At the opening of the 20th century, the well-respected sociologist Max Weber published one of his major works, entitled The Protestant Ethic and the Spirit of Capitalism. In it, he argued that the birth of modern capitalism, defined as the pursuit of profit as an end in itself, had its origins in Protestant religious thought. In particular, he focused upon the Calvinist belief in divine predestination as the doctrine which enabled Christians to view worldly success as a symbol of God’s favour, and encouraged the growth of capitalism into a self-sustaining social system.

Although his theories proved very popular, his thesis has been critiqued over the past century, and is now cited more often as an object of study in its own right than as a contemporary opinion. One of Weber’s fundamental tenets, however, still informs the way that many people perceive the flow of history, ancient, mediaeval, and modern–the idea that capitalism is a modern phenomenon.

For most of us, its something we’ve never really thought about directly; I certainly hadn’t, until I read parts of the ‘Spirit of Capitalism’ for class. Yet when you begin to think about it, the whole idea of capitalism ‘beginning’ with the Protestant movement seems a little strange. After all, if the essence of capitalism is the pursuit of profit, what were the dozens of generations of merchants who traversed the known world in the ancient and mediaeval periods doing before Protestantism came along?

A purist might say that trade and production do not automatically constitute capitalism, and they might be right, but there is a large body of evidence for commercial activity in the Middle Ages, and particularly in the Mediterranean, which deserves to be recognized for its enterprise and sophistication.

Unlike the Baltic Sea trade, which I covered on a post about the Hanseatic league, trade in the Mediterranean peaked far earlier and dealt in very different commodities. Instead of transporting bulky items, like timber and furs, Mediterranean, and particularly Italian, merchants traded in high-value luxury goods, like spices, gems, dyes, and exotic metalwork. And although goods like these had circulated the seas for centuries, the volume and value of this trade increased dramatically in the 12th century, as a booming and prosperous Europe underwent economic expansion.

As you can see in the map above, these traders were active across a wide swathe of the Mediterranean world, and could be gone for months. To this end, the major Italian cities established trading colonies, to protect their interests abroad and monopolise the sources of desirable goods. These cities included, Amalfi, Naples, Genoa, and of course, Venice. The merchant-imperialism of these cities went hand in hand with the complex ways of investing and launching trading missions organised by the merchants themselves, as seen in the commenda contract.

Although there are several predecessors to the commenda, the precise origin of this type of contract are not known. What is clear, however, is that by the 12th century, it offered a secure way for merchants to invest their capital and their labour in a way that was legally protected. Most often, two merchants would come together to create a commenda, one of which agreed to fund a trading mission, and the other of which undertook the actual traveling. Alternatively, both parties could put up capital, but one would still have to go abroad.

These contracts not only allowed people to combine capital, therefore, but also enabled young venture captialists, just starting out, a way to earn themselves profit in partnership with an established businessman. Through successive surviving documents, historians can even trace this process in action, as people undertaking trading missions with other people’s investments eventually earn enough to add their own capital.

In this way, we can see that mediaeval merchants were using complicated financial contracts to pursue increasing profits long before Protestantism shaped the face of Europe. Whether or not their activities deserve to be called ‘capitalism’ is largely a matter of definitions, but they nonetheless testify to the importance of ingenuity and enterprise in the European economy of the 12th century and beyond.

Learn More:

Robert S. Lopez, The Commercial Revolution of the Middle Ages: 950-1350, (Cambridge, 1976), is a good general introduction to the economic history of the period discussed above, as well as for the more particular subject of the commenda.