and refers to a large region linked within a single network of exchanges.)
This meant that goods, ideas, religions, and technologies were now being
exchanged across the largest of all the world zones.
The expansion of commerce and trade was also a crucial source of
innovation. Since Adam Smith (1723–1790), economists have understood
that competitive markets encourage innovation. Unlike tributary rulers,
merchants lacked the power to generate wealth by force; instead, they
had to use ¿ nesse. They had to produce and sell goods as ef¿ ciently and
cheaply as possible. That required a constant openness to innovation. This is
“Smithian” growth. Tributary rulers normally despised commerce, but they
also needed goods such as rare stones or silks, or horses that only merchants
could supply, so they often protected commerce. But merchants À ourished
best in the cracks between Agrarian empires, such as in small city-states
that traded with wealthy neighbors. Venice and Genoa in Renaissance Italy
and ancient Phoenicia are good examples of such highly commercial city-
states. Urbanization stimulated commerce because cities sucked in goods,
techniques, and people from large hinterlands. In 3000 B.C.E., few cities had
more than 30,000 inhabitants, and most were in Mesopotamia or Egypt. By
100 C.E., there may have been over 70 large cities spread throughout Afro-
Eurasia, some with populations of several hundred thousand (Christian,
Maps of Time, p. 326).
Despite their hostility to commerce, tribute-taking rulers could also stimulate
innovation and growth. Generally, tribute-takers had less incentive to
innovate than merchants, because they could extract resources coercively.
Indeed, in an era when growth was painfully slow by modern standards,
it often made more sense to capture wealth through war, than to produce
wealth through investments that could take generations to mature. That is
why most rulers in the later Agrarian era thought of themselves primarily
as warriors rather than producers. They admired warfare, found ful¿ llment
in it, and spent much time preparing for it. Nevertheless, to succeed as
tributary rulers, they sometimes had to encourage innovation. Heavy taxation
encouraged innovation, as peasants were forced to raise production in order
to feed themselves and pay taxes. The most farsighted rulers understood
that they could increase tributes by stimulating production and maintaining
infrastructure. That meant protecting peasants, building and maintaining