, territory and ethnicity.
Archaeologists, anthropologists and historians consider the exchange an act of communication and establishment of social relations, an act of connection between people, families, clans, tribes and peoples, and representativeness. It changes, therefore, the very construction of society and the way in which this society will evolve. Labor, power and ideological relations change as exchanges, and specifically markets, span broad groups of the population.
The social order generated by the market
A market is both a system, an institution, a procedure and an infrastructure, as well as being a system of social relations. From the economy, the market is the place where supply and demand are found. To put it another way, the economy is itself a science that is born with the market; The exchange of goods and services is the origin of business.
The impacts of markets on the economy are manifold and are derived from:
- Regular raw materials supply
- Productive specialization
- Innovation in production methods and products and services
- The elimination of monopolies (increased competition, lower prices, better allocative efficiency)
- Increased production and consumption (increased diversity of products, imitation of products and adaptation of products to trade and storage)
- The growth of the economy, favored by technological exchange, the reduction of information costs and transaction cost.
- Adapting to the particular needs of populations (local microeconomies)
A reduced version of this post was published in the magazine Emporion No. 129. September 2017.
If you want to know a little bit more …
Morales, J.F. (1978) La teoría del intercambio social desde la perspectiva de Blau. REIS: Revista Española de Investigaciones Sociológicas, ISSN 0210-5233, nº 4. 1978, pág. 129-146.
Polanyi, K. (1944) La Gran Transformación: los orígenes políticos y económicos de nuestro tiempo. Ed. 2007. Buenos Aires: Fondo de Cultura Económica.
Polanyi, K. et al. (1976) Comercio y mercado en los imperios antiguos. Labor, Barcelona.
Roberts, K. (2015) Origins of Business, Money, and Markets. Columbia Business School Publishing. 10 feb 2015.
Casson, M. i Lee, J.S. (2011) The Origin and Development of Markets: A Business History Perspective. Business History Review 85 (Spring 2011): 9-37. ISSN 0007-6805.
Dietler, M. i López-Ruiz, C. (2009) Colonial Encounters in Ancient Iberia. Phoenician, Greek, and Indigenous relations. The University of Chicago Press.
Mayet, C. I Pine, K.J. (2010) The Psychology of Gift Exchange. University of Hertfordshire. Internal Report.
Mauss. M. (2009) Ensayo sobre el don. Forma y función del intercambio en las sociedades arcaicas. Katz Editores. Buenos Aires.
Offer, A. (1997) Between the gift and the market: the economy of regard. Economic History Review, L, 3 (1997), pp. 450-476.
Sherratt, S. (2016) Greeks and Phoenicians: Perceptions of Trade and Traders in the Early First Millennium BC. Chapter 6 in Bauer, A.A. i Agbe-Davies, A.S. (Editors) Social Archaeologies of Trade and Exchange. Routledge.
Agbe-Davies, A.S. i Bauer, A.A. (2016) Rethinking Trade as a Social Activity: An Introduction. Chapter 1 in Bauer, A.A. i Agbe-Davies, A.S. (Editors) Social Archaeologies of Trade and Exchange. Routledge.
Lyons, C.L. i Papadopoulos, J.K. (2002) The Archaeology of Colonialism. The Getty Research Institute.
Other web pages of interest in the subject: