Archaeologists have found written archives from the 1890 B.C. town of Kanesh, in modern-day Iraq. Adam Davidson wrote about what we can glean about economics through those who lived 4,000 years ago:

• Millennia before Adam Smith the ancient town had an advanced economy. It had what were essentially checks and bonds. There were also venture capitalists that invested in groups of risky startups. And there were active debt markets.
• In an echo of the last decade this encouraged financial speculation and eventually led to economic collapse with years of recession and search for effective regulation.
• Evidence indicates that trade obeys a “gravity model”. In most cases trade between two countries is determined by the size of their economies multiplied together, divided by the distance between them.
• The archives suggest that this town, which was around when Mammoths still roamed the world, also obeyed the gravity model.
• This indicates that institutions such as the WTO, and trade deals such as NAFTA and the TPP actually have very little effect on trade.
• Instead there is a ‘natural’ level of trade between countries that doesn’t easily yield to interference or control.

Read more about what a more modern understanding of economics can do to help us deal with some of the negative consequences of trade, and other details about economic life in Kanesh over here.

Source: The New York Times

Via: Marginal Revolution