Was Florence a perfectly competitive market? Transactional evidence from the Renaissance

Abstract

To the extent that any location can be considered the birthplace of mercantile capitalism, northern Italy, and especially Florence, is that place. Double-entry bookkeeping, marine insurance, partnerships with branches, holding companies, bills-of-exchange, and international banking in general all of these accoutrements of modern business and finance were invented in northern Italy in the late thirteenth and fourteenth centuries.1 No one today, contra Weber, seriously questions that late-Medieval and early-Renaissance Italian merchants had passionately pursued but rationally disciplined acquisitive motives.2 These facts, with the absence of big business and big government,3 have led many to infer that northern Renaissance Italian economies must have been close to Adam Smith's dream a world of unfettered individualist entrepreneurs, rationally wheeling and dealing in laissez-faire markets.4 But was Florence a perfectly competitive market? Or even a close facsimile?