The Influence of Government on Global Trade and Ancient Secular, Commercial, and Legal Regulations
Government and Global Trade
The responsibility of societal administration overseers or government in all forms is to stay in power by providing for the economic sustainability and growth of their domain. Such consideration was perhaps best exemplified by the simple statement of the U.S. President Calvin Coolidge in a 1925 speech before the American Society of Newspaper Editors, when he proclaimed “The business of America is business.”1 While the quote is reflective of a conservative, capitalistic, free-market economic model, its relevance to the broader commercial imperative as a driving force in the construction and maintenance of societies is true for both the modern and the ancient worlds. For nations to grow and prosper, wealth needs to be created to support the needs of its citizens, although not always in an equal distribution system. As noted earlier, outside of war, trade, the extension of the exchange process, is the greatest creator of prosperity for a kingdom or a country. A balanced or positive trade with others is a better vehicle for sustaining life than a negative one. Autocratic regimes or governments early on in history recognized, therefore, that the promotion of trade was a beneficial element in the maintenance of their domains.
The involvement and influence of an authoritative body in the construction and preservation of the commercial endeavor were as evident in ancient times as they are today. Initially, the ruling bodies of independent regions controlled cross-territorial trade using court-appointed trade emissaries who worked on behalf of the state with all wealth or profits from their transactions accruing to the coffers of the monarchs. As previously noted, the initial cross-territorial trading expeditions of the Egyptians and Chinese were conducted under the auspices of counselors, pharaohs, and emperors. The funds flowing from such ventures were used not only to sustain the opulence of such rulers and to fund their armies but also to provide financing for public use, projects, and other administrative services deemed necessary for the control of their constituents. As long-distance commercial venturing increased, the use of private parties began to emerge. Rulers realized that while they might not be in absolute control of these traders, letting them operate on their own did not require an investment of the ruler’s state funds. If they could still participate in the rewards of trade that such independent merchants produced they still benefited. Out of this consideration royal charters were begun, bestowing the right of merchants to trade privately on behalf of the kingdom. In return for the privilege in some cases, a license-like fee was paid up front or a tax was collected when goods were imported—the tariff principle, in which the monarch participated as a noncapital partner with guarantees of revenue from the trading venture. The idea of the state receiving a constant flow of revenue from the trading exercise was very appealing and hence governments naturally partnered with businessmen in the pursuit of their jointly beneficial commercial endeavors.
As presented earlier, even ancient tribal regimes, normally an extended family or clan with a chieftain, operating in and therefore controlling a specific territory, recognized that they could extract a toll from those crossing their region. Such a transit fee, ensuring safe passage for a merchant and his commercial caravan, was the forerunner of the modern-day import tariff. This tax was for many governments the chief revenue-generating mechanism. It is noteworthy that the first federal tax enacted by the fledgling U.S. Congress was an import duty.
The involvement of the state or royal regimes in the exchange process began in antiquity and is still evident in the modern era of globalization. The regulation of trade both within its own borders as well as the commercial crossing of its borders is a prime objective of the administration of societies—a governmental imperative. Not only did it serve to enrich the state, but the exercise of control over their societies ensured the economic prosperity of its citizens, which was paramount to assure those in power remained in power. Chapters 3 and 4 provided a profile of the influence of governing bodies on the commercial imperative, underscoring the importance of such interaction. From the Pax Mongolica of Genghis Khan providing safe passage for merchants in lands under his domain, to provisions in the Magna Carta recognizing the importance of foreign traders in the English kingdom, and on to the free-trade argument made in the Declaration of Independence, governments have always recognized the inherent need to intermingle the affairs of state with the commercial imperative. While at times such determination was shared with religious forces, as noted in Chapters 4 and 8, during the age of discovery, the effect on the advancement of global trade has always required a partnership between government and the private commercial sector.
The government drivers of globalization are just as evident today as they were in antiquity. The initial privatization of cross-border trade and the influence in degrees of regulatory governmental control began in ancient times. Today this process is evident in reverse as former communist nations transferred the factors of production from state ownership and control back to the private sector. The shift in modern times to capital or freer market economies and away from the mercantile policies of the 15th century as recounted in Chapter 4 continue to be influenced by the early social economic writings of Adam Smith in 17762 and the competitive advantage theories of foreign trade advanced by David Ricardo in the 1800s.3 The use of tariffs and other trade domestic restrictions especially as to the rights of foreigners to engage in commerce has always been practiced by governments.
In the modern era, following World War II, national governments have influenced and fostered the growth of globalization beginning with the General Agreements on Tariffs and Trade (GATT) initiative in 1947 that called for new or in essence more liberal trading agreements among the signatory nations to promote open and freer trade in the world. The intent was perhaps best expressed by President Ronald Reagan just before the progressive Uruguay Round of GATT discussions in 1986 urging the participants to open their markets from domestic protectionist policies and “treat American products as they treat their own.”4 While such reference to equal treatment was targeted to investment opportunities by foreign corporations in today’s world, it reflected and echoed the often prejudiced treatment of alien citizens in the domestic commercial circles of ancient regimes, as well as the recognition of the importance of foreign trade in the development of the world. The GATT provisions were primarily aimed to reduce historically high restrictive tariffs (import duty percentages) on foreign products. The effect was to open markets to other countries. For example, India moved from a former rate of 71 percent to 32 percent while the United States dropped from 7 percent to 3 percent. While the emerging nations like India had larger percentage rate reductions, the developed countries took a larger monetary loss in tax revenue. Replaced by the World Trade Organization (WTO) in 1975, the continuing pressure to lower national tariffs and the liberalization on national foreign direct investment regulations by governments have helped global commercial trading and investment to record new levels in the modern era. The basis for such a direction was the global economic learning curve that began with the ancient practice of barter and progressed as the roots of globalization took hold over centuries of intercontinental trade.
Regional territorial trading blocks, like the European Union (EU) and North American Free Trade Agreement, are reminiscent of ancient lands trading with their contiguous territories. Many of the global governmental economic trading associations are directly traceable to these practices in ancient times, as the traditional commercial relationships continue to be used. Overall, the more recent reestablishment of East–West trade and the rise of China (in 2010 the second largest economy after the United States) and India have brought global trade back to days initially built on the spice and incense trade as well as the Silk Road.
Governments have always worked with the commercial sector to achieve mutual goals. In the ancient world, the marriage of national political agendas with cross-border trade resulted in a unification of goals as their economic fortunes intertwined.
Protection of High-Seas Trade
As previously noted, the Roman Empire was so concerned with the interruption of their shipping lanes for imported grain that they dispatched army legions to protect such precious routes, knowing fully their importance in the maintenance of their civilization. Emperor Julius Caesar rose to public prominence when he was proclaimed a national hero for his valiant victories over pirates in the Mediterranean.
European sovereign rulers many centuries later not only dispatched their own military forces but also hired privateers along with rival buccaneers to attack and plunder the lucrative resources of the newly explored worlds in both the East and the West. During this era of mercantilism, the survival of the country depended on the free, unencumbered movement of resources back to individual nations to enrich their kingdoms. In 1801 to 1805, reminiscent of the problem that plagued Rome, the Barbary States of North Africa supported pirates plundering seaborne commerce as their ancestors had before them. They demanded tribute money, seized ships, and held crews for ransom or sold them into slavery. To combat these outrages, the United States sent maritime regiments into the Mediterranean. With the U.S. Navy blockading the enemy’s coast, bombarding their shoreline defenses and engaging pirate ships on the sea, a contingent of seven marines along with 300 Arab and European mercenaries descended on Tripoli. The free and unencumbered movement of commercial trade on sea as well as land routes has always been a global priority for nations. Such unity of purpose, transnational alliances, outside of allying in war may be rooted in an economically based imperative. A joint recognition of mutual need and support for free trade still motivates governments to act in unison. In modern times, the pirates of Somalia off the coast of East Africa have begun to duplicate the historic scenarios that have interrupted essential global trade routes. The fundamental need to protect international shipping lanes is recognized by national governments of the world. Again one sees their united efforts to support and foster the global exchange principle. Even emerging nations like China, new to the world economic system, have joined this endeavor. Chinese admirals have reportedly stated that “they want warship to escort commercial vessels that are crucial to the country’s economy” and secure their interests in the resource-rich areas of the world, wanting to position them in an ocean stretch from the Persian Gulf to the Strait of Malacca just south of the Asian continent.5
Trade: The Political Tool
In the 19th century, as the United States grew in commercial importance to the world, its chief exportable commodity ended up not only dividing the nation but also sending ripples across the Atlantic and affecting other nations. The Civil War began in 1861 between the industrialized North and the agriculturally bound South. The overt sentiments were about the moral ideology of slavery and the division, but the conflict was in reality grounded in economic principles that had international ramifications. Without the use of slave labor imported from Africa, the production of cotton, the key to the Confederate economy and its largest cash crop, doomed the region to commercial disaster. But even in that day, this U.S. domestic issue had extraterritorial trade implications. The British textile industry, the mainstay of the Victorian industrial complex, was beholden to imports from the American South, as the area accounted for 80 percent of the raw material. In consideration of such recognition, the Confederacy tried to use its global advantage to force England to support its position in both deed and financial assistance using economics as a financial foreign policy tool, a principle used today in international politics. The Confederacy first placed an embargo on shipments to the port of Liverpool, the chief cotton-receiving facility in England. Such an action not only drove up the price of cotton but also severely impacted the plight of textile workers, resulting in the phrase “the cotton famine.” Knowing well the value of this specialized commodity, the Confederacy used the resource as collateral for cotton-backed bonds to finance the war as they controlled its price and hence the value supporting the bonds. As Niall Ferguson rightly points out, this two-pronged financial mechanism might have worked and strengthened the South’s ability to win the war if it were not for the fact that the key port of New Orleans, the embarkation point for cotton shipments to England, was seized in April 1882 by Union naval forces, effectively eliminating the South’s commercial trump card to force other nations to join their cause.6 The fall of the valued Southern port destroyed the South’s ability to control cotton shipping and hence its pricing along with the destruction of the financial security backing the bonds was eliminated and their cause was dismissed by other trading nations. The disruption in foreign ocean trade led to the South losing its political economic strength and with it one of the key financial backing instruments, contributing to the loss of the war with the North.
In his book 1434: The Year a Magnificent Chinese Fleet Sailed to Italy and Ignited the Renaissance, Gavin Menzies7 proposes that a delegation of the commercially inspired Star Fleet of the great Chinese explorer Admiral Zheng visited Florence, then an independent state. Menzies further hypothesizes that during an audience with Pope Eugenius IV and his advisers, the knowledge (via books, research papers, instruments, and maps) gathered by Chinese merchant travelers was bestowed on the Italians, resulting in the beginning of a revival movement—the Renaissance. While the notion that the Chinese ignited the Renaissance is certainly challengeable, what is interesting is that this meeting may have been the first official globally based trade discussion between governments. If the conferences did take place it was a historic occasion setting the precedent for international trade cooperation and an important step toward globalization driven by a government-to-government initiative. It may have been a precursor to trade agreements as well as the grandfather of GATT and the present WTO. As noted previously, Florence was an independent state while the Catholic Church was considered a semipolitical entity. (Today the Church operates as an independent state—the Vatican—and has diplomatic relationships with governments around the world.) Although the meeting has been challenged by scholars, the European circumnavigation of the world that followed is a substantiated fact testified to by the travels of Christopher Columbus, Ferdinand
Magellan, Vasco da Gama, and the others that followed. Perhaps, although it is a conjecture, the idea that such new routes did in fact even exist may have been realized through the information and techniques given to the Europeans. The globalization imperative to reach out to new lands, engage with new people, and trade with them may have been one of the Chinese legacies that enabled separate regions of the world to grow with a common human endeavor. The great period of European exploration that followed may owe a debt to the Chinese government’s political initiative if Menzies’s contentions become widely accepted. However, some historians believe that Christopher Columbus possessed ocean maps and navigation guides, like the compass that the Chinese invented, that he got from early Arab traders who in turn had procured them from Indian and Chinese sources during their own trading expeditions to the Far East.
Trade has always existed as a political tool of governments. Countries have cut off trade with foreign nations to punish them or signed lucrative trade deals coupled with special loan conditions to further their political and economic influence around the world. Countries offer the most favored status with tariff exceptions or reduced rates to further their global policies. Both in antiquity and today such practices abound. On the other hand, the relative strength of multinational corporations (MNCs) in modern times has begun to offset the historic authority of nations to influence global trade. The ability to monitor, no less control, the private worldwide commercial moves of MNCs has diminished the influence of governments to a degree. With more and more freedom to roam the globe and place their value chain activities in the emerging countries of their choice, those offering them the best deals to operate within and without their borders will receive the benefit of MNC financial investment. The future ability of major industrialized nations to force commercial enterprises to abide by their domestic-oriented policies does not carry the same weight as historical examples would indicate.
Emergence of Ancient Commercial Secular Laws
While the belief in the supernatural and the emergence of organized religions had interpretive doctrines to suit the needs of their followers within the realm of the everyday exchange of goods and services (the commercial process and wealth attainment), it was also left to the secular government authorities to compose the rules of commercial transactions. The state, in the historic guise of supreme rulers, also recognized that it was essential to preserve harmony (thus their continued dominance in their kingdoms) and to ensure the economic welfare of their citizens through regulations pertaining to the exchange process. Records of such laws have been maintained and are revered in the same manner as religious teachings, as they provided guidelines for the construction and interpretation of many of our modern secular commercial laws.
Code of Hammurabi
Since the commercial process was so important to early civilizations, one of the first recorded rules of civil conduct, around 1700 to 1880 BCE, the Code of Hammurabi, contained vast passages on business transactions along with those devoted to family and land transfers. All records of commercial transactions were required to be kept on tablets as legal documents in case of discrepancies.
The concept to write down a deed of agreement between parties was created. This idea allowed people to have a say over their affairs provided the actions required did not violate the Code. So sacred was this legal provision that it was prescribed to be drawn up in the temple by a notary public and confirmed with an oath by the parties to it that it would be carried out as if made with god and the king. It was publicly sealed and attested to by professional eyewitnesses, as well as by collaterally interested parties. The transparent manner in which it was executed may have provided sufficient guarantees that it would be abided by. If a dispute arose, the judges would first consult the agreement to see if it coincided with the Code as it still remained the overriding instrument of prescribed justice. While one could appeal the court ruling to the king, in most cases, the king returned the case to the judges with orders to decide in accordance with the Code.
A growing way of conducting business was for a merchant to entrust his goods or invested capital in a traveling agent (as noted previously) who would then seek markets via a series of trade transactions and, in the process, produce operating revenue. In recognition of this commercial system the code insisted that such an agent should precisely inventory and offer a receipt for all he received in every transaction in order to account for all losses and profits from the business activities entered on behalf of principles. Such commercial principles further noted,
Even if the agent made no profit he was bound to return double what he had received, if he made a poor profit he had to make up the deficiency; but was not responsible for loss by robbery or extortion on his travels. On his return, the principle must give a receipt for what was handed over to him. Any false entry or claim on the agent’s part was penalized three-fold. In normal cases profits were divided according to contract, usually equally.8
The caravan, or common carrier in ancient times for those merchants using intermediary agents, required a receipt for the consignment and a receipt upon delivery. This is the basis for the two prime principles of the modern bill of lading. Even the warehousing of grain was granted regulatory outlines as the warehousemen took all risks and paid double for shortages evidenced by a properly witnessed receipt first given while being granted one-sixtieth of the stored value for his services—state-instituted price guidelines.
Prior to the Code of Hammurabi, archaeological evidence notes the existence of Urkagina’s Code around 2350 BCE and Ur-Nammu’s Code placed at 2050 BCE; both contained a legal reference that punished the unjust and those who dealt unfairly in trading activities.
Laws of Manu
The Laws of Manu, prescribed from 1280 BCE to 880 BCE, in the region known today as India, synchronized life’s social obligations and became the cornerstone of the practice of Hinduism. Portions are devoted to business contracts and trade disputes with specific references to rules and practices governing the exchange of merchandise, shipping, and even port dues, another forerunner of the tariff or duty systems employed today. Such laws transcended a vast territory as “India is more than a country. It is a subcontinent.”9 Such proclamations with a commercial ingredient influenced the way of life of vast populations across large stretches of land mass and the traders who traversed such routes. They followed many centuries later the origin of codes of behavior for the region as proclaimed in the Arthashastra, as previously noted.
Draco’s Law
The Greeks via Draco’s Law in 621 BCE touched on debtor’s obligations, providing for enslavement for those whose status was lower than that of their creditor. Issuance of these very dogmatic rules evolved into the term draconian to exemplify unyielding and inflexible, strict policies and decrees. Romans using the 12 Tables prescribed in 450 BCE also handled the problem of debtors, as noted in Table III:
Aeris confessi rebusque iure iudicatis XXXdies iusti sunto.
[A person who admits to owing money or has been adjudged to owe money must be given 30 days to pay.]
Post deinde manus iniectio esto. In ius ducito. Ni iudicatum facit aut quis endo eo in iure vindicit, secum ducito, vincito aut nervo aut compedibus XVpondo, ne maiore aut si volet minore vincito. Si volet suo vivito, ni suo vivit, qui eum vinctum habebit, libras faris endo dies dato. Si volet, plus dato.
[After then, the creditor can lay hands on him and haul him to court. If he does not satisfy the judgment and no one is surety for him, the creditor may take the defendant with him in stocks or chains 15 pounds in weight, he may not restrain him in greater but if he wishes in less. The debtor may live where he wishes. If he does not live on his own, the creditor must give him a pound of wheat a day. If he wants to he may give more.]
Tertiis nundinis partis secanto. Si plus minusve secuerunt, se fraude esto.
[On the third market day, (creditors) may cut pieces. If they take more than they are due, they do so with impunity].10
Japan’s Feudal Labor Practices
The Seventeen Article Constitution of Japan (640 CE) may have contained the first nationally mandated labor law regarding employment practices and set the stage for modern state intervention in such matters:
XVI. Let the people be employed (in forced labor) at seasonable times. This is an ancient and excellent rule. Let them be employed, therefore, in the winter months, when they are at leisure. But from Spring to Autumn, when they are engaged in agriculture or with the mulberry trees, the people should not be so employed. For if they do not attend to agriculture, what will they have to eat? If they do not attend to the mulberry trees, what will they do for clothing?11
Law of Justinian
The Law of Justinian, circa 483 CE, has a section that can be considered as the originator of the legal theory recognizing intellectual proprietary rights—which were later applied to copyrights, patents, and trademarks—in a section titled “Different Kinds of Things.” It speaks of things and personal property rights that are accrued from altering basic elements found in natural raw materials as well as recognizing the capacity of man to adjust them and create new things. It is the precursor for the protection of inventions and work that changes the original structure of materials or how they are used together:
In the preceding book we have expounded the law of Persons: now let us proceed to the law of Things. Of these, some admit of private ownership, while others, it is held, cannot belong to individuals: for some things are by natural law common to all, some are public, some belong to a society or corporation, and some belong to no one. But most things belong to individuals, being acquired by various titles, as will appear from what follows.
Thus, the following things are by natural law common to all—the air, running water, the sea, and consequently the sea shore. No one therefore is forbidden access to the seashore, provided he abstains from injury to houses, monuments, and buildings generally; for these are not, like the sea itself, subject to the law of nations.
On the other hand, all rivers and harbors are public, so that all persons have a right to fish therein.
The sea shore extends to the limit of the highest tide in time of storm or winter.
Again, the public use of the banks of a river, as of the river itself, is part of the law of nations; consequently everyone is entitled to bring his vessel to the bank, and fasten cables to the trees growing there, and use it as a resting place for the cargo, as freely as he may navigate the river itself. But the ownership of the bank is in the owner of the adjoining land, and consequently so too is the ownership of the trees which grow upon it.
Wild animals, birds, and fish, that is to say all the creatures which the land, the sea, and the sky produce, as soon as they are caught by any one become at once the property of their captor by the law of nations; for natural reason admits the title of the first occupant to that which previously had no owner. So far as the occupant’s title is concerned, it is immaterial whether it is on his own land or on that of another that he catches wild animals or birds, though it is clear that if he goes on another man’s land for the sake of hunting or fowling, the latter may forbid him entry if aware of his purpose.
Fowls and geese are not naturally wild, as is shown by the fact that there are some kinds of fowls and geese which we call wild kinds. Hence if your geese or fowls are frightened and fly away, they are considered to continue to be yours wherever they may be, even though you have lost sight of them; and anyone who keeps them intending thereby to make a profit is held guilty of theft.
When a man makes a new object out of materials belonging to another, the question usually arises, to which of them, by natural reason, does this new object belong—to the man who made it, or to the owner of the materials? For instance, one man may make wine, or oil, or corn, out of another man’s grapes, olives, or sheaves; or a vessel out of his gold, silver, or bronze; or mead of his wine and honey; or a plaster or eye salve out of his drugs; or cloth out of his wool; or a ship, a chest, or a chair out of his timber. After many controversies between the Siabinians and Proculians, the law has now been settled as follows, in accordance with the view of those who followed a middle course between the opinions of the two schools. If the new object can be reduced to the materials of which it was made, it belongs to the owner of the materials; if not, it belongs to the person who made it. A vessel can be melted down, and so reduced to the rude material—bronze, silver, or gold—of which it is made: but it is impossible to reconvert wine into grapes, oil into olives, or corn into sheaves, or even mead into the wine and honey of which it was compounded.
Writing again, even though it be in letters of gold, becomes a part of the paper or parchment, exactly as buildings and sown crops become part of the soil. Consequently if Titius writes a poem, or a history, or a speech on your paper or parchment, the whole will be held to belong to you, and not to Titius. But if you sue Titius to recover your books or parchments, and refuse to pay the value of the writing, he will be able to defend himself by the plea of fraud, provided that he obtained possession of the paper or parchment in good faith.
Where, on the other hand, one man paints a picture on another’s board, some think that the board belongs, by accession, to the painter, others, that the painting, however great its excellence, becomes part of the board. The former appears to us the better opinion, for it is absurd that a painting by Apelles or Parrhasius should be an accessory of a board which, in itself, is thoroughly worthless.12
Throughout the development of the rule of law, a commercial imperative based on dealings of men and the property they wish to control is shown in the history of codified codes. The influence of the trading process is intertwined with the growth of civilization and the advancement of human society as exemplified by the state’s desire to create rules of social conduct. So important to the conduct of life was commerce that through ancient times its regulation was placed in both secular and religious documents.
History of Proprietary Rights
Mankind has always harbored his personal items and has gone to great lengths to protect his belongings. From hiding them in caves, to placing them in the ground, to storing them in a series of inaccessible or fortified surroundings, the desire to safely conceal valued things that one has acquired has always been an activity practiced by human beings. It may be one of the traits we share with other species on earth. Perhaps, most valued of our possessions are the things we create ourselves, as opposed to finding them naturally in our surroundings, as they came to identify us as unique and special individuals. We refer to such property as proprietary rights.
Patents
Although developing in a communal setting for one’s survival, mankind, according to Maslow’s hierarchy of needs, shows that he has always desired to be individualistic, striving for a higher level of attainment and personal recognition for his accomplishment along with an economic reward for such proprietary actions. Individual victory in battle was probably the primeval equivalent of such desire, as the spoils went to the winner. But within a peaceful environment individual contest was also practiced with the Greek origination of the Olympic games in 776 BCE and the crowning of champions on the physical athletic field. Recorded history tells us that somewhere between 600 and 500 BCE, city administrators in the Greek colony of Sybaris granted exclusive right of use to citizens producing worthy new things. Specifically, “encouragement was held out to all who should discover any new refinement in luxury, the profits arising from which were secured to the inventor by patent for the space of a year.”13 Some historians suggest that the first recipients were annual competitive creators of unique culinary dishes, according to the records of Athenaeus.14 Such an authorized public designation was not so much a law as a grant of recognition by the local authority. In England around 1330, recognized endowments in the form of letters patent were issued by the sovereign to inventors petitioning the crown. In Latin, literae patentes meaning letters that lie open referred to the fact that a seal hung from the foot of the document proclaiming, “To all to whom these presents shall come.” Such an announcement was symbolic of a public town crier addressing the masses, advising them to come forth and hear the proclamations of their liege lord as opposed to a private communication between parties or letters closed and addressed to a specific person who would have to break a seal in order to read its personal content. Such a document was usually posted on the door or wall of an establishment so that all who entered would be aware of the special dispensation given to the owner. The use of such early documents was really to raise money for the royal house and in essence granted a monopoly to those who could afford payment. During this period, patents were given to companies of common goods, such as salt, which outraged the population as it limited competition and hence fair market pricing.
This economic abuse of the crown’s power was stopped by James I, who revoked all prior letters of patent and under the Statue of Monopolies, the Parliament restricted the king’s grant to inventors of original work. Years later, during the time of Queen Anne, a more systematic procedure for the governmental issuance of patents was inaugurated with the requirement of a written description of the invention having to be submitted with a formulized review process and other legal protections for the prescribed owners. In France, a similar system evolved with submitted patents also reviewed by the Maison du Roi (household of the king) and the Parliament of Paris, often in conjunction with academies of learning. The Republic of Florence in 1421 recognized the patent idea following the financially induced petitioning of Filippo Brunelleschi for a barge with hoisting gear to load and unload marble along the Arno River. In the 12th century, Venice granted special protected privileges to inventors of the silk-weaving process, as silk at that time was a prized luxury item. Exporting silkworms and the knowledge of the procedure from China is prohibited and punishable by death. A Venetian statute of 1474 was passed primarily to protect economies of the city’s glass makers, who, as they emigrated, demanded similar protections in their new homelands, thereby expanding the concept. The inducement for the legal rights for patents may have started in individual recognition and as the first Patent Act of the U.S. Congress in 1790 recognized “an Act to promote the progress of useful Arts” for “useful and important” discoveries,15 but its historic development had a decidedly financial motive.
Copyrights
The historical protection of literary works was not developed so much for the legal rights of authors as in its modern usage but as an ancient device to regulate and control the output of printers, the public dissemination of ideas, and information that those in power deemed such circulation dangerous to their authority.
Very early written forms of communication in antiquity were limited to record keeping, a historical account of events. The symbolic pictorial storytelling as found in cavemen’s drawings, Egyptian hieroglyphics, and the petroglyphs of American Southwest Indians were limited in circulation as they were carved in stone. As movable parchment-type surfaces like animal skins, papyrus, and later paper developed, the main users of such devices were merchants to make lists of transactions and inventory, as the preceding text has evidenced. Reproduction of writing was later entrusted to the work of scribes, many of whom were literate slaves during the Roman era. The ancient Chinese dynasties used the services of religious order monks in monasteries as imperial scribes. However, most works remained cloistered in the houses and institution of their benefactors, as copying by hand was an arduous task and hence expensive to employ. Furthermore, only a small percentage of the ancient populations was literate and capable of reading. The technology of the printing press in the 15th and 16th centuries was welcomed by the state and the church in Europe with Johannes Guttenberg’s invention of the movable type, although the original process is attributed to Chinese ingenuity. Such development also occurred during the first global expansion of mercantile trade by major European nations, which in turn resulted in the appearance of secular universities that were producing a new educated bourgeois or middle class as opposed to the previous royalty and their aligned landed gentry elite. The publishing industry was encouraged and tolerated as a tool for the wider dissemination of Bibles and governmental information to keep societies in check. Therefore, little leeway was allowed for authored dissents and criticism of such institutions. Consequently, sovereign states, as encouraged by the Church, established controls over printers with the need for licenses to produce particular approved and authorized books for a fixed period while prohibiting the import of foreign printed works. Under the English Licensing Act of 1662, a monopoly was granted to members of the Stationery Company, who acted most diligently in their selection of books so as to not offend the license grantor, the sovereign, and their alliance partners in the realm, the Church. The act lapsed in 1695 and was followed 11 years later by the Statute of Anne, whose proper title was An Act for the Encouragement of Learning, by Vesting the Copies of Printed Books in the Authors or Purchases of Such Copies, during the Times Therein Mentioned.
This statute was the originator of the modern copyright law, containing a provision that first recognized the legal right of authorship works as a form of intangible property, giving it equal status to the more traditionally recognized physical estate and other personal tangible assets; hence, it was subject to financial penalties if misappropriated by others (one penny for every page, split between the author and the crown). It required a copy of the book to be placed on deposit with the King’s Library (a predecessor to the modern practice of the U.S. Library of Congress) as well as the educational institutions of Oxford and Cambridge. It granted protection rights for an initial period of 14 years (grandfathering 21 years for books already in print form) with a renewable 14-year term if the author was still alive. What is interesting is that while the statute was still a draft, it was debated in the House of Lords that the legal theory behind the enactment was that the right of the author was proclaimed as a natural law recognized by all mankind and that the added statutory grant of a limited (time) monopoly was to protect and insure such a universally accepted proposition. Intellectual pursuit—the dissemination of knowledge via its resulting physical embodiment, the written work itself—was raised to a unique altruistic status. However, in Piracy: The Intellectual Property Wars from Gutenberg to Gates, author Adrian Johns relates that intellectual property rights (i.e., patents, copyrights, trademarks) are rooted in theories of economics and trade as well as the needs of civilizations.16 He argues that the noble idea of disseminating knowledge, quoting John Stuart Mill in his protest that the abolishment of patents would “enthrone free stealing under the prostituted name of freed trade,” would leave “men of brains” defenseless “before men of money-bags,” or the unscrupulous and motivated entrepreneurs who make money off the ideas of others without giving reasonable compensation to them. Johns is describing piracy, the unauthorized financial enrichment of one to the financial detriment or loss of another. While Johns’s book also focuses on the more modern dissemination of information via digital networks, he underscores the mutual relationship between creativity and commerce with the exchange imperative (i.e., trade), the handmaiden and protector of the intellectual process, and the agent of the development and progression of civilization.
Trademarks
As related in the preceding text, the use of marks to identify and distinguish one’s property is as old as mankind’s presence on earth. The basis for such use was rooted in an economic motivation to resolve ownership disputes, aid in public identification or advertising, and to signify quality of workmanship. Archaeologists feel that cave drawings as early as 5000 BCE not only were intended to describe events, as noted earlier, but represented ownership of them by the drawer. Distinctive markings are also evident on primitive pottery and tools, indicating that they belonged to a specific party, family, or clan. In the Mesopotamian period (circa 3500 BCE), as well as the area of Cnossos on Crete, cylindrical seals in stone were used to identify daily traded commodities. In the first dynasty in Egypt, ownership symbols were placed on bricks, quarry stones, and roof tiles to identify the craftsmanship of stonecutters and fashioners of these architectural structures. Potter’s marks have been found on clay and ceramic containers in almost all societies in the ancient world. The markings of property outside the workmanship of artisans appeared on animals allowing the early farmer, rancher, or lord to distinguish his livestock in open grazing pastures and to identify them when they went to market. Blacksmiths of the Roman world placed marks on their metal armaments while in medieval England the requirement to place a distinguishing mark on the construction of swords was not so much to publicize quality workmanship but to identify defective weapons so that the maker could be punished for causing injury on the battlefield to its user.17 As goods moved in transit across more extensive geographical territories, the use of a merchant’s mark on goods in the 10th century was primarily to provide a way of identifying ownership rights of goods lost in transit to shipwrecks, pirates, and other disasters on route.
The earliest known trademark laws were not intended to protect the rights of product makers against those appropriating their name, but it was for the benefit of the buyer. The English Bakers Marking Law in 1266 governed the use of stamps of pinpricks on loaves of bread for health considerations while a similar requirement in 1363 pertaining to silversmiths was aimed at ensuring quality and integrity. It was not until the 15th century with the emergence of craft guilds that trademark-like symbols and logos began to be used as marketing techniques to represent the quality of products and to promote the goodwill of collective artisan groups housed in specialized towns or regions. These guilds used distinctive markings to promote the collective unified tradesmen as opposed to particular individuals. Membership in the guild was restricted and those members who manufactured defective or poor products were held accountable in order for the reputation to be upheld. Bell makers were among the first artisans to use this practice and they were followed by paper makers with water marks to identify sheets of paper. The first recorded case involving trademarks, Southern v. How,18 was brought under English common law principles in 1618 that allowed for remedies in respect to fraud and improper use of marks known then as “passing off.” A high-quality cloth manufacturer brought a claim of improper appropriated use against a competitor who made inferior quality products while placing the marking reserved for the superior quality on his goods. The first law on the subject was passed in 1862 and titled The Merchandise Marks Act focusing on deceptive indications or fraudulent activities. Thirteen years later, the registration of trademarks was incorporated with the first one made by the Bass Red Triangle of the Bass Brewery, a company established in 1777.
Universal Conventions
Nations, by becoming signatories to universal conventions for the cross-border legal protection of trademarks, copyrights, and patents, have helped to further drive globalization in the modern era. While not directly involved in the international trade process as active partners in transactions as in ancient times, their consolidated efforts to recognize the importance in the commercial arena of shielding proprietary rights on a global stage has greatly assisted the promotion of globalization.
Countries have banded together to create the Paris Convention, first signed in 1883, for the protection of industrial property. To date, it has been signed by more than 170 countries. Its prime provision allows a trademark owner to backdate in a foreign country to the date of initial filing in his home country if an application for registration is made in another treaty country within six months of the first filing at home. What is so important about this extended time frame, the backdate allowance, is that it has the effect of stopping trademark pirates. The phrase describes those unscrupulous parties who wait to see the filings in major countries by large multinational organizations and then rush abroad to register them and then attempt to sell them back to the true owners, who are at some point wished to enter such markets but upon filing found their trademarks already owned by others. This practice in the past prevented global firms from enlarging their business via the marketing of a universal brand name without paying off those who hijacked their trade names. In some instances, as the author has experienced firsthand, such dishonest parties resort to international blackmail. As part of the price to transfer a trademark back to the original owner, they demand a hefty fee as well as their appointment as the local distributor or licensee for products, services, or both, bearing the valued trademark. Some even threaten to put on the market, using their country or multiple country registration rights, an inferior version of the trademarked product thereby damaging the quality and reputation of the brand with consumers in these markets destroying the ability to enter them in the future. They further intimidate the true owner by threatening to dump substandard merchandise at less than the established prices in the home countries as well, thereby damaging an existing market. Besides the Paris Convention, the Madrid Protocol allows a national of a member country who has an application pending or has been granted trademark registration in his home country to file a single application with the World International Property Organization (WIPO) for all other countries covered by the protocol. Such a procedure eliminates the need to file in numerous independent jurisdictions, a timely and costly process. The Community Trade Mark system allows, from the onset, no prior country application or registration needed, a single filing to cover all EU countries at once. The previously noted Paris Convention also applies to patents. Like the provision of the right to claim priority for trademarks, when one files in any of the member states his or her right is preserved for one year (note: trademark is within six months) to file in other member nations and still retain the original filing date in such additional countries. The ability to centralize patent filing is provided under the Patent Cooperation Treaty covering 140 countries and is administered by WIPO. The European Patent Convention grants a similar procedure: one filing for the members of the European Patent Organization (EPO) while equal provisions are available for groups of African countries and the current nine member states that formed the Eurasian Patent Organization (EAPO).
Within the area of copyrights, the Berne Convention for the Protection of Literary and Artistic Works, first originating in 1886, covers authored materials. Under the Berne Convention, copyrights for creative works automatically come into force and are protected upon their creation. They do not have to be asserted or declared nor do they need to be registered nor applied for in signatory countries to the convention. As soon as a work is fixed—that is, written or recorded on some physical medium—its author is automatically entitled to all copyrights in the work and to any additions or derivative works based on the original, unless and until the author explicitly disclaims them or until the copyright expires. Foreign authors are accorded equal rights and privileges for their copyrighted works. They are treated just like domestic authors in any of the countries that adhere to the convention. Under the convention, all works are protected from being copied or infringed on for a minimum of 50 years with member countries having the right to extend such a period. Related to the Berne Convention and reared to copyrights are the Universal Copyright Convention and specific sections of the Trade-Related Aspects of Intellectual Property Rights declaration as formulated under the WTO.
Piracy, in respect to copyrights and patents, is not so much the appropriation of a proprietary right or name stealing as with trademarks, but internationally takes the form of counterfeit merchandise that uses the work of authors and inventors in the products they offer to consumers. While the aforementioned agreements under unified governmental action have helped strengthen globalization, the problems of misappropriating someone else’s intangible property still remains.
Back to the future
Historical economists looking back a thousand years, and using the standards of the times, have determined using gross domestic product (GDP) as the measurement value of a country, that for over 800 years from 1000 to 1820 China and India together accounted for almost 54 percent of the world’s GDP.19 The swing, beginning in the 19th century and attributable to the embrace of the Industrial Revolution in the West, moved Europe and US, to a combined 62 percent a century later in 2004. Latest 2014 GDP, in current price figures, shows China as the second largest economy with the US in the top position. But if GDP is adjusted for purchasing power parity (PPP) China is number 1 followed by the US and India.20
The projected world economic structure as a percentage of global GDP for 2050 indicates that the world is moving back to the future. Economists predict that China and India would again attain their dominance with a collective 45 percent while the EU and US would be at a united 41 percent. Globalization seems to be at work again altering the global economic environment returning it to those ancient civilizations that birthed the commercial imperative. However this time the world is more interconnected and more interdependent as opposed to centuries ago when nations were remotely linked. Improvements in high-tech communication and rapid efficient transportation have shrunk the globe while commerce has united it.
The world tends to be transfixed on the vast amount of technological advancements in the 20th and 21th centuries. This fascination with the present tends to distract from the fact that most of the basic inventions and discoveries upon which the modern world is based, and in fact still used, as well as the creation of modern marvels originated in the ancient world. It is interesting to note that most scholars suggest that more than half of human histories innovative breakthroughs originated in old age China. The world is also deeply beholden to antiquated India and the civilizations of the Islamic regions of the Levant for the scientific foundations the modern world takes for granted. A list of breakthroughs and advancements afforded global society by the ancestors of these areas would take up many pages in this book.
It should be well noted that cross regional trade allowed original inventions and ideas as well as their ongoing enhancement to be carried abroad. They made her way around the world carried by merchant tradesmen, both those visiting foreign lands from the regions of initial development and those coming into those areas. It could be said that even the motivational inspiration for their initial creation and continuing upgraded innovation was and still is the commercial value that flows from their use.
Contemporary packaging for products or systems carries the attention getting moniker ‘new and improved’ while advertising for them touts the familiar phrase as a competitive advantage. This declaration is a common recognized purchase motivator seen and heard by consumers around the world. It existed in ancient times and continues in the modern era as the present always reflects elements of the past.
Although scientific historians do credit specific countries with these aforementioned numerous advancements their wide dispersal, being copied, borrowed and improved upon as they made their way around the world, makes it difficult to specifically assign a geographical origination point. Today with the explosion of modern globalization new technological improvements tend to be a composite, the combined input of centers of excellence located around the world. This process is fueled by semi-closed nations embracing more open capitalistic programs as countries like China and India are again becoming centers of research distinction, again another example of moving back to the future. Global civilization continues to be enhanced and global commercialization energies the process.
As his book goes to press, a TV commercial by one of America’s larger fast food hamburger chains, Jack in the Box, debuted. The spot, titled “Spice Trade,” is inspired by the deserts of Mongolia and chronicles the beloved Jack big head character’s pursuit to acquire an irresistible spice to use in his next craveable burger dubbed the Black Pepper Cheeseburger. The voice over informs the viewer that a legendary quest was undertaken by him across the globe for an ingredient that was coveted by royalty. After endless searching, he comes across a wise spice trader who gives him exotic black peppercorns, and in exchanges Jack barters his most beloved precious procession a motorcycle. The last frame is of Jack riding a camel laden with the spice and the merchant trader on the bike. In the modern era, the idea of a valued imported spice is revisited as is the age old method of exchange, the simple barter process. The marketing and trading principles still applies even as globalization matures. Today, like centuries ago, basic spice ingredients that add flavor and therefore richness to food is still relevant. Around the world pepper and salt continue to be essential kitchen components and are placed on the tables of restaurants. Not much has changed as the first global products, as introduced in Chapter 5, endure as to their impact on global consumers and world trade. The phrase back to the future still resonates.
Also, as the book manuscript is prepared for publishing, the influence of religion on globalization as covered in Chapter 8 also continues. Pope Frances, the head of the Catholic Church, is critical of global capitalism calling it a “subtle dictatorship” that “condemns and enslaves men and women.”21 His Eminence even mentions the crimes of the Roman Catholic Church during the period of Spanish colonialism (see Chapter 4); presumably the clergy’s acquiescence to the harsh treatment of indigenous people used as forced labor to acquire the resources of the colonized territories for economic gain. He acquaints such historic period with the unfairness and inequity that destroys the livelihood of the poor by the current beneficial agents of global capitalism. The past seems to always echo into the future.
Final Reflections
Parallel and embedded in the movement of ancient innovative advancements that the modern world tends to take for granted were also the fundamental tenets of business principles—trade practices and supportive infrastructures that are still in use today. As the reader may recall the book’s Introduction opened with a personal recollection of a young naïve international executive from the US venturing out into the world. His overseas associates to ease the transition would often remark, “As you Americans are fond of saying, let’s get down to business”; like the idea was the sole invention of my native country. Such prompting was to offer some degree of comfort to a nervous fledgling American businessman. Although, in retrospect, it could be interpreted as having been delivered in a tongue-in-cheek manner by the speaker it was their way of easing the initial restraint or awkwardness of a first meeting, a social breaker for a juvenile international businessman. As previously explained tongue-in-cheek is an English language idiom, a figure of speech. It implies that a statement is humorously or otherwise not seriously intended, and should not be taken at face value. A way of saying something that is untrue in a way that amuses you, but you want the person you’re speaking to to believe it. You brace your cheek with the tip of your tongue, to keep yourself from laughing; hence tongue-in-cheek.
As I recall their kind empathetic pronouncement, I am embarrassed, ashamed of my ignorance. I did not know that barter the forerunner of trade that begot the commercial initiative is simply a human trait. It developed everywhere and began in antiquity. Its origin cannot be traced to a particular society identified by geographical location, ethnicity or belief system. It has produced both good and bad results as have all social engineering instruments and the institutions that utilize them. It was and still is a contributing factor to the development of civilization around the world. It is a common characteristic of all people, a shared bridge that connects us. My valued associates were going back to the future echoing a historic relationship connection based on the most standard of human interaction—the ancient process of exchange that first brought people together. Universally understood and practiced by all. As I look back today I marvel at the wisdom of my friends that uttered the aforementioned statement even if it was uttered tongue in cheek. Today, we refer to the process as globalization but in fact the practice has always been with us.
In the Introduction section of the book, the natural propensity to exchange the valued results of one’s special knowledge and/or applied physical skills was noted as a trait found only in human species. A recent article sustains this proposition, recognizing it a sociological mechanism in the evolution of mankind.22 Professor Marean, offering an explanation of how humans conquered the planet, concludes that it is due to a generically encoded feature embedded in H. sapiens he calls hyperprosociality. The term describes a proclivity to engage to an extraordinary degree “in highly complex coordinated group activities with people who are not kin to us and who may even be complete strangers.” This predisposition toward an extreme brand of cooperation with those outside of one’s family, territorial clan or regional tribe helps explain the motivational onus for cross border trade beyond the general search for basic survival resources and need fulfillment, both instinctive characteristics in all living creatures. The ancient barter process was a natural extension of the ingrained cooperative activities of human beings. Over time such exchanges progressed to organized commercial trade across and between wider geographical destinations; and globalization was born.
Clearly the often quoted line from the play The Tempest by Willian Shakespeare (Act 1, Scene 1) “What’s past is prologue” reminds us that history helps to set the stage for what exists today and what may occur in the future. Global business managers should appreciate and understand the roots of globalization and business principles as they influence their modern activities.