For a historian, even one who operates on a grand scale, Braudel is noticeably theoretical. In the second of the three volumes that constitute his great synthesis of history from the bottom, the theory stands out even more than in the first (The Structures of Everyday Life, 1982). Here, Braudel makes a fine distinction between commerce and capitalism--between predictable and fairly routine processes of exchange, and those involving special products or long distances that are speculative in motive. Full-blown capitalism, which operates only on a global scale, will be the subject of the next volume; this one, still halfway in the locality, begins with local markets and fairs, and the development of retail selling. As usual, Braudel's theories don't get in the way of color and detail. Markets were held on specific days of the week, he tells us, as they still are: an irreplaceable source of fresh produce at low prices. In Moscow, the market was held on the frozen Moskva river, where transportation was easiest; during the abnormally cold 17th century, the Thames became the site of a spontaneous market, of carnivals and fairs. Most markets took place, however, in specific areas where covered stalls were built, with separate rows for different kinds of goods. On the periphery were open-air markets in grains, candles, ropes, and other goods, and around these were the bakers, shoemakers, and dealers in second-hand clothes. So vast were the markets in London, Paris, Istanbul, and other large cities that whole regions were organized to supply them. Braudel also notes--against Marx--that markets for labor existed before the industrial epoch. As early as the 13th century, ""the Place de Greve in Paris and the nearby Place 'Juree' by Saint-Paul-de-Champs, or the square outside Saint-Gervais. . . were the usual places for hiring labor."" In villages and towns, laborers gathered at squares and hails to be hired by foremen. Braudel goes far beyond these local institutions, however, to depict the growth of trade and, necessarily, of middlemen. As trade expanded, shops became more specialized; but as fortunes were made, artisan-shopkeepers became wholesalers, and diversified. Braudel tells of an 18th-century lace manufacturer in Caen who extended his business as far as New York and then began to deal in spices, foodstuffs, and muslin. This flexibility at the upper levels is important to the development of what Braudel calls capitalism, since it means that the merchant can respond to demand in different areas; that is, he can become a speculator. There is a wealth of information on trading monopolies; state budgets, moneylending, and peasant revolts, all supported, as in the previous volume, with helpful charts, maps, and illustrations. And holding it all together is Braudel's theory, which acts like a plot device, making the reader eager for the denouement in the concluding volume. A great project that keeps getting better.