The Rise and Fall of Venice

From Chrystia Freeland’s book Plutocrats, pp. 278-279:

Venice owed its might and money to the super-elites of that age, and to an economic and political system that nurtured them. At the heart of the Venetian economy was the commenda, a joint-stock company that lasted for a single trading mission. The brilliance of the commenda was that it opened the economy to new entrants…. The commenda was a powerful engine of both economic growth and social mobility–historians studying government documents from AD 960, 971 and 982 found that new names accounted for respectively 69 percent, 81 percent, and 65 percent of all the elite citizens cited.

Venice’s elite were the chief beneficiaries of the rise of La Serenissima. But like all open economies, there was turbulent. We think of social mobility as an entirely good thing, but if you are already on top, mobility can also mean competition from outside entrepreneurs. Even though this cycle of creative destruction had created the Venetian upper class, in 1315, when their city was at the height of its economic powers, they acted to lock in their privilege. Venice had prospered under a relatively open political system in which a wide swath of the people had a voice in the selection of the republic’s ruler, the doge, and successful outsiders could join the ruling class. But in 1315, the establishment, which had been gradually tightening its control over the government, put a formal stop to social mobility with the publication of the Libro D'Oro, or Book of Gold, which was an official registry of Venetian nobility. If you weren’t in it, you couldn’t join the ruling oligarchy. 

This political shift from a nascent representative democracy to an oligarchy marked such a striking change that the Venetians gave it a name: La Serrata, or the closure. And it wasn’t long before the political Serrata became an economic one, too. Under the control of the oligarchs, the Venetian state gradually cut off the commercial opportunities for new entrants. The commenda, the legal innovation that had made Venice (and other Italian city-states) rich, was banned.