Economic and Social Exchange in Renaissance Florence
By John F. Padgett and Paul D. McLean
Published Online, 2002
Abstract: The commercial credit system, through which the Renaissance Florentines dominated European international finance, emerged out of their particular social-network structures of family, neighborhood, and social class, with double-entry accounting providing the technical tool to increase the volume of “friends” with whom Florentines could reciprocate. Blending historically inherited logics of economic and social exchange was central to the Florentines’ generative capacity to make credit and liquidity, which in turn helped Europe to expand through trade. Judging from data from the 1427 catasto, the particular network innovation achieved in Florence was this: economic partnership modeled on elite marriage (hence across neighborhood, within social class) was cross-cut with commercial credit modeled on clientage (hence within neighborhood, across social class). This social framework for economic markets emerged as an unintended byproduct of the political process of repressing the Ciompi rebellion of wool workers in 1378, which transformed the guild system. Through multiple-network rewiring, new cross-industry organizational forms were created. These concentrated economic wealth into the hands of a new style of generalist or “Renaissance man” elite, but they also actively sponsored new industries and new citizens. In Renaissance Florence, constructing political elites and constructing financial markets were two sides of the same co-evolutionary process of making new organizations, new markets, and new people.