The History of Entrepreneurship

 

The Beginnings of Trade

The original entrepreneurs were, of course, traders and merchants. The first known instance of humans trading comes from New Guinea around 17,000 BCE, where locals exchanged obsidian, a black volcanic glass used to make hunting arrowheads for other needed goods. These early entrepreneurs exchanged one set of goods for another. The first known instance of humans trading comes from New Guinea around 17,000 BCE when locals exchanged obsidian, a black volcanic glass used to make hunting arrowheads for other needed goods. Around 15,000 BCE, the first animal domestication began taking place, and around 10,000 BCE, the first domestication of plants. This step toward agriculture was critical for the advancement of the human species. Now, instead of having to continually move around as nomadic tribes, seeking new places to hunt and to gather, we could stay in one place. Agriculture allowed us to start to form larger stationary communities and cities (the basis for civilizations), which set the stage for the development and spread of human knowledge. Agriculture changed everything for humans, enabling the formation of stable rather than migratory populations and laying the foundation for human populations to grow from 15 million to over 7 billion in the millennia ahead. As more people moved into these stable communities, one of the most important advances took place with the advent of specialization. Instead of each tribe hunting and gathering their food, different individuals within each tribe would become experts at certain tasks, such as farming, hunting, gathering, fishing, cooking, tool-making, shelter-building, or clothes-making. The importance of specialization in various tasks (versus self-sufficiency in all) cannot be overstated. As some individuals in a community focused on one activity or another, they got much better at it, speeding up the pace of innovation. As different people got better at different tasks through specialization, they were then able to exchange with one another for the various goods and services needed, increasing the benefits for all. As methods of agriculture improved, the first towns and cities were seen. Dependable food supplies allowed people to build permanent houses and settle in one area. As settlements increased in size, new social institutions such as religious centre's, courts, and marketplaces developed. The advent of towns produced further specialization, creating jobs in tool-making, pottery, carpentry, wool-making, and masonry, among others. The specialist created items faster and of a better quality than each family making its own, increasing standards of living. When the last Ice Age ended around the year 8,000 BCE, the poles melted, raising sea levels and creating a divide between Siberia and North America. This divide created two separate human civilizations for nearly 10,000 years, until European explorers reached the Americas again in the 15th century.

 

The First Cities

The Middle East’s fertile crescent between the Tigris and the Euphrates had the right mix of plants and animals to sustain the foundations of civilization. Around 4,000 BCE, people in central Asia tamed horses, giving them a major advantage in both agricultural work and warfare. By 3,000 BCE, the first settlements and cities formed in Sumeria (modern day Iraq). During this timeframe, the city of Uruk along the banks of the Euphrates River was home to 50,000 people in an amount of space that would have previously supported just one hunter-gatherer. Humans had become much more efficient at generating the food and energy necessary to support their communities. Human civilizations began to spring up near rivers like the Nile, the Tigris and Euphrates, the Indus, and the Yellow and Yangtze. In the first cities, writing was developed to keep track of crops. In this period, the first armies developed and the first city governments were formed. Agricultural settlements had put humanity on a rapidly developing path toward intellectual and scientific advancement.

 

Trade Routes Allow Ideas and Memes to Spread

Trade routes between the new cities soon sprang up. Donkeys, horses, and camels enabled trade caravans between civilizations, moving both goods and ideas. Ships were built to carry trade over the seas. Networks and hubs soon formed and more complex structures emerged. Great Pyramids were built in Cairo. Temples were built in Sumeria. Around 2000 BCE, iron was discovered, leading to advances in warfare and a very tumultuous few centuries. Around 600 BCE, human warriors with iron weaponry on horseback led to the creation of empires. Between 500 BCE and 117 CE, small cities turned into the Persian Empire, Alexander’s Empire, Han Chinese Empire, and Roman Empire with complex political systems and philosophies and beliefs. Judaism, Christianity, Hinduism, Buddhism, and Islam formed and became the world’s five major religions between 1300 BCE and 600 CE. Trade routes expanded. Salt from Africa reached Rome, rice travelled from China to Asia, and the secrets of making paper were transferred from China to Europe. Arab traders brought coffee, lemons, and oranges into Europe for the first time. Around 800, gunpowder was discovered in China when carbon and sulphur were combined with potassium nitrate. Around the year 1200, an Italian trader named Leonardo Fibonacci brought the standard system of numbers that we still use today from Arabia to Europe. Separated from the rest of the world, the Aztecs, Mayans, and Incan empires had formed in the Americas. Starting in 1492, Columbus’ voyages connected Europe and the Americas, bringing guns, horses, and disease. With the importance of Atlantic trade, power would shift toward the West in the coming centuries as Europeans colonized and laid the foundations for a globalized world. The reconnection of the hemispheres marked a major turning point for our species.

 

The Invention of Money

Early trade consisted of barter (one good for another). If Tom had twenty cows and Igor had eighty hens, and Tom and Igor agreed that one cow was worth four hens, then the trade could take place. The problem with the barter system, however, was that in order for a trade to take place, both parties had to want what the other party had. This “co-incidence of wants” often did not happen. Thus, the demands of growing business and trade gave rise to a money system. Silver rings or bars are thought to have been used as money in Ancient Iraq before 2000 B.C. Early forms of money (called specie) would be often be commodities like seashells, tobacco leaves, large round rocks, or beads. While the money system still had much development to go through (credit and paper money did not yet exist), its invention over four thousand years ago was of crucial importance to the world we live in today. The use of money, an accepted medium to store value and enable exchange, has greatly enhanced our world, our lives, our potential, and our future. By the year 1100, the prevailing cultural system in the Western World was feudalism. It was a world of kings and lords, vassals and serfs, kingdoms and manors. Long-distance trade was expanding and new worlds of foreign spices, oriental treasures, and luxurious silks were discovered. Three hundred and fifty years later, after weathering a Black Death and the Hundred Years War, Europe emerged by expanding trade to new levels and building the foundation for the start of the competitive market economy we know today.

 

The Creation of Markets

With a population spurt starting around 1470, cities, markets, and the volume of trade grew. Banking, initially started by Ancient Mesopotamians, grew to new heights and complexities; the guild system expanded; and the idea that a business was an impersonal entity, with a separate identity from its owner, started to take hold. Silver imports from the new world drove expanded trade and bookkeepers created standardized principles for keeping track of a firm’s accounts based on Luca Pacioli’s accounting advances. Early entrepreneurs, called merchants and explorers, began to raise capital, take risks, and stimulate economic growth. Capitalism had begun. Early on in the history of capitalism, the idea of monetary gain was shunned and shamed by many. The practice of usury, charging interest on loans, was banned by the Christian Church. Jobs were assigned by tradition and caste. Innovation was stifled and efficiency was forcefully put down, sometimes punishable by death. In sixteenth-century England, when mass production in the weaving industry first came about, the guildsmen protested. An efficient workshop containing two hundred looms and butchers and bakers for the workers was outlawed by the King under the pretence that such efficiency reduced the number of available jobs. Makers of innovative shirt buttons in France in the late 1600s were fined and searched and the importation of printed calico textiles cost the lives of 16,000 people. The world would soon see, however, that innovation was generally a good thing, making lives better, and that efficiency was a path toward a higher standard of a living.