Pepper accounted for some 70 per cent of the spice trade by bulk, but other commodities from further afield – nutmeg and mace, cinnamon, ginger, cloves and turmeric, as well as several largely forgotten exotics such as calamus, asafoetida, ajowan, galangal and zedoary – began to find their way to Europe, and these became even more valuable. For centuries spices were not just the world’s most valued foodstuffs, they were the most treasured commodities of any type. ... Nutmeg and mace were the most valuable because of their extreme rarity.
Commodity Clock
Every treasure becomes tomorrow's ordinary commodity.
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A simple example is the spread of muskets among New Zealand’s Maori tribes. One tribe, the Ngapuhi, adopted muskets from European traders around 1818. Over the course of the next 15 years, New Zealand was convulsed by the so-called Musket Wars, as musketless tribes either acquired muskets or were subjugated by tribes already armed with them.
This increased supply then reduces the price and reduces the profit margin, until the profit margin on that article once more falls to the general level of profits (relative risks considered) in other industries. Or the demand for that article may fall; or the supply of it may be increased to such a point that its price drops to a level where there is less profit in making it than in making other articles; or perhaps there is an actual loss in making it. In this case the “marginal” producers, that is, the producers who are least efficient, or whose costs of production are highest, will be driven out of business altogether. The product will now be made only by the more efficient producers who operate on lower costs.
It was she who said, “In this place it takes all the running you can do, to keep in the same place.” There is no such thing as winning a Red Queen race; the best you can ever do is run faster than the competition. ... In evolutionary systems, sustainable competitive advantage does not exist; there is only a never-ending race to create new sources of temporary advantage.
The dynamism of new monopolies itself explains why old monopolies don’t strangle innovation. With Apple’s iOS at the forefront, the rise of mobile computing has dramatically reduced Microsoft’s decades-long operating system dominance. Before that, IBM’s hardware monopoly of the ’60s and ’70s was overtaken by Microsoft’s software monopoly. AT&T had a monopoly on telephone service for most of the 20th century, but now anyone can get a cheap cell phone plan from any number of providers.
Or consider watches. Fifty years ago, by spending a lot of money on a watch you could get better performance. When watches had mechanical movements, expensive watches kept better time. ... Since the invention of the quartz movement, an ordinary Timex is more accurate than a Patek Philippe costing hundreds of thousands of dollars.
Today’s container ships go not much faster than a nineteenth-century steamship and today’s internet sends each pulse little quicker than a nineteenth-century telegraph – but everybody is using them, not just the rich. ... Now almost everybody can afford the cheap goods carried by container ships; almost everybody can afford the internet; almost everybody can afford to travel by jet. ... The story of the twentieth century was the story of giving everybody access to the privileges of the rich, both by making people richer and by making services cheaper.
The same holds true for your knowledge investments. Java is the conservative choice of today. ... With your head in your monitor coding, you might not even hear about something like this until it was too late. You might find yourself on the job market with a suddenly less valuable skill.
Moreover, oil was seen as different from other commodities. “It should be remembered that oil is not an ordinary commodity like tea or coffee,” intoned Yamani. “Oil is a strategic commodity. Oil is too important a commodity to be left to the vagaries of the spot or the futures markets, or any other type of speculative endeavor.”