than the exchange level. Losses to the trader were mostly the result of mis-
fortune–the death of pack animals, the sinking of a ship, spoiled or plun-
dered cargo–or misinformation, such as bringing a shipment of goods to a
place where the price turned out to be less than expected. A trader who
ended up with a caravan of dates, hides, textiles, or tin in a place where the
price was insufficient to cover his costs was not long for the business.
All trade situations eventually changed: either improved, deteriorated, or
just went in new directions. A huge number of variables impacted on trade,
including changing tastes, fashions, andconsumption patterns; traditions and
taboos; political and social upheavals; and war, to name a few. Nevertheless,
even when most of the variables appear to have been similar, people often
responded to them very differently.
On theories of trade
In recent years the study of the exchange and circulation of goods has been
dominated by two controversies. Thefirst centers on a theory referred to as
“Substantivism”advocated by a group of scholars led by Karl Polanyi. This
in effect elevates the old gift-giving versus profit-seeking discussion to the
level of a theoretical controversy. Substantivism attacks what is referred to as
“Formalism,” which maintains that the way in which modern capitalist
economies work–that is, through a market system–is the normal, standard
way all economies have worked; it is a universal paradigm.
The Substantivists claim that the use of supply and demand to establish
price did not appear until the fourth centuryBCE(in Greece) and that the
mature market-driven profit-seeking system of price-fixing markets was not
firmly established until the industrial revolution of the eighteenth and
nineteenth centuriesCE. They believe that people in earlier societies had non-
market economies in which the exchange of goods was essentially a social
act. The goal of exchange was to engender social relations, to form contacts,
and to gain prestige as well as to acquire desired goods but not to make a
profit from the sale of one’s own goods. Supply and demand played no role
in setting price. Thus the study of trade is useful primarily to determine
social and political patterns. In place of entrepreneurs haggling in a free
market, Polanyi saw what he called administered or treaty trade organized
between governments. The traders were not private businessmen but gov-
ernment officials, and the prices and quantities of goods to be traded were
fixed through treaties negotiated beforehand that remained in effect for long
periods of time.
In recent years much new textual and archaeological material has been
amassed that was not available to Polanyi, who wrote in the 1950s, or his
followers, whose heyday extended across the two decades that followed. This
new material shows that the Substantivists greatly overstated the role of the
state and understated the importance of private entrepreneurship in
4 Some introductory musings