Trade, Political Economy and Empires, or the Triad that Turned Us into Merchants

By Mattia Steardo

Fernand Braudel famously argued that the economy was a tripartite system, in which capitalism was forming the upper layer, the world of rich merchants and bankers well-acquainted with political power. Hence, the central question related to the advent of modern economies was to understand how and when the “capitalist sector”, the one reproducing itself according to the laws of profit-maximization, was able “to expand and conquer the whole of society”.[1] Another famous observer of the economy, Adam Smith, thought that economic modernity was marked by the development of a commercial society, one in which “every man thus lives by exchanging, or becomes in some measure a merchant”.[2] Those insights point at the gradual expansion of a merchant-logic into other domains of the social world. The following piece offers an exploration of the entangled histories of trade, political economy and empires, to provide a nuanced view about how merchant behavior became the prescribed code of conduct of modern economic actors.

Early modern European societies were based on multiple social stratification, whose result was the creation of separate social domains. An influential socio-teological theory divided society in three classes (oratores, bellatores, and laboratores), assigning rights and obligations according to class-belonging. However, the laborer class was much more complex: peasants were part of family-groups and village communities, artisans formed guilds and craft confraternities, merchants teamed up in nations, sharing faith or geographical origin. Those social groups were sanctioned also by distinct judiciary systems, and the development of shared customs over time.

Since the 10th century, Italian merchant communities created new commercial instruments to reduce risks and pool resources, such as the bills of exchange, and insurance or partnership contracts. Their proficiency in writing and the development of an accounting culture allowed the invention of another important tool, the double-entry book-keeper. Additionally, historians have highlighted how traders were afflicted with “a furor scribendi, a compulsion to write”.[3] They produced thousands of manuals, pamphlets, treaties, describing both practices and techniques to achieve success in trade, both the places and cultures that they saw around the globe. In fact, merchants were maybe the most mobile social groups in early modern Europe, following step-by-step or even preceding imperial overseas expansion. Thanks to empires, European merchants developed sustained cooperation with non-European merchant communities, and this led to the emergence of a global merchant writing culture, based on a ‘cosmopolitan language of trade’ in a world increasingly marked by imperial coercive violence.[4]

European merchants were lucky to live in societies whose rulers had an high estimation of the importance of trade. Especially after the 16th century, commercial expansion and imperium extension went hand in hand, and this meant the proliferation of texts relating to commerce, trade, and political economy. Lay and religious intellectuals, merchants and politicians, all concurred in the creation of an enormous corpus of economic knowledge, aimed at the strengthening of political power through economic means, or at the design of economic ventures blessed by political partnership. However, economic texts might be also more prosaic, dealing with ways to improve household management, and therefore meddling economic advice with moral prescriptions.

In the case of England, Emily Erikson has interestingly noted that during the 17th century, more and more merchants picked up the pen in the public sphere, compared to the previous period when professionals and clergymen were the most active writers.[5] Merchants were reacting to the new prominence that trade gained in English society, after Queen Elizabeth I popularized the practice of granting political privileges to commercial companies and individuals. English expansion of trade was based on political allocation of rights, merchants were fighting for privileges, but they had to find justifications for their economic projects other than their self-interests. Therefore, support for different kinds of commercial ventures was fashioned according to the category of the common good of the nation. Arguments were supported by rational calculations and statistics, especially after the introduction of Political Arithmetick by William Petty (1623-1687).

The work of Adam Smith, and especially his famous invisible hand, has been interpreted as the most convincing moral justification of the pursuit of individual self-interests in the name of the common good. He wrote during a crucial age for European empires. During the 18th century, European intellectual life came to be dominated by the reformist aspirations of the Enlightenment, which were translated in an increasing relevance of useful and practical economic knowledge, aiming both at individual improvement, both at developing new forms of imperial economic governance. Sophus A. Reinert and Steven Kaplan have labeled this process as the “economic turn”.[6] On a theoretical level, it was a sign of the epistemological shift that political economy was witnessing, from a science describing the ways to enhance private and public wealth, to a science describing the laws of motion of society as a whole. On a practical level, it meant a process of diffused economic growth in the Atlantic world supported by the crucial extractive powers of empires. However, the jealousy of trade determined the breakthrough of imperial warfare: between the 18th and the 19th centuries, empires constantly fought for the constantly increasing wealth produced in empires, forming changing coalitions during the War of Jenkins’ Ear, the Seven Years’ War, the American Revolution, the French Revolution, the Napoleonic wars and the independence wars in Spanish America.

For the first time in world history, the 19th century witnessed the global hegemony of a single power, the British Empire. This was sanctioned by the victory over Napoleon, in which a pivotal role was played by British fiscal-military apparatus sustained by the impressive reach of commercial and imperial networks. At the same time, classical British political economy, and its universalizing aspirations, gained global preeminence. It meant not a unidirectional process of diffusion, but a creative adaptation of ideas to each particular context, as the case of Argentina proves.[7] In early 19th century Buenos Aires, Adam Smith was recognized as an enlightened economist, cited in support for freedom to trade, or for the banishment of privileges and monopolies. Also, the understanding of labor as the true source of wealth was influenced by European political economy. However, in contrast to Smith, South Americans were mostly skeptical of the civilizing effects of market forces: in a republican blend, it was believed that law, institutions and education would create civilized subjects, apt to live in a modern and republican commercial society.

Eventually, the underlying assumptions of political economy, what Karl Marx argued against, started to be accepted and assumed globally, meaning the ideas that society was formed by interdependent individuals bonded by the participation in a commodity-based economy. This idea was the inheritance that empires granted to nation-states through the common adoption of political economy as the science of government and modern institution-building: society was a commercial one, citizens should be merchants. To conclude, the new intellectual history of political economy and empire offers exciting new paths of research, if one accepts empire not as a backward remnant of a medieval past, but as the political ideal that has structured the modern world.

Author’s Bio: Mattia Steardo is a PhD candidate in Global History of Empires, a joint program between the University of Turin (Italy) and the Higher School of Economics, Moscow and St. Petersburg (Russian Federation). His dissertation explores the intellectual history of political economy in Buenos Aires (1790-1850), interpreted in the light of the processes of commodification and commercialization that the region was experiencing.


[1]     Fernand Braudel, Civilization and Capitalism, 15th-18th Century. Volume 2: The Wheels of Commerce (London: WiIliam Collins Sons & Co Ltd, 1983) 248.

[2]     Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations (Oxford: Oxford University Press, 1976), 37.

[3]     Sophus A. Reinert and Robert Fredona, “Merchants and the Origins of Capitalism”, in Teresa da Silva Lopes, Christina Lubinski, and Heidi Tworek (eds.) The Routledge Companion to the Makers of Global Business (London: Routledge, 2020), 178.

[4]     Francesca Trivellato., The Familiarity of Strangers (New Haven: Yale University Press 2009) 189-193.

[5]     Emily Erikson, Trade and Nation. How Companies and Politics Reshaped Economic Thought (New York: Columbia University Press, 2021).

[6]     Sophus A. Reinert and Steven Kaplan (eds.), The Economic Turn: Recasting Political Economy in Enlightenment Europe (Anthem Press, 2019).

[7]     Nicola Miller, Republics of Knowledge. Nations of the Future in Latin America (Princeton: Princeton University Press 2020), 164-180.

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