Globalization 1490s

He sat down with a drink at a bar in South Bay Area of San Francisco. He had just gone through my blog and commented this...

“You are late! About 500yrs late to talk about globalization. Five hundred years ago, people were sending ships to start new trade routes. Sending people to settle down in distant parts of the globe. They settled down, married local folks and kept a trading connection to where they came from. What your blog says was attempted with more success 500 years ago. But then there were problems, ships ran on sail, there were pirates, warring trading competitors and lack of technology. Today we have politics and still warring trading competitors.”

He then ended in sarcasm. What is more difficult? Technical impediments or political impediments?

Nothing could be more further than truth. Take an example for 1490s when Columbus discovered America and Vasco da Gamma discovered the sea route to India. Lets do a globalization score card of those days.

Free movement of goods

Concept of customs duty were unknown during those days. However, there was a reasonable port-duty to be paid for the upkeep of the ports. Also, if any port were “foolish enough” to impose unreasonable duty or some sort of import duty then ships would go away from that port! How much “Free Market Liberalism” could you expect.

Free movement of people

India's West Coast is a good example where people from Arabia or Europe settled down, even married the locals and contributed to the local economy. More to the contrary, the Monarchs, during those days, actually wanted more subjects and went out of the way to the get the best architects (to build their Vanity Mausoleums) and other artisans to enrich their state. They seemed to be more adroit in building their “fill-in-the-state's-name” Inc than their modern democratic counterparts!

Free movement of capital

As late as the onset of World War I, the concept of “capital accounts” did not even arise. One could buy the European stocks in Bombay. Also the Silk Route had developed a complex banking system with an instrument that is between a cheque and a promissory note, You could take your goods across the Silk Route, sell your products, deposit all the gold and get a promissory note or cheque to be “en-cashed” at your home “bank”!

Property Rights & Enforcement

It is there the 1490s hit a wall! The concept was absent. On the other hand the owner of the property was responsible to its defence. There were pirates and some governments demanding exclusive rights. That was the first weakness of the 1490s.

Colonialism – the rise of “exclusive markets”

In another way the the 1490s started the slide away from Free Market Capitalism with the rise of colonialism. The European traders wanted not only exclusive market access but also have the privileges of an exclusive source of raw materials and other things to be sold. In my opinion, that was the beginning of the end!