Spice Spice Baby🌶️

WTF #1 How the lust for spice built the modern world.

Our little tortoise will take you on a journey from Amsterdam to London, then New York, and finally land you in Bombay.

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Dutch merchants started sailing to the Far East to build their trading networks when the Spanish cut off their spice supply from Lisbon. At first, this network was very decentralized — the merchants individually established expedition companies and funded a few ships to find a new trade route. In the first six years, only 1 out of 10 ships returned with one-third of its crew.

It meant this was a high risk for the merchants. So, to distribute this risk, they sought investors who could financially back the ship and its crew. If the voyage was successful, the investor used to get a share in the profits (or dividends). But what if the ship they invested in didn’t “return”? Investors came up with an ingenious plan to reduce their risk — diversification. They started investing in different ships from different voyages.

These early voyages helped the Dutch build a secure trading network. But other European countries were also trying to set up their trading empires. So, to beat this cut-throat competition, the merchants decided to join hands. In 1602, all of these companies united into a single, government-backed trade monopoly, with its own, officially sanctioned military — VOC or Dutch East India Company.

Now, VOC needed lots of capital to fund its expeditions. That led to the birth of the first stock market — the Amsterdam Stock Exchange (ASE), and VOC became the first company to issue stocks in the entire history of humanity. It was the foundation of the new world order and capitalism as we know it today.

VOC raised 6 million guilders ($110 million today) from its IPO, even though the country was in an economic depression. They massacred, colonized, and spread their network throughout the Far East. One-sixth of the world population worked for VOC, directly or indirectly. During its two centuries of existence, the profit margins were as high as 1500%, most of which they used to build warships and dikes after the Netherlands won independence from Spain.

Not only did it change the face of its home country (literally and figuratively), its power and global influence are still evident. It became a powerful economic engine, not just for the Dutch but for the entire world. VOC became the first multinational cooperation. ASE became the leading financial center for attracting and distributing the world's capital, just like New York Stock Exchange today.

Moreover, the Dutch currency became the global medium of exchange or preferred store hold of wealth — making it the leading reserve currency for over two centuries. The country's borrowing power increased and marked the beginning of financial bubbles (such as the Tulip Mania). So did the spending power, which weakened its financial health with the rising over-consumption. Due to this, international conflicts arose, and power started to shift.

As people earn more, they become more expensive and less competitive. Something which is also happening currently — people are becoming pretentious and envious. Those who inherit wealth and power are more vulnerable to challenges when compared to those who fought for them. And that is how the leading powers start losing to other countries whose people are willing to work for less.

VOC went bankrupt and dissolved in 1799. The British followed suit with the British East India Company. They copied the Dutch and further reduced their competitiveness. After the Dutch lost their colonies to the British in the fourth Anglo-Dutch war, the British Empire rose to power and became the largest empire ever.

At the core of its imperial domination was the Royal Navy — it invested most of its capital in building the most advanced naval fleet at the time. They practiced frugality in other parts of society and gained the most from exploiting its citizens, colonies, and businesses primarily through taxes and violence. Its most profitable venture, however, was the Royal African Company — where they enslaved Africans and traded them as a commodity.

Meanwhile, 6848 km away in one of its colonies where the first fight for freedom was taking shape, 22 brokers in Bombay started putting their money on ships carrying cotton under a Banyan tree. If the ships got in profits, they benefited.

That was how the journey of the legendary stock market of India began. It is the oldest stock exchange in Asia. In the same decade of the 1850s, the Companies Act enabled these traders to trade in corporate securities.

Great Britain went bankrupt after devoting all its money and resources to World War 2. At this time, the U.S. was a rising world power, and it lent $4.34 billion to save Britain. A new world order emerged that shaped the world we live in today. Note that all of these powers used a capitalistic approach. In its worst form, capitalism is inherently colonization.

Capitalism, in simple words, is an economic system in which private players own and control property with the single motive of making profits. Earlier capitalists used to enslave laborers, who were considered property, rather than humans. Salves were forced to work — without pay and in terrible conditions. So, the period of the rise of capitalism was also a dark period that saw the development of systematic slavery.

In 1885, the U.S. was one of the last countries to abolish slavery. A few decades later, the term "American Dream" was coined by James Truslow Adams in 1931, saying that "life should be better and richer and fuller for everyone, with opportunity for each according to ability or achievement." We need to know that whenever a superpower is uncrowned, this change is rooted in economic downturns that lead to violent conflicts, civil wars, and revolutions. Empire becomes vulnerable to its rivals and is at risk of international wars. And this forces the country to choose between defaulting or printing more currency.

To save itself and recover from the Market Crashes of 1929, 1973, 2000, 2008, and 2020 — America chose to inject more money into its economy. This process devalues the currency and raises inflation. Like its predecessors, America has been investing heavily in its military. Till now, America as a superpower has seen lower levels of conflict, but we can see extreme polarization of wealth, values, and politics.

America may well be able to delay its decline, but the decline is inevitable. India is one of the potential nations considered to be the next global superpower. A land of potential always has to choose between two paths — be controlled, or take control. Invaders like the Dutch and the British focused on exerting control, but India never did.

When India started getting back on its feet, it took control and focused on its most valuable asset — people. It utilized this asset to build things from the ground up. Indians are super intelligent, and our people have worked well to serve the world with IT services.

Unlike China, which seems to be heading towards stagnation, India shouldn’t hang onto what worked and continue with experimentation. Our asset has to become our intelligence and the products we make with them. If India wants to lead the global order, it has to deploy its human resources to build products that make money instead of itself becoming the product that makes money.

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We’ll just leave this here…

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