The Open-Access City
What can modern American cities learn from the explosion of trade in Bruges, Antwerp, and Amsterdam during the Commercial Revolution?
If you’ve ever seen the movie In Bruges starring Colin Farrell, there’s a good chance you have sworn off ever visiting the city that serves as the movie’s namesake. Farrell’s character, a rookie hitman who botches an assassination attempt of a priest in England, instead killing a child, is sent by his boss to the city of Bruges to lay low and wait for further instructions. He is not very happy about it:
“There's a Christmas tree somewhere in London with a bunch of presents underneath it that'll never be opened. And I thought, if I survive all of this, I'd go to that house, apologize to the mother there, and accept whatever punishment she chose for me. Prison... death... didn't matter. Because at least in prison and at least in death, you know, I wouldn't be in fuckin' Bruges. But then, like a flash, it came to me. And I realized, fuck man, maybe that's what hell is: the entire rest of eternity spent in fuckin' Bruges.
Harsh.
In truth, Bruges is a charming little city, albeit one dominated by corny tourist traps. But it is indeed a bit depressing. Like other medieval European cities, you feel walking through the city center that you can precisely identify the era in which the city slipped into irrelevancy. And there’s a good reason for that. In the late Middle Ages, Bruges was one of the preeminent European trading hubs, drawing merchants from the far reaches of the Christian world. The city became the northwestern outpost of what historians call the Commercial Revolution, a dramatic revival of global trade that brought immense wealth to coastal ports able to meet merchants’ needs.
An excellent book recently recommended to me by the Charter City Institute’s Kurtis Lockhart satisfied my longstanding desire to learn more about what happened to Bruges, but also left me making some unexpected connections to problems cities face today. The book, Cities of Commerce: The Institutional Foundations of International Trade in the Low Countries, 1250-1650, fittingly by a Dutch economic historian named Oscar Gelderblom, traces the rise of Bruges, the subsequent usurpation as the region’s dominant port by Antwerp, followed by Amsterdam.
The economic institutions of Bruges, Antwerp, and Amsterdam underwent enormous changes through the period Gelderblom examines, first to attract foreign merchants and the lucrative growth they brought, then to retain them. The competition between the port cities of the Low Countries with its rivals—including London, Calais, and the various cities of the Hanseatic League in modern-day Germany—was intense. The close proximity of these ports to each other allowed merchants to take their business elsewhere with relative ease if cities failed to protect trade, settle disputes in a timely manner, or ensure contracts were enforced. Gelderblom’s thesis is thus relatively simple: the intensity of this urban competition incentivized individual cities to adapt legal systems conducive to frictionless, transparent, and open markets.
The extent to which this institutional competition between cities caused subsequent rapid growth in the Netherlands is a question better answered by professional economic historians, but there is obviously an interesting story here. And I am, to a great extent convinced by Walter Scheidel’s case laid out in Escape From Rome that the deep political, religious, and social fragmentation of Europe after the fall of the Western Roman Empire—even when it led to fierce and prolonged warfare—was a major factor in the continent’s adoption of more modern trade law and practices. So it’s certainly worth talking about what competition between Bruges, Antwerp, Amsterdam, and its rival port cities looked like. What were its key features? A few themes stand out in Gelderblom’s analysis.
Bruges, Antwerp, and Amsterdam continually revisited economic policy to adapt to market expansion.
As trade in the Low Countries, France, and Germany outgrew large seasonal fairs, merchants began to trade in cities like Bruges year-round. Early on, trade was often between merchants from the same jurisdiction. Merchants from the German Hanse would trade with fellow German conduits in Bruges, for example. Magistrates in Low Country ports had a solution to this: They would allow merchants to set up courts to resolve disputes in accordance with their own legal systems. In essence, foreign traders could appeal for a “foreign nation” (trade guild) creating a regulatory sandbox within each market for, say, English traders to settle suits under English law.
For the moment, this move was rather brilliant. Cities like Bruges didn’t need to risk picking the “wrong” set of rules for merchants to follow, which might alienate traders or foreign governments. But it has some obvious limits. When trade became more permanent and merchants began to live full-time in these fledgling commercial cities, they wanted to trade with merchants of other nationalities. An English trade guild could not effectively resolve disputes between a wholesaler operating out of Genoa and a merchant from London. Trade law had to be reclaimed by local authorities, which it ultimately was. Over time, Gelderblom notes, municipal Low Country courts took up some of the work of enforcing contracts and resolving disputes under a unified legal code.
The circumvention of foreign trade guilds is just one instance of many in which the port cities of the Low Countries adapted to the pressures the growth of the size and scope of trade put on key economic institutions. At other points, local governments would find clever ways to bypass potential bottlenecks on the growth of trade and broaden the types of evidence admissible in court to speedily resolve litigation.
The Low County ports were particularly open to adopting foreign merchants’ legal and business practices.
The adaptability of the Low Country ports’ legal institutions had additional benefits. Even after bypassing trade guilds and establishing specialized courts to deal with various areas of mercantile law, traders in these cities relied mainly on third-party arbiters. This meant that while cities’ legal systems gradually converged, they remained open to alternative rules and customs practiced elsewhere. Over time, a standardized system of mercantile law emerged in northwestern Europe, in part because cities remained so flexible and reliant on private solutions.
A prominent example of this is the adoption of double-entry bookkeeping, a key innovation that came out of the thriving maritime economies of Italian city-states in the 14th century. The use of double-entry bookkeeping proved incredibly useful for merchants running complex businesses and the practice gradually spread north. Notably, it also served as more ironclad proof of debits, credits, and orders than mere shipmaster accounts. Eventually, merchants in disputes over missed deliveries appealed to arbiters and courts for these documents to be admissible as proof in contract disputes. As the use of them continued to grow, not only did double-entry account books become acceptable evidence in legal disputes, but so did partnership agreements, IOUs, and other contracts hashed out between merchants. Rather than declaring a standard and implementing it top-down, Bruges, Antwerp, and Amsterdam allowed a type of “bottom-up” legislating that led to the use of business practices that were not only more efficient, but also more conducive to speedily resolving disagreements.
At key points, Low Country port cities crushed the power of rent-seekers in favor of growth.
Growing markets in Low Country ports put them on collision courses with key interest groups, such as the trade guilds operating legal sandboxes. Two particularly important junctures in the development of these cities were their conflicts with hostellers and brokers.
Before merchants bought their own compounds in trading hubs in cities like Bruges, hostellers served as key go-betweens for merchants, distributors, wholesalers, and workers. In effect, hostels were, as Gelderblom calls them, “one-stop shops” providing not only lodging but pricing information, storage for merchants’ goods, and lending products. Some hostellers, with permission, even bought and sold goods on merchants’ behalf. Similarly, brokers, with their deep knowledge of local markets and relationships with merchants, could charge fees to set up trades between merchants who otherwise didn’t have the information to do it themselves.
When merchants began to permanently settle in port cities, however, the usefulness of hostellers and brokers declined. Merchants didn’t need hostellers to execute purchases and sales for them anymore. Traders could get pricing information from local publications or their own employees on the ground. They could also store their own goods on their own properties.
Anticipating a future in which their services could be split up and purchased by merchants more efficiently elsewhere, hostel operators and brokers, like many rent-seeking interest groups throughout history, could have fought back and extracted legal protection from competition from local government. Indeed they did. Broker guilds were, for a time, able to artificially keep their numbers low, their fees high, and convince magistrates to mandate that merchants use licensed brokers when trading commodities.
Ultimately, however, these attempts by interest groups to extract rents consistently failed. Local magistrates, when forced to side with free markets or politically powerful interest groups, sided consistently with the former. Gelderblom writes that this choice was made much easier by the fact that trade was nonetheless growing rapidly. Interest groups were not fighting over slices of a shrinking pie. There was plenty to go around without dishing out special favors.
Ok, but what does this have to do with modern cities?
None of this is to say the late medieval Dutch model is something to be emulated, of course, and the Dutch Republic after this era entered into a period of prolonged stagnation that saw it fall behind England and become a mere second-tier player in European affairs. The period we’re discussing here is one of Smithian growth, not the Schumpeterian growth associated with the Industrial Revolution (to which the Dutch were latecomers). But the relative intensity of urban competition during this period and the mechanisms by which it produced consistent leaps forward in commercial policy—all while the major powers of Europe dumped untold resources into wars for control of the Netherlands—is fascinating, and, I think, raises some key questions for today’s American cities. Among them:
How can cities build political cultures more friendly to outside practices and adapt to economic change? Relatedly, what’s stopping cities from experimenting with more radical institutional change?
How can cities break rent-seeking bottlenecks on growth, or perhaps more importantly, prevent their formation?
American cities seem increasingly sclerotic and hostile to experimentation or learning. Major cities across the country are captured by tiny cliques of NIMBY landowners who make even minor changes in land-use regulation an enormous undertaking. Despite fellow developed countries like France and Spain consistently proving subway systems can be built far more cheaply than they are in the US, domestic infrastructure officials and transit agencies see absolutely no urgency to learn from the rest of the world, instead choosing to deliver outrageously expensive, mediocre services from favored contractors. Growing urban-rural political polarization has also meant that the real action in municipal elections has shifted from multi-party fall contests to lower turnout Democratic primaries, further narrowing the scope of urban policy debates. The global economy has changed tremendously over the last 50 years. Has the way we organize and govern cities really adapted commensurately with these changes?
How might we take a page from the nimble cities of the Dutch Golden Age and break out of the political malaise that’s infected so many cities? There are no easy answers, of course. But I have a few ideas, and at least one seems particularly compelling.
Feed hungry software.
A decade ago, venture capitalist Marc Andreessen wrote that software was eating the world. At the time, companies like Uber and Airbnb were shattering the status quo in key urban markets by circumventing powerful rent-seeking lobbies. In the decade since, this revolution has only accelerated. When economist Mancur Olson lamented the decline of American growth in the early 1980s, in part blaming decades of accumulated rent-seeking producing economic sclerosis, he proposed accelerating jurisdictional integration as a means of peacefully countering extractive interest groups. While achieving macroeconomic growth so rapid that rent-seekers become dispensable is unlikely anytime soon, expanding the scope and depth of markets is a viable alternative. Olson had in mind measures like free trade agreements and interstate occupational license compacts but software can accomplish much of this legal legwork too.
In 2020, Zoom radically upended regional white-collar labor markets, suddenly collapsing dozens of regional professional labor markets into one national talent pool. Suddenly employers could scour the country for top talent from a desk in New York and assemble a team scattered across the country. The medieval trade guilds of today are on notice.
Over the long-run, software will continue to integrate regional markets both within and outside the United States. As the magistrates of Bruges, Antwerp, and Amsterdam discovered, growing the depth and scope of the market will have two political effects. First, it will tilt the political environment against extractive interest groups, amplifying the potential gains from gutting their state-granted favors and protections. Second, even if cities resist these incentives, software will allow markets to circumvent them nevertheless, so long as national governments with the power to fight back instead nurture it. In Bruges and Antwerp, the proliferation of unlicensed brokers proved beyond the reach of the state to combat, so it simply gave up. Software will integrate markets by force and there’s little that cities themselves can do to stop its march. With this inflow of new talent, ideas, and tools, perhaps even stagnant, slow urban bureaucracies will show renewed vigor and creativity.
Just as the growth of international trade proved to be the key juncture that led Low Country ports to break free of hostellers and brokers, the maturation of the virtual economy with its capacity to seamlessly integrate markets across borders may also prove to be exactly the kind of jolt our cities need.
Disagree? Did I get something completely, laughably wrong? Feel free to tell me in the comments below or on Twitter @cojobrien.
Well written, thank you for sharing! As always, you pose an interesting question and have given us a lot to think about. Excited for the next post!