Historical Time Periods, Finance, and the Economy

Neolithic Revolution-Fall of Roman Empire

For the first time ever, humans began to have what could be considered an economy. Prior to
the Neolithic Revolution, each member of the small nomadic tribes had to hunt or gather to
survive. With ​the development of agriculture,​ people began to perform specialized (and
non-essential for survival) tasks since farmers could more easily produce a surplus of food.
Early cities were formed, and the production of pottery, art, and other items resulted in a
rudimentary ​barter system​. By the Bronze Age, multiple societies, including the Sumerians, had
developed ​monetary systems​. Some even had concepts of ​debt​. As urbanization and
economies grew, the resultant empires began to expand and clash. For centuries, Rome
flourished as a republic (and later and empire) through military conquest. In their conquered
territories, trade networks formed and strengthen. Goods from throughout the Mediterranean
and as far as East Asia were traded, forming an early global (or at least Old World) economy.
The fall of the Roman Empire cast Europe into the Dark Ages, a time categorized by a lack of
significant scientific innovation and disunity.

Medieval Europe-Renaissance

With the absence of a major centralized political power, Europe fell into the “Dark Ages”. Local
petty-kingdoms had formed, and the prevailing governmental system of ​feudalism​ discouraged
trade and economic growth. Feudalism relied heavily on hereditary positions and titles the rights
to land being traded from the king and down the chain of authority in exchange for goods,
services, and oaths of fealty. The ​manorial system​, as it was known, made peasants dependent
on the lord and his land. People enjoyed virtually no social mobility. In this time period, lords and
their knights would occasionally siege neighboring castles or manors, and would only keep track
of the loot they gained through the endeavor. This meant that no one ever kept track of profit
margins, which is very poor financial practice. Towards the end of the Middle Ages, an
increased interest in Classical works sparked a ‘rebirth’ of Europe, the Renaissance. The
Renaissance came with a renewed interest in trade, manufacturing, and exploration.
Improvements in banking ​also allowed for real ​financial services​ to be offered for the first time in
ages, albeit limited.
Age of Exploration-Industrial Revolution

With the Renaissance came a surge of new inventions and development. European seafaring
technology rapidly improved, leading to the ​discovery of new lands​ as well as the​ formation and
expansion of trade networks​. Inventions such as the p ​ rinting press​ allowed for rapid spread of
ideas and technologies. Spain and Portugal vied for dominance of the sea, exploring both Africa
and the Americas with competition in mind. For the first time in history, New and Old Worlds
collided and massive trade networks arose. The resultant Columbian Exchange forever altered
the biosphere and agriculture. The ​Atlantic slave trade​ often followed a triangular path: slaves to
the Caribbean (to farm sugar), molasses to North America (to make rum), and rum to Africa in
exchange for slaves. In order to fund the ventures to new lands, Europe developed ​stocks ​to
mitigate individual risk. For example, owning 1/10 of of 10 ships was less risky than owning one
whole ship. ​Double-entry bookkeeping ​allowed for people to keep track of profits and to made
sure that the accounting equation (assets = liabilities + owner's equity) remained true. Along
with ​improvements in banking​, stocks and accounting really made finance into an industry. With
the many European colonies that formed, finance was able to cement itself as necessary all
over the world. As Europe began to develop improved manufacturing technology, the Age of
Exploration made way for the Age of Industry.

Industrial Revolution-Internet

The invention of the modern ​steam engine ​had a massive impact on the world. It revolutionized
transportation, with ​steamboats, ​and ​trains​ allowing for goods to be shipped expediently and
cheaply. The textile industry was one of the first to utilize industrial technology with the ​spinning
jenny​ and eventually the ​cotton gin​ drastically improving the efficiency of cotton production and
development. The ​internal combustion engine ​enabled the development of ​airplanes​ and
automobiles,​ which further revolutionized travel and transport. The concept of the ​assembly line
also made the automobile affordable because it made assembling items much more efficient
and cheap. Communication was forever changed by the ​telegraph,​ the ​telephone,​ and
eventually the​ radio​ and even ​television.​ With the new industries, a new way to control them
came to be: ​the corporation​. In order to help recover from a period of economic downturn known
as the Great Depression (which resulted from a crash in the ​modern stock market​ in the US),
Congress established the ​Federal Deposit Insurance Company​ to protect against bank failure.
Also, the ​Banking Act​ was passed, giving the Federal Reserve enough power to help stabilize
the economy. Other things like the ​credit card​ and ​venture capital ​ came to be, changing how
people raised and spent money. The development of ​space technology​ impacted finance and
the economy greatly, although indirectly. Many new concepts and inventions that were intended
for space were also useful back on Earth. The invention of modern ​computers​ led to the
eventual development of the internet, which would further revolutionize finance.
Internet-Modern Times

The ​internet​ went through multiple stages in the 1970s and 80s, but the creation of the ​World
Wide Web​ permanently altered the course of human history. Now people could do so much
online: buy and sell goods and services (including stocks), hire employee or look for jobs, and to
spread ideas rapidly. Most people today get their news from the internet, and using the internet
to replace tasks such as grocery shopping is increasing common. ​Social media​ has grown to
dominate the lives of many and become a great marketing tool. For instance, an ad of Facebook
can recommend a restaurant, you can check its reviews on Yelp, call an Uber to get there, and
pay using Apple Pay. Additionally, ​financial services​ have become more accessible due to the
internet, and many people file their taxes and manage their accounts using the Intuit programs
like TurboTax and QuickBooks. The internet has allowed for companies to easily work in many
countries at once, and has globalized the economy greatly. Factory production has been made
much more efficient through the use of ​robots,​ which are capable of replacing humans in many
settings. ​Cell phones​ have made communication easier than ever, and ​artificial intelligence ​may
replace humans wherever possible. ​Credit cards​ have become widespread, which has caused
convenience and strife. The ​Great Recession​ was a economic downturn due to the collapse of
the housing industry, which had been booming. This prompted President Obama and Congress
to pass the​ American Recovery and Reinvestment Act​, which was intended to protect and help
create jobs. Since the economy has largely recovered, new trends are showing. The interest
rates and other patterns seem to foreshadow another economic dip, but that is purely
speculative. It does seems likely that automation will continue to improve efficiency and that
newer technologies related to genetics will begin to impact the economy.

The Impact of Finance

Initially I asked the question: “How has finance changed throughout history?”. As I researched, I
realized the better question was: “How has finance changed history?”. As long as a humans
have had an economy, finance has been a streamlining and revolutionary force for (mostly)
good. Finance has been used to track and record business results, enable economic growth,
and spur innovation. Although it has frequently changed in response to new developments, new
financial developments have forced the world to adapt and thrive. Capitalism and its
accompanying concepts have allowed for unprecedented freedom. The stock market, for
instance, allows every man and woman the opportunity to literally invest in a company and
share in their profits. Ironically, people were most free as hunter-gatherers, but the freedom and
time have had a strong positive correlation for a while, at least in the western world. New issues
like surveillance and monitoring that we face in the digital age are, as far as we can see, not
particularly limiting to our freedom. The overarching trend has been that innovation and
ingenuity fuel and are fueled by financial developments in what could be described as a
beneficial vicious cycle: an upward spiral.
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