The Origins of the Market Economy: State Power, Territorial Control, and Modes of War Fighting

Abstract

The origin and spread of money-based commodity markets is normally attributed to a natural evolution from barter and is usually seen as a solution to problems of exchange. I want to propose that markets to a considerable degree develop historically out of a different set of dynamics. These are concerned with the state-building tasks of territorial conquest and control, and are closely related to specific modes of war fighting. In this connection, markets develop not only to facilitate exchange per se but also to facilitate the mobilization of resources and their management across space and time. This need to manage resources geographically and temporally contributes not only to the spread of commodity markets but also to the development of markets in land and in labor.