A Splendid Exchange: How Trade Shaped the World

Free Trade Polemics: Nothing New on the Horizon

William Bernstein convincingly shows that trade is inseparable from human nature and has played a pivotal role in the history of mankind (pp. 15, 18, 89). Any effort to stifle trade is doomed to failure in the long run, to do so would invite smuggling, retaliation, and eventually a real war (pp. 261-65, 356, 367, 376). Bernstein begins his history of trade around 3000 B.C.E. in Sumer in what is today Iraq and ends with the contemporary ambivalence about globalization. Climate, geography, natural resources, germs, openness to outside influences, technological advances, economically efficient institutions, political stability, and consumer preferences have all played a role in influencing trade (pp. 10-11, 34, 41-42, 53, 75-79, 86, 96-99, 103, 106-09, 129-51, 155-57, 167, 170-73, 187, 189-95, 199, 208, 215, 221-26, 232, 240, 243, 248, 254, 263, 270, 278, 286-87, 294, 307-12, 319-37, 356, 375-83). Bernstein notes that in the absence of any authority beyond the tribe, entrepreneurs will prefer to raid instead of either trading or protecting trade (p. 67). Few things excite the envy and belligerence of the ruling elites of a nation as much as wealth derived from commerce (pp. 43-53, 90, 103-06, 116-29, 174-97, 214, 238-40, 284, 314, 354, 376). Bernstein also shows with much conviction that the controversy about a positive trade balance has been around since the Antiquity (pp. 41-42, 258, 264, 279, 287, 290). Prominent Roman citizens such as Pliny the Elder and Seneca were complaining in the 1st century C.E. that Romans were wasting precious metal on fleeting luxuries such as silk and pepper imported from China and India. The perception that one nation¿s gain comes only at the expense of another pleads for both a positive trade balance and mercantilism. Ideally, a nation should import raw materials and export finished manufactured products, which has a positive impact on employment. Bernstein correctly points out that nations grow wealthy mainly by improving their industrial and agricultural productivity. A nation¿s true wealth is also defined by how much it consumes (p. 258). Like Erik Reinert, Bernstein emphasizes that most industrial countries first industrialize behind a protectionist wall and are then slowly and systematically integrated economically with nations at the same level of development. The United States followed the example of England to industrialize behind such a wall for about 150 years based on Adam Smith¿s Wealth of Nations (pp. 319-20, 349-51, 372-75). Bernstein also reminds his audience that anti-globalization rallies are nothing new (pp. 199, 256-59, 270, 283, 302-05). Think for example about the dumping of tea into Boston harbor on December 16, 1773, under the pretext of ¿no taxation without representation.¿ In reality, local smugglers and tea merchants feared the competition of the English East India Company that could import tea directly from Asia into America for the first time based on the Tea Act of May 1773. These local players couched their arguments in the predictable protectionist language of national interest. Protectionism benefits the economic agents who predominantly own a relatively scarce resource, say, labor, land, or capital, and harms those who own a relatively abundant one (p. 342). Unsurprisingly, the losers of the Boston Tea Party were the end consumers who ended up paying more for their tea in the absence of more robust competition (pp. 241-43). Protectionist trade legislation usually strikes hardest at the weak and powerless (p. 307). In addition, Bernstein cogently demonstrates that the Western powers, leveraging their superior military and maritime technologies, gave up on their armed monopolistic ways and embraced free trade, regardless of the wants and needs of non-western powers such as India and China (pp. 198-240, 294-95). The elites of these two countries have not forgotten how badly western-inspired free trade hurt their countries

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A valuable resource for teachers of history and economics, and a good read for anyone with intellectual curiosity.

Bernstein's book is real tour de force that covers trade from earliest times until the present. He explores the technology of trade from camel saddles to clipper ships, steamboats and modern aircraft, the navigational dimension of trade from monsoons to trade routes, the politics of trade from the Dutch East India Company to the the Seattle protests against the WTO. The cast of characters ranges from pirates to explorers to financiers to economists like Smith and Ricardo, the settings from desert oases to opium dens to coffee houses. Every page has little known tidbits of information like the discovery and spread of coffee as well as a reprise of more familiar events like the Opium Wars. Anyone who teaches economic and/or political history needs this book on the bookshelf.

Fascinating history of world trade

The appeal of this comprehensive history of world trade is rooted in its valuable information, thoughtful insights and brilliant writing. But, you¿ll also be delighted with the fascinating, little-known details that financial theorist William J. Bernstein throws in along the way. For example, did you know that the Boston Tea Party, the legendary event that helped launch the American Revolution, was not a selfless act of patriotism, but a venal stunt by greedy smugglers and merchants that actually cost the colonists a lot of money? How about the fact that an Ethiopian herder may have discovered coffee in A.D. 700 when he noticed that his goats and camels bounced merrily around all night after chewing on the red berries of an unknown shrub? Or that the early Chinese sometimes adulterated their precious tea exports with sawdust? Bernstein fills his book with such beguiling minutiae, but primarily he presents a knowing, comprehensive, discerning report on world trade from its prehistoric beginnings to the present. getAbstract predicts that Bernstein¿s saga will engage you from the first page to the last, and from sea to shining sea.

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