CHAPTER 1: 1492: The Seven Deadly Sins Tumble out of Europe

European Capitalism: Amoral, Abstracting, Accumulating, Limitless

FOLLOWING BRAUDEL, WE CAN DEFINE CAPITALISM AS THE "realm of investment and of a high rate of capital formation," where multiplying capital is the all-consuming goal, private property rights are assumed and markets and prices govern economic actions. Here, capital means either fixed assets used in production or circulating assets such as raw materials, unfinished goods and, most of all, money. Accumulating capital was the goal which integrated European society. That was not predetermined or inevitable; it was the result of people's choices--though once made they could not easily be unmade by later generations.

This drive to increase capital took off in the towns, especially Italian city-states and Dutch and German cities. Towns had more freedom for innovation apart from princely control, for Italian and German cities often ruled themselves. The country's fertile land could increase capital only very slowly. Harvest came once or twice a year, and the capitalist who wanted a quicker turnover of his investment could not speed it up. It was hard to increase the amount of tillable land, and demand for foodstuffs was limited too. Governments tended to control the price, lest food riots break out.⁴⁷ Farming was not abstract or limitless.

The drive to increase capital found release in the long-distance trade of luxury goods, not in the trade of necessities such as foodstuffs, which could not be transported far. Luxury goods made by city craftsmen and traded by city merchants were in great demand, and governments did not normally regulate their price. Their production was not limited by the seasons. They were less perishable and could be traded over long distances. Capitalists were less interested in producing them than they were "in distribution, marketing--the sector in which real profits were made."⁴⁸

By stressing profit, not production, by trading luxury goods, not necessities, and by setting the highest prices, capitalists circumvented God's purposes for the economy and trade. The prophet Amos warned Israel of God's anger against unjust profiteering:

     Hear this, you who trample the needy

        and do away with the poor of the land, saying,

     "When will the New Moon be over

        that we may sell grain,

     and the Sabbath be ended

        that we may market wheat?"--

     skimping the measure,

        boosting the price

        and cheating with dishonest scales,

     buying the poor with silver

        and the needy for a pair of sandals,

        selling even the sweepings with the 
wheat.49

Avaricious capitalism was not the result of private property but of a rebellious priority on accumulating property above worshiping God or supplying one's neighbor with necessities. Merchants did not corrupt European society with capitalism. They used capitalism to integrate a society which could not be integrated fully through politics or religion. They were the priests of the self-interested religion of ambition and avarice. Generalists who used the easily translated language of money, they effortlessly crossed political and religious boundaries to finance and coordinate the vices that existed: simony, sale of indulgences, tax-farming, wartime raids and ransoms, rulers' prodigal spending.

Bills of exchange show how merchant bankers integrated European society and flaunted their superiority over the church and their immunity from its rules. A bill of exchange was a merchant banker's promise to pay a certain amount "after a stipulated period in another place with a different currency." A merchant in Florence might write up a bill promising to pay three hundred Venetian ducats in six months in Venice. The merchant banker then sold the bill for money in one currency (ducats), and it was redeemed later in another currency (florins). The currency exchange rate between ducats and florins was set such that the banker made a profit (really, interest) on the exchange and a profit by investing the purchaser's money for the stipulated period. This increased capital and avoided the church's ban on usury (earning interest).⁵⁰

The Medici, the pope's bankers, used bills of exchange in conducting his business, thus using church funds to evade the church's ban.⁵¹ Though perhaps unreasonable, this ban and merchants' evasion symbolized the church's failed attempt to control economic life and to integrate European society. Yet the bill of exchange showed the merchants' successful attempt to integrate business dealings in distant places--Florence and Venice, for example.

As Braudel points out, "The bill of exchange, . . . the key weapon in the armoury of merchant capitalism in the West, was still . . . circulating almost exclusively within the bounds of Christendom." That similarity in creed and church created a minimal level of trust needed to accept bills from distant places.⁵² Yet widespread similarity was not full integration. The bill might earn interest or buy slaves, and both were practices condemned by the church.

Bills of exchange, exchange fairs, stock exchanges, joint stock companies and other devices abstracted the merchant from the particularities of locality, product, people, nation, religion or language. Such financial devices flowed across these barriers. The merchant was distanced from the morality or immorality of any particular transaction. He profited from distant investments without feeling responsible if his agent was "buying the poor with silver and the needy for a pair of sandals." He had learned the wisdom "of never allowing oneself to be deterred in the pursuit of profit by moral, religious or sentimental considerations." He rejected "traditional values," which held that long-distance trade "served no legitimate social purpose" and threatened "the salvation of the soul." The abstract, generalized nature of his business allowed him to engage in many forms of trade. He did not have to know the details of any one craft, only the prices. Thus he could integrate European trade across craft and industry lines as well.⁵³ These devices were developed in Italian city-states mainly engaged in Mediterranean trade with Egypt and the Levant. The long-distance luxury trade in Asian spices, medicinal plants, jewels, ivory, dyes and herbs was the most profitable. It drove the growth of city-state capitalism. Slaves were also traded. Columbus's home city, Genoa, dominated the long-distance slave trade. Its merchants bought slaves in the Balkan Black Sea ports and sold them in Egypt or in Genoa.

Italian and Moslem domination of long-distance Mediterranean trade drove Portugal and Spain to seek other trade routes. In 1492, Columbus was seeking a shortcut to the Orient to horn in on the spice trade. The Spanish brought to the Americas these capitalist devices. The resulting plantations were conquest institutionalized. Braudel calls them "capitalist creations par excellence: money, credit, trade, and exchange tied them to the east side of the Atlantic." They were "remote controlled" from Europe by means of capitalism's abstract devices with few misgivings about their harsh exploitation of human life.⁵⁴

This amoral capitalism resulted from the failure of religion or the state to integrate and control European society. That is clear when we consider the example of China, which did not develop capitalism despite its advanced market economy. Using Confucian culture, the Chinese state integrated and controlled Chinese society. According to Braudel, it did not allow merchants to nourish great ambitions: "The state uncompromisingly controlled everything and expressed unmistakable hostility to any individual making himself `abnormally' rich." It controlled the economy in a nearly Christian manner: guarding against famine, controlling markets and opposing "excessive wealth." Only the state, not the individual, could accumulate capital.⁵⁵

Theoretically, Christian doctrine encouraged similar moral control of Europe's economy. As pious individuals exercised self-control, renounced greed and considered their neighbor when buying or selling, the economy would come under control. However, Christianity was not heeded in Europe as Confucianism was in China. Moreover, Confucianism was "a state ideology as well as a personal ethic." It explicitly justified and upheld the social order.⁵⁶ By contrast, Christianity was a personal ethic strangely unconcerned with exactly what government or economy its followers lived under. Its "kingdom of God" was not a blueprint for a specific nation or empire, and its God-centeredness provoked rebellion among its own adherents. Absorbed in their pursuit of riches and power, Christendom's pope, church officials and rulers did not use Christian doctrines to integrate European society.⁵⁷

Integrated mainly by capitalist devices and common self-seeking, this European society was almost destructively dynamic, innovative, aggressive and expansionist. Describing it at a later stage, historian Theodore Von Laue calls it "a singularly prolific cultural hothouse in which all human accomplishments were advanced at a forced clip." Even by 1500, it was a hothouse in the making.⁵⁸