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Sunday, February 11, 2024

Information society

From Wikipedia, the free encyclopedia
 
An information society is a society or subculture where the usage, creation, distribution, manipulation and integration of information is a significant activity. Its main drivers are information and communication technologies, which have resulted in rapid growth of a variety of forms of information. Proponents of this theory posit that these technologies are impacting most important forms of social organization, including education, economy, health, government, warfare, and levels of democracy. The people who are able to partake in this form of society are sometimes called either computer users or even digital citizens, defined by K. Mossberger as “Those who use the Internet regularly and effectively”. This is one of many dozen internet terms that have been identified to suggest that humans are entering a new and different phase of society.

Some of the markers of this steady change may be technological, economic, occupational, spatial, cultural, or a combination of all of these. Information society is seen as a successor to industrial society. Closely related concepts are the post-industrial society (post-fordism), post-modern society, computer society and knowledge society, telematic society, society of the spectacle (postmodernism), Information Revolution and Information Age, network society (Manuel Castells) or even liquid modernity.

Definition

There is currently no universally accepted concept of what exactly can be defined as an information society and what shall not be included in the term. Most theoreticians agree that a transformation can be seen as started somewhere between the 1970s, the early 1990s transformations of the Socialist East and the 2000s period that formed most of today's net principles and currently as is changing the way societies work fundamentally. Information technology goes beyond the internet, as the principles of internet design and usage influence other areas, and there are discussions about how big the influence of specific media or specific modes of production really is. Frank Webster notes five major types of information that can be used to define information society: technological, economic, occupational, spatial and cultural. According to Webster, the character of information has transformed the way that we live today. How we conduct ourselves centers around theoretical knowledge and information.

Kasiwulaya and Gomo (Makerere University) allude that information societies are those that have intensified their use of IT for economic, social, cultural and political transformation. In 2005, governments reaffirmed their dedication to the foundations of the Information Society in the Tunis Commitment and outlined the basis for implementation and follow-up in the Tunis Agenda for the Information Society. In particular, the Tunis Agenda addresses the issues of financing of ICTs for development and Internet governance that could not be resolved in the first phase.

Some people, such as Antonio Negri, characterize the information society as one in which people do immaterial labour. By this, they appear to refer to the production of knowledge or cultural artifacts. One problem with this model is that it ignores the material and essentially industrial basis of the society. However it does point to a problem for workers, namely how many creative people does this society need to function? For example, it may be that you only need a few star performers, rather than a plethora of non-celebrities, as the work of those performers can be easily distributed, forcing all secondary players to the bottom of the market. It is now common for publishers to promote only their best selling authors and to try to avoid the rest—even if they still sell steadily. Films are becoming more and more judged, in terms of distribution, by their first weekend's performance, in many cases cutting out opportunity for word-of-mouth development.

Michael Buckland characterizes information in society in his book Information and Society. Buckland expresses the idea that information can be interpreted differently from person to person based on that individual's experiences.

Considering that metaphors and technologies of information move forward in a reciprocal relationship, we can describe some societies (especially the Japanese society) as an information society because we think of it as such.

The word information may be interpreted in many different ways. According to Buckland in Information and Society, most of the meanings fall into three categories of human knowledge: information as knowledge, information as a process, and information as a thing.

Thus, the Information Society refers to the social importance given to communication and information in today's society, where social, economic and cultural relations are involved.

In the Information Society, the process of capturing, processing and communicating information is the main element that characterizes it. Thus, in this type of society, the vast majority of it will be dedicated to the provision of services and said services will consist of the processing, distribution or use of information.

The growth of computer information in society

Internet users per 100 inhabitants
Source: International Telecommunication Union.
The amount of data stored globally has increased greatly since the 1980s, and by 2007, 94% of it was stored digitally.

The growth of the amount of technologically mediated information has been quantified in different ways, including society's technological capacity to store information, to communicate information, and to compute information. It is estimated that, the world's technological capacity to store information grew from 2.6 (optimally compressed) exabytes in 1986, which is the informational equivalent to less than one 730-MB CD-ROM per person in 1986 (539 MB per person), to 295 (optimally compressed) exabytes in 2007. This is the informational equivalent of 60 CD-ROM per person in 2007 and represents a sustained annual growth rate of some 25%. The world's combined technological capacity to receive information through one-way broadcast networks was the informational equivalent of 174 newspapers per person per day in 2007.

The world's combined effective capacity to exchange information through two-way telecommunication networks was 281 petabytes of (optimally compressed) information in 1986, 471 petabytes in 1993, 2.2 (optimally compressed) exabytes in 2000, and 65 (optimally compressed) exabytes in 2007, which is the informational equivalent of 6 newspapers per person per day in 2007. The world's technological capacity to compute information with humanly guided general-purpose computers grew from 3.0 × 10^8 MIPS in 1986, to 6.4 x 10^12 MIPS in 2007, experiencing the fastest growth rate of over 60% per year during the last two decades.

James R. Beniger describes the necessity of information in modern society in the following way: “The need for sharply increased control that resulted from the industrialization of material processes through application of inanimate sources of energy probably accounts for the rapid development of automatic feedback technology in the early industrial period (1740-1830)” (p. 174) “Even with enhanced feedback control, industry could not have developed without the enhanced means to process matter and energy, not only as inputs of the raw materials of production but also as outputs distributed to final consumption.”(p. 175)

Development of the information society model

Colin Clark's sector model of an economy undergoing technological change. In later stages, the Quaternary sector of the economy grows.

One of the first people to develop the concept of the information society was the economist Fritz Machlup. In 1933, Fritz Machlup began studying the effect of patents on research. His work culminated in the study The production and distribution of knowledge in the United States in 1962. This book was widely regarded and was eventually translated into Russian and Japanese. The Japanese have also studied the information society (or jōhōka shakai, 情報化社会).

The issue of technologies and their role in contemporary society have been discussed in the scientific literature using a range of labels and concepts. This section introduces some of them. Ideas of a knowledge or information economy, post-industrial society, postmodern society, network society, the information revolution, informational capitalism, network capitalism, and the like, have been debated over the last several decades.

Fritz Machlup (1962) introduced the concept of the knowledge industry. He began studying the effects of patents on research before distinguishing five sectors of the knowledge sector: education, research and development, mass media, information technologies, information services. Based on this categorization he calculated that in 1959 29% per cent of the GNP in the USA had been produced in knowledge industries.

Economic transition

Peter Drucker has argued that there is a transition from an economy based on material goods to one based on knowledge. Marc Porat distinguishes a primary (information goods and services that are directly used in the production, distribution or processing of information) and a secondary sector (information services produced for internal consumption by government and non-information firms) of the information economy.

Porat uses the total value added by the primary and secondary information sector to the GNP as an indicator for the information economy. The OECD has employed Porat's definition for calculating the share of the information economy in the total economy (e.g. OECD 1981, 1986). Based on such indicators, the information society has been defined as a society where more than half of the GNP is produced and more than half of the employees are active in the information economy.

For Daniel Bell the number of employees producing services and information is an indicator for the informational character of a society. "A post-industrial society is based on services. (…) What counts is not raw muscle power, or energy, but information. (…) A post industrial society is one in which the majority of those employed are not involved in the production of tangible goods".

Alain Touraine already spoke in 1971 of the post-industrial society. "The passage to postindustrial society takes place when investment results in the production of symbolic goods that modify values, needs, representations, far more than in the production of material goods or even of 'services'. Industrial society had transformed the means of production: post-industrial society changes the ends of production, that is, culture. (…) The decisive point here is that in postindustrial society all of the economic system is the object of intervention of society upon itself. That is why we can call it the programmed society, because this phrase captures its capacity to create models of management, production, organization, distribution, and consumption, so that such a society appears, at all its functional levels, as the product of an action exercised by the society itself, and not as the outcome of natural laws or cultural specificities" (Touraine 1988: 104). In the programmed society also the area of cultural reproduction including aspects such as information, consumption, health, research, education would be industrialized. That modern society is increasing its capacity to act upon itself means for Touraine that society is reinvesting ever larger parts of production and so produces and transforms itself. This makes Touraine's concept substantially different from that of Daniel Bell who focused on the capacity to process and generate information for efficient society functioning.

Jean-François Lyotard has argued that "knowledge has become the principle [sic] force of production over the last few decades". Knowledge would be transformed into a commodity. Lyotard says that postindustrial society makes knowledge accessible to the layman because knowledge and information technologies would diffuse into society and break up Grand Narratives of centralized structures and groups. Lyotard denotes these changing circumstances as postmodern condition or postmodern society.

Similarly to Bell, Peter Otto and Philipp Sonntag (1985) say that an information society is a society where the majority of employees work in information jobs, i.e. they have to deal more with information, signals, symbols, and images than with energy and matter. Radovan Richta (1977) argues that society has been transformed into a scientific civilization based on services, education, and creative activities. This transformation would be the result of a scientific-technological transformation based on technological progress and the increasing importance of computer technology. Science and technology would become immediate forces of production (Aristovnik 2014: 55).

Nico Stehr (1994, 2002a, b) says that in the knowledge society a majority of jobs involves working with knowledge. "Contemporary society may be described as a knowledge society based on the extensive penetration of all its spheres of life and institutions by scientific and technological knowledge" (Stehr 2002b: 18). For Stehr, knowledge is a capacity for social action. Science would become an immediate productive force, knowledge would no longer be primarily embodied in machines, but already appropriated nature that represents knowledge would be rearranged according to certain designs and programs (Ibid.: 41-46). For Stehr, the economy of a knowledge society is largely driven not by material inputs, but by symbolic or knowledge-based inputs (Ibid.: 67), there would be a large number of professions that involve working with knowledge, and a declining number of jobs that demand low cognitive skills as well as in manufacturing (Stehr 2002a).

Also Alvin Toffler argues that knowledge is the central resource in the economy of the information society: "In a Third Wave economy, the central resource – a single word broadly encompassing data, information, images, symbols, culture, ideology, and values – is actionable knowledge" (Dyson/Gilder/Keyworth/Toffler 1994).

At the end of the twentieth century, the concept of the network society gained importance in information society theory. For Manuel Castells, network logic is besides information, pervasiveness, flexibility, and convergence a central feature of the information technology paradigm (2000a: 69ff). "One of the key features of informational society is the networking logic of its basic structure, which explains the use of the concept of 'network society'" (Castells 2000: 21). "As an historical trend, dominant functions and processes in the Information Age are increasingly organized around networks. Networks constitute the new social morphology of our societies, and the diffusion of networking logic substantially modifies the operation and outcomes in processes of production, experience, power, and culture" (Castells 2000: 500). For Castells the network society is the result of informationalism, a new technological paradigm.

Jan Van Dijk (2006) defines the network society as a "social formation with an infrastructure of social and media networks enabling its prime mode of organization at all levels (individual, group/organizational and societal). Increasingly, these networks link all units or parts of this formation (individuals, groups and organizations)" (Van Dijk 2006: 20). For Van Dijk networks have become the nervous system of society, whereas Castells links the concept of the network society to capitalist transformation, Van Dijk sees it as the logical result of the increasing widening and thickening of networks in nature and society. Darin Barney uses the term for characterizing societies that exhibit two fundamental characteristics: "The first is the presence in those societies of sophisticated – almost exclusively digital – technologies of networked communication and information management/distribution, technologies which form the basic infrastructure mediating an increasing array of social, political and economic practices. (…) The second, arguably more intriguing, characteristic of network societies is the reproduction and institutionalization throughout (and between) those societies of networks as the basic form of human organization and relationship across a wide range of social, political and economic configurations and associations".

Critiques

The major critique of concepts such as information society, postmodern society, knowledge society, network society, postindustrial society, etc. that has mainly been voiced by critical scholars is that they create the impression that we have entered a completely new type of society. "If there is just more information then it is hard to understand why anyone should suggest that we have before us something radically new" (Webster 2002a: 259). Critics such as Frank Webster argue that these approaches stress discontinuity, as if contemporary society had nothing in common with society as it was 100 or 150 years ago. Such assumptions would have ideological character because they would fit with the view that we can do nothing about change and have to adapt to existing political realities (kasiwulaya 2002b: 267).

These critics argue that contemporary society first of all is still a capitalist society oriented towards accumulating economic, political, and cultural capital. They acknowledge that information society theories stress some important new qualities of society (notably globalization and informatization), but charge that they fail to show that these are attributes of overall capitalist structures. Critics such as Webster insist on the continuities that characterise change. In this way Webster distinguishes between different epochs of capitalism: laissez-faire capitalism of the 19th century, corporate capitalism in the 20th century, and informational capitalism for the 21st century (kasiwulaya 2006).

For describing contemporary society based on a new dialectic of continuity and discontinuity, other critical scholars have suggested several terms like:

  • transnational network capitalism, transnational informational capitalism (Christian Fuchs 2008, 2007): "Computer networks are the technological foundation that has allowed the emergence of global network capitalism, that is, regimes of accumulation, regulation, and discipline that are helping to increasingly base the accumulation of economic, political, and cultural capital on transnational network organizations that make use of cyberspace and other new technologies for global coordination and communication. [...] The need to find new strategies for executing corporate and political domination has resulted in a restructuration of capitalism that is characterized by the emergence of transnational, networked spaces in the economic, political, and cultural system and has been mediated by cyberspace as a tool of global coordination and communication. Economic, political, and cultural space have been restructured; they have become more fluid and dynamic, have enlarged their borders to a transnational scale, and handle the inclusion and exclusion of nodes in flexible ways. These networks are complex due to the high number of nodes (individuals, enterprises, teams, political actors, etc.) that can be involved and the high speed at which a high number of resources is produced and transported within them. But global network capitalism is based on structural inequalities; it is made up of segmented spaces in which central hubs (transnational corporations, certain political actors, regions, countries, Western lifestyles, and worldviews) centralize the production, control, and flows of economic, political, and cultural capital (property, power, definition capacities). This segmentation is an expression of the overall competitive character of contemporary society." (Fuchs 2008: 110+119).
  • digital capitalism (Schiller 2000, cf. also Peter Glotz): "networks are directly generalizing the social and cultural range of the capitalist economy as never before" (Schiller 2000: xiv)
  • virtual capitalism: the "combination of marketing and the new information technology will enable certain firms to obtain higher profit margins and larger market shares, and will thereby promote greater concentration and centralization of capital" (Dawson/John Bellamy Foster 1998: 63sq),
  • high-tech capitalism or informatic capitalism (Fitzpatrick 2002) – to focus on the computer as a guiding technology that has transformed the productive forces of capitalism and has enabled a globalized economy.

Other scholars prefer to speak of information capitalism (Morris-Suzuki 1997) or informational capitalism (Manuel Castells 2000, Christian Fuchs 2005, Schmiede 2006a, b). Manuel Castells sees informationalism as a new technological paradigm (he speaks of a mode of development) characterized by "information generation, processing, and transmission" that have become "the fundamental sources of productivity and power" (Castells 2000: 21). The "most decisive historical factor accelerating, channelling and shaping the information technology paradigm, and inducing its associated social forms, was/is the process of capitalist restructuring undertaken since the 1980s, so that the new techno-economic system can be adequately characterized as informational capitalism" (Castells 2000: 18). Castells has added to theories of the information society the idea that in contemporary society dominant functions and processes are increasingly organized around networks that constitute the new social morphology of society (Castells 2000: 500). Nicholas Garnham is critical of Castells and argues that the latter's account is technologically determinist because Castells points out that his approach is based on a dialectic of technology and society in which technology embodies society and society uses technology (Castells 2000: 5sqq). But Castells also makes clear that the rise of a new "mode of development" is shaped by capitalist production, i.e. by society, which implies that technology isn't the only driving force of society.

Antonio Negri and Michael Hardt argue that contemporary society is an Empire that is characterized by a singular global logic of capitalist domination that is based on immaterial labour. With the concept of immaterial labour Negri and Hardt introduce ideas of information society discourse into their Marxist account of contemporary capitalism. Immaterial labour would be labour "that creates immaterial products, such as knowledge, information, communication, a relationship, or an emotional response" (Hardt/Negri 2005: 108; cf. also 2000: 280-303), or services, cultural products, knowledge (Hardt/Negri 2000: 290). There would be two forms: intellectual labour that produces ideas, symbols, codes, texts, linguistic figures, images, etc.; and affective labour that produces and manipulates affects such as a feeling of ease, well-being, satisfaction, excitement, passion, joy, sadness, etc. (Ibid.).

Overall, neo-Marxist accounts of the information society have in common that they stress that knowledge, information technologies, and computer networks have played a role in the restructuration and globalization of capitalism and the emergence of a flexible regime of accumulation (David Harvey 1989). They warn that new technologies are embedded into societal antagonisms that cause structural unemployment, rising poverty, social exclusion, the deregulation of the welfare state and of labour rights, the lowering of wages, welfare, etc.

Concepts such as knowledge society, information society, network society, informational capitalism, postindustrial society, transnational network capitalism, postmodern society, etc. show that there is a vivid discussion in contemporary sociology on the character of contemporary society and the role that technologies, information, communication, and co-operation play in it. Information society theory discusses the role of information and information technology in society, the question which key concepts shall be used for characterizing contemporary society, and how to define such concepts. It has become a specific branch of contemporary sociology.

Second and third nature

Information society is the means of sending and receiving information from one place to another. As technology has advanced so too has the way people have adapted in sharing information with each other.

"Second nature" refers a group of experiences that get made over by culture. They then get remade into something else that can then take on a new meaning. As a society we transform this process so it becomes something natural to us, i.e. second nature. So, by following a particular pattern created by culture we are able to recognise how we use and move information in different ways. From sharing information via different time zones (such as talking online) to information ending up in a different location (sending a letter overseas) this has all become a habitual process that we as a society take for granted.

However, through the process of sharing information vectors have enabled us to spread information even further. Through the use of these vectors information is able to move and then separate from the initial things that enabled them to move. From here, something called "third nature" has developed. An extension of second nature, third nature is in control of second nature. It expands on what second nature is limited by. It has the ability to mould information in new and different ways. So, third nature is able to ‘speed up, proliferate, divide, mutate, and beam in on us from elsewhere. It aims to create a balance between the boundaries of space and time (see second nature). This can be seen through the telegraph, it was the first successful technology that could send and receive information faster than a human being could move an object. As a result different vectors of people have the ability to not only shape culture but create new possibilities that will ultimately shape society.

Therefore, through the use of second nature and third nature society is able to use and explore new vectors of possibility where information can be moulded to create new forms of interaction.

Sociological uses

Estonia, a small Baltic country in northern Europe, is one of the most advanced digital societies.

In sociology, informational society refers to a post-modern type of society. Theoreticians like Ulrich Beck, Anthony Giddens and Manuel Castells argue that since the 1970s a transformation from industrial society to informational society has happened on a global scale.

As steam power was the technology standing behind industrial society, so information technology is seen as the catalyst for the changes in work organisation, societal structure and politics occurring in the late 20th century.

In the book Future Shock, Alvin Toffler used the phrase super-industrial society to describe this type of society. Other writers and thinkers have used terms like "post-industrial society" and "post-modern industrial society" with a similar meaning.

Related terms

A number of terms in current use emphasize related but different aspects of the emerging global economic order. The Information Society intends to be the most encompassing in that an economy is a subset of a society. The Information Age is somewhat limiting, in that it refers to a 30-year period between the widespread use of computers and the knowledge economy, rather than an emerging economic order. The knowledge era is about the nature of the content, not the socioeconomic processes by which it will be traded. The computer revolution, and knowledge revolution refer to specific revolutionary transitions, rather than the end state towards which we are evolving. The Information Revolution relates with the well known terms agricultural revolution and industrial revolution.

  • The information economy and the knowledge economy emphasize the content or intellectual property that is being traded through an information market or knowledge market, respectively. Electronic commerce and electronic business emphasize the nature of transactions and running a business, respectively, using the Internet and World-Wide Web. The digital economy focuses on trading bits in cyberspace rather than atoms in physical space. The network economy stresses that businesses will work collectively in webs or as part of business ecosystems rather than as stand-alone units. Social networking refers to the process of collaboration on massive, global scales. The internet economy focuses on the nature of markets that are enabled by the Internet.
  • Knowledge services and knowledge value put content into an economic context. Knowledge services integrates Knowledge management, within a Knowledge organization, that trades in a Knowledge market. In order for individuals to receive more knowledge, surveillance is used. This relates to the use of Drones as a tool in order to gather knowledge on other individuals. Although seemingly synonymous, each term conveys more than nuances or slightly different views of the same thing. Each term represents one attribute of the likely nature of economic activity in the emerging post-industrial society. Alternatively, the new economic order will incorporate all of the above plus other attributes that have not yet fully emerged.
  • In connection with the development of the information society, information pollution appeared, which in turn evolved information ecology – associated with information hygiene.

Intellectual property considerations

One of the central paradoxes of the information society is that it makes information easily reproducible, leading to a variety of freedom/control problems relating to intellectual property. Essentially, business and capital, whose place becomes that of producing and selling information and knowledge, seems to require control over this new resource so that it can effectively be managed and sold as the basis of the information economy. However, such control can prove to be both technically and socially problematic. Technically because copy protection is often easily circumvented and socially rejected because the users and citizens of the information society can prove to be unwilling to accept such absolute commodification of the facts and information that compose their environment.

Responses to this concern range from the Digital Millennium Copyright Act in the United States (and similar legislation elsewhere) which make copy protection (see DRM) circumvention illegal, to the free software, open source and copyleft movements, which seek to encourage and disseminate the "freedom" of various information products (traditionally both as in "gratis" or free of cost, and liberty, as in freedom to use, explore and share).

Caveat: Information society is often used by politicians meaning something like "we all do internet now"; the sociological term information society (or informational society) has some deeper implications about change of societal structure. Because we lack political control of intellectual property, we are lacking in a concrete map of issues, an analysis of costs and benefits, and functioning political groups that are unified by common interests representing different opinions of this diverse situation that are prominent in the information society.

Trade

From Wikipedia, the free encyclopedia

Trade involves the transfer of goods and services from one person or entity to another, often in exchange for money. Economists refer to a system or network that allows trade as a market.

An early form of trade, barter, saw the direct exchange of goods and services for other goods and services,[1] i.e. trading things without the use of money.[1] Modern traders generally negotiate through a medium of exchange, such as money. As a result, buying can be separated from selling, or earning. The invention of money (and letters of credit, paper money, and non-physical money) greatly simplified and promoted trade. Trade between two traders is called bilateral trade, while trade involving more than two traders is called multilateral trade.

In one modern view, trade exists due to specialization and the division of labor, a predominant form of economic activity in which individuals and groups concentrate on a small aspect of production, but use their output in trade for other products and needs.[2] Trade exists between regions because different regions may have a comparative advantage (perceived or real) in the production of some trade-able commodity – including the production of scarce or limited natural resources elsewhere. For example, different regions' sizes may encourage mass production. In such circumstances, trading at market price between locations can benefit both locations. Different types of traders may specialize in trading different kinds of goods; for example, the spice trade and grain trade have both historically been important in the development of a global, international economy.

A picture of a busy market in Mile 12. Lagos - Nigeria
A busy market in Mile 12. Lagos - Nigeria

Retail trade consists of the sale of goods or merchandise from a very fixed location[3] (such as a department store, boutique, or kiosk), online or by mail, in small or individual lots for direct consumption or use by the purchaser.[4] Wholesale trade is the traffic in goods that are sold as merchandise to retailers, industrial, commercial, institutional, or other professional business users, or to other wholesalers and related subordinated services.

Historically, openness to free trade substantially increased in some areas from 1815 until the outbreak of World War I in 1914. Trade openness increased again during the 1920s but collapsed (in particular in Europe and North America) during the Great Depression of the 1930s. Trade openness increased substantially again from the 1950s onward (albeit with a slowdown during the oil crisis of the 1970s). Economists and economic historians contend that current levels of trade openness are the highest they have ever been.[5][6][7]

Etymology

Trade is from Middle English trade ("path, course of conduct"), introduced into English by Hanseatic merchants, from Middle Low German trade ("track, course"), from Old Saxon trada ("spoor, track"), from Proto-Germanic *tradō ("track, way"), and cognate with Old English tredan ("to tread").

Commerce is derived from the Latin commercium, from cum "together" and merx, "merchandise."[8]

History

Prehistory

Trade originated from human communication in prehistoric times. Trading was the main facility of prehistoric people,[citation needed] who exchanged goods and services with each other in a gift economy before the innovation of modern-day currency. Peter Watson dates the history of long-distance commerce to c. 150,000 years ago.[9]

In the Mediterranean region, the earliest contact between cultures involved members of the species Homo sapiens, principally using the Danube river, at a time beginning 35,000–30,000 BP.[10][11][12][13][need quotation to verify]

Some[who?] trace the origins of commerce to the very start of transactions in prehistoric times. Apart from traditional self-sufficiency, trading became a principal facility for prehistoric people, who bartered what they had for goods and services from each other.

The caduceus, traditionally associated with Mercury (the Roman patron-god of merchants), continues in use as a symbol of commerce.[14]

Ancient history

Ancient Etruscan "aryballoi" terracota vessels unearthed in the 1860s at Bolshaya Bliznitsa tumulus near Phanagoria, South Russia (formerly part of the Bosporan Kingdom of Cimmerian Bosporus, present-day Taman Peninsula); on exhibit at the Hermitage Museum in Saint Petersburg

Trade is believed to have taken place throughout much of recorded human history. There is evidence of the exchange of obsidian and flint during the Stone Age. Trade in obsidian is believed to have taken place in New Guinea from 17,000 BCE.[15][16]

The earliest use of obsidian in the Near East dates to the Lower and Middle paleolithic.[17]

Robert Carr Bosanquet investigated trade in the Stone Age by excavations in 1901.[18][19] Trade is believed[by whom?] to have first begun in south west Asia.[20][21]

Archaeological evidence of obsidian use provides data on how this material was increasingly the preferred choice rather than chert from the late Mesolithic to Neolithic, requiring exchange as deposits of obsidian are rare in the Mediterranean region.[22][23][24]

Obsidian provided the material to make cutting utensils or tools, although since other more easily obtainable materials were available, use was exclusive to the higher status of the tribe using "the rich man's flint".[25] Interestingly, Obsidian has held its value relative to flint.

Early traders traded Obsidian at distances of 900 kilometres within the Mediterranean region.[26]

Trade in the Mediterranean during the Neolithic of Europe was greatest in this material.[22][27] Networks were in existence at around 12,000 BCE[28] Anatolia was the source primarily for trade with the Levant, Iran and Egypt according to Zarins study of 1990.[29][30][31] Melos and Lipari sources produced among the most widespread trading in the Mediterranean region as known to archaeology.[32]

The Sari-i-Sang mine in the mountains of Afghanistan was the largest source for trade of lapis lazuli.[33][34] The material was most largely traded during the Kassite period of Babylonia beginning 1595 BCE.[35][36]

Later trade

Mediterranean and Near East

Ebla was a prominent trading center during the third millennia BCE, with a network reaching into Anatolia and north Mesopotamia.[32][37][38][39]

A map of the Silk Road trade route between Europe and Asia

Materials used for creating jewelry were traded with Egypt since 3000 BCE. Long-range trade routes first appeared in the 3rd millennium BCE, when Sumerians in Mesopotamia traded with the Harappan civilization of the Indus Valley. The Phoenicians were noted sea traders, traveling across the Mediterranean Sea, and as far north as Britain for sources of tin to manufacture bronze. For this purpose they established trade colonies the Greeks called emporia.[40] Along the coast of the Mediterranean, researchers have found a positive relationship between how well-connected a coastal location was and the local prevalence of archaeological sites from the Iron Age. This suggests that a location's trade potential was an important determinant of human settlements.[41]

From the beginning of Greek civilization until the fall of the Roman Empire in the 5th century, a financially lucrative trade brought valuable spice to Europe from the far east, including India and China. Roman commerce allowed its empire to flourish and endure. The latter Roman Republic and the Pax Romana of the Roman empire produced a stable and secure transportation network that enabled the shipment of trade goods without fear of significant piracy, as Rome had become the sole effective sea power in the Mediterranean with the conquest of Egypt and the near east.[42]

In ancient Greece Hermes was the god of trade[43][44] (commerce) and weights and measures.[45] In ancient Rome, Mercurius was the god of merchants, whose festival was celebrated by traders on the 25th day of the fifth month.[46][47] The concept of free trade was an antithesis to the will and economic direction of the sovereigns of the ancient Greek states. Free trade between states was stifled by the need for strict internal controls (via taxation) to maintain security within the treasury of the sovereign, which nevertheless enabled the maintenance of a modicum of civility within the structures of functional community life.[48][49]

The fall of the Roman empire and the succeeding Dark Ages brought instability to Western Europe and a near-collapse of the trade network in the western world. Trade, however, continued to flourish among the kingdoms of Africa, the Middle East, India, China, and Southeast Asia. Some trade did occur in the west. For instance, Radhanites were a medieval guild or group (the precise meaning of the word is lost to history) of Jewish merchants who traded between the Christians in Europe and the Muslims of the Near East.[50]

Indo-Pacific

Austronesian proto-historic and historic maritime trade network in the Indian Ocean[51]

The first true maritime trade network in the Indian Ocean was by the Austronesian peoples of Island Southeast Asia.[51] Initiated by the indigenous peoples of Taiwan and the Philippines, the Maritime Jade Road was an extensive trading network connecting multiple areas in Southeast and East Asia. Its primary products were made of jade mined from Taiwan by Taiwanese indigenous peoples and processed mostly in the Philippines by indigenous Filipinos, especially in Batanes, Luzon, and Palawan. Some were also processed in Vietnam, while the peoples of Malaysia, Brunei, Singapore, Thailand, Indonesia, and Cambodia also participated in the massive trading network. The maritime road is one of the most extensive sea-based trade networks of a single geological material in the prehistoric world. It was in existence for at least 3,000 years, where its peak production was from 2000 BCE to 500 CE, older than the Silk Road in mainland Eurasia and the later Maritime Silk Road. The Maritime Jade Road began to wane during its final centuries from 500 CE until 1000 CE. The entire period of the network was a golden age for the diverse societies of the region.[52][53][54][55]

Sea-faring Southeast Asians also established trade routes with Southern India and Sri Lanka as early as 1500 BC, ushering an exchange of material culture (like catamarans, outrigger boats, sewn-plank boats, and paan) and cultigens (like coconuts, sandalwood, bananas, and sugarcane); as well as connecting the material cultures of India and China. Indonesians, in particular were trading in spices (mainly cinnamon and cassia) with East Africa using catamaran and outrigger boats and sailing with the help of the Westerlies in the Indian Ocean. This trade network expanded to reach as far as Africa and the Arabian Peninsula, resulting in the Austronesian colonization of Madagascar by the first half of the first millennium AD. It continued up to historic times, later becoming the Maritime Silk Road.[51][56][57][58][59]

Mesoamerica

Tajadero or axe money used as currency in Mesoamerica. It had a fixed worth of 8,000 cacao seeds, which were also used as currency.[60]

The emergence of exchange networks in the Pre-Columbian societies of and near to Mexico are known to have occurred within recent years before and after 1500 BCE.[61]

Trade networks reached north to Oasisamerica. There is evidence of established maritime trade with the cultures of northwestern South America and the Caribbean.

Middle Ages

During the Middle Ages, commerce developed in Europe by trading luxury goods at trade fairs. Wealth became converted into movable wealth or capital. Banking systems developed where money on account was transferred across national boundaries. Hand to hand markets became a feature of town life and were regulated by town authorities.

Western Europe established a complex and expansive trade network with cargo ships being the main carrier of goods; Cogs and Hulks are two examples of such cargo ships.[62] Many ports would develop their own extensive trade networks. The English port city of Bristol traded with peoples from what is modern day Iceland, all along the western coast of France, and down to what is now Spain.[63]

A map showing the main trade routes for goods within late medieval Europe

During the Middle Ages, Central Asia was the economic center of the world.[64] The Sogdians dominated the east–west trade route known as the Silk Road after the 4th century CE up to the 8th century CE, with Suyab and Talas ranking among their main centers in the north. They were the main caravan merchants of Central Asia.

From the Middle Ages, the maritime republics, in particular Venice, Pisa and Genoa, played a key role in trade along the Mediterranean. From the 11th to the late 15th centuries, the Venetian Republic and the Republic of Genoa were major trade centers. They dominated trade in the Mediterranean and the Black Sea, having the monopoly between Europe and the Near East for centuries.[65][66]

From the 8th to the 11th century, the Vikings and Varangians traded as they sailed from and to Scandinavia. Vikings sailed to Western Europe, while Varangians to Russia. The Hanseatic League was an alliance of trading cities that maintained a trade monopoly over most of Northern Europe and the Baltic, between the 13th and 17th centuries.

The Age of Sail and the Industrial Revolution

Portuguese explorer Vasco da Gama pioneered the European spice trade in 1498 when he reached Calicut after sailing around the Cape of Good Hope at the southern tip of the African continent. Prior to this, the flow of spice into Europe from India was controlled by Islamic powers, especially Egypt. The spice trade was of major economic importance and helped spur the Age of Discovery in Europe. Spices brought to Europe from the Eastern world were some of the most valuable commodities for their weight, sometimes rivaling gold.

From 1070 onward, kingdoms in West Africa became significant members of global trade.[67] This came initially through the movement of gold and other resources sent out by Muslim traders on the Trans-Saharan trading network.[67] Beginning in the 16th century, European merchants would purchase gold, spices, cloth, timber and slaves from West African states as part of the triangular trade.[67] This was often in exchange for cloth, iron, or cowrie shells which were used locally as currency.[67]

Founded in 1352, the Bengal Sultanate was a major trading nation in the world and often referred to by Europeans as the wealthiest country with which to trade.[68]

In the 16th and 17th centuries, the Portuguese gained an economic advantage in the Kingdom of Kongo due to different philosophies of trade.[67] Whereas Portuguese traders concentrated on the accumulation of capital, in Kongo spiritual meaning was attached to many objects of trade. According to economic historian Toby Green, in Kongo "giving more than receiving was a symbol of spiritual and political power and privilege."[67]

In the 16th century, the Seventeen Provinces were the center of free trade, imposing no exchange controls, and advocating the free movement of goods. Trade in the East Indies was dominated by Portugal in the 16th century, the Dutch Republic in the 17th century, and the British in the 18th century. The Spanish Empire developed regular trade links across both the Atlantic and the Pacific Oceans.

Danzig in the 17th century, a port of the Hanseatic League

In 1776, Adam Smith published the paper An Inquiry into the Nature and Causes of the Wealth of Nations. It criticized Mercantilism, and argued that economic specialization could benefit nations just as much as firms. Since the division of labour was restricted by the size of the market, he said that countries having access to larger markets would be able to divide labour more efficiently and thereby become more productive. Smith said that he considered all rationalizations of import and export controls "dupery", which hurt the trading nation as a whole for the benefit of specific industries.

In 1799, the Dutch East India Company, formerly the world's largest company, became bankrupt, partly due to the rise of competitive free trade.

Berber trade with Timbuktu, 1853

19th century

In 1817, David Ricardo, James Mill and Robert Torrens showed that free trade would benefit the industrially weak as well as the strong, in the famous theory of comparative advantage. In Principles of Political Economy and Taxation Ricardo advanced the doctrine still considered the most counterintuitive in economics:

When an inefficient producer sends the merchandise it produces best to a country able to produce it more efficiently, both countries benefit.

The ascendancy of free trade was primarily based on national advantage in the mid 19th century. That is, the calculation made was whether it was in any particular country's self-interest to open its borders to imports.

John Stuart Mill proved that a country with monopoly pricing power on the international market could manipulate the terms of trade through maintaining tariffs, and that the response to this might be reciprocity in trade policy. Ricardo and others had suggested this earlier. This was taken as evidence against the universal doctrine of free trade, as it was believed that more of the economic surplus of trade would accrue to a country following reciprocal, rather than completely free, trade policies. This was followed within a few years by the infant industry scenario developed by Mill promoting the theory that the government had the duty to protect young industries, although only for a time necessary for them to develop full capacity. This became the policy in many countries attempting to industrialize and out-compete English exporters. Milton Friedman later continued this vein of thought, showing that in a few circumstances tariffs might be beneficial to the host country; but never for the world at large.[69]

20th century

The Great Depression was a major economic recession that ran from 1929 to the late 1930s. During this period, there was a great drop in trade and other economic indicators.

The lack of free trade was considered by many as a principal cause of the depression causing stagnation and inflation.[70] Only during World War II did the recession end in the United States. Also during the war, in 1944, 44 countries signed the Bretton Woods Agreement, intended to prevent national trade barriers, to avoid depressions. It set up rules and institutions to regulate the international political economy: the International Monetary Fund and the International Bank for Reconstruction and Development (later divided into the World Bank $ Bank for International Settlements). These organizations became operational in 1946 after enough countries ratified the agreement. In 1947, 23 countries agreed to the General Agreement on Tariffs and Trade to promote free trade.[71]

The European Union became the world's largest exporter of manufactured goods and services, the biggest export market for around 80 countries.[72]

21st century

Today, trade is merely a subset within a complex system of companies which try to maximize their profits by offering products and services to the market (which consists both of individuals and other companies) at the lowest production cost. A system of international trade has helped to develop the world economy but, in combination with bilateral or multilateral agreements to lower tariffs or to achieve free trade, has sometimes harmed third-world markets for local products.

Free trade

Free trade is a policy by which a government does not discriminate against imports or exports by applying tariffs or subsidies. This policy is also known as laissez-faire policy. This kind of policy does not necessarily imply because a country will then abandon all control and taxation of imports and exports.[73]

Free trade advanced further in the late 20th century and early 2000s:

Perspectives

Protectionism

Protectionism is the policy of restraining and discouraging trade between states and contrasts with the policy of free trade. This policy often takes the form of tariffs and restrictive quotas. Protectionist policies were particularly prevalent in the 1930s, between the Great Depression and the onset of World War II.

Religion

Islamic teachings encourage trading (and condemn usury or interest).[74][75]

Judeao-Christian teachings do not prohibit trade. They do prohibit fraud and dishonest measures. Historically they forbade charging interest on loans.[76][77]

Development of money

A Roman denarius

The first instances of money were objects with intrinsic value. This is called commodity money and includes any commonly available commodity that has intrinsic value; historical examples include pigs, rare seashells, whale's teeth, and (often) cattle. In medieval Iraq, bread was used as an early form of money. In the Aztec Empire, under the rule of Montezuma cocoa beans became legitimate currency.[78]

Currency was introduced as standardised money to facilitate a wider exchange of goods and services. This first stage of currency, where metals were used to represent stored value, and symbols to represent commodities, formed the basis of trade in the Fertile Crescent for over 1500 years.

Numismatists have examples of coins from the earliest large-scale societies, although these were initially unmarked lumps of precious metal.[79]

Trends

Doha rounds

The Doha round of World Trade Organization negotiations aimed to lower barriers to trade around the world, with a focus on making trade fairer for developing countries. Talks have been hung over a divide between the rich developed countries, represented by the G20, and the major developing countries. Agricultural subsidies are the most significant issue upon which agreement has been the hardest to negotiate. By contrast, there was much agreement on trade facilitation and capacity building. The Doha round began in Doha, Qatar, and negotiations were continued in: Cancún, Mexico; Geneva, Switzerland; and Paris, France, and Hong Kong.[citation needed]

China

Beginning around 1978, the government of the People's Republic of China (PRC) began an experiment in economic reform. In contrast to the previous Soviet-style centrally planned economy, the new measures progressively relaxed restrictions on farming, agricultural distribution and, several years later, urban enterprises and labor. The more market-oriented approach reduced inefficiencies and stimulated private investment, particularly by farmers, which led to increased productivity and output. One feature was the establishment of four (later five) Special Economic Zones located along the South-east coast.[80]

The reforms proved spectacularly successful in terms of increased output, variety, quality, price and demand. In real terms, the economy doubled in size between 1978 and 1986, doubled again by 1994, and again by 2003. On a real per capita basis, doubling from the 1978 base took place in 1987, 1996 and 2006. By 2008, the economy was 16.7 times the size it was in 1978, and 12.1 times its previous per capita levels. International trade progressed even more rapidly, doubling on average every 4.5 years. Total two-way trade in January 1998 exceeded that for all of 1978; in the first quarter of 2009, trade exceeded the full-year 1998 level. In 2008, China's two-way trade totaled US$2.56 trillion.[81]

In 1991 China joined the Asia-Pacific Economic Cooperation group, a trade-promotion forum.[82] In 2001, it also joined the World Trade Organization.[83]

International trade

International trade is the exchange of goods and services across national borders. In most countries, it represents a significant part of GDP. While international trade has been present throughout much of history (see Silk Road, Amber Road), its economic, social, and political importance have increased in recent centuries, mainly because of Industrialization, advanced transportation, globalization, multinational corporations, and outsourcing.[citation needed]

Empirical evidence for the success of trade can be seen in the contrast between countries such as South Korea, which adopted a policy of export-oriented industrialization, and India, which historically had a more closed policy. South Korea has done much better by economic criteria than India over the past fifty years, though its success also has to do with effective state institutions.[84]

Trade sanctions

Trade sanctions against a specific country are sometimes imposed, in order to punish that country for some action. An embargo, a severe form of externally imposed isolation, is a blockade of all trade by one country on another. For example, the United States has had an embargo against Cuba for over 40 years.[85] Embargoes are usually on a temporary basis. For example, Armenia put a temporary embargo on Turkish products and bans any imports from Turkey on December 31, 2020. The situation is prompted by food security concerns given Turkey's hostile attitude towards Armenia.[86]

Fair trade

The "fair trade" movement, also known as the "trade justice" movement, promotes the use of labour, environmental and social standards for the production of commodities, particularly those exported from the Third and Second Worlds to the First World. Such ideas have also sparked a debate on whether trade itself should be codified as a human right.[87]

Importing firms voluntarily adhere to fair trade standards or governments may enforce them through a combination of employment and commercial law. Proposed and practiced fair trade policies vary widely, ranging from the common prohibition of goods made using slave labour to minimum price support schemes such as those for coffee in the 1980s. Non-governmental organizations also play a role in promoting fair trade standards by serving as independent monitors of compliance with labeling requirements.[88][89] As such, it is a form of Protectionism.

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