Ancient Tablets Show Markets Worked 4k Years Before Economists Explained Them

The discovery of a 4,000-year-old clay tablet from Kanesh, Turkey, has shed new light on the origins of modern markets. The tablet outlines the founding charter of a twelve-partner trading company, which pooled 33 pounds of gold and specified profit-sharing ratios and penalties for early withdrawal. This level of sophistication is remarkable, given that it predates Adam Smith's writings on economics by 3,700 years. The merchants of Assur, who operated in ancient Iraq, demonstrated a deep understanding of financial instruments, including securitization, which allowed them to buy and sell loan documents as collateral for new loans. For example, Ahatum, a woman from the time, lent silver to four different men over nine years, keeping her own records and building a portfolio of receivables without the need for a bank.

The Kanesh tablets also provide evidence that the fundamental structure of human commercial behavior has not changed over time. In 2019, economists from Harvard, Sciences Po, the University of Chicago, and the University of Virginia applied a gravity model to the Kanesh tablet records, which predicted trade flows between countries based on economic size and geographic distance. The results showed that trade fell off with distance at nearly the same rate observed between modern nation-states, suggesting that human commercial behavior has remained consistent over the past 4,000 years. This finding supports Friedrich Hayek's theory of spontaneous order, which posits that complex economic systems can emerge without central design.

The implications of this discovery are significant, as they challenge the notion that markets are artifacts constructed by experts. Instead, the Kanesh tablets suggest that markets are emergent systems that arise from the interactions of individuals pursuing their own interests. This has important implications for policymakers, who often assume that markets require expert supervision to function effectively. The tablets also highlight the importance of understanding the historical context of commercial behavior, which can provide valuable insights into the development of modern economic systems. For instance, Deirdre McCloskey's argument that the bourgeois virtues, such as prudence and honest dealing, drove the modern world can be reevaluated in light of the Kanesh tablets, which show that these virtues were present in ancient commercial systems.