Prologue

When I began teaching global management business courses I was struck by the reality that the vast majority of my students had a ­minimal ­introduction if not noticeably absent knowledge as to the history of ­commerce. They also lacked an appreciation of the impact of the ­commercial ­imperative on the development of civilization. As most of them were born in the era of modern globalization, with product choices and common brand names for everyday goods coming from a broad ­spectrum of foreign sources, the assumption that the world marketplace was created in their time was a commonly held conviction. The notion that globalization is a recent occurrence with a decidedly prejudicial depiction as a United States, no less European-inspired event, permeates the presentations of many educators, books and articles, authors, and the public.

The idea that such a system evolved over time and that today’s ­business management principles were birthed in antiquity were ­concepts my students never considered. I decided that I would open every class with a presentation on the roots of globalization, the emergence of the exchange imperative, and trade as a prime initiator propelling and ­contributing to societal growth and development. All cultures throughout history at one time or another engaged in cross border trade—what we today call ­globalization. It is an economic system with overtones of social and ­political ramifications that links all of us together. Many years later my continuously updated lecture notes for such sessions, coupled with a private research fascination on the contribution of the commercial ­imperative to civilization, have resulted in this book. Beyond the impetus provided by my students to investigate the subject matter, I remembered vividly my global executive experiences when an understanding of the history of global commerce would have well served my world managerial responsibilities if only such an introduction was given to me during my academic years. Doing business with foreign associates requires a deeper appreciation of how the art and science of working across borders developed, as the processes and principles that emerged still impact the establishment of commercial relationships today. Framed in the era of modern globalization, the current function of both undergraduate and MBA programs is to produce global citizen managers rather than ­graduates who are specialized in specific disciplines. This new educational ­pedagogical approach begins with business history or the roots of ­globalization.

In many textbooks and articles the word “globalization” is defined by the result it produces as opposed to the mechanism it really is. The term is used to describe a spreading economic phenomenon, the increased trend of nations to trade and invest across and between borders at a pace and to a degree not seen before: The growing economic interdependence around the world to signify that the economic good fortune or in reverse, the economic ills, of any one sovereign country could affect all the others. It reflects an interconnected interlinked global marketplace. The word is plainly objective. It describes an exemplified condition supported by fact. The term is not judgmental. Modern globalization is not a ­perfect ­economic system; it just exists, and one needs to deal with it. The term, however, has been hijacked by numerous prejudicial agenda-driven groups who have altered the word’s simple definition to suit their political, economic, and social agendas. It has been used to metaphorically symbolize problems that a changing environment endures. Some see the phenomenon as capitalism gone globally viral and that the commercial imperative lacks an ethical direction when applied worldwide. Many ­portray the process as contributing to the widening gap between rich and poor—the haves and have not’s. They fail to understand that the original exchange process that evolved into ancient cross territorial trade was never intended to be an equitable system of give and take. Undue advantage and damage has always accompanied relationships of humans since the beginning of mankind.

The word “globalization” should be defined as a universal ­mechanism that grew out of the naturally occurring ordered-exchange process. It matured on the back of common denominators of shared need ­values across and between social groups around the world. This meaning ­properly recognizes it as a socially induced system that is inherent in all cultures fostering social integration. It is a method to help manage the affairs of human beings and a collectively engineered apparatus to provide for the mutual, but not always equal, attainment of basic needs. As such it began in ancient times and continues in the present.

However, students in undergraduate and graduate business programs, as well as owners and managers of corporations, face a career ­historically marred by the negative overtones that the commercial endeavor has ­produced.

While the commercial world today and throughout history is not ­justifiably immune from valid criticisms for its practices and overall ­conduct, its influence on the development of civilization should not be overlooked. This consideration, along with the desire to acquaint the ­current business profession with its roots of its principles, provided the motivation for the construction of this book.

The book is intended to provide a historic perception of how the ­natural process developed, how the commercial world evolved to form the basis for many of our modern business techniques, and how the trade imperative (the precursor of global commerce) influenced the ­construction of our constantly developing civilization. The gathered material was constructed as a neutral assessment and not intended to portray ­globalizations as good or bad. However, any inspection into ­historical accounts must recognize that there will always be the prejudicial filters that are part of human record-keeping activity. The term ­“history” is derived from the Greek word historia, which means ­information or an inquiry designed to elicit truth. I recall one of my own professors once remarking that ­history is the version of past events that people have decided to agree upon, and ­therefore it is always subject to ­reinterpretation and examination sustained by newly confirmed facts that themselves can be challenged by future observers. It should be noted that the majority of references to history in this book are taken from generally accepted researched writings with many based on the published accounts as offered by scribes of ­yesterday. Such accuracy is always suspect as early public record keeping was in the purview of territorial rulers who engaged writers to portray their deeds in a decidedly positive fashion, cementing the fact that their historical tenure would always be preserved in the best possible way. Many historic accounts reported years, if not centuries, after the actual events took place relied on ­storytellers who themselves blended myth and fact to sustain their subjective conclusions. Classical authors did not rely on statistics, as such a ­collection in antiquity was not ­officially organized or, when it was available, was deeply suspect. Hence ­illogical ­contradictions appear in historic writings. Many ancient ­historians were therefore ­careless with details, reckless with chronology, and more ­desirous of flamboyant ­rhetoric to attract readers than interested in ­accuracy. Historian T.J. Cornell perhaps best sums up the danger of relying on historical records reminding us that, “all history contains an element of fiction.”1 In spite of such misgivings, pictures of the past do emerge that are worthy of ­inspection, examination, and reflective comment. Some theories introduced in the book recount the ideas of fringe historians as historic consensus is always in flux and new discoveries may alter what is presently considered correct. No matter how history is presented, and for that matter debated, to paraphrase the great Greek orator Cicero, in order to gain the maturity of knowledge, one must inquire into the past or the infancy of wisdom will remain.

As history is an unending dialogue between the past and the present, looking backward allows us to better plan for the future and such is the overriding intent of this book: to give current and future managers a better appreciation and understanding of the process they have inherited so they might use it better. Lao Tzu, the Chinese philosopher whose sayings are often recounted as those of Confucius, wrote that “By three methods we may learn wisdom: First, by reflection, which is the noblest, second by imitation, which is the easiest; and third by experience, which is the bitterest.”2

Globalization is a modern term but the roots of its theoretical ­inception are deeply buried in antiquity, and hence an inspection into the past, which allows for reflection in the present, is a good way to gather intelligence, perhaps emulate it and in the end use it to combat the harsh realities that occur around us. To put globalization in a time perspective, drawing a mental picture of its progression, think of a stadium and a playing field. In the beginning, ancient times, the participants in the game were few. Most of the earth’s population either sat on the sidelines as a supporting cast or in the stands watching the event while experiencing its effects either directly or indirectly. Over the centuries, such ­bystanders were more and more influenced by the incumbent players and got more involved in the game. They demanded alteration of the rules of the game to satisfy their needs and the participants began to structure their ­strategic intent and tactical activities with spectators in mind. In the modern fast-changing global environment, the audience has begun to come out of their seats as the appeal to join those on the field and get into the economic game has strengthened. The basic system, however, was created long ago, and over time more and more territorial participants entered the arena as players as opposed to just sitting in the stands.

At the end of 2014, the world population exceeded 7.3 billion and by 2050 conservative estimates predict another 2.5 billion will be added, a 34 percent increase. As the world grows, so will the interaction of its inhabitants as players rather than spectators. The effect of modern globalization in the words of Thomas L. Friedman is a “hot, flat and crowded” world.3 Metaphorically, what is happening is best illustrated by a lyric from singer-songwriter Don McLean’s song American Pie (1971): “‘Cause the players tried to take the field [but] the marching band/Refused to yield, do you recall what was revealed.”4

Such a question has been answered. More and more participants are on the global commercial field of play and the stadium continues to fill up. A larger slice of the world’s population will now be represented as the era of modern globalization, the unprecedented expansion of trade between and among nations based on ancient principles, takes hold. Emerging nations, the marching band, have made their presence known, and competition with the incumbent players has begun. Ironically, history reveals that the so-called developing nations of today were at one time the early purveyors and in fact the dominant players in the global trade game.

The modern world is, however, a changing, evolving one that ­students of today, the future executives of tomorrow, will need to engage. While new skills and techniques will need to be engineered to deal with such issues, the lessons of history still form the basis of this educational ­process. Most textbooks on the subject of international business and/or ­management devote an introductory chapter describing the globalization process, recounting such development in a series of statistical charts and depicting the growth of international or cross border trade and its ­financial cousin—foreign direct investment. The data shows that the world has embraced the phenomenon in the modern period, after World War II, at an accelerated pace and to a degree never before experienced. But such a concentration targeting the leap in natural progression, based ­primarily on arithmetical references in the modern era, does not tell the whole story nor does it allow an appreciation and understanding of how the ­development of the world was enhanced and fueled by the concept of globalization throughout history.

Commercial history is intertwined with mankind’s history and this partnership will continue to shape and influence the future. Knowing where one comes from helps in the construction of the current journey and such is the theme of this book. As well stated in a recent article, “There are already manifold interactions between business history and management studies, but to date they have been tended to be more particular and patchy than general and systematic.” A “closer engagement” to “further consideration and discussion” is warranted so that research historians and business theorists can combine to provide a platform of introspection to further the education of international managers.5

The study of history is often placed in the realm of humanities in most universities. Business school students, with their desire to learn something that will lead to a job, are more prone to take courses that build specific managerial proficiencies, which directly relate to career ­opportunities. The traditional pedagogy employed in most programs tends to stress ­fundamental skill sets within the core dimensions of finance, ­accounting, marketing, supply chain or logistics. They are all tied together by ­managerial strategy and cross administrational systems. When economics is added to the instructional mix a measure of history is introduced into most curriculums. However most texts, offering an element of historic prospective, tend to go back only as far as the 18th century and the industrial revolution before leaping forward to the modern era beginning with World War I.

However, to study history is to study and learn about people. It is the language of emotion,6 events, and response to them. It relates ­mankind’s relationship development. Since the beginning of time people have built numerous systems to help them adjust to human behavior: “The ­observant person goes through life asking: Where did that come from?”7 Only by appreciating and understanding the past can we construct the future.

Mark Twain, the American writer, humorist and social ­commentator, is credited with saying “History doesn’t repeat itself but it does rhyme.” The saying is not as strong as the dangerous warning issued by George Santayana, an American philosopher, essayist, poet, and novelist, although he always kept a valid Spanish passport writing “Those who do not remember the past are condemned to repeat it.” While the events of the past and those that are about to unfold are not in perfect unison there is a lot to be learned from examining them. Today’s business managers need to recognize that those that went before them, even in antiquity experienced analogous issues attached to the parallel commercial process they currently engage in. There exists a patterned reference between the past and the present. Therefore today’s executives, especially those operating in a global context, walk in the pathways constructed by ancient trade merchants. They were the first cross territorial ambassadors venturing into culturally alien societies but finding a common ground upon which to build relationships. It was called exchange, a globally shared human system as old as time itself whereby all people satisfied their life material needs. To accomplish their uniform goals universal principles of business from a variety of civilizations were devised that are still used today. Hence the conducting of commercial transactions, abet to varying degrees, is found in every society on earth.

This book is intended as a consolidated historic look at how the exchange imperative evolved into ancient cross territorial and then ­intercontinental trade, the precursor of modern-day globalization. It does not cover all events as such a task is simply too daunting. Therefore the information presented is selective and the presentation style is not built around a precise chronological passing of notable events. Events are approached with references linking historical aspects of the commercial process with sections depicting their modern relevance.

The book begins with a discussion of the prime driver of human relationship the normative ingrained desire, both physical and physiological, to exchange the fruits of one’s labors with others, precursor of trade, and its contribution to the development of civilization. It traces the emergence of the trading initiative via early commercial profiles of geographical regions and into the age of global exploration. It then offers an inspection of three areas of the business operational axis—products, infrastructure, and mediums of exchange—to show their contribution to the modern commercial system. Next the influence of the collateral elements of religion, government, and commercial laws is offered.

While many similar concepts lead to the emergence of common ­principles across the globe, they developed in the context of varying ­historical events. The text, therefore, presents them from a number of diverging yet intertwined circumstances and references academic ­disciplines from a different perspective. Because of this consideration, the text may repeat itself if only to stress their importance and influence on the globalization process.

The Second Edition of the book expands on the basic premise of the first one. To provide managers with a historical prospective of the process that came to be known as globalization and the appearance of universally applied business principles. Even in the short period since the original was published more and more research has emerged tracing the exchange process to thousands of years before transactional records were kept. Archeological expeditions have unearthed artifacts indicating that global trade was more wide spread and linked more geographical distant groups than previously thought hence Chapter 3 has been augmented to reflect such considerations. The ancient trading activities of countries including Russia, Brazil, Korea, the Caribbean and others are added while a deeper examination is offered for countries initially profiled. The first global products as presented in Chapter 5 are enlarged to include additional items that throughout history economically defined an era. All the other sections have been updated where appropriate to reflect new information.

All authors, whether they write non-fiction or fiction books, have a recurring theme they wish to portray. It is kind of an internal personal driver that motivates them to put something down on paper. In my three books on the subject of international business beginning with ethics, this one on globalization and the last devoted to cross-cultural management my underlying premise is to show the reader that the world is more the same then different. There are connecting rods of similarity despite the factors of separation in value determinants that underscore the diverse application of ethical behaviors and cultural identities. The system of exchange as explored in this book unites us all. It supports a natural ingrained desire to reach out and touch others, itself the catalyst of human development. It is an inherited human trait, a common ­denominator that is ­universally applied. Every society on earth has ­practiced exchange as far back as recorded history. The process is a sacrosanct social ­contract that has evolved into the modern term globalization. Even when the activities of ancient peoples were not chronicled the remnants they left behind show evidence of trade between indigenous groups and alien ­territorial ­societies. Global managers would be well advised to keep such ­consideration in mind as they venture out into the world. While they will encounter variations in socio-economic conditions and culturally induced value ­systems they need to keep in mind that there is a shared common thread, the exchange imperative. The merchants of old realized this phenomenon and the commercial traders of today merely follow in their footsteps. It is a shared legacy. Tracing the roots of globalization and business principles truly parallels the development of civilization on earth.

This book is dedicated to my children and grandchildren. May they learn from the past as I have, use such knowledge in their lives, while making sure they pass it on to those that follow in their footsteps.

Lawrence A. Beer,

July 15, 2015