A Splendid Exchange

A Splendid Exchange: How Trade Shaped the World by William Bernstein is an interesting book about trade and economic history. Bernstein is clearly a very smart guy, he had a PhD in Chemisty and an MD. He also worked as a financial advisor. Parts of this come through in the book. He mentions materials more than someone who wasn’t aware of their importance would, but it is interesting to see that a book on trade include the bessemer process for making steel but doesn’t mention the printing press.

The book has some amusingly bad analogues drawn. There are some comparisons between ancient cities and modern ones that make little sense. An early trade route is referred to as WTO 1.0 or similar. They grate in the text. Perhaps a good editor weeded more of these out, perhaps a bad editor tried to make the book sound more modern and put them in.

The book describes how trade grew from people trading food in areas with a food surplus to trading with people who had some other commodity as soon as this was at all possible. It’s fascinating to read how human civilization and trade rose together. It’s amazing to read how there were efforts at building a Suez Canal from 600BC.

The great trading routes from Europe all the way to China are described in some detail. The Romans role in trade and further the role of the Muslims in trade is also elaborated on. There is some of the usual anti-muslim feel in the book but not a great deal. The author is smart enough and well enough read to let wonder at the achievements on Islam strongly overwhelm the effect of today’s propoganda.

The book’s heart is in the description of the trade of silk and spice from China and the spice islands to Europe. The book describes the risks and the losses, including the heavy casualties of early trading trips and the mechanisms of transport and the role of law and writing and credit in enabling humanity to trade across the accessible world.

After the description of the great Indian Ocean trading setup, the Black Death is brought in as a product of trade and a cause of the coming dominance of Europe over the world. This undoubtedly has some justification. It’s also not surprising that a doctor would ascribe disease such import. The statistics on the plague are amazing. England’s population went from 5-6M to 2-3M. The plague was truly a holocaust.Whether the plague enabled Europe to then obtain dominance over the world is questionable but it was clearly a factor.

Bernstein then writes about the rise of the Portugese, Spanish, Dutch and then British trade Empires with great flourish.  He describes the enormous achievements and blood thirsty nature of the initial voyages of the Portugese in the Indian Ocean and then the voyages of the discovery of the Americas. It’s good to read history that wears both arm bands, both black and white, when looking at events. The rise of the Portugese, their fall and the ascession of the Dutch in the East is explored and explained.

Bernstein goes on to describe how the phenomenal success of European driven trade changed the main trading goods from high value spices and silk to mass market products like sugar, cotton, grain and ores.

The book continues into the modern era, correctly pointing out the huge role of trade policy in the Civil War and in modern history. The contribution of tarrifs to the great depression is looked at and surprisingly for a book about trade this role is discounted, probably justly. Bernstein points out that at the time trade was not a huge contributor to most economies and that the changes in the size of the major economies doesn’t correlate with their declines nor their tariff policies.

In the section on the modern age the role of the GATT and the modern explosion into globalisation is expounded on. The amazing rise of trade in the current era is also looked at. It’s an appropriate finish to a good, but flawed book.



One response to “A Splendid Exchange

  1. Pingback: The Ascent of Money « ReviewSien

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