Mediaeval Merchants and the Origins of Capitalism

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.

The German-language cover of The Protestant Ethic and the Spirit of Capitalism (

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?

Byzantine coin hoard recovered from Macedonia. Although most mediaeval economic activity was non-monetarised, the Mediterranean luxury trade required the high-quality currency minted in Byzantium. (

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.

Mediaeval trade routes utilised by Italian merchants, (

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.

Venice, the archetypical Italian trading city. (Wikimedia Commons)

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.

5 thoughts on “Mediaeval Merchants and the Origins of Capitalism

  1. I’ve always been a bit sceptical about the capitalism/protestantism claims too. There could, of course, be something in it, but what’s so uncapitalist about Genoese with trading outposts in Crimea, Arabs with trading missions to Zanzibar and India or the Silk Road?

    Is it because they didn’t have joint-stock companies?

    • I think it has a lot to do with the perception that the world really starts in 1500, and therefore ‘capitalism’ must too. To support his argument, for example, Weber very carefully defines what he means by capitalism, and it has a lot to do with the ‘rational’ investment of capital, the reinvestment of profits, etc., but I think (here I have to admit I’m a bit rusty…) it also has do do with financial tools like stocks.

      What I think the commenda contracts show, though, is that mediaeval merchants and their predecessors had a very clear understanding of capital, labour, and returns. Too me, their trading isn’t very different from modern venture-capitalism, and I have to agree with you that drawing a line in the sand between ‘capitalism’ and ‘not capitalism’ is rather arbitrary. After all, the profit motive is the same in ancient Babylon as it is today, right? People didn’t start trying to make money just because Protestantism came along and told them they could.

      The only way I think Weber potentially gets it right is by noting that Protestantism may have helped capitalism become socially normalised in a way that hadn’t been the case before, but I think you’d have to study social attitudes towards profit (and not just that held by the Church) in order to make a really strong argument.

      Anyways, I’m glad there are others out there who find his thesis fundamentally odd! I was in a modern historiography class when I read Weber for the first time, and no one else seemed to have a problem with the idea of enterprise before capitalism….

  2. HI Marissa! I just stumbled across your excellent blog and saw this interesting post on the origins of capitalism. I wholeheartedly agree with you in challenging the notions of capitalism as an invention of the Protestant age or even an exclusively Western invention for that matter. In making this statement, I have in mind a Byzantine historical text by Michael Attaleiates from the end of the 11th century before the maritime republics of Italy rose to prominence. It’s interesting because although it does not have the vocabulary of Adam Smith and modern economics, it demonstrates an understanding of how free markets operate and the negative effects upon them of governmental monopolies. It also pokes holes in the Protestantism thesis because it demonstrates a clear preference for an economy without government intervention in the buyer-seller relationship of agricultural products. I quote the text at length below.

    [Once on learning that whole wagon loads of grain were being brought into the city of Rhaedestos where they were would be bought and distributed to the guest houses of the monasteries there and to the stores of both the main church itself and many local ones and that they were freely being sold to purchasers and cellarers alike so bringing prosperity to everyone, this vile knave [the eunuch Nikephoritzes under Michael Parapinakes (1071-1079)], jealous of their prosperity, built a fundax (a granary) outside the city thinking to gather together the wagon loads effecting this by imperial mandate. The plan was to make the granary the only seller of grain, that necessary of life, allowing no one else if he was not associated with the granary to sell it so giving the granary a treacherous and demonic repute. Hence, that man grew prosperous, the cities’ prosperity diminished, and the wrath of the Divine came down upon the lands held by the Romans.

    25. It was not as before where a potential buyer of grain would buy it from the seller and if he did not like it he would go to another seller and another after that and so buy from the wagons. Instead, the incoming grain was stored in the granary’s enclosure having grain sellers nearby the granary and many grain peddlers who would pick up the grain, sell it, and deposit the money of which they would struggle to get three coins more than a coin. No one was to buy from the wagons: not a sailor heading for the capital, a city person, a farmer, nor anyone else. Instead, they had to buy from the granary at the pleasure of them and their destructive chief of the granary who stopped the people bringing down grain and foully took the grain from them imposing grave demands on them for public places forcing them to buy grain contriving in many ways to make it more destitute. With the granary so set up, the previous prosperity fell due to the unspeakable injustice and the price of grain went from eight or ten modia of grain a nomisma to a single modius.[10] For not only then were grain-bearing wagons, alas the avariceness of it, charged a tax, but also all other goods for sale which were near it. Eventually, the inhabitants of countryside and Rhaedestus started to sell their own agricultural products in their own homes.

    26. And so, the loads of grain were taken and the granary alone was master of the grain. Nothing of this sort had ever happened and never had such an injustice been committed. For if one was caught selling grain at home that he/she had grown, like a common murderer, bandit, or some who had committed some unspeakable deed, his property was seized and confiscated by the agent in charge of the granary. For the chief of the granary had with him nearly a hundred knaves at his command with whom he subjected the wretched sellers and farmers to much abuse as there was no one capable of resisting them who had the sheer force of numbers and the might of the logothetes behind them filling them with irrestrainable audacity. Being paid a sum of 60 pounds from the granary, he was more than content with its means of procurement, while a want not only of grain, but also other commodities gripped everyone else.

    27. With the price of grain having risen, the price of everything else rose, and because now it cost more for purchases, workingmen demanded higher wages because of the lack of food.[11] Prominent persons and those near the granary recognized what problems it was causing and hence this terrible destitution unpleasantly gripped the world as this unjust profit like a drug mixed with honey sated the terrible lasciviousness of those in power until with his profit they lost all their property and salvation.]

    More as well as references to Byzantine economists on

    • Hi Scott!
      Thanks for stopping by, and thanks for sharing! I am a little familiar with the name of Michael Attaleiates, but have never seen this passage referenced before! I think you’re right that it shows a clear understanding of the underlying economics, and a very strong preference for enterprise without government interference or coercion–both major parts of how Weber would define capitalism.

      Thanks again for that great passage, and I hope you visit again!

  3. Pingback: Light Upon Light: Abbot Suger and the Invention of Gothic | mediaevalmusings

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