Byways and Tribal Capitalism

I have been indulging in leisure again.  For nine days I backpacked along the ancient Ridgeway, the superhighway of Neolithic Britain and a trade route into the modern era.  Starting about 6,000 years ago, (roughly the time Sarah Palin imagines Adam and Eve holding hands in a newly wrought Eden) the Britons occupying the plains either side of the Ridgeway were settling the river valleys to raise crops and herd animals.  As the crops and herds increased, and the Iron Age and Bronze Age opened trading opportunities in new technologies, these Britons took strides that set them and their heirs on the road to market capitalism.

The road they followed is the road I walked – the Ridgeway Trail.

The Ridgeway is a geographic feature of Jurassic and Corallian limestone, an 87 mile long spine of rocky downs running through Southern England from Ivinghoe Beacon in Buckinghamshire to Overton Hill, near Avebury in Wiltshire.  It was linked by other routes to ports in the South and on the Channel.  The Ridgeway was admirably suited as a commercial highway in early times because the limestone was porous, draining rain away from the high pathway to the plains below.  When the tracks below were impassable mires of mud for man and beast, the Ridgeway remained a quick and easy road from one region to another.  Being high, with excellent views down the slopes and over the plains, it was also possible to detect and defend against brigands who might beset unwary travellers, with ring forts provided to secure travellers and goods along the route.

Neolithic Britons were secure enough to form large agrarian tribes, planting and harvesting grains and herding sheep.  They were prosperous enough to have excess grain and sheep to trade for iron and bronze tools and gold jewellery and other valuable trade goods.  They were economically advanced enough to have specialisation, with certain tribes and regions known for their skill in producing iron or bronze or pottery.  They were politically advanced enough to have organised militias, with a ‘warrior aristocracy’.  They were wise enough to promote collective security and agree byways for safe passage with neighbouring tribes to enable commerce along the Ridgeway.

The Ridgeway reminded me every day we walked along that it is infrastructure, transparency and mutually-enforced rules which secure and grow markets for productive capitalism.  Infrastructure provides a common framework for trade to take place.  Transparency allows those trading in markets to evaluate each other’s wares and defend against brigands who might wish to ambush the unwary.  Rules of safe conduct and fair dealing promote the confidence which encourages those with excess production to bring it to market to trade for their present and future needs.  Mutual enforcement ensures that the temptation of any tribe to loot its neighbours is curbed by the risk of finding itself precluded from the trade routes and from access to markets.

I imagine that like many small, agrarian, tribal states, England of the pre-Roman period was organised into settlements relying on militias with only small dedicated military elites.  This arrangement, as exists in modern Switzerland, allows the civilian militia to contribute most of its energies under secure conditions to increasing production, growing the surplus which sustains collective prosperity.  Although a professional military or ‘warrior aristocracy’ can be useful in providing skilled leadership, if that military gets too large, or the aristocrats too greedy, the incentive to produce a surplus is removed and tribes tend to weaken, grow poor and fail.  Prosperity and security require a delicate balance in the social contract.

The Ridgeway also reminded me that prosperity invites looting by aggressors.  By the Roman era, England was producing a large enough surplus to be exporting across the Channel, with trade goods from as far afield as the Mediterranean.  This has been substantiated by findings of pottery, jewellery, coins and other goods in early Celtic settlements.

It was the prosperity of England as a grain exporter that led Julius Ceasar to covet it for the Roman Empire.

A professional military demands a large production surplus from the civilian population to sustain it.  The state expropriates the surplus production and provides it to the military.  If the military can secure more resources and more production to the state, the expropriation can increase prosperity of its tribe – or at least the elite that commands it.  But if the military fails to secure more resources, then the expropriation from those producing a surplus will gradually erode the incentive to produce a surplus – leading to decline and increasing poverty and political strife.

Ceasar understood that securing the large agricultural surplus of England to finance and feed his armies would help underpin the military strength of the Roman Empire.  Naturally, the Romans secured and settled the most prosperous agricultural regions.  As a result, there are Roman traces along the Ridgeway – improvements to the roads, the forts, and the commercial links to market towns and ports on the coasts.  We walked Roman roads last week too – straight, raised and solid even 2,000 years later.

Following the Romans, the Danes, the Angles, the Saxons and the Normans invaded and occupied the same lands.  Throughout the changing political and ethnic mix of tribes and elites, the Ridgeway continued to function as a trade route through prosperous middle England.

Modern markets could usefully reflect on the durable Ridgeway model of market infrastructure.  Transparency of assets – whether sheep or shares or CDOs – is critical to the effective function of markets for price discovery and investment.  Those who have secured a surplus are unlikely to risk taking their wealth to a market where assets are not open to inspection and proper valuation.  Security of trade routes and market towns for merchants and traders is essential to encourage those with a surplus to bring it forward, promoting effective allocation of assets and underpinning growth in production.  Mutually-enforced rules of conduct, fair dealing and safe passage are key to building a reputation that attracts both buyers and sellers and ensures a sustained market prosperity.

The modern ‘warrior aristocracy’ could usefully reflect on the fate of societies that deplete the incentives to surplus production and fail to secure commensurate returns from a costly military.  Whether a Neolithic tribe, a Celtic settlement, the mighty Roman Empire or the Soviet Union, history proves that a tendency to excess expropriation by the state undermines any incentive to investment and surplus production.  Excess expropriation will ultimately weaken the economy supporting the elites and the professional military that secures their privileges and interests.

As the global elites meet in the coming weeks to address the current economic crisis, they could do worse than contemplate the lessons I gleaned from the Ridgeway.  Those who provided poor transparency, promoted dishonest market practices, looked the other way or collaborated in the robbing of passing merchants and investors, and otherwise violated the precepts embodied in the Ridgeway model should be held accountable for their failings.  The global model going forward must return to the principles embodied in the ancient stone backbone of English commerce.

Links:

The Ridgeway (Wikipedia)

The Ridgeway National Trail

Neolithic, Iron Age and Bronze Age Britain (BBC)

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Congratulations to Rich H (Miss America) who was to cover for me last Friday and instead secured his own position in the RGE blogroll.

5 Responses to "Byways and Tribal Capitalism"

  1. Detlef Guertler   October 31, 2008 at 5:33 am

    Welcome back in our so unreal real world of 2008, LB!It’s a wonderful way of learning historic lessons following ancient trails. So I’d like to add some aspects from my actual point of view – overlooking the Mediterranean Sea and the Straits of Gibraltar.1. The other important trail for ancient british economy was the Sea. And one of the most important sources for the british wealth in those times was cornish tin that found its way to the whole occident as it was bitterly needed for the production of bronze weapons. So: Foreign trade helps to produce wealth. And make sure you produce something no-one else does or has.2. Somewhere near the Straits of Gibraltar was the location of the legendary, super-wealthy, super-secret city of Tartessos. Tartessos was the place where all the treasures of the Far West and Far North came from – and it was a complete fake. It was a tale told of phoenician traders that tried to keep the secret of their sources, e.g. the origin of the cornish tin. So: Markets may be more successful with growing transparence, the individual trader or society can become richer with growing intransparence.3. Who destroyed the phoenician wealth and society? The same power that destroyed the british wealth and society: The most powerful military machine ever seen in the ancient world – Rome. The world history knows some examples of wealthy, well organized societies that were destroyed by military force: Milet (destroyed by the Persians), Carthago (destroyed by the Romans), the Inca Empire (destroyed by the Spaniards), India (destroyed by the Britons). Today, there are two big, wealthy societies, strong in trade and economy, weak in military power: Japan and the European Union. It’s not inevitable that they share the fate of Milet, Carthago or Cusco – but it’s possible.

  2. Guest   October 31, 2008 at 7:47 am

    Markets are truly not markets when they are the tools fordeception. You have zeroed in again on our problem whichis the corruption in all facets of transparency in the markets. The accounting is false, the government figures are false. The rules are skewed to benefit the connected.Capital is not being used to benefit society, but to benefit cronies. We are now a crony corrupt society thatis the antithesis of True Free Markets

  3. Guest-O-Rama   October 31, 2008 at 12:25 pm

    London Banker, You are so sexy when you’re historical :)So really how was your vacation? Will the pound keep dropping vs the dollar for a while. If so I might be tempted to hike the Ridgeway during our Thanksgiving. Someone said dollar will strengthen til Libor gets to 2. Any truth to that?Based on what you wrote, do you think Americans are destined to vote in O’Bama because we couldn’t bring down the price of oil with our little vendetta in the Middle East? Everyone here’s been complaining that it was a war for oil but as far as I can tell that hasn’t turned out to be the case much. Did we paradoxically screw ourselves by going to war? Or did we actually help outselves by having so much debt out there that we’re the flat currencey? I know in the long run that’s going to kill our exports and exports is about all we’ve got going for us now and at that point the dollar will come down and oil will go up again (at least for us). Just trying to wrap my head around all of this (and plan for vacation because despite everyone’s insistence to save for tough times I’m afraid if everyone goes belly up those frequent flyer miles and hotel points we’ve wracked up will be worthless.)Also re your history lesson, I was also a bit under the impression that places with above average fecundity put together armies and went plundering so there wouldn’t be so many trouble making young men running around and the ones that were left after the wars would have fortunes enough to marry (OK maybe not trying to kill off young men deliberately but they do need jobs once all the free land runs out and that is a byproduct of war). Certainly being in the navy was about the only thing many third sons could do if they weren’t going to inherit or join the church…I’m not sure how tiny little switzerland got by with their maximally efficient system given that they were a catholic country and not a great place for agriculture other than milk and cheese. Or are you saying that was a recent invention? Maybe they had more self control and just married earlier. Maybe they just had beautiful daughters and sent them off to convents or to be wives in other countries?

  4. hazleton   October 31, 2008 at 7:20 pm

    I chuckle when I hear the phrases transparency and non transparency. It is as if we need to be politically correct and not call people who they really are – they are LIARS, and they STEAL with their LIES.

  5. Roland   November 1, 2008 at 11:15 pm

    Mr. Guertler is correct. Rather than reform itself, an empire would sooner plunder the world.The Gracchi perished, and Rome followed the path of more and bigger warlords, ending with Caesarism.Oh sure, reality eventually catches up with an empire. It only takes a few hundred years! Of course, that’s much too late to do most people in their world any good. And by that time, the culture is so corrupted by the lengthy imperial malaise, that the return of reality finds little left worth salvaging.The USA may be rotting economically and socially, but they do have a first-class war machine. To match US military power would require larger investments with longer lead times than has been true at any point in the military affairs of modern history. No other power at present is willing to even attempt to close the capability gap. Meanwhile, the USA has already loudly announced a doctrine of preventive attack upon anyone who might become a “peer competitor.”But it will probably never come to a contest anyway. The economic, social, and cultural elites across the Western world have too many interests in common, and most elites outside the West, want to be more like the West. For example, Euros might complain about American rudeness, but they will not try to change the current division of geopolitical labour.Besides, being the “Enforcer of Last Resort” is a highly marketable service, a valuable niche in the globalized economy, which can net the USA considerable revenue. For example, why do the Saudis accept US paper for irreplaceable oil resources? Because US armies keep the King on his throne; the Chinese, Russians, or Euros cannot offer him a competitive service!In this view, the devastation of Iraq was at least partly about demonstration, or “marketing a package of global enforcement services,” if you will.Global investors need a great power that can discipline emerging nations, someone to beat up any minor powers that quibble over the rules of the global game. It’s expensive to develop the war machine oneself–easier to pay the USA to kill people, and then just send some blue helmets over to clean up the mess afterwards.So even in a globalized world economy, someone must play the role of sovereign, backing the order with force. Since the world is nowhere near the level of sophistication to constitute a true global polity to exercise the sovereignty in a just fashion, it stands to reason that in effect the world’s greatest military power will effectively perform the sovereign role.So again, Guertler makes a good point: making or designing better widgets is wonderful, but if you can’t defend the wealth, someone can push you into subjection. A genteel extortion racket is perfectly viable as an economic model.In a global sense, it’s a sub-optimal outcome, as the world would end up poorer. But nothing in history necessitates economically optimal outcomes. Why else do you think some wars matter so much in the course of history?Empires are not innovators. It occurred to me on a tour of the Near East that empires tend to be relatively stagnant in their techniques, art, etc. There was more innovation in a few decades in a handful of Greek cities, than there was in centuries in the whole Roman empire.The only hope is that the world as a whole would draw another lesson from the history of Old England: that the various states on the planet behave like the Barons did toward King John, and act to curtail the power of the sovereign.In other words, I think the stubborn defense of sovereign privileges on the part of the world’s parochial states would actually be the path of progress in the long run, just as the Baron’s intransigence, while wholly motivated by parochial concerns, lay the basis for English constitutionalism.But will Europe, Japan, and China drag today’s King John to a new Runnymede? My bet would be “No.”