A Splendid Exchange: How trade has shaped the world from prehistory to the present
By William Bernstein
Atlantic Books £22, 400 pages
FT Bookshop price: £17.60

In an era when trade is defined by interminable World Trade Organisation talks and offers nothing more romantic than slab-sided container ships ploughing between nondescript ports, William Bernstein’s book is like a trip to the movies to watch Johnny Depp swinging through the rigging.

Take the story of Fernão de Magalhães, the Portuguese adventurer better known to English speakers as Ferdinand Magellan. He came to prominence in 1509 when a Portuguese flotilla became the first European “trade mission” to reach Malacca, the port near modern-day Singapore vital to controlling the lucrative trade from China, Japan and the spice islands.

After an ostensibly hospitable welcome by the locals, the Portuguese suspected a trap. Magellan was sent to warn the expedition’s leader, who was playing chess with a group of well-armed Malayan guests. Sure enough, smoke from onshore signalled a Malayan attack. Magellan and his compatriots managed to chuck their guests overboard, repel the assault and escape – but not before Magellan rowed to land to rescue his cousin, the only Portuguese to survive from the many who had gone ashore.

They returned the next year to capture Malacca – an important moment in the rise of European dominance of world trade. Not content with that adventure, this time under Spanish sponsorship, Magellan famously went on to complete the first circumnavigation of the world by rounding Cape Horn a decade later. He died skewered by the spears of hostile Filipinos.

Magellan’s tale is just one among many colourful episodes that make A Splendid Exchange a highly entertaining read. Bernstein’s enthusiasm for his subject and impressive organisation of a wealth of material enable him to plot with pace and verve a largely chronological account of man’s trading history.

His essential thesis is that the urge to exchange goods is a fundamental part of human development that underpins and explains much of our history – and the more freely we can do it, the better off we tend to be. The first part of this is pretty much unarguable. But Bernstein is forced by the end to acknowledge that the case for free trade is not straightforward. In fact, he comes to this slightly lame conclusion: “The dilemmas of free trade are reminiscent of Churchill’s famous assessment of democracy: ‘The worst form of government except all those other forms that have been tried from time to time.’”

But the bulk of his tale is a fascinating journey through the evolution of trade, from simple barter in prehistoric times to the complex global patterns today.

What is striking is that for much of history, trade was built on conquest and often violently enforced monopolies – not least when Europeans were involved. The urge to “truck, barter and exchange”, as Adam Smith described it, is all very well. But until recently, the much stronger urge was to grab and control by force the trade in goods needed either for basic economic and military needs or for the accumulation of wealth. Even what Bernstein calls the Pax Islamica – some seven centuries of Arab supremacy that established a settled and sophisticated trading empire from the east Mediterranean to the Far East – was built on naval supremacy and bold military action. This ended in 1498 when Vasco da Gama sailed round the southern tip of Africa to reopen European access to the Indian Ocean and beyond. “Free trade” was hardly his aim: he was a greedy, religious bigot prepared to rob, murder and kidnap to get his hands on the spices and other exotica that would make a fortune for him and his Portuguese masters.

Brutality was a vital element in the development of trade and the successive empires built upon it – Roman, Arab, Mongol, Spanish, Dutch, British – culminating in the 18th- and 19th-century slave trade. Equally compelling is the sheer doggedness, courage and skill that characterised the pioneers of trade. Vasco da Gama set sail in 1497 with three tiny ships; they didn’t see land for 95 days as they battled round the Cape of Good Hope; they crossed 2,800 miles of the Indian Ocean and made landfall within seven miles of their target; only two of the three ships and less than half the 170-strong expedition made it home more than two years later, most killed by scurvy.

The book vividly describes how such feats of adventure, enterprise and conquest established networks of commerce around the world in grains, metals, spices, coffee, tea and textiles long before anyone coined the term globalisation. Many features remain constant today – the preponderance of sea routes as the main arteries of global commerce, the importance of controlling key “choke points” such as the Bosphorus and the Straits of Hormuz and, of course, the struggle over access to markets.

In the final chapters, Bernstein examines the issue of protectionism. Given that much argument against free trade these days starts from the premise that the poor must be shielded from overbearing industrialised countries and multinational corporations, he points out that it was the poor who benefited most from repeal of the protectionist corn laws in 19th-century Britain – and smaller traders who profited from the collapse of the East India Company monopolies.

But he writes that “proving that protectionism makes the world poor (or that free trade makes it rich) is problematic”. The protectionism of the interwar period, symbolised by the notorious Smoot-Hawley tariffs imposed by the US in 1930, did not “even significantly deepen” the Great Depression, he says. World gross domestic product doubled between 1914 and 1944 despite stagnant global trade volumes and two world wars.

Bernstein also acknowledges that “a significant minority of citizens are unavoidably harmed” in the process of free trade. But he is not about to yield to the anti-globalisation camp. Tipping his cap to postwar Europe and its peaceful common market, he insists that trade deepens mutual understanding and spreads material benefits as we develop a desire to “sell things to others rather than annihilate them”. He cites some intriguing statistics. World Health Organisation figures show that violence accounted for just 1.3 per cent of world deaths in 2004 – an all time low – the number of battle deaths is one 30th of the level of the 1950s. It may be no coincidence that the institutions of rules-based commerce have developed worldwide reach during this time. In a year when attempts to thrash out a global fair trade deal at the WTO have again stalled, the clear message from this book is to knuckle down and have another go – however dull and unromantic that may seem.

Hugh Carnegy is the FT’s executive editor

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