By Witzel, Morgen
European Business Forum , No. 18
We are used to thinking of 'big business' as something that only flourishes in a capitalist, free-market economy. But business has a habit of adapting to whatever environment it finds itself in. In the Middle Ages, European business took on some surprising forms. Small firms might form networks, often over wide geographical distances to create larger business organisations. Sometimes these were limited-life consortia, set up to exploit a particular commercial opportunity and then disbanded when no longer needed. Alternatively, firms might club together in guilds to collectively market their goods and services.
Business also has the habit of adopting other organisational forms, and many of these guilds and other organisations borrowed heavily from the dominant social organisation of the day, the Catholic Church. But the Church itself also had huge commercial interests; according to some estimates, by 1400 the various institutions of the Church controlled between them about one-third of the wealth of Europe. The most powerful and wealthy of these organisations were the large monastic orders, the Benedictines and the Cistercians, and it comes as no surprise to learn that both orders were also powerful multinational businesses.
Order and structure: the Benedictines
The Benedictine monastic order was founded by St Benedict of Nursia around 525 AD, at Monte Cassino in southern Italy. Benedict's initial purpose was to give structure and form to the monastic movement, which at the time was still fairly anarchic (at a previous monastery, Benedict had nearly been poisoned by monks who refused to recognise his authority as abbot). His first step was to draw up what is now known as the Rule of St Benedict, 73 precepts which set out the duties of members of monastic communities. The Rule begins with a statement of goals: monks are to dedicate their work to the glory of God. The remainder of the Rule then specifies how those goals should be carried out, setting not only times of work, meals, prayer and rest but also the hierarchy and chain of command within each monastery. Supreme over all was the abbot, who directed the affairs of each monastery; below him were subordinate officers such as the treasurer, and then came the general chapter of monks. The monks were to obey the orders of the abbot, but those orders had to be explained in chapter, and monks could voice their own views of the abbot's decisions.
Other monasteries quickly recognised the utility of the Rule and adopted it. By 600 AD there were hundreds of monasteries across Europe, all following the Rule and now formally organised into a single organisation. Hundreds more were founded in succeeding centuries. Each monastery had its own lands and its own industries, which were added to by donations from pious lay people over time.
Thus a single monastery with 30 or 40 monks might end up owning thousands or even tens of thousands of acres, including not only farmland but also mines, mills, vineyards, villages and towns, manufacturing industries such as textiles, and seaports. All of these had to be managed and run, and clearly the 30 or 40 monks could not perform the labour themselves. So, the monks became managers, looking after their resources, keeping accounts, managing production and distribution, finding markets and conducting trade as well as their religious duties.
The organisational principles set out in the Rule of St Benedict proved to work equally well in a business context. The abbot in effect became the general manager, with each abbey established as a separate business unit and the other monks each given individual duties and responsibilities within the unit. Each abbot reported in turn to the superior of the order. This was a highly structured, 'top-down' form of organisation, very much oriented towards command and control, and business historians have likened it to the 'line and staff' model of organisation which was popular in the early 20th Century (and still is in some places). …