The Pre-Industrial World

The kinds of interactions between human beings which are the stuff of economics go back to the dawn of civilisation, but the systematic study of these relationships is heavily skewed towards recent times. From the time when language developed some 100,000 years ago,1 there must have been buyers and sellers, borrowers and lenders. The need for credit must have been critical from the beginning of settled agriculture about 11,000 years ago.2 Indeed, the reason why some 5,000 years elapsed between the time of the first permanent settlements in Mesopotamia in the Middle East and the rise of the first city states of significance in the same area may well have had to do with the lack of any way of recording more debts than could be remembered by the village headman. It was finding ways of keeping track of increasingly complex webs of obligations which, as much as anything else, made the growth of larger-scale polities possible. There is ample evidence, however, in the form of clay tablets, that sophisticated methods of recording obligations were in operation when the earliest cities were established about 3,700 BC.3