Trade

Caduceus is the symbol of trade.

Commerce is the name given to the economic activity that consists of the transfer and exchange of goods and services between people or between other entities in the economy.

One of the earliest forms of trade, the gift economy, involved the exchange of goods and services without an explicit agreement of immediate or future rewards. A gift economy involves the exchange of things without the use of money. Modern traders typically trade through a medium of exchange, such as money. As a result, the purchase can be separated from the sale, or Profit. The invention of money (and credit card, paper money, and non-physical money) greatly simplified and promoted commerce. Trade between two traders is called bilateral trade, while trade involving more than two traders is called multilateral trade.

In a modern view, trade exists because of specialization and the division of labor, a predominant form of economic activity in which individuals and groups concentrate on a small aspect of production, but use their output in exchanges for other products and needs. Trade exists between regions because different regions may have a comparative advantage (perceived or real) in the production of some tradable commodity, including the production of natural resources that are scarce or limited elsewhere. For example: the size of the different regions can favor mass production. In such circumstances, trading at market rates between locations can benefit both. Different types of merchants may specialize in trading different types of goods; For example, the spice trade and the grain trade have historically been important in the development of a global and international economy.

Retail is the sale of goods or merchandise from a highly fixed location (such as a department store, boutique, or kiosk), online or by mail order, in small or individual lots for direct consumption or use by of the buyer. Wholesale trade is the traffic in goods that are sold as merchandise to retailers, or to industrial, commercial, institutional, or other professional business users, or to other wholesalers and related subordinate services.

Historically, openness to free trade increased substantially in some areas from 1815 until the outbreak of World War I in 1914. Trade openness increased again during the 1920s, but plummeted (particularly in Europe and America of the North) during the Great Depression of the 1930s. Trade openness increased considerably again beginning in the 1950s (although with a slowdown during the oil crisis of the 1970s). Economists and economic historians maintain that the current levels of trade openness are the highest in history.

History

Egyptian amphora.

The origins of trade date back to the late Neolithic period, when agriculture was discovered. At the beginning, the agriculture that was practiced was subsistence agriculture, where the jousts were for the population dedicated to agricultural affairs. However, as new technological developments were incorporated into the daily life of farmers, such as animal power, or the use of different tools, the harvests obtained were increasing. Thus the propitious moment arrived for the birth of commerce, favored by two factors:

• The harvests obtained were greater than they needed for community subsistence.
• It was no longer necessary for the entire community to engage in agriculture, so part of the population began to specialize in other matters, such as pottery or steelwork.

Therefore, surplus crops began to be exchanged with other objects in which other communities specialized. Normally these objects were elements for the defense of the community (weapons), deposits to be able to transport or store food surpluses (amphoras, etc.), new agricultural utensils (metal hoes...), or even later luxury objects. (mirrors, earrings, etc).

This primitive trade, not only involved a local exchange of goods and food, but also a global exchange of scientific and technological innovations, among others, iron work, bronze work, the wheel, the lathe, navigation, writing, new forms of urbanism, and a long etcetera. In the Iberian Peninsula this period is known as the Orientalizer, due to the continuous influences received from the East. At this moment is when the Iberian culture arises.

In addition to the exchange of innovations, trade also led to a gradual change in societies. Now wealth could be stored and exchanged. The first capitalist societies as we know them today began to appear, and also the first social stratifications. In the beginning, the social classes were simply the people of the town and the family of the leader. Later, other more sophisticated social classes appeared, such as warriors, artisans, merchants, etc.

Bartering

Bartering was the way ancient civilizations began to trade. It was about exchanging merchandise for other merchandise of equal or lesser value. The main drawback of this type of trade was that the two parties involved in the commercial transaction had to agree on the need for the merchandise offered by the other party. To solve this problem, a series of intermediaries arose that stored the merchandise involved in commercial transactions. These brokers very often added too much risk to these transactions, and this type of trading was quickly put aside when the coin appeared.

Currency introduction

Currency, or money in a more general definition, is a community-agreed means of exchanging goods and goods. Money not only has to be used for exchange, but it is also a unit of account and a tool to store value and make fractionation possible. Historically there have been many different types of currency, from pigs, whale teeth, cocoa, or certain types of seashells. However, the most widespread without a doubt throughout history is gold.

The use of money in commercial transactions was a great advance in the economy. Now it is no longer necessary for the parties involved in the transaction to need the merchandise of the opposite party. More advanced civilizations, such as the Romans, extended this concept and began to mint coins. The coins were objects specially designed for this matter. Although these primitive coins, unlike modern coins, had the value of the coin implicit in it. That is, the coins were made of metals such as gold or silver and the amount of metal they had was the face value of the coin.

The only downside to money was that being an agreement within a community, it had no value out of context. For example, if a community's trade item were whale teeth, those teeth had no value outside of the community. For this reason, a little later, the concept of currency arose. The currency, now yes, is an element of exchange accepted in a much wider area than the community itself. The most common currency was pure gold, although throughout history others have also appeared, such as salt or pepper.

Trade routes

Throughout the Middle Ages, transcontinental trade routes began to emerge that tried to supply the high European demand for goods and merchandise, especially luxury ones. Among the most famous routes, the Silk Road stands out, but there were also other important ones such as the routes for importing pepper, salt or dyes.

Trade through these routes was direct trade. Most of the merchandise changed owners every few tens of kilometers, until reaching the rich European courts. Despite this, these first commercial routes were already beginning to consider regulations on imports. There were even times when the use of silk for men's clothing was prohibited, in order to reduce the consumption of this expensive product.

The Crusades were an important trade route created indirectly. The route that was created as a result of the movement of troops, supplies, weapons, specialized craftsmen, spoils of war, etc. revived the economy of many European regions. This merit is attributed in part to the English King Richard I the Lionheart, who by getting involved in the Third Crusade achieved important commercial victories for Europe, such as the reestablishment of the Silk Road, the recovery of the pepper routes.

Rise of the bank

The Cambist and his wife, Marinus van Reymerswale.

The non-combatant members of the Order of the Temple (the Knights Templar) (12th-13th centuries) managed a complex economic structure throughout the Christian world, creating new financial techniques (promissory notes and even the first bill of exchange) which constitute a primitive form of the modern bank.

Among the services offered was the transport of money. Pilgrims could deposit money in one establishment and then go to another establishment and withdraw it, even between different countries, which contributed to safety on the roads. This was the first bill of exchange.

But in those days the Church forbade usury (profit through interest). Thus, the Templars built or helped to build more than 70 cathedrals in just over 100 years, forged and supported a legion of artisans... (many claim they were an "ethical multinational").

The service in particular (the “bill of exchange”), greatly fostered international trade at fairs, where merchants could return to their countries of origin without their money being in danger of being stolen by highwaymen.

Towards the end of the Middle Ages and the beginning of the Renaissance, a bank or bank was a monetary establishment with a series of services that greatly facilitated trade. The pioneers in this area were money changers who participated in annual fairs and basically dedicated themselves to making currency exchanges charging a commission. These money changers grew, to the point that the great European banking families such as the Medici, the Fugger and the Welser appeared.

The Age of Discovery

Around the year 1400, the disruption of the Mongol Empire, the growth of the Ottoman Empire, and the end of the Byzantine Empire caused all European trade routes to the East to be blocked. The search for new routes, the rise of mercantile capitalism and the desire to explore the potential of a global economy, fueled the age of discovery in Europe.

Thus, Europe turned to the search for new routes to India in order to re-establish the import of spices. But finally, Portugal and Spain were the two countries that obtained the monopoly of these routes, thanks to the work of explorers such as Christopher Columbus, Vasco da Gama, Fernando de Magallanes or Juan Sebastián Elcano.

The discovery of America by Europeans marked another step in trade. The new flow of gold and silver that the Spaniards obtained "almost-free" in the Americas, reorganized and consolidated the European commercial and capital networks. European banking grew exponentially and the big European banks began to emerge, such as the Bank of Amsterdam, the Bank of Sweden or the Bank of England.

The Spanish and Portuguese dominance of the newly established routes forced other European powers, such as England and the Netherlands, to look for alternative routes. These countries devoted themselves to systematically exploring the Indian and Pacific oceans. These trading expeditions were the beginning of the British Empire.

Transatlantic trade

Before the XIX century, transatlantic crossings between America and Europe were made by sailing ships, which was slow and difficult. often dangerous. With steamboats, the crossings became faster and safer. Then large ocean companies began to emerge with very frequent crossings. Soon, the fact of building the largest ocean liner, fast or luxurious, became a national symbol.

From the 17th century onwards, almost all transatlantic voyages to North America, the port of arrival was the port of NY. Soon the transatlantic trade made New York the first port of North America, and as a consequence, it attracted most of the future transatlantic merchandise and all the passenger traffic. New York became the commercial capital of the United States and one of the most important cities in the world. In addition, most of the immigrants who went from Europe to the United States arrived in New York, with which this city was also the destination of all the famous and rich travelers in luxury cruises, as well as of the poor immigrants, who they traveled in the lower parts of these ships. Therefore, although transatlantic crossings could be made between any part of Europe and the Americas, the destination was always assumed to be New York, unless otherwise stated.

Innovations in transport

Steam locomotive.

Before the transportation revolution of the 19th century, consumer goods had to be manufactured near the destination. It was economically unfeasible to transport goods from a distant location. Along with the Industrial Revolution came a series of transportation innovations that revitalized commerce. Goods could now be manufactured anywhere and transported very cheaply to all points of consumption.

One of the first contributions of the transportation revolution was the railway. Great Britain was the pioneer in this area, and as a result, it currently has the densest railway network in the world. In Spain, the first railway line was built in 1840 between the towns of Barcelona and Mataró

In other parts of Europe and the United States, river transport was also very important. Many rivers began to be widened and deepened in order to make them navigable. And a little later in many regions dense networks of navigable channels began to be built.

Finally, the appearance of the automobile and the systematic construction of highways meant that merchandise could be transported right to the exact point of consumption, which is known as capillary distribution of merchandise.

Globalization

Globalization, from an economic point of view, is a trend derived from neocolonialism that tries to create a free trade zone at the international level. Globalization is born as a consequence of the need to reduce production costs in order to give the producer the ability to be competitive in a global environment.

Following Cano (2007:2) cited by Mesino (2009,127), he comments that current globalization is a complex phenomenon, which transcends the economy and directly impacts fundamental aspects of the life of nations, such as culture, education, politics and, in general, the visions of the contemporary world. This means that the phenomenon of globalization has accentuated interactions of all kinds, fostering spaces for new knowledge and generating a trend towards the homogenization of culture and values.

Numerous peace and environmental groups protest against this trend, in favor of other, more protectionist policies.^{[citation needed]} Other trade union groups are also strongly opposed to globalization, as multinationals transfer jobs from developed countries to Third World countries, with much lower wages.

Types of shops

retail shops in Kasane, Botswana.

Commerce is a source of resources both for the entrepreneur and for the country in which it is established: the more companies sell the same product or provide the same service, the cheaper the services.

• The wholesale trade (also known as "the wholesale trade" or "the wholesale trade") is the activity of the purchase-sale of goods whose buyer is usually not the final consumer of the goods: the purchase with the aim of selling it to another merchant or a manufacturing company that employs it as raw material for its transformation into another commodity or product.
• The retail trade (also known as "commercio al por menor", "comercio al menor", "comercio detallista" or simply "to detail") is the activity of buying-sale goods whose buyer is the final consumer of the goods; that is, who uses or consumes the goods.

and these two types of commerce include the following:

• The trade is the one that takes place among persons present in the same country, subject to the same jurisdiction.
• The foreign trade is the one that takes place between people from one country and those living in another.
• Land trade, Maritime trade, air trade and river trade they refer to the mode of transporting the goods and each one is proper to a branch of trade law, which bears the same name.
• The self-employment It is the one that is done on its own account, for itself.
• The trade by commission is the one that is made on account of another.
• The e-commerce the term electronic commerce (or e-commerce), refers to any form of transaction or electronic exchange of goods, information or services, which facilitates commercial operations and generates specific government policies to improve the competitive position of the economies; whose exchange is based on the transmission of data on communication networks such as the Internet.

Systems

Mercantilism

Mercantilism is the economic theory that considers that a country's wealth is based solely on supplies of gold and silver. From this it follows that exports have to be boosted while imports have to be heavily taxed with tariffs. This theory had an intense impact on the European states in the 17th and 18th centuries, and it is one of the main reasons that led to colonialism. Countries had to be as independent as possible in order not to import too much resources from other countries. For this reason, European countries created a dense network of colonies that supplied the metropolis with all those necessary goods.

The idea that world wealth was fixed and that the only way to get more wealth was to absorb another country, motivated the great European wars of the 17th and 18th centuries, such as all the Anglo-Dutch wars.^{[citation required]}

Thanks to the economic theories of Adam Smith and liberal economic theory, mercantilism was left aside. In this way, they began to conceive ideas such as that both parties in a commercial transaction can benefit, since the goods exchanged are more valuable for the new owners, or that gold is simply a yellow mineral and that it is valuable because there are bit.

Capitalism

Ginza, commercial heart of Tokyo, Japan.

Capitalism is the economic system that was instituted in Europe between the 18th and 19th centuries. The foundation of capitalism is the establishment of companies specialized in the purchase, production and sale of goods and services, in a market free from State control. The only rule that governs in a pure capitalist system is the law of supply and demand. This rule sets prices based on the buyer's degree of need for the goods, relative to the seller's degree of capital need (also related to the amount of merchandise stored by the seller).

This economic system generated a situation of free competition in a market self-regulated by supply and demand, which brought about a new change in world trade. During the Industrial Revolution and the sudden changes it represented, different reactions against capitalism appeared, such as syndicalism, communism or anarchism.

A special case is the emergence of market anarchism which argues that the current economic-political system is rather a state capitalism consisting of state-protected monopolies and is therefore an economic system incompatible with a genuine market. free.

World Trade Organization

WTO members.

The World Trade Organization (WTO) is an international organization based in Geneva, Switzerland, which oversees trade agreements between its members. It was created in 1995 as a secretariat to administer the General Rate and Trade Agreements, post-world war trade treaties, which ceded many interests to achieve exchanges and open unfair competition or monopolies.

International trade

International trade involves the buying, selling or exchanging of goods and services in different currencies and forms of payment. These exchanges between different countries or different geographical areas have been increasing thanks to trade liberalization and the elimination of tariff and non-tariff barriers.

Trends

Doha Rounds

The Doha round of World Trade Organization negotiations aimed to reduce trade barriers around the world, with a focus on making trade fairer for developing countries. The talks have been hampered by a divide between rich developed countries, represented by the G20, and major developing countries. Farm subsidies are the most important issue on which it has been the most difficult to negotiate an agreement. On the contrary, a great agreement has been reached on trade facilitation and capacity building. The Doha round began in Doha, Qatar, and negotiations continued in: Cancun, Mexico; Geneva, Switzerland; and Paris, France, and Hong Kong.

Chinese

Beginning in 1978, the government of the People's Republic of China (PRC) began an experiment in economic reform. Unlike the earlier Centrally Planned Economy, the new measures progressively relaxed restrictions on agriculture, farm distribution, and, several years later, urban enterprises and labor. The more market-oriented approach reduced inefficiencies and stimulated private investment, especially by farmers, thereby increasing productivity and production. One of the features was the creation of four (later five) Special Economic Zones located along the southeast coast.

The reforms were spectacularly successful in terms of increasing production, variety, quality, price and demand. In real terms, the economy doubled in size between 1978 and 1986, doubling again in 1994, and again in 2003. In real per capita terms, the doubling from the 1978 base took place in 1987, 1996, and 2006. In 2008, the economy was 16.7 times larger than in 1978, and 12.1 times its previous per capita levels. International trade progressed even faster, doubling on average every 4.5 years. Total bilateral trade in January 1998 exceeded that of all of 1978; in the first quarter of 2009, trade exceeded the level of the full year of 1998. In 2008, China's two-way trade amounted to $2.56 trillion.

In 1991, China joined the Asia-Pacific Economic Cooperation group, a trade promotion forum. In 2001, it also joined the World Trade Organization.

Ethical aspects

As in all human actions, ethical aspects are also related to trade. They characterize, for example, the so-called fair trade (fair trade) as a socially and ecologically compatible model of trade, in which all levels of trade, from producers to consumers, are conscientiously considered from an ethical point of view and in that above all agricultural producers in developing countries should be fairly remunerated. However, this choice of terms carries the danger that "normal" be considered unfair or less fair and that the "tradition of prejudices" be perpetuated; against trade. There is no doubt that modern business management uses clever strategically secured marketing measures to induce market participants to make certain buying or selling decisions. The gaps in self-service shelves, the placement of low-priced items, oversized shopping carts, suggestive background music and a thousand other practices are found every day. However, these "tricks" of sale cannot be considered per se ethically questionable, not even as a disabling manipulation, at least as long as the (purchase) decisions are not based on being taken by surprise, but on the conviction and free will of the buyer.

Additional bibliography

• Beckwith, Christopher I (2011, 2009). Empires of the Silk Road: A History of Central Eurasia from the Bronze Age to the Present. Princeton: University Press. ISBN 978-0-691-15034-5. (in English)
• Bernstein, William (2008). A Splendid Exchange: How Trade Shaped the World. New York: Grove Press. ISBN 978-0-8021-4416-4. (in English)
• Davies, Glyn (2002, 1995). Ideas: A History of Money from Ancient Times to the Present Day. Cardiff: University of Wales Press. ISBN 978-0-7083-1773-0. (in English)
• Nomani, Farhad; Rahnema, Ali (1994). Islamic Economic Systems. New Jersey: Zed Books. ISBN 978-1-85649-058-0. (in English)
• Paine, Lincoln (2013). The Sea and Civilisation: a Maritime History of the World. Atlantic. (Covers sea-trading over the whole world from ancient times.) (in English)
• Rössner, Philipp, Economy / Trade, EGO - European History Online, Mainz: Institute of European History, 2017, retrieved: March 8, 2021 (pdf). (in English)
• Watson, Peter (2005). Ideas: A History of Thought and Invention from Fire to Freud. New York: HarperCollins Publishers. ISBN 978-0-06-621064-3. (in English)
• William Bernstein: A Splendid Exchange: How Trade Shaped the World from Prehistory to Today. Atlantic Books, 2008, ISBN 1-84354-668-X. (in English)
• David Christian: Maps of Time. An Introduction to Big History. Foreword by William H. McNeill. University of California Press, Berkeley 2005, ISBN 0-520-24476-1. (in English)