How capitalism tamed medieval Europe

At CapX

European capitalism had begun in northern Italy, chiefly Venice, one of nine Italian cities that had surpassed 50,000 people by this point. Like Flanders, Venice was at the mercy of the sea but its isolated and vulnerable geography led to what John Julius Norwich called: “a unique spirit of cohesion and cooperation… not only at times of national crisis but also, and still more impressively, in the day-to-day handling of their affairs.” Venice was high in trust, a vital component for the growth of sophisticated markets, and so was the first to develop joint-stock companies and banks. In 1156 the Republic raised a public loan, the first time since antiquity, and the following year it issued the first banking laws in Europe.

The Venetians, along with their arch-rivals the Genoese and Pisans, had been involved in the crusades, but despite papal prohibition had continued to trade with the infidel. Indeed, nothing would stop their desire to engage in commerce, and Arab geographer and traveller Ibn Jubayr noted that “It is amazing to see that the fires of discord burn” between Christians and Muslims when it comes to politics but, when trading, travellers “come and go without interference”. Religious zealots back in Europe observed with frustration that among Westerners settled in the Levant, once they began to trade with the Muslims, they lost their hunger for holy war.

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