The Medici Bank and the World of Florentine Capitalism

The Medici Bank and the World of Florentine Capitalism

By Richard A. Goldthwaite

Past and Present, No. 114 (1987)

Introduction: The old debate about the vigour of the spirit of capitalism in late medieval Italy wore itself out long ago, not having generated enough really interesting questions to keep it going. It is generally conceded that the Italian merchant was driven by the acquisitive instinct to make more money, that he was prepared often to take great risks to turn a quick profit, that he had carefully worked out the business techniques for proceeding rationally towards this goal, and finally that he was none the less passionately involved in this activity for all the ranting and raving of clerics about his abuse of the usury doctrine and about the moral dangers inherent in the business world. Since the beginning of business history as a distinct discipline within the realm of economic history, all these qualities of the early capitalist have been emphasized by economic historians of the period out to disprove notions that capitalism did not arise until the sixteenth century or later. Doubts linger on in some quarters about the existence in Italy of a positive and articulated those of capitalism, like the so-called work ethic and ascetic spirit associated with Protestantism and there is a general tendency to regard the merchant in this early stage of commercial capitalism more as a speculator, a kind of gambler, than as a planner with long-range goals. Generally speaking, however, discussions of capitalism in Italy have not succeeded in defining the term with sufficient precision to render it a useful tool for historical analysis.

Still, we recognize a vast difference between capitalism as we know it today and its earlier stage in Italy, and sometimes the terms industrial and mercantile capitalism are used to make that distinction. In modern industrial capitalism the accumulation of wealth results from the control of the means of production, and in the opinion of some this entails the development of techniques for political, social and cultural control as well. A central theme in the analysis of how capitalists function, therefore, is that spirit of competition that drives them to increase their power in order to reduce and even eliminate competition. Today we take it for granted that a corporate executive tries to dominate the market, or at least strives to get a larger share of it; and we are not really surprised when they exploit political contacts, attempt to influence legislation and stretch, circumvent and even break the law in order to achieve this objective.

This aspect of modern capitalism – competition among firms and their preoccupation with power has not been discussed in the literature on business history in Renaissance Italy. To raise the subject for historical consideration involves questions about the structure of the business community, about the relation of firms with one another, about their relations with government, about their function in the overall economy in short, about the behaviour of the firm and the entrepreneur in an institutional context rather than as disembodied agents of that ethereal “spirit” of capitalism that dominated so much of the older discussions of the subject, leaving them without any real substance. What is proposed here, therefore, is to look, in the light of modern and contemporary developments, at the bank of the most powerful family in one of the first great centres of international commerce and banking to gain a better perspective on the history of capitalism in an earlier stage of its development.

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