4 - The politics of business

Summary

Possibly the greatest single difference in business practice between medieval western Europe and today's advanced economies is the role of politics. Today, businessmen and governments try to influence each other's behavior at all levels in an enormous variety of ways. For example, businessmen try to persuade politicians through contributions to political parties, the efforts of armies of articulate lobbyists, appeals from their employees, and occasionally through direct bribes. Governments, for their part, employ selective taxation, antitrust legislation, and product regulation to nudge businesses in desired directions. Although these are but a few of the many devices used by each side to put pressure on the other, they are applied in the context of an elaborate set of ground rules that have developed over time and that are subject to only limited political tampering. Most advanced economies enjoy widely accepted company laws, banking regulations, statutes for fraud and bankruptcy, rules for the protection of property rights, and conventions for settling disputes on a national and international level. To be sure, today's governments are constantly having to respond to complaints of unfair practices, tilted playing fields, and the like, but underlying all domestic and international trade is a bedrock of generally accepted law.

Medieval businessmen, on the other hand, could not escape the fact that in no European legal jurisdiction was there such a concept as “inalienable rights”: there were only legal privileges.