Metal trade, cities, and the rise of inequality

ruins of an ancient city in the Indus Valley

Starting from the 9th millennium BC, humanity engaged in agriculture. Yet it was only in the 4th millennium BC that the first complex urban societies began to emerge. In regions like the Nile Valley, Mesopotamia, Central Asia, and the Indus Valley, the world’s first cities appeared alongside writing, powerful states, and significant socio-economic inequalities.

What caused this remarkable transformation? How did societies transition from agrarian communities with minimal social stratification to bustling urban centers marked by stark inequality? These have been longstanding open questions.

In Barcelona School of Economics Working Paper 1423, “The Dawn of Civilization. Metal Trade and the Rise of Hierarchy,” Matthias Flueckiger, Mario Larch, Markus Ludwig, and Luigi Pascali propose an answer: the pivotal turning point was the invention of bronze.


Bronze: tin, copper, and trade

A key innovation during the 4th millennium BC was the discovery that copper and tin could be combined into an alloy much harder and more durable than any other known metal at the time. It enabled our ancestors to fabricate tools that made food production more efficient and weapons that revolutionized warfare.

The technological advances associated with the use of bronze meant that securing a steady supply became central. However, copper and especially tin are rare commodities. Often, the known deposits of the two metals were in geographically distant regions. This necessitated the establishment of complex trade networks and resulted in an explosion of long-distance trade between metal mining sites and populous areas. Regions located along these trade corridors gained significance and became economically important.

The potential for taxation of this trade was high, particularly in “bottleneck” locations that could not be easily circumvented. The authors argue that it is precisely in these bottlenecks that a new trade-taxing elite could emerge, causing the rise of cities and states.

During the “Urban Revolution,” small population centers grew into big cities and states with advanced social, economic, and political systems.

Assur, the capital of what later became the Assyrian Empire, provides a case in point. Prior to the Bronze Age, Assur was a small settlement situated in the least productive area of Mesopotamia. However, this changed dramatically with the discovery of bronze.

Due to its geographic location, Assur rapidly developed into the capital city of the regionally dominant Empire. It was situated between Anatolia to the west, a highly fertile region with a relatively high population density, and tin mining sites to the east. This central location between demand and supply made the Assyrians an important intermediary.

Assyrian chiefs promoted trade by protecting traders, and they benefited from trade by taxing merchants. Original Assyrian texts (1950-1750 BC) describe a flourishing market economy in which profit-oriented and risk-taking merchants thrived, supported by sophisticated financial contracts and a well-functioning judicial system.

The tax revenue for the (emerging) empire was staggering. Estimates based on the tin trade between Kanesh and Assur alone suggest tax revenue streams high enough to ensure the livelihood of 1,000 individuals.

Mapping ancient trade routes, grid cell by grid cell

To examine the relationship between metal trade and the Urban Revolution, the authors compile extensive data spanning the Old World during the Bronze Age:

  • Bilateral trade relationships
  • Cropland distribution
  • Metal mine locations
  • Archaeological evidence of significant settlements and social inequality

Transit regions and the Urban Revolution

Using this data, the researchers estimate the relative transportation costs across different modes (e.g., land, river, seacoast) during the Bronze Age. Then, they draw the routes connecting agricultural populations to metal sources that would have had the lowest transportation costs. These routes are called the “least-cost paths.”

Figure 1 illustrates the distribution of cropland and mines and the least-cost paths connecting them:

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Figure 1: Least-cost paths between cropland and tin and copper mines

Using these paths, they then calculate a “transit index” for each grid cell, a weighted count of the least-cost paths connecting farmers with metals that pass through the cell. Essentially, the transit index identifies the “road-knots” in the metal trade network—the cells in which trade corridors intersect.

Figure 2 shows the values of this transit trade index as well as the location of cities that emerged during the Bronze Age:

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Figure 2: Trade Index and Bronze Age Cities

Analysis of the data confirms what is visually suggested by Figure 2: cities often arose in the Bronze Age trade corridors. Taking their analysis one step further, the authors can argue that this relationship is causal: transit trade explains not only the rise of cities, but also of political states and social inequality.

Notably, after accounting for transit trade, farming productivity appears negatively related to the Urban Revolution. Going back to the example of Assur, the city was surrounded by desert-like land that was unproductive. Nonetheless, its strategic location at the confluence of the Tigris and two important tributaries endowed it with a vital node in a large trade route.

Taxes on the Bronze Age metal trade played a key role in the rise of social hierarchy and inequality

There are several mechanisms through which the transit trade could have sparked the Urban Revolution. The authors argue that the taxation of trade played a paramount role.

To do this, they first approximate the potential tax revenues that a trade-taxing elite could extract in each grid cell by measuring the blockage costs of the cell —the additional transportation costs traders would incur to bypass that cell. This variable is intuitive: the more costly it is to circumvent a region, the more traders will be willing to pay to pass through it. Essentially, this variable identifies the bottlenecks in the metal trade network.

Once the bottlenecks have been identified, the researchers run a statistical “horse-race” between the measure of transit trade (i.e., the trade index) and the measure of tax potential (i.e., the blockage cost) by including them simultaneously in the regression analysis.

It turns out that only the potential trade-tax revenue measure consistently predicts the rise of cities, settlements, and other social hierarchy markers. This supports the relevance of the appropriability theory: the earliest hierarchically complex societies and civilizations emerged in areas where local elites could extract a surplus from traders due to their strategic location in the metal trade network.

Conclusions

Previous literature has attributed the Urban Revolution to farming and sedentism (the practice of living in one place for a long time). The authors of this study show that places where the Urban Revolution started were not necessarily the most productive, contradicting some previous findings. They propose an alternative theory: the Urban Revolution started in regions of strategic value to the metal trade, where rulers could extract value from traders through taxation.

Using data on the distribution of cropland, mines and sites archaeological indicative of the Urban Revolution, this research documents that places located along important trade corridors connecting copper and tin mines to fertile lands were more likely to experience the Urban Revolution, and that this is likely the result of a new elite fostered by the taxation of transit traders.