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By Root 1578 0

of vin rouge. It needed wine because wine provided vitamins, yeast, and calories to get the English through the long winters. And it needed wine because, well, wine is fun. Given that England was too cold to grow a decent grape, the English required a system of foreign exchange to get their spirits from France. They traded English fleece to Flanders for Flemish cloth (the good stuff at the time), then brought that to southern France to trade for the fruit of the vine. Luckily, the English controlled both Flanders and Gascony (on the west coast of France) at the time. Thus they were able to trade freely, transport safely, and drink to their hearts’ content. For these reasons, and a million other feudal details, the French hated the Brits. In 1337, they attacked Flanders to regain control of the mainland, beginning the Hundred Years’ War, which really lasted 116 years until 1453, when the Brits were finally expelled from continental Europe and went back to drinking beer, a habit they largely retain to this day.1

What does all that have to do with us, doing business in a high-technology information age? Well, beer is not the only habit that has hung around since the Middle Ages. Back then we were a land-based world, and the people who controlled more high-value land than anyone else ruled. Land is a zero-sum game: The more I have, the less you have; and the more I have, the more powerful I am relative to you. Land meant crops, and land meant rent from serfs—tradesmen, farmers, and craftspeople—who created the goods and consumables that drove the economy. There was a one-to-one correlation between the most powerful people and the ones who had the most land. To this day, Queen Elizabeth remains one of the richest people in the United Kingdom based on her family’s landholdings.2 In a time of finite resources, feudal nobility learned that to succeed and gain more power, they needed to protect and hoard what they had. They built castles with moats around them to protect their fiefdoms, conquered everything they could, and built their wealth one furlong at a time, habits that served them well for centuries.

Fast-forward a few hundred years to the birth of the industrial revolution. The invention of machines, powered mainly by the steam engine, brought a host of innovative ways to make things. The rate and scale of manufacturing increased exponentially. A savvy entrepreneur could suddenly mass-produce goods efficiently and bring them to market at lower prices than his craft-guild cousin. Machines created a systematic way to get rich relatively quickly. One no longer needed a lifetime to amass wealth or had to risk a dangerous voyage in search of treasure. Anyone with money to invest could identify cutting-edge inventions, build an efficient factory to make them (or make with them), and take market share from his old-world rivals. Initiative and innovation became wealth, and old gave way to new, all powered by a new investor class able to make money with money. In 1776, Adam Smith wrote The Wealth of Nations, and capitalism was born.3 The word capital, by the way, comes from the Latin word capitalis, meaning head. Under capitalism, you could use your head to get ahead.

As we shifted from land to capital as the engine of wealth, however, the zero-sum mentality of feudal times remained. Capital, too, is finite, and the more capital I had the less you had. With more, I could innovate, expand, and do things that you could not. Capitalists developed habits of power, certain rules of thumb about how to succeed in the new economy. When we had stuff, we hoarded it; we did not share. We did not give it away; we meted it out and only for high returns. We extracted interest. For hundreds of years, assets meant power, and to succeed we controlled them zealously. Generally, we built a fortress around our holdings and defended them against all invaders. We dominated markets, protected trade secrets, and made sure everything we did received a patent or copyright. We could also control information flow to the market, and so developed a host of