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New Worlds: Sources of Wealth

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Where does wealth come from?

The answer to that question has changed over time, to a far greater degree than you may realize if you’re not in the habit of reading about pre-modern history. And this is not simply a matter of dry economic consideration, but the foundation on which everything from military strategy to social prejudice may rest.

For most of human history, the main source of wealth has been land. Land produces valuable things, above all food; without food, nothing else matters very much. But there are other products of value, too, such as minerals — not just the obvious precious metals like gold and silver, but pragmatic necessities like salt, tin, and coal — lumber from forests, wool or cotton or flax for textiles, fish from rivers and coasts, and so forth. Owning land, at least as we think of it now (and more on that in a later essay), means owning whatever the land produces.

Whether directly or indirectly. If you own land and work it yourself, you profit from the fruits of your labors, but in many cases the landowner and the laborer are not the same person. In those cases, the wealth for the former comes from skimming off a portion of what the latter produces, as a tax or a rent or whatever term fits the framework. Stick a pin in this idea, because we’re going to come back to it in a moment.

But before we get there, bear in mind: there’s a pretty sharp limit to how much you can increase the wealth production of your land. You might be able to squeeze a few extra percentage points out of it by switching to a more profitable crop, or one better-suited to the local environment; if you invest in a capital improvement like irrigation or adopt a superior technique of crop rotation, that too might help. But until the advent of modern fertilizers and scientifically bred plant strains, the gains from this tend to be pretty marginal. If you want to get significantly richer, you need more land. Which you might obtain by clearing a forest or draining a fen, or sometimes buying it from the current owner or gaining it through arriage . . . but in pre-modern times, the main way you’re going to get more land is by taking it from somebody else. Which is to say, through war.

And primarily through war against other countries. Internecine fighting does happen within a country, but it’s less desirable for the state, and whoever loses will probably go whining to the monarch about the whole thing and ask for royal intervention to restore their proper rights. Beating up foreign neighbors, on the other hand, was just business as usual for thousands of years, especially for any place ruled by a warrior aristocracy (which was a lot of them, albeit not all). War wasn’t endemic simply because people were belligerent and cruel; they were belligerent and cruel because that was a winning economic strategy as well as a geopolitical one.

Of course, even back in the day, land wasn’t the only way people made a living. There have always been artisans, crafting raw materials into finished goods that other people need; there have always been people who sold their services instead, whether they were prostitutes or physicians or performing artists. Some of them even made extremely good livings, if their goods were particularly luxurious or their services sufficiently rarefied. But when we’re looking at where wealth primarily comes from, and why the answer to that isn’t the same now as it used to be, the main subject we need to look at is commerce.

I’m not going to be able to speak in great depth about this, because economics is definitely my weak suit in the deck of worldbuilding topics. But round about the early modern era — in fact, it’s possible that this is one of the things that defines the early modern era, since I know this is true in both England and Japan — commerce began to rise significantly in importance. Although trade has been with us since even before the days of agriculture, a few centuries ago we started developing everything from better ships to more sophisticated financial tools that turned commerce into a far greater driver of the economy than it had previously been. (For most countries: maritime trading nations like Venice and the Phoenicians were always an outlier for this.) And then the Industrial Revolution hit, and suddenly the real sources of value were pieces of infrastructure like factories and the labor to make those factories go — things you can’t easily grab through warfare, since industrial methods of war tend to wreck the infrastructure and kill the people.

The social effects of this were huge. If you look at English history (and other areas as well, but this is the one I know best), from the early modern period on, what you see is land declining in its overall value while commercial sources become more lucrative. Remember that pin I had you stick in the topic of taxes and rents a few paragraphs ago? When land is the primary source of wealth, the people who own it will also attach social value to it, so that the respectable way to be rich is by owning land. The best thing is to have other people work that land for you, and you live off the profits; the second best is often to work it yourself; working someone else’s land, or crafting things, or (shudder) engaging in trade is positively déclassé.

But what happens when some of those déclassé activities abruptly surge in significance? What happens when the merchants experience huge gains in wealth, while the incomes of the landowners remain stagnant or decline because there’s only so much they can do to squeeze more blood out of those stones? You get a strange inversion where the upstart commoners have all the money, while the landed aristocracy finds itself with little more than respectability to its name. And the latter can’t directly exploit these new sources of wealth without damaging that respectability, which many of them don’t want to do. Their best recourse is usually to marry money instead . . . and fascinatingly, I read a while ago that during the years when Queen Victoria was in mourning, aristocrats married commoners at a much higher rate than before, because her withdrawal from society meant there was no longer the pressure of royal disapproval pushing them to stay within their own class.

This is, of course, a very broad view of the topic. There are a million nuances and exceptions just below the surface, not to mention the effect events like the Black Death can have on the overall economic situation (that one shifted much of European society from expensive land and cheap, plentiful labor to scarce, valuable labor and much cheaper land). But the economy most of us live in today is one that, while not completely divorced from the land — after all, we still need food, minerals, lumber, and so on — generates most of its wealth through elaborate systems that would have been unimaginable and even incomprehensible to someone a thousand years ago. When we think about where value lies in our fictional societies and who controls it, we’d do well to remember that we’re on the far side of a rather massive watershed.

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6 thoughts on “New Worlds: Sources of Wealth”

  1. A terrific read with regard to the creation of wealth that leads into the post medieval, land-based world, into the Renaissance and the roots of capitalism that I recently came across is The Richest Man Who Ever Lived: The Life and Times of Jacob Fugger (2015) by Greg Steinmetz.

    A series of books on the vast wealth of merchants achieved via the India Ocean trade of antiquity has just been published too, such as reviewed in the latest NY Review of Books —

    https://www.nybooks.com/articles/2023/04/20/garum-masala-indian-ocean-trade-in-antiquity-cobb/

    There is this, when calling Venice an outlier — in my humble opinion, not really, particularly when one looks at other sea-power based trading, even in Europe, of antiquity. That’s part of of what made Egypt so wealthy, as that way way back in her ancient antiquity, Egypt understood the monsoon timing for successful trade through the Indian Ocean.

    Without a large successful mercantile trade it was hard in any era to launch an invasion campaign for others’ lands, because with rare exceptions, one needed that tax base to get the loans to pay for the war. King Edward III successfully took down the very successful early Italian banking families of Sienna, for instance, by defaulting on all the loans he got at one period in the 100 Years War, but he got the loans backed by the wealth of the wool trade (which then, due to such defaulting and the Great Mortality) had to change back home too — from merely exporting the raw staple, then importing the finished cloth, to fabricating the cloth at home too, while continuing the wool export. (It was in this change that Chaucer, btw, got named by King Edward to be the wool export import custom inspector for England.) After that, banking, already centralized in Italy, exploded in other cities such as Florence.

    That sometime we call such mercantile, sea-faring empires outliers, those such as Greece, for instance, or very early, Troy, who lived so well by tax and tariff of the east-west trade, or Venice is because they fought like hell to keep their monopolies — which they could afford to do due to the massive wealth. Which ended up a lose-lose for Venice and Genoa, particularly after the focus of trade route shifted with the voyages out of Portugal and Spain, turning Portugal late in the 14th and the 15th centuries into the centers of the spice trade for Europe — though both Venice and Genoa particularly, continued very large players in the vastly lucrative slave trade, which boomed after the first waves of the Black Death.

    Anyhow, you probably know all this! I’m fascinated by these utterly entwined elements of history of warfare: money, personnel and supply, and from where they are gotten. Until recently, for instance, I had no idea how far back it goes even into antiquity that mercenaries were essential to warfare of even empires such as the various iterations of Persia. In this case, Rome was The Outlier — a standing, professional army.

  2. O — forgot to mention, among other mercantile empires was the Hansa, which like the others could only be taken down when a state — like Louix XIV’s France — had enough wealth via sophisticated, flexible tax systems — which means its own mercantile wealth to tax — to fund its own army, large enough, well supplied enough, to last long enough to defeat the, by then, less wealthy entities such as the Hansa League.

    Economic history — as opposed perhaps to economics per se — is fascinating, wherever one looks on the globe!

  3. A lot of places tried to insist that the social status was rulers, warriors, farmers, merchants in that order, even when the merchants were so wealthy that it could not work.

    In the Dark Ages, a knight was simply a man who fought, and no one lower had clout. As they came out into the High Middle Ages, merchants could grow wealthy enough to have clout. So they invented the ceremony of knighting to set themselves off. Unfortunately, a merchant incapable of fighting could be capable of going through the ceremony. . . .

  4. It’s worth reading any of David Landes’s economic histories for the vocabulary and a good sense of the orthodox view of economic history.

    It’s also worth considering the difference between the abstraction of wealth and the medium of exchange. In the modern era — some economic (and military!) historians consider this the real economic dividing line between the modern era and previous eras, arguing strenuously over chicken-and-egg distinctions — there’s always adequate exchange media to avoid barter. In the Nottinghamshire of 1257, one wouldn’t have totted up the value of this year’s crop of barley and paid that amount in rent to the lord; instead, one would have divided one’s harvest directly and brought it to the lord. (And it was always the tenant’s responsibility to transport the goods, whether the tenant was free or otherwise.) Three centuries later, the default method would have been to pay the rent in money… because there was enough money at its economic velocity to support that many transactions. This “advance” occurred considerably later in eastern Europe, which explains some things by itself.

    And all of this without considering “bookkeeping” and “accounting” and “letters of credit” and so on — topics no doubt set up for later in the month.

  5. Rent etc. paid ‘in kind’ makes funding soldiers — or anything else difficult.*

    More recently, scholarship in this field believes that ‘in kind’ was never the preferred payment, particularly by the time silver and gold mining was going on in Hungary.

    * Credit is what matters ultimately, which is why, for another instance, the ante bellum Southern Slavery financial system was working badly. In the South one could always exchange embodied value in a human body for a gambling debt, etc. But it could not buy a carriage that was built in the north. A cow or a bushels of grain wouldn’t pay a merc or buy a sword.

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