The Good: Fascinating stories about trade through the millennia
The Bad: The treatment of todays trade issues feels a bit tacked on
The Bottom Line: A fun read about an important topic
A Splendid Exchange:How Trade Shaped the World
By William J. BernsteinAtlantic Monthly Press; 467pp; $30
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."