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Private Government in Genoa

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Genoa’s Freedom: Entrepreneurship, Republicanism, and the Spanish Atlantic by Matteo Salonia (Lexington Books, 2017); 214 pages.

If the city of Genoa had advertised for security services in the 15th century, the job description might have looked like this:

Security-Services Wanted

Entrepreneurs in the city of Genoa recently fired the king of France and seek a replacement to provide security services.

REQUIREMENTS/DUTIES

  • Provide cost-effective domestic and foreign security services for 1 year, renewable annually.
  • Abide by the Genoese law code and procedures for arrest and prosecution.
  • Operate within a fixed budget to be negotiated at contract signing.
  • Respond quickly to monthly and ad hoc reviews by Genoa’s fiduciary, the Bank of St. George.

TERMINATION: 30-day notice by either party.

SUBVERSION: Attempts to undermine the contract will result in contract termination (see king of France).

CORPORATE CULTURE: The city values unhampered economic activity. As a hireling, you are not to expand or redefine services to include new tasks (mission creep) or place security employees above the law.

The practice and concept of liberty in Genoa

 The preceding job description, although fanciful, captures Genoa’s spirit at the close of the Middle Ages (roughly from the late 5th century to the end of the 15th century). In his book Genoa’s Freedom: Entrepreneurship, Republicanism, and the Spanish Atlantic, Matteo Salonia (a lecturer at King’s College, London) explains that the people of Genoa refused to trust government (i.e., the commune of Genoa) to manage the city and its many trading centers in a conventional way. Instead, they assigned the task of city finance and governance to shareholders (bondholders) of the privately owned Bank of St. George. This approach to finance and governance was remarkably successful and enduring in comparison with more conventional practices adopted elsewhere in Italy and throughout Europe.

Most fundamentally, the Genoese people conceived of liberty (libertà) in a way that differs from commonly held assumptions about that historical period. Instead of tying it to the exercise of monopolistic political control in a geographically defined area, they viewed liberty as the “freedom to do business.” Consequently, they actually delegated both internal political control (peacekeeping) and foreign defense to leaders of other states. As long as they could conduct business without interference, they believed their liberty was safe. For them, control of their economic lives was more important than membership in a political body.

Salonia’s work is important for libertarians, voluntaryists, and private-property (ethical) anarchists because Genoa was a vital trading center in the late Middle Ages and early Modern Era, and these aspects of its history have not been told. Furthermore, the practices of other Mediterranean centers, such as Florence and Venice (which functioned along conventional lines), have been recited over and over again. Why? Florentine and Venetian writers were numerous, prolific, and talented, and their widely available writings were accepted as exemplars of political and standard economic thinking. But Salonia has uncovered a much-needed “corrective” of the received narrative by exploring the city archives of Genoa. And those records tell an inspiring story of private individuals’ exercising genuine control over their political hirelings. They also show that the Genoese “were primarily preoccupied with making money, so they did not write masterpieces of political thought; neither did they indulge in numerous philosophical debates on the best government” (p. 74).

Instead of submitting themselves to power brokers engaged in land acquisition, glorified kingship, and the centralized state, the Genoese viewed security services merely as a way to safeguard the utilitarian institutions and physical objects that made their comfortable way of life possible (pp. 74-79). Their poetry and orations, for example, show that the Genoese valued the city for its useful features: the lighthouses, the harbor with its vessels and navigators, the massive pier that made the harbor safe, the aqueduct that brought clean water, and the underground tunnel that collected the city’s drain-water.

Furthermore, rather than listing the names of Genoa’s wealthy men one by one, their literature cites the economic activities and attitudes that flourished there, the industrious nature of its citizens, and the vast trading networks dispersed around the world. In other words, the idea of “civic space” emphasized their economic activities, not political participation. That distinguishes them from the devotion to politics that has plagued the West since the ancient Greeks first placed the life of the individual under the jackboot of the polis, the same polis that condemned Socrates to death.

Salonia concludes that “the Genoese late-medieval colonial system was characterized by private entrepreneurship, geographical vast- ness, and adaptability. It facilitated the movement of capital toward more profitable markets and determined the fluidity of the Genoese intercontinental network” (p. 35). He points out a crucial difference in the approach of the Genoese (quoting Tom Scott): “[Unlike] Venice, Genoa never sought to construct a colonial territorial empire.” And just as the Genoese avoided the acquisition and administration of an expensive land empire, they also limited government in its domestic role. Salonia explains that “as early as 1303 the Genoese had in mind a coherent project of constitutional governance” (p. 54).

That included the conceptual framework famously described by Douglass C. North: “A capital market entails security of property rights over time and will simply not evolve where political rulers can arbitrarily seize assets or radically alter their value” (p. 54). That definition reminds us of the insights of the great economic historian, Robert Higgs, who coined the term “regime uncertainty” and identified its stultifying effects on business and, as a result, economic progress — especially in his book Depression, War, and Cold War. The point is that the Genoese — from generation to generation — were able to protect the rule of law, limit the power of the doge (duke), enjoy financially sound self-government, and safeguard economic prosperity (p. 55). The remainder of this review outlines three examples (among many) of how the Genoese practiced their form of liberty.

Example #1: Private governance of a dynamic trading network

 In his second chapter, Salonia introduces us to the resilient and wide-ranging Mediterranean trading network of the Genoese. In particular, he describes the active day-to-day role of businessmen in delegating tasks, acquiring price data, monitoring investments, verifying the honesty of their agents, and doing business of any kind with virtually anyone willing to do likewise. Most vitally, he elucidates the quintessentially capitalistic practice of accumulating capital, perpetually reinvesting this capital to fund additional business expansion, and the key role played by individual businessmen in financing the governance of the city — a kind of “private investor” role that ultimately led to the foundation of the Bank of St. George (1407) as a way to institutionalize this practice. The Bank of St. George controlled the use of funds by the commune of Genoa (i.e., the city’s political governing body) by maintaining tight control of the purse strings. As a result, the Genoese flourished economically and exhibited a constant interplay between the aristocracy and day-to-day businessmen — akin to the economic and social fluidity we would expect in a capitalistic economy. Not only did that foster individual entrepreneurial initiative, but it also had a positive impact on the physical security of the Genoese trading network.

Example #2: The physical security of the Genoese trading network

 A common objection to large-scale private-sector provision of security services is the claim that it doesn’t work in the “real world.” But Salonia demonstrates that Genoa’s far-flung trading network enjoyed security that was equal to or better than that provided by politically centralized solutions in the face of the expanding Ottoman Empire of the Turks. One way to measure Genoa’s success in defending private property in far-flung locations is to study the Crimean settlement of Caffa (Kaffa), now called Feodosia. This settlement was able to outlast the “10-ton political gorilla” of the Eastern Mediterranean — the city of Constantinople, which fell to the Ottoman Turks in 1453 — by 22 years. And even when it fell, in 1475, its fate was still in its own hands — not in the hands of the Ottoman Turks.

The story of Caffa is told in a remarkable series of documents located in the state archives of Genoa. They show that the eventual fall of the city was not caused by military weakness. As an overview, I quote Salonia’s introduction to the chapter entitled “Self-Government and Self-Perception” (p. 63):

After the fall of Constantinople, the Genoese could have decided to create a public fleet and to grant more powers to the communal government in order to defend their Crimean colonies. Instead, they decided to transfer the government of the colonies to the private businessmen of St. George [a private bank established to manage and pay back the debts incurred by the city’s political government]. This move is noteworthy, because it shows the Genoese’s distrust of their doge [i.e., duke] as well as their belief in the power of private arms — even when facing extraordinary challenges.

The Genoese believed they had sealed their own fate because of internal discord within the colony. One manuscript (by an unknown author) describes a dispute among the Genoese inhabitants of Caffa about whether or not to return some slaves who had escaped from the neighboring realm of the Tartar (Tatar) khan, himself a vassal of the Ottoman sultan (pp. 64-65). The sultan had requested the return of the slaves to the local Tartar captain, a man called Eminec, but the Genoese refused. Among the Genoese, there was a dispute about the matter; some looked with favor upon returning the slave, but the opposing Genoese won out. This created a division within Caffa.

As a result, some of the Genoese devised a plot to poison Captain Eminec — eliminating the complaining party. To carry out the plot, they asked the Tartar khan to visit the city and to bring the captain with him. The khan agreed but the Genoese who favored Eminec warned him ahead of time not to eat or drink anything. Even then, the Genoese could still have killed him to “resolve” the issue, but they could not agree on how to carry out the assassination.

It important to see this situation for what it was: The Genoese clearly felt secure enough in their military position vis-à-vis the Tartars and the Turkish sultan to murder a complaining party who was the direct appointee (the captain) of the Tartar khan! They somehow felt that the khan would permit or at least accept it. But the situation took an interesting turn.

Eventually, after a number of plots were hatched among the Tartars, the Genoese faction that favored the original slaveholding captain began to engage in a kind of civil war within the city. At that point, the Turkish armada reached the city, and they commenced with a siege. After great suffering, the people of Caffa sent out a delegation of ambassadors to establish a treaty with the Turks, but the ambassadors betrayed the city in exchange for their own safety and the safety of a number of their friends (about 4,000 people). The Ottoman Turks were allowed to enter the city because the people of Caffa believed that agreeable terms had been reached. But upon entering, the Turks imprisoned those who were not protected by the betrayers (pp. 66-67). So the Genoese people of Caffa sealed their own fate.

Example #3: Negotiating for security

Salonia also shows (pp. 69-73) how Genoa negotiated for its security services — first with the king of France (Charles VI) and then with the famed condottiero of Milan, Francesco Sforza. In doing so, he contrasts the Genoese conception of libertà with the conventional practice of political state-building and territorial acquisition. Like many Renaissance city-states, Venice in the late 14th century sought to dominate its neighbors through conquest. As a result, that city was soon expending vast quantities of resources on the defense of its land empire. This change in focus was at odds with the early history of the city, when Venetians focused on lucrative trade instead of political conquest. In contrast, Genoa refused to acquire extensive landholdings, and for a period of two centuries, the city “outsourced” its military and domestic peace-keeping functions to foreigners.

In 1395, the city was afflicted by civil conflict between factions. Rather than grant additional military and political powers to its own doge (Duke Antoniotto Adorno), the Genoese commissioned the duke to negotiate with King Charles VI of France to send a governor (a signore) to protect the treasured libertà of Genoa’s citizens, which they valued more than political sovereignty. Clearly they feared the predatory rule of a compatriot more than the rule of a foreign signore. Order was restored, and the Genoese prospered. In 1464, there again was civil strife as the doge, Paolo Fregoso, sought to attain dominance in the city. So the Genoese retained an outsider, Francesco Sforza, the duke of Milan, to end the conflict. Once again, economic considerations, which constituted the heart of Genoese libertà, were the chief concerns. Furthermore, the Genoese had already shown that when a foreign signore became too greedy, they were fully prepared to rebel. So although it is true that both France and Spain were making incursions into Italy at that time, the outlook of the Genoese allowed them to retain through negotiations what was most important to them — their entrepreneurial endeavors.

Conclusion

 Even though the idea of a centralized nation-state came to dominate European political theory, Genoa provides a fascinating alternative: a late-medieval form of government that “was lacking almost any fiscal and military power” (p. 165). In its protection of property rights and support for the accumulation of capital (through budgetary laws imposed on government and the use of private banks with shareholders to provide funding), the history of Genoa may even help to explain why European civilization was the first to achieve long-term economic growth.

  • They relied on private-sector notaries instead of state diplomats to organize their network of trading posts throughout the Mediterranean and Black Sea.
  • Their model of private economic expansion was flexible and spontaneous — responding to changing market signals instead of grand political visions, which is why Genoese settlements survived the dissolution of the Mongolian order in Asia and the advancing Turks much longer than some notable rivals.
  • In the 16th century, the unique Genoese conceptions of sovereignty and political legitimacy meant that Genoa did not create a territorial state, standing army, or a publicly controlled military fleet to counter the incursions of France and Spain into the Italian peninsula.

Most critically for those who study the Americas, the entrepreneurial, mercantile, legal, and banking institutions of Genoa played a central role in the vast shift of economic activities from East to West after the fall of Constantinople — as Europeans focused less on trade with East Asia and began to exploit opportunities in the New World. Indeed, some of the most riveting material in the book addresses the role of Genoa in developing Central and South America with Spain. Unlike other European royal houses, the Spanish Hapsburg rulers with their far-flung empire were able to appreciate the curious spirit of the Genoese. As a result, both nations shared a mutually beneficial relationship that harnessed Genoese business practices, entrepreneurial energy, colonial techniques, diplomacy, and administrative know-how. To this very day, one can find Genoese communities dispersed across Latin America. They serve as reminders that, in addition to the military might of Spain, decentralized individual efforts played a key role in New World developments.

This article was originally published in the August 2018 issue of FFF’s monthly journal, Future of Freedom.

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    Lawrence M. Ludlow provides international location analyses, technical writing, and marketing services to corporate clients. He holds an M.A. in medieval studies from the University of Toronto’s Centre for Medieval Studies and has lectured on manuscripts, early printing, and art history at the Newberry Library in Chicago and at the San Diego Public Library.