This series is adapted, with permission, from a Chinese-language series by our friend Marcus Ji, who looks at historical events through an economic lens. We have condensed and adapted the original for an international audience.
To protect a wildly profitable monopoly, people have tried far harsher measures than you might imagine. Yemen banned the export of fertile coffee seeds on pain of death. Portugal kept sending fleets to the pepper coast that came back with half their crews dead. China made leaking its tea-making craft a capital crime. Modern firms build legal walls out of patents.
The defences escalate; the outcome is monotonously the same. Not one of them held. Pepper, nutmeg, coffee, tea, rubber – every one was prised open by smuggling, espionage, deception or new technology. Even the most sophisticated modern monopoly only bought itself some extra years.
So: is there any wall that can actually stop the human desire for profit?
To answer it, separate two things that usually get muddled together:
- Motive – what drives someone to break into a monopoly? The answer is always the same: profit. The higher it is, the more people try, and the harder. This motive has not dimmed once in 2,000 years.
- Means – how high is the technical cost of breaking in? Can you smuggle out a living seed, slip into a forbidden zone, reverse-engineer a formula, find an equivalent? This cost changes with the technology of the age.
Separate them and a clear rule appears: extreme profit decides whether someone comes to break the wall (almost always, yes); the technical cost of breaking decides how long it takes. The question is never whether a monopoly falls, but when – and “when” depends entirely on the means. Tea’s monopoly held for thousands of years not because its profit was any less tempting than the rest, but because the means to break it – slipping into a sealed region, keeping fragile seedlings alive across months at sea – did not mature until the 19th century. The motive was always there; it waited for the cost of the means to fall low enough.
Pepper: How tempting is the profit?
For centuries, the pepper that Europe craved reached it through a single choke point: Venetian merchants, who controlled the overland routes from the East and took their cut at every hand. Pepper was no minor luxury – a pound cost roughly four days of an ordinary worker’s wages, for a kitchen spice – and that wall made Venice rich.
The best measure of how tempting the profit was is Vasco da Gama. In 1497 he left Lisbon with four ships and about 170 men to find a sea route around Africa to India; two years later he returned with two ships, most of the men dead. By any sane risk calculation, no one should have sailed again. Instead the voyage became an annual fixture – because da Gama’s pepper cargo was worth about sixty times the cost of the whole expedition, and over the following decades Portugal’s spice profits ran to ten or twenty times its entire national budget. Half the crew dying did not stop the annual sailings. The sixtyfold return did. Where profit is high enough, not even death deters. (By contrast, no kingdom sent a fleet for mustard or local herbs – the profit was too thin to be worth a life.) And da Gama’s route was the means that broke the wall: sailing around the Cape cut out every Venetian middleman between Europe and India, and Venice’s centuries-old monopoly dissolved.
Tea: Even a craft could not be kept
By the early 1800s tea was Britain’s national drink, and Britain depended on China for essentially all of it – a vast silver drain that was one economic root of the Opium War. The only real fix was to grow tea in British-controlled India. China guarded it fiercely: foreigners were barred from the interior tea regions, and smuggling seeds or leaking the process could bring the death penalty. Note that China was guarding not just a plant but a body of knowledge – the making of tea, which lives in people’s heads and should be the hardest thing to steal.
This is where the paradox resolves. Tea’s profit was every bit as high as pepper’s, so why did its monopoly last thousands of years? Not the motive – the means. Breaking tea required three near-impossible things at once:
- slipping into a forbidden interior where foreigners faced death;
- learning an intricate craft that lived only in the makers’ hands;
- keeping delicate live seedlings alive through months of salt spray at sea.
Before the 19th century that cost was close to unpayable – not for lack of people wanting to, but for lack of anyone able to. Then one invention dropped the cost sharply: the Wardian case, a sealed glass box whose internal moisture recycled itself and shut out sea salt, letting fragile plants survive a long voyage. The living-transport problem that had blocked everyone for millennia was solved.
In 1848 the East India Company hired the Scottish botanist Robert Fortune to steal China’s tea knowledge, at £500 a year – five times his normal salary. There was a saying about the margin: “a penny when picked, a pound when sold.” Fortune shaved his head, wore a false queue and Chinese robes, and travelled deep into the tea districts disguised as an official. He brought back three things:
- the fact, which had long puzzled Europe, that green and black tea come from the same plant, differing only in whether the leaf is oxidised;
- the discovery that China’s export green tea was dyed with Prussian blue and gypsum, to satisfy the foreign belief that green tea should look green;
- via Wardian cases, nearly 20,000 seedlings plus skilled tea-makers.
The most counterintuitive part: Fortune’s stolen Chinese plants mostly died in India – the industry succeeded on the native Assam variety plus the stolen craft and craftsmen. By the 1890s India supplied about 90% of Britain’s tea. From Fortune’s departure to the collapse of a thousands-of-years-old monopoly: about 40 years. The wall stood for millennia and fell in 40 years. What brought about the downfall wasn’t a change in motive, but the reduced cost of breaking in.
Diamonds: A wall collapsing in real time
Every case so far is settled history. Diamonds are different: the collapse is happening right now, in the last three or four years.
For a century, the diamond trade looked like a counterexample. De Beers, founded in 1888, is widely regarded as the longest-lasting monopoly in modern history – from 1888 to the late 1990s it controlled roughly 80–90% of the world’s diamond supply. By the rule above, such profit should have drawn countless challengers. How did it hold for a hundred years?
The answer completes the rule rather than breaking it. De Beers did not hold on through geography or a technical secret – diamonds are actually a fairly common gemstone, mined in many countries. It held on two ways:
- it funnelled the world’s rough diamonds through a central selling system and stockpiled them, manufacturing scarcity;
- In 1947 an advertising copywriter wrote “A Diamond Is Forever,” welding diamonds to love and marriage to manufacture demand. (The notion that an engagement ring should cost two or three months’ salary was likewise a 1980s De Beers invention, with no basis in tradition.)
In other words, De Beers could not keep the wall-breakers out – nobody can – so it did something else: it controlled supply and demand at once, raising the effective cost of breaking in to an extreme. Even if you dug up a diamond, you could not get a good price, or into its distribution system. That is how it lasted a century.
But a ceiling is still a ceiling, and the break came from both ends. On supply, world-class mines found in Russia, Australia and Canada after 1990 sold straight into the market. On demand, lab-grown diamonds – chemically identical, all but impossible to tell apart – reached mass production and destroyed the one story the whole edifice rested on: natural scarcity. The collapse has been swift. De Beers’ market share has fallen from about 80% in 1990 to under 30% today; a one-carat lab-grown diamond that cost around US$3,400 in 2020 now sells for roughly US$400; synthetics have gone from 5% of US engagement rings in 2019 to over 45% in 2024; and De Beers’ parent, Anglo American, has written the business down by billions and is now trying to sell it. The wall that stood for nearly a century – the one that felt eternal – is coming down fast, and once it started, it came down completely.
The same rule today, wearing a patent
It is tempting to think all this belongs to the distant past. But move to the present, swap the guarded thing for “technology” and the wall for “the patent,” and the rule holds exactly. Two modern firms show it from opposite directions.
Tesla tore its own wall down. In 2014 it pledged not to sue anyone using its technology in good faith. Musk’s reasoning was almost a modern restatement of this whole article: technological leadership is never defined by patents, which offer feeble protection against a determined competitor – a patent is often just “a lottery ticket to a lawsuit.” Tesla’s real rival was not other electric cars but the flood of petrol cars leaving factories daily; while the electric-car category was still small, walling rivals out would only starve the category Tesla needed to grow. In an unformed new market, growing the pie beats owning it – so tearing the wall down was the rational move.
Kodak died defending its wall. The digital camera that killed Kodak film was invented, and patented, by Kodak itself in 1975. But film was an ~80%-margin, ~90%-share business, and management, fearing digital would eat that cash flow, told the engineer it was “cute – but don’t tell anyone.” Kodak went bankrupt in 2012; that same year Instagram, a 13-person imaging company, was bought for US$1 billion. The deeper lesson isn’t “transform sooner” – digital photography was structurally far less profitable than film (Kodak lost about US$60 a camera even as America’s number-two maker), and was soon swallowed by phones anyway. This is the Innovator’s Dilemma: incumbents don’t fail to see the new technology; they finish the sums and cannot bring themselves to trade a high-margin business for a low-margin one. Kodak’s real loss was never rebuilding an equally profitable business for the digital age.
The billion-dollar sieve
Any rule worth its name must survive a hunt for counterexamples. The meaningful test is scale: monopolies making a billion dollars a year or more – big enough to attract every smuggler, spy, new mine and new technology on earth. (A monopoly earning only modest sums might genuinely go unchallenged, not because it can’t be broken, but because breaking it isn’t worth the trouble.) At that scale, no monopoly built on guarding a secret or a scarcity has ever lasted. Three cases look like exceptions and instead mark the rule’s edges:
- Google, Windows, Visa survive not by walling but by running – constant iteration plus network effects, Tesla’s path, not the wall’s. Stop running and they fall, as Kodak and Nokia did.
- Patent drugs hold during their term only because breaking in is illegal – the law raises the cost to infinity – then collapse 80–90% the day the patent expires, an event the industry literally calls the “patent cliff.”
- Coca-Cola guards not a secret (its formula was cracked long ago) but a brand and a distribution network – a demand-side moat – and doesn’t even earn monopoly margins.
The only long-term survivors changed how they live: the moat moved from a supply-side secret to a demand-side brand, or from guarding to running. There is no third way.
Why gold lasts and diamonds don’t
One question remains: if every profiteering monopoly falls, why do some valuable things hold their worth for millennia – gold, for instance? Put gold beside diamonds and the answer is sharper than “monopolies fall.” Diamond scarcity is manufactured; gold’s is natural. Diamonds are common; their scarcity was built by De Beers’ stockpiling and a 1947 slogan. Gold is different: all the gold ever mined, about 220,000 tonnes, would form a single block the size of a large house, and mining adds only about 1.8% a year – a scarcity fixed by geology, which no amount of capital or technology can accelerate. There is no De Beers of gold; the ten largest miners account for only 27% of output, so no one can corner it, and any attempt to cut supply and lift the price simply draws recycled gold back into the market.
From this a near-iron trade-off emerges. Any scarcity that yields extreme profit must be a manufactured scarcity – only by artificially pinching something that was not scarce can you extract returns far above cost. And anything manufactured carries the seed of being exposed: the story dates, the technology catches up, the cartel loses control. Conversely, a genuinely natural scarcity like gold is stable precisely because no one can manipulate its supply – which is also why no one earns extreme profit from it. Gold’s reward is slow durability, not a windfall.
This is why natural diamonds will not “retreat gracefully” into a luxury symbol the way a mechanical watch does. A Patek Philippe’s scarcity is anchored in a thing – a craft no one can replicate. Gold’s is anchored in a thing – a stock no one can mass-produce. A natural diamond’s scarcity is anchored only in a story – “this one came from the ground” – because a lab-grown stone is the same carbon, physically identical or purer and 90% cheaper. A scarcity anchored in a thing is hard; a scarcity anchored in a story is soft. Diamonds did not lose to another diamond. They lost to the fact that stories eventually get exposed.
The answer
So – can anything stop the human desire for profit? Across eight cases and two thousand years, the answer is flat: no. Behind it sits a plain economic mechanism – excess profit attracts rent-seeking. The profit is the motive, and it almost never dies; defence can only raise the cost of breaking in, changing the speed of collapse, never the collapse itself. China’s death-penalty defence of tea was far harsher than Rome’s near-total openness on pepper, and tea fell all the same – the severity of a defence is simply a readout of how tempting the profit behind it is. The higher the wall, the larger the reward it advertises.
And the biggest winner is rarely the origin: China held tea for millennia, only to be undone by a single Scottish spy who carried its craft off to India. Holding a scarcity is not the same as holding it for long. What you can do is never to block the desire – that is a war you lose – but to know exactly how large a reward is chalked on your wall, and to move behind the next one before someone lowers the cost of breaking this one. Any monopoly that looks unbreakable is only an itemised reward for whoever breaks it, with the lock priced a little higher for now. However dear the lock, a key gets cut for it in the end.
Previously in this series: Why merchants of the past failed to calculate gross margins?
Next in this series: How did gender-based division of labour come about in the first place?
