Wednesday, February 13, 2013

Ten Ancient Mistakes VII A

I already talked about mistake #7 Customer Concentration. There is perhaps a better example which comes from a fascinating article I remember reading as an undergraduate, which unfortunately I am unable to find again to properly cite.

The article argued that Iceland lost its independence in the thirteenth century because the spinning wheel was introduced in Europe that same century. How that came about was that Iceland had never had the agricultural resources to support much of a population, and that they were always having to import grain. Fortunately, they had flocks of sheep that provided wool that they used to trade for grain. The spinning wheel changed all that because it made linen cheap. James Burke takes it from here:
While the upper classes bought silk, the peasants were able to afford linen, now in plentiful supply thanks to the earlier introduction of the horizontal loom and the spinning wheel. These two devices had considerably increased the production of both wool and linen. Linen was cheap to produce: to make linen thread all that was necessary was to harvest the flax, allow it to rot in water, dry it, beat the stalk to remove the fibrous material, and twist this together. The widespread and increasing use of linen in the late fourteenth century represents one of those crucial moments in the history of the process of change when the sequence of events suddenly changes direction and context. (James Burke, Connections, 2nd ed. [New York: Simon & Schuster, 1995], 100).
With the production of clothing on the increase, the price dropped, particularly since linen was cheap. Icelandic farmers could no longer get sufficient prices for their product and thus could not afford to buy the grain to feed themselves and the Norwegians had to step in to save their Icelandic brethren (so the argument went). This is why Iceland belonged first to Norway and then to Denmark, and one of the reasons that the Icelanders bear no great love for the Danes.

It is also an example of how a country (Iceland) relied too much on one customer (Europe), and what happened when that customer decided to get its product (clothing) elsewhere.