5.2 Economics

Italy lay at the center of the incredibly lucrative trade between Europe and the Middle East, a status determined both by its geography and the role Italians had played in transporting goods and people during the crusading period. Along with the trade itself, it was in Italy that key mercantile practices emerged for the first time in Europe. From the Arab world, Italian merchants learned about and ultimately adopted a number of commercial practices and techniques that helped them (Italians) stay at the forefront of the European economy as a whole. For example, Italian accountants adopted double-entry bookkeeping (accounts payable and accounts receivable) and Italian merchants invented the commenda, a way of spreading out the risk associated with business ventures among several partners – an early form of insurance for expensive and risky business ventures. Italian banks had agents all over Europe, which provided reliable credit and bills of exchange, allowing merchants to travel around the entire Mediterranean region to trade without having to literally cart chests full of coins to pay for new wares.

One other noteworthy innovation first employed in Europe by Italians was the use of Arabic numerals instead of Roman numerals, since the former are so much easier to work with. Overall, Italian merchants, borrowing from their Arab and Turkish trading partners, pioneered efforts to rationalize and systematize business itself in order to make it more predictable and reliable. Benefiting from the fragmentation of the Church during the era of the Babylonian Captivity and the Great Western Schism, Italian bankers also came to charge interest on loans, becoming the first Christians to defy the Church’s ban on “usury” in an ongoing, regular fashion. The stigma associated with usury remained, but bankers (including the Medici family that came to completely dominate Florentine politics in the fifteenth century) became so wealthy that social and religious stigma alone was not enough to prevent the spread of the practice. This actually led to more anti-Semitism in Europe, since the one social role played by Jews that Christians had grudgingly tolerated – money-lending – was increasingly usurped by Christians.

Much of the prosperity of northern Italy was based on the trade ties Italy maintained with the Middle East, which by the fourteenth century meant both the remains of the Byzantine Empire in Constantinople as well as the Ottoman Turkish empire, the rising power in the east. From the Turks, Italians (especially the great mercantile empire controlled by Venice) bought precious cargo like spices, silks, porcelain, and coffee, in return for European woolens, crafts, and bullion. The Italians were also the go-between linking Asia and Europe, by way of the Middle East.

The Italian city-states were sites of manufacturing as well. Raw wool from England and Spain made its way to Italy to be processed into cloth, and Italian workshops produced luxury goods sought after everywhere else in Europe. Italian luxury goods were superior to those produced in the rest of Europe, and soon even Italian weapons were better-made. Italian farms were prosperous and, by the Renaissance period, produced a significant and ongoing surplus, feeding the growing cities themselves.

One result of the prosperity generated by Italian mercantile success was the rise of a culture of conspicuous consumption. Both members of the nobility and rich non-nobles spent lavishly to display their wealth and their culture and learning. All of the famous Renaissance thinkers and artists were patronized by the rich, which was how the artists and scholars were able to concentrate on their work. In turn, patrons expected “their” artists to serve as symbols of cultural achievement that reflected well on the patron. The fluorescence of Renaissance art and learning was a consequence of that very specific use of wealth: mercantile and banking riches translated into social and political status through art, architecture, and scholarship.

Political Setting

Even though the western Roman Empire had fallen apart by 476 CE, the great cities of Italy survived in better shape than Roman cities elsewhere in the empire. Likewise, the feudal system had never taken as hold as strongly in Italy – there were lords and vassals, but especially in the cities there was a large and strong independent class of artisans and merchants who balked at subservience before lords, especially lords who did not live in the cities. Thus, by 1200, most Italian cities were politically independent of lords and came to dominate their respective hinterlands, serving as lords to “vassal” towns and villages for miles around.

Instead of kings and vassals, power was in the hands of the popoli grossi, literally meaning the “fat people,” but here meaning simply the rich, noble and non-noble alike. About 5% of the population in the richest cities were among them. The culture of the popoli grossi was rife with flattery and politicking, since so much depended on personal connections. Since noble titles meant less, more depended on one’s family reputation. The most important thing to the social elite was honor. Any perceived insult had to be met with retaliation, meaning there was a great deal of bloodshed between powerful families. There was no such thing as a police force, after all, just the guards of the rich and powerful and, usually, a city guard that answered to the city council. The latter was often controlled by powerful families on those councils, however, so both law enforcement and personal vendettas were generally carried out by private mercenaries. Another aspect of the identity of the popoli grossi was that, despite their penchant for feuds, they required a peaceful political setting on a large scale in order for their commercial interests to prosper. Thus, they were often hesitant to embark on large-scale war in Italy itself.

Likewise, the focus on education and culture that translated directly into the creation of Renaissance art and scholarship was tied to the identity of the popoli grossi as people of peace: elsewhere in Europe noble identity was still very much associated with war, whereas the popoli grossi of Italy wanted to show off both their mastery of arms and their mastery of thought along with their good taste.

The central irony of the prosperity of the Renaissance was that even in northern Italy, the vast majority of the population benefited only indirectly or not at all. While the lot of Italian peasants was not significantly worse than that of peasants elsewhere, poor townsfolk had to endure heavy taxes on basic foodstuffs that made it especially miserable to be poor in one of the richest places in Europe at the time. A significant percentage of the population of cities were paupers, the indigent and homeless who tried to scrape by as laborers or sought charity from the Church. Cities were especially vulnerable to epidemics as well, adding to the misery of urban life for the poor.