Class notes
World Economic History Sessions 1 to 6
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Detailed notes from Sessions 1 to 6. All covered on midterm exam.
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World Economic HistoryMid-Term 1
1. From Early Societies to Industry – Social and Economic Revolution
● ~6000 BC: From hunter-gatherers to settled agriculture
○ The shift of human organization from hunter-gatherers to settled agriculture
enabled the creation of societies (permanent settlements).
■ Advantages:
● Surpluses were easily stored and traded.
● Specialization and trade ↑, self-sufficiency ↓
○ There was a higher demand for specific products.
● Taxation was facilitated.
■ Disadvantages:
● Less varied diets led to poorer health.
● Crop loss and famine were risks.
● Early economic systems
○ ~4500 BC: Sumer
■ Sumer had extremely fertile land because of its proximity to rivers like
the Euphrates. These rivers also provided an easy way of transporting
goods.
■ Contributions:
● The concept of an “empire” → Diffused legal system,
technology, trade, etc.
● A complex division of labor → Doctors, engineers, potters, etc.
● Contracts → Property ownership.
● Hierarchy → Priests and warriors controlled artisans and
peasants.
● Writing → Useful for record-keeping for taxes, trade, etc.
● Weights and measures → Important for trade.
○ ~1500 BC: Mesopotamia (Assyria)
■ Mesopotamia made large contributions to the idea of a modern-day
contract (e.g. trade agreements, joint investments)
○ ~1300 BC: Greece
■ Greeks used money (in the form of coins) extensively. They used it as
a (1) store of value, (2) means of exchange, and (3) unit of account.
They used gold and silver, which were rare.
■ Greece’s fertile land provided it with abundant resources and
flourishing markets.
■ Athens’ economic development was strong, but it had a limited
workforce and little technological development.
○ ~800 BC: Rome
■ Pax Romana – A time of economic prosperity and peace in the
Roman Empire, largely influenced by trade relations.
● The Roman Empire had access to rivers and the sea, which
provided a cheaper way of transporting goods.
, ■ Rome made many advances in science, architecture, and medicine,
but not in labor technology.
■ Romans created the foundations of corporate law. They established
the idea of a company’s separate identity from its members (e.g.
limited liability, owning shares).
■ Romans had their legal system and enforced contracts, created the
idea of tax farming, and established guilds.
● Tax farming – any type of tax collection conducted by private
individuals rather than salaried state personnel
■ Banking and credit facilities were created.
● Bankers were unpopular and banned in many cities. There
was a papal ban on interest.
● However, people got around by making payments in foreign
currencies. Money changers thus grew in importance.
■ Decline:
● Over-taxation to fund the military for conquest
● Inefficiency of government and corruption
● Imperial overreach; challenges on fringes
■ After Rome’s decline, the continent followed. Land was uncultivated
and violence spread.
● ~200 BC: Early economic activity in China
○ The Qin Dynasty made large economic contributions to Asia, such as
taxation, writing, weights, and measures.
○ The Han Dynasty became as large as the Roman Empire.
○ China had an economy of scale. It had no competition with other states,
unlike Europeans.
○ China pioneered technological innovation, creating paper money and many
tools for sea trade.
■ China had a highly advanced naval power that provided protection
and boosted economic growth through sea trade.
● ~600 AD: Arabic trading system
○ Trust was vital in the Arabic economy.
■ There was a lot of buying on credit with no interest.
■ Law relied on oral testimony, not written contracts.
○ Taxes were levied on land and on non-Muslims, which encouraged
conversion.
○ Inheritance laws divided up dead partners’ estates between multiple people
(polygamy), which stopped firms from growing.
● ~800 AD: Feudalism and the Carolingian Empire
, ○ The Carolingian Empire had no administrative system. It depended on the
loyalty of the nobility in a system called feudalism.
○ This system withered after the Black Death (1346).
● ~13th Century: Mongol Empire and trade
○ When the Mongol Empire eventually conquered China, it controlled Asia
through its monopoly on trade.
■ They made extensive use of China’s paper (fiat) money that could not
be redeemed for silver or bronze.
○ When China drove out the Mongols, they rejected the idea of money or free
markets and worried about the increasing power of the merchant class.
■ China eventually banned sea trade and destroyed its navy (15th
century). It restored the tribute system.
● ~14th Century: Hanseatic League, guilds, and city-state
○ With the growth of specialization and markets, individual merchants were
replaced by trading organizations such as guilds.
■ Guilds were made up of craftsmen who received a monopoly to trade
in a city in return for donations to the king.
○ The Hanseatic League was founded by north German towns and German
merchant communities abroad to protect their mutual trading interests. The
league dominated commercial activity in northern Europe through its guilds.
■ The League had a NATO idealogy of protection. However, they mostly
looked after their interests, which caused the league to crumble.
● Importance of agriculture
○ Systems in which farmers had ownership rights were best for productivity
because they invested in their land. If land was not owned, the focus was on
short-term profit, which degraded land.
■ Dispersed strips of land were put together and enclosed. To do this,
farmers had to fence land, but many couldn’t afford to.
● Land value ↑.
■ Common land became fields.
● Proto-industrialisation
○ Proto-industrialization is the regional development, alongside commercial
agriculture, of rural handicraft production for external markets.
● Geography, institutions, and development
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