Empire in Asia

A New Global History

The Political Economy of Merchant Empires

Book Cover

Book Title

The Political Economy of Merchant Empires. Cambridge; New York: Cambridge University Press, 1991


Tracy, James D. (ed.)


"The Political Economy of Merchant Empires" focuses on why European concerns eventually achieved a dominant position in global trade at the expense of well-organized and well-financed rivals, especially in the Asian context. The author hints at the principal feature that differentiates European enterprises from indigenous trade networks in various parts of the globe: their form of trade organization. The Europeans had organized their major commercial ventures as an extension of the state or as autonomous trading companies, which was endowed with many of the characteristics of the state, including the capacity to wage war to further their interests.

The fears of Europeans stationed in Asia were formed not merely by national rivalries back home, but they saw themselves at a disadvantage to the conniving way of greedy Asian foes. The reasons for building fortifications in Asia was thus more than a way of keeping other European trade rivals out, but also to grant protection against the indigenous people. It has been the work of modern scholars of Southeast Asian trade in the early modern centuries to vindicate early modern European perceptions of an Asian hostility so implacable that it could only be broken down by force.

Scope (Topics Covered, Time Period)

The book represents an effort at collaboration among scholars of multiple perspectives as an approach to the rich and complex cross-cultural trade it seeks to elucidate. The book covers largely the fourteenth and eighteenth centuries.

Four of the essays explore in various ways the connection between trading wealth and the armed strength of the state or its agencies. A broad comparative survey of state policies of trade highlights the contrast between Mughal India and the European state system, which promoted competition and increased state interest in trading wealth.

Topics explored include other debates on how Europe was finally able to dominate mainland Asia. For example, Geoffrey Parker argues that Europe emerged as the dominating power by exporting not its mercantile institutions, but its revolution in military technology, developed in the course of ensuing warfare among the major states. The comparison between Tokugawa Japan and Habsburg Spain represented how Japan managed to use its silver-production profits wisely, while the latter's policies with regard to silver contributed to its decline by wasting these precious gains on European wars.

Argument (Methodology, Significance)

The increasing successes of trading cities also meant rising social position and political influence for traders. Recent studies thus point to the conclusion that direct control of trade by state functionaries, whether the prince or his officials, is a reaction to European presence in Southeast Asia, not a condition that the Europeans had discovered upon their arrival. For example, state officials had previously taken little part in trade under the Sultans of Melaka but starting from the seventeenth century, they turned into leading figures in local trade because of the special privileges given to them by the VOC, which found this procedure a convenient way of gaining cooperation of states that were not under its authority.

Hence the general argument is based on the premise set by K.N. Chaudhuri's remark, that one should explain the European trade in Asia as one that was not of peaceful trading, but that of armed trade. The combination of state power and trading interest in European countries were judged as vital to producing the answer to Europe's reason for dominance. In addition, this paradigm is utilized to explain the eventual success of the Europeans in their commercial struggles with formidable indigenous rivals, especially in Asia.

The author pushes readers to reflect on the mentality that supported such campaigns on the part of foreign powers towards the indigenous trading societies, as well as many less dramatic applications of force in achieving goals of trade. The discussion that follows will first review differing strategic aims for which force was employed, and then consider how modern students of this regions have reinterpreted Southeast Asian trade in the era of European contacts, suggesting that things were not quite as they seemed to the builders of Europe's merchant empires.

Annotated by Michelle Djong