They understood a lot more about innovation and entrepreneurism than our modern big-city mayors do.
Venice, Italy — It is a tragicomic irony that the old Venetian Republic, because of its entrepreneurial and capitalist culture, has been admired by historians as “the New York City of its day.”
Given the socialist agenda of New York City Mayor Zohran Mamdani, historians will have to find another modern metropolis to make comparisons. In the meantime, Mamdani and his communist clique should visit this extraordinary lagoon city and learn why it became the economic powerhouse of medieval Europe.
The Venetians were remarkable innovators from the start. Legend has it that the Veneti, a European tribe living in northeast Italy, fled the barbarian armies assaulting Rome in the fifth century a.d. Seeking refuge in the marshes of a lagoon — an unlikely destination for an invading army — they were forced to improvise. They built homes on top of wooden piles driven deep into the mud.
Whatever the precise origins of the Venetians, they eventually — almost impossibly — constructed a city entirely surrounded by water. Independent and free, they reinvented themselves.
“Water may be a threat, but it is also Venice’s lifeblood, influencing every aspect of life,” writes Dennis Romano in Venice: The Remarkable History of the Lagoon City. “Lacking land, the very definition of wealth in the Middle Ages, Venetians were compelled to look to trade and commerce for their livelihood.”
The point must not be missed: In Venice, there was no place to grow crops, no fields to raise livestock, no resources other than water and fish. “By all rights, the early Venetians should have just starved to death,” writes Meredith Small in Inventing the World: Venice and the Transformation of Western Civilization. Yet the Venetians had cultivated an identity as a community of resilient, tough-minded people set apart from a hostile world. “That identity was part myth,” Small explains, “but it brought all the lagoon people together as a community, a governmental entity, and as an economy.”
Thus, this maritime city-state became a leader in the Commercial Revolution (stretching from the eleventh to the 18th century) that transformed European economic life. Nearly every Venetian was engaged in free-market economic activity. Sailors, dock workers, shipbuilders, shop owners, bankers: All were invested in the success of a vast, international, capitalist enterprise.
Importantly, unlike the mayors who govern cities such as San Francisco, Chicago, New York, and Washington, D.C., the highest-ranking officials in the Venetian government were working merchants themselves. They understood the value of capital, the satisfaction of creating and running a business, and the virtues required to make a profit. They passed laws to protect — not punish — the city’s entrepreneurs. “Venice was nicely placed to join in the economic development of the Middle Ages and the Renaissance in Europe,” writes Small, “because Venetians had no feudal lords holding them back.”
Here is a lesson for the socialist mandarins running some of America’s once-great cities: The Venetians had no feudal lords holding them back.
St. Mark’s Square in Venice (Photo courtesy of the author)
The results were nothing short of astonishing. Consider Venetian currency. Like other city-states, Venice coined its own money, but its republican government — composed mostly of the merchant class — had a keen interest in maintaining a stable value for its coins. Without it, Venice’s money couldn’t be trusted in the international market.
Such was the reputation of Venetian currency that when the first Venetian gold coin appeared, the ducat, in 1284, it quickly became the most reliable medium of exchange in the known world. Backed by the Venetian Republic, it was the equivalent of the American dollar (at its historic best). It remained the coin of choice for the next 500 years.
Talk to local Venetians, and you’ll learn that the original name for the Rialto Bridge was Pons de la Moneta, meaning, “the bridge of money.” Like almost nowhere else in Europe, creative and hardworking people in Venice enjoyed the freedom to make money.
It is no historical accident that the first national bank in history — supported by the state — was established in Venice. After all, the Venetians needed a safe place for their profits. The word “bank,” by the way, comes from the Italian word banco, meaning “bench”: Clerks used to sit outside on benches conducting business with depositors. (The word “bankrupt” comes from banco rotto or “broken bench.”)
As Venice became a trading empire, there was an urgent demand for better accounting practices. Enter the Franciscan monk, Luca Pacioli (1447–1517), who taught mathematics to luminaries such as Leonardo da Vinci. “Without mathematics,” he said, “there is no art.” Pacioli was also the first to explain double-entry bookkeeping. It was a simple but transformative innovation. Every transaction must be recorded into two opposing columns, credits and debits (or assets and expenses). For the first time, merchants had a straightforward, accurate system for recording the profitability of their business.
This simple accounting tool embodies the entrepreneurial mindset that is essential for a dynamic, free-market economy: If a business owner, through ingenuity and hard work, cannot efficiently provide a desirable good or service, his business will fail.
This Venetian innovation has since revolutionized how businesses function around the world, from neighborhood cafés to international corporations. No democratic socialist, if such a creature existed in medieval Venice, could ever have conceived of the concept.
Like no other people in Europe, the Venetians managed to take a liability — living on a small, isolated lagoon with scarce resources — and turn it into a gateway to economic dynamism. At the peak of the city’s trading expeditions, about 3,000 Venetian merchant ships a year sailed out into the northern Adriatic before heading south into the Mediterranean. When they returned, because ships could anchor almost anywhere, the city became a vast loading dock.
It is no wonder that, next to Florence, Venice took the lead in advancing the European Renaissance. To live in medieval Venice was to live amid a thriving marketplace of vendors, shopkeepers, artists, musicians, printers, inventors, and entrepreneurs of every kind.
Gasparo Contarini, a Venetian politician, was one of the first to write about the city. “But the sight of Venice,” he observed in The Republic of Venice (1543), “thanks to some divine plan rather than human contrivance, beyond the imagination of all who have not seen the city, is not only secure from attack by land or sea, but is also in the most suitable position for amassing an abundance of commodities for its citizens.”
If, as many Venetians believed, Providence played a role in orchestrating their opportunities, they would play their part as well: They would give the world a story about what individuals can create and achieve if they have the freedom to make the venture.
