Status Goods are traded only in peace time, of course, but, more often than not, mankind has been embroiled in warfare and international trade and the production of civilian Status Goods largely cease. So what follows now is an historical backdrop to those peacetime periods in which normal economic development has been allowed to take place.

The problem with economics is that governments have always interfered with currency and trade, and this is why the subject is a great deal more complicated than it needs to be. In the following, I will be describing some very important non-Status Goods -- namely armaments -- which bring down particular forms of governance and are then the cause of quite new forms of protection, or governance.

The following will not attempt to be a comprehensive theory of history as Toynbee and some others have attempted, but follows a particular route from somewhere around ancient Sumeria at about 10,000BC, through the Mediterranean regions, through central Europe to the west coast and from there to the United States of America today. Other routes could have been followed such as ones which take in civilisations in Central and South America or the important ones of India and China, but the following will do as an adequate framework into which evolutionary economics can be placed.

1. Tribal Governance

This refers to the many different social and economic groups of early mankind -- essentially tribal -- living all round the world after the retreat of the last Ice Age (about 20,000BC). These ranged from pure hunters (within the arctic circle), hunter-gatherers (in most inhabited parts of the world), hunter-gatherer-peasant farmers (mainly in forests), pastoralists (in the Asian steppes) and almost-pure farmers (in highly-fertile alluvial sites in the Middle East). It is a moot point as to whether any of these many different societies could be said to have any form of governance as we understand the term today. It amounted to little more than the domination of alpha males within local communities and would have been accessible and transient. This first age of mankind came to an end dramatically when the bow-and-arrow was first used as an offensive weapon instead of a purely hunting weapon at between about 15-10,000BC by nomadic hunter-gatherers against pure-farmers in highly-fertile regions such as Mesopotamia (modern Iraq) and Anatolia (modern Turkey). Individual farming households would have been totally unable to defend themselves against surprise attacks by groups of bowmen.

2. Cities

The only defence that could be developed against the bow-and-arrow were wooden palisades on earth mottes or the building of mud-walled villages and cities to which farmers could flee when attacked. These started to appear at about 10,000BC. Many hundreds, and probably thousands, of these sprang up all over the Middle East (and in many other places elsewhere at different times). The full development of cities over large regions took thousands of years because much more was involved than their mere construction. They had to be maintained on permanent stand-by with access to water supplies and with stocks of food in case of prolonged siege. In fact, they had to become permanently inhabited and in time became local economies of their own, trading with the farmers and with distant cities, and developing their own forms of governance. Such fort-like cities were impregnable to attacks by groups or armies with the bow-and-arrow because they could be defended by their inhabitants throwing rocks or molton pitch and suchlike on attackers and also, of course, by using their own bow-and-arrows. Some of these cities subsequently became quite large and thus became bases for particularly powerful rulers and elites.

3. Civilizations

The palisades and compressed-mud walls of the Cities' period were, however, vulnerable to the close approach of attackers wearing bronze helmets, shields and armour. Also, once walls had been chipped through, the inhabitants couldn't resist the attackers' new slashing weapon -- the sword -- which could not have been made previously from wood or flint. The use of bronze for weaponry began at about 4,000BC and, from this time onwards, civilizations developed by voluntary or forced amalgamations of cities. This first occurred within generally flat alluvial regions able to be quickly traversed by warrior-kings with their bronze-armoured forces. At least a dozen distinctly different civilizations, each with its own characteristic grain crop, language, religion, architectural style and culture -- though with almost identical governmental structures -- appeared spontaneously right across the Middle East, India and China. By this time, mud walls were quickly giving way to baked-brick or stone walls. Wars typically took the form of contests between the armoured warrior-kings and their immediate entourages lasting for no longer than a day, with the remainder of their "armies" being merely untrained peasants drafted from the fields and sparingly supplied with bows-and-arrows, spears and slings. Usually, these untrained armies would not fight enthusiastically because they had nothing to gain, whichever warrior-king won. They would "win" battles or flee from the scene according to the outcomes of the warrior-kings themselves.

4. Empires

From around 500BC, in the Middle East, China and Macedonia particularly, systematic army training and discipline was invented for the first time -- usually, but not exclusively, with the greater use of mercenary soldiers who first started to appear in the previous era due to the lackadaisical behaviour of peasant-soldiers. The chariot invented by the Assyrians enabled them to easily subjugate and straddle several different civilisations in the Middle East. The three-layered spear attacks by the disciplined phalanxes of Alexander the Great, for example, would have been equivalent to modern tanks in their effect and were unstoppable by the armies of the existing civilization in Persia and much beyond. Within ten years, Alexander the Great was able to carve out a huge empire cutting across, and spanning, several different civilizations of thousands of years' standing ranging from Greece and Egypt in the east to Uzbekistan and India in the west. This Greek empire didn't actually last long because quite new forms of gubernatorial control had to be developed among diverse peoples, languages and cultures, But soon, by the use of disciplined troops, many other empires sprang into existence from this time onwards. These included the Roman, Byzantine, Islamic, Sassanid, Han Empires and many more. Typically, these empires, unlike the previous civilizations, were generally tolerant of the many different religions and cultures that they controlled and derived taxation from -- simply because they had to be. Centralised totalitarianism as we often experience it today was simply not workable.

5. Feudal-states

Imperial armies, however well disciplined, were large and highly unmaneuverable. Also, when empires were under attack, armies often took a long time to march to distant boundaries, sometimes across difficult terrains. They were no match for the fast-moving horse-borne warriors of the central Asia steppes and peripheral regions who started to attack the empires all around them. These armies would never engage in set-piece battles that had been customary hitherto, but only pick off weak parts of the imperial armies facing them by means of various feints, dissimulations and rapid turning tactics -- thus dismembering them little piece by little piece. From about the 4th century AD until the 10th, repeated hordes of Goths and Huns, Avars and Slavs, Gepids and Bulgars, Rus and Pechenegs, not to mention the Mongols, poured out of central Asia invading Europe, the Middle East, India and China. They destroyed, or took over, all the imperial forms of governance that they came across. Feudal-states developed in Europe alone into which many armies poured and then settled down, find rich pasture for horses. (Also, the innovation of haymaking at around this time enabled feudal lords to maintain large numbers of horses through the winter.) Many further military innovations were instituted leading to heavily armoured knights and chevalier warfare. The horse was also used innovatively in agriculture and in building construction, particularly for the building of stone castles. The new armies of feudal states, importantly based on the horse, were able to rapidly retreat when necessary within their castles, and thus provided -- at long last -- a form of defense against Goth-like attacks.

6. Nation-states

The new castle-protected society was as strong a form of governance as had so far yet been invented. The previous types of armies -- imperial or horse-borne -- would have found it very hard going to make any sort of progress at all in trying to invade and subdue Europe as a whole in the 12th and 13th centuries. And, indeed, when small armies of heavily-armed feudal knights went abroad, as they did occasionally on Crusades, they were generally victorious against armies of the remaining empires in the Middle East, unless heavily outnumbered. The dominance of the feudal-state and of their castle-centred military methods remained the case until the next decisive innovation came along in the early 1300s -- the bombard, or cannon -- developed from gunpowder which, hitherto, had not been used for aggressive purposes. The cannon was made of bronze and fired iron cannonballs, and by the end of the 14th century had been developed well enough to be able to blast a passage through the strongest castle walls. From now onwards, the sound of the cannon was also the death-knell of the feudal-state. As cannons were perfected, made more mobile and attached to ever-larger armies, the cost of warfare leaped higher and higher and feudal-states had to amalgamate into larger kingdoms levying monetary forms of taxation on everybody. Also, the cannon became differentiated into many other forms of artillery and hand-held weapons. In Europe, feudal states developed into absolute kingdoms and then into the modern form of nation-state with a huge repertoire of explosive weapons and platforms for delivering them on land, sea and from the air.

7. Functional governance

The nuclear weapon, first dropped in 1945 on Hiroshima and Nagasaki, invalidated any idea that nation-states could now effectively defend themselves. Furthermore, offensive engagements between nuclear countries have a high chance of resulting in the mutual destruction of sufficent infrastructure so as to set them back centuries, if not millenia. Nuclear warfare, however, will still be possible and, as has been the case with all previous decisive weapons, a new form of governance must develop if there is going to be long-term security. For example, an individual terrorist carrying a nuclear weapon in a suitcase or backpack could destroy the whole government of a major nation-state in one blow, and there is no doubt that this could happen. A world-wide state or a simultaneous set of them, each performing a specialist function in a lateral, decentralised structure (immune form nuclear attack), is therefore necessary and will undoubtedly develop in the coming centuries. The military arm of it must be able to carry out surveillance over, and if necessary attack, any and every nation-state or entity seriously contemplating nuclear war or other nasty methods of mass destruction. The path towards such a military governance is already taking shape, the role being forced on the United States of America at the moment. However, besides warfare, there are many other problems in the modern world, such as pollution, resource depletion, freshwater control, global warming, protection of rare species and rain forest habitats and so on which will require specialised global control and for which nation-state governance is largely ineffective.

The succession of different forms of governance described above brought about by successive generations of increasingly powerful weaponry is therefore the backdrop against which economic development fitfully proceeds during peacetime intervals. Along with the demise of the present sort of nation-state governance, it is highly likely that national currencies will also disappear. The US dollar is already the major trading currency in the world. The Chinese renminbi (or yuan) is tied to the US dollar and will probably remain so. It is likely that the dollar-renminbi will gradually take over as the principal currency both for international trade and also for domestic transactions everywhere.