INstitutional TRansformation and the Entangled Commercial Cultures of International trade, 1450-1750
Abstract
Globalisation is a defining feature of the modern world. Over the past five centuries, international trade has driven economic development, restructured societies, and brought about the vast movement of goods, people and ideas. Yet, as recent de-coupling from China and conflict with Russia has shown, the globalised system can be fragile. Whereas the supremacy of unipolar ‘western’ institutional practices defined late twentieth century globalisation, the twenty-first century looks set to see international trade take place in a multipolar institutional context.
Understanding the impact of these changes requires new ways of thinking about global institutional development: ones that recognises enduring, alternative institutional norms that have never fully been subsumed within ‘western’ practice. This raises important questions about how globalisation developed in the first place, as the traditional model of European imperial expansion imposing institutions on the world is unfit for purpose. We must ask instead why global actors adapted, adopted or opposed institutional transformation and how these processes shaped and reshaped what would become the common institutions of global international trade.
To answer these questions, this project will use archives from across the world and an interdisciplinary methodology to deliver a global and intrinsically comparative analysis that will reveal globalisation’s multipolar and adaptive institutional origins. Specifically, it will focus on institutional transformation between 1450 and 1750 in three vital nodes of the premodern world economy – the Gulf of Guinea, the Gulf of Khambhat, and the Straits of Malacca. By developing a systematic approach for analysing institutional transformation across linguistic, imperial and cultural boundaries, this project will integrate local and global analysis of premodern trade to challenge long held beliefs about the origins of capitalism, globalisation and European economic dominance.
Scientific Background
This project will offer a radical new understanding of how ‘globalised’ institutions were generated through the entanglement of commercial cultures from across the world. To do so, it will set about answering one distinctive question: why did global actors adapt, adopt or oppose institutional transformation and how did these processes shape and reshape the common institutions of global international trade?
In answering this question, the project will offer a new approach to understanding global histories of capitalism and economic development, drawing on cutting edge quantitative and qualitative methodologies on institutions and economic behaviour, as well as delivering new empirical evidence from global archives. It will focus on the rules, behaviours and customs that made everyday trade and exchange possible, placing the actors participating in cross-cultural trade at the centre of its analysis. This will make an important contribution to histories of globalisation, empire, and trade, offering an alternative narrative of institutional transformation that expressly rejects the teleological assumption often found in New Institutional Economics (NIE) that European or ‘western’ institutions were imposed and accepted globally. Instead, this project will integrate local and global experiences of early modern traders to re-examine the origins of capitalism and globalisation. By designing an intrinsically global methodology that encourages a connected and comparative assessment of economic institutions, and archives offering a diverse linguistic and geographical perspective, this project will challenge existing conventions in NIE that remain entrenched in economic history scholarship.
This new approach is important because, while it is well known that international trade in the early modern period drove fundamental and wide-ranging changes in the worldwide economy, how individuals and communities operated within (and so helped to shape) the institutions that informed the functioning of international commerce remains poorly understood. There has been considerable focus on Europe’s imperial expansion, especially in the field of NIE, and this has often prioritised institutional change imposed by states and corporations. Moreover, many studies examine the topic in purely economic or political terms, often in relation to national-imperial development, skewing our understanding of international trade towards the state and underplaying (or ignoring) cultural and social conditions. This is a mistake. As this project will demonstrate, it was outside, across and in the contested spaces between competing world-systems – where overlapping commercial networks were not underpinned by a single set of rules, regulations, laws, behaviours or customs – that institutional transformation took place, shaped by the evolution of entangled commercial cultures and practices.
To analyse these changes, the project will specifically analyse three vital nodes of the early modern economy - the Gulf of Guinea, the Gulf of Khambhat, and the Straits of Malacca. Within these case study regions, the project will identify and trace when, how and why commercial actors changed how they did business to compete in increasingly global markets. To do so, the project team will engage with texts from Africa, Asia and Europe, produced by entities ranging from empires to trading companies to private traders. Through these records, produced by actors who came together in spaces of unequal and competing power and authority, we can trace how distinct economic cultures responded to structural changes in the global economy and newly encountered institutional practices. In doing so, the project will argue firstly that global trade took place in a multipolar institutional environment, and secondly that institutional transformation in specific local contexts was transmitted through international trade, an exchange that generated globalised forms of economic behaviour.
Objectives
We need a new research framework for the study of early modern international trade that recognises that individuals and communities across the world informed institutional transformation in ways that had wide-ranging ramifications for the shape, structure and development of both local and global economies. The research questions are, in the first instance, substantive and historical:
Who were early modern traders and how did participation in international trade change between 1450 and 1750?
How did traders in local markets interact with global trading networks? What compromises did traders make to facilitate cross-cultural, global exchange?
How did entanglement generate new institutional practices? In what ways did traders impose, adopt or adapt their institutions in response to global experiences?
To what extent was institutional transformation shaped by cross-cultural exchange rather than being imposed by powerful states or empires?
These questions introduce research issues of analytical and methodological significance applicable beyond this project’s case study regions, which this project will take a leading role in investigating:
How can a consideration of behaviour and decision making – personally and communally – change our appreciation of the history of economic life?
How does global history ‘from below’ demand engagement with the social and cultural determinants of institutional change?
How can we account for the multiplicity of influences on institutional transformation?
In answering these questions, this project will offer a new approach to understanding global histories of capitalism and economic development. Scholars attempting to understand the world economy as a connected whole have long sought to present integrated systems as means for explaining connectivity (Smith, 1776; Marx, 1887; Wallerstein, 1974). Within these studies, the role of history for understanding the origins and development of a global capitalist system is crucial. For example, Smith depended on an interpretation of early modern monopoly corporations and Weber relied heavily on his understanding of an early modern ‘Protestant work ethic’ (Smith, 1776; Weber, 1930). Although the validity of these works has been disputed, they remain foundational, powerful narratives explaining the ‘rise of the West’ and the supposed unique characteristics of European institutions (North 1991; Allen 2011; Acemoglu and Robinson 2013; Philips and Sharman 2020). The enduring influence of these accounts is, in part, due to the challenges academics face in undertaking global studies more effectively, as this requires fundamental shifts in perspective and engagement with material from across the world (Drayton and Motadel 2020). Critiques of Euro-centric, statist, and imperial dynamics have used comparative studies to offer more nuanced analysis of the global economy and demonstrate how traditional institutional interpretations of the ‘Great Divergence’ fail to explain the ongoing sophistication and growth of the non-European global economy in the early modern period (Pomeranz 2000; Reinhard 2015; Belich et al. 2016; Yazdani and Menon 2020). Yet, while these studies offer wide-ranging overviews, or tell us more than ever about comparative production in China and Europe for example, more needs to be done to examine how economic actors moved within the global negotiated ‘equilibrium’ (Curtin 1984; Subrahmanyam 2005; Darwin 2008). Despite attempts to move beyond traditional systems-based models, understanding of the cultural and social conditions of global trade remains limited (Roy and Riello, 2018). It is here that this project will make its most significant contribution: demonstrating how globalisation influenced institutional transformation in a cyclical and layered process of institutional exchange.
To achieve this goal, it is important to acknowledge tension, adaption and conflict when examining institutional transformation. Informal institutions, typically defined as socially shared rules that are created, communicated and enforced outside officially sanctioned channels, were carried easily by diasporic or mercantile communities, while formal institutions, the rules and procedures communicated and enforced through official channels, were less easily transmitted into spaces with contradictory institutions of their own (Helmke and Levitsky 2004). However, although most definitions treat institutions as relatively enduring features that are difficult to change (Mahoney and Thelen 2010) moments of political and economic instability in thbe early modern period – for example during moments of encounter – generated the need for competing institutions to rapidly adapt when coming into contact with each other. Vitally, recent work has highlighted the contested nature of institutions, recognising that they represent legacies of historical struggles and competition (Mahoney and Thelen 2010), which has generated new opportunities for examining how institutions could be contested and competitive in sites of entangled commercial cultures such as the case studies in this project. At the heart of this work is the recognition that compliance and enforcement were limited without corresponding buy-in from participating actors (Streeck and Thelen 2005). This relationship has been examined especially usefully in relation to commerce in entangled spaces, where an actor’s ability to select and move across formal institutional boundaries could be supported by informal cross-border institutional networks: transformation took place when informal institutions were altered to attract said actors, or when actors altered their own practices in order to enter specific imperial institutional zones (Trivellato 2011; Rothman 2011; Ghobrial 2011).
Between 1450 and 1750, then, the expansion of international trade was unfolding in an economic environment without a single dominant set of rules, regulations, laws, behaviours, customs or institutions. Cross-cultural contact often occurred in spaces that fell between pre-existing economic and political zones. In these spaces, commercial actors’ pre-existing expectations of commercial culture butted against competing actors who too brought their own established outlook on the conduct of trade (Aslanian 2010; Trivellato 2011; Kayadibi 2011; Silva 2012). By tracing how economic ideas and behaviour were transmitted through these entanglements this project will reveal the processes through which they were negotiated and transformed (Galeotti and Goyal 2009; Antunes 2017). For example, Akan merchants in West Africa simultaneously adapted to Arab and Portuguese commercial engagement by radically altering the region’s agricultural and salt-production output, the physical spaces of local markets, and the process by which deals were struck (Hellman and Smith 2022). In turn, Portuguese and Arab traders were expected to alter their own behaviour to operate within the rapidly changing environment (Smith and Boscariol 2022). In local contexts like this, where traders from diverse backgrounds interacted, it is possible to trace how institutional transformation occurred as a response to globalisation. Recent studies of commercial communities have highlighted how merchants in diverse contexts sought to maintain essential institutions – such as accessing credit, legal cooperation, striking deals and protection for traders – and have shown how local pressures affected patterns of global interaction and empire (Fusaro and Polonia 2010; Mather 2011; Nursoo 2018; Cañizares-Esguerra 2018). In doing so, they have expanded on traditions that have re-contextualised cross-cultural encounter, highlighting institutional hybridisation as an important feature of international trade by showing how new entrants to established markets sought to integrate global commercial practices with established and locally recognised ‘rules of recognition’ (Bhabha, 1994). Consequently, contested spaces required the creation or adoption of institutional practices that crossed national, imperial and cultural divides (Subrahmanyam 2011; Antunes and Polonia 2015; Erikson and Sampsa 2018). Building on work that has demonstrated the ways in which mercantile diasporas functioned within national and imperial structures, this project will examine how psychological, cognitive, emotional, cultural and social factors contributed to the economic decision making and behaviours of participants in early modern global trade (Thaler, 2015). A key objective of this project, therefore, is to place local and transnational actors in a common framework of analysis that emphasises economic collaboration and competition, rather than state-driven enforcement, as the key driver behind institutional transformation across the world.
Methodology
Despite recent advances in institution studies and growing interest in non-European commercial agents in independent studies, efforts to examine the emergence of ‘globalised’ institutional practice have often side-lined non-European (or even non-Anglo-American) agency in this process. Overcoming this is key challenge for global economic history, and this project’s methodology is intended to provide a crucial meso-level link between (sometimes unhelpful) overarching analysis of macro structures such as empire and individual actors’ behaviour and strategies, allowing scholars to improve explanatory frameworks while at the same time maintaining contextual specificity.
This international and collaborative programme will therefore investigate multiple forms of global institutional creation, continuity and change, through three interlinked case studies: the Gulf of Guinea; the Gulf of Khambhat; and the Straits of Malacca (Curtin 1984; Chaudhuri 1985; Tracy 1990). These case studies have been selected for four reasons: first, they each represent significant nodes in the global economy that underwent rapid and long-term changes as a consequence of increasing international trade; second, each represents sites of entanglement and contestation between and across different world systems, where the economic cultures of local traders, diasporic groups, Islamic states and European maritime empires intersected; third, each was shaped by traders who were also active in at least one other of the case study regions, allowing the possibility of tracing institutional transformation through these networks; and finally, and practically, each draws on some similar archives and sources as the other case studies, enabling the project’s researchers to cross between them and draw both comparative and connected conclusions about institutional transformation.
The project combines historical methods with an analysis on four levels of institutional transformation and in a comparative perspective that also considers the diffusion of institutions through connected analysis. Across each case study, institutional transformation will be interrogated through a common typology that highlights the roles and power of specific actors in different forms of institutional continuity and change: first is displacement, involving the removal of old rules and the introduction of new ones. Although not inherently a gradual form of change, displacement can be slow moving. Normally new institutions are introduced by actors who were losers under the old system and so displacement can involve a significant upheaval. The second type of change is layering: new rules are introduced alongside or on top of existing ones. It often takes place when institutional challengers cannot change existing rules. The third form is drift: the impact of existing rules changes due to shifts in the environment. The fourth and final form is conversion: the enactment of existing rules is changed as actors actively exploit the inherent ambiguities of institutions. This typology represents an important framework for effective comparative global history, and an important means of identifying commonalities that can be analysis across different case study region.