The Babylonian economy was rooted in its agricultural production and extensive networks of trade. The Babylonian empire was situated in the Fertile Crescent, and as such, farmers were able to produce a surplus of food. Civilizations of the time in the area were building nation-states based on agricultural surplus and a mix of barter and precious metal–based trade. Food surpluses were stored and guarded by the King's military, and as such, the King maintained control over his subjects. Tax collectors were able to more easily extract taxes from subjects, as they grew crops like wheat and barley that were easy to count and demand a portion of. The Babylonian empire traded their surplus food stores with neighboring empires and nation-states and, in return, were able to import luxuries and raw materials that the region lacked. Babylonian artisans also traded along the well-established land and sea routes of the area, and loose and informal barter systems between artisans and small scale farmers were common.

The Babylonian empire is a potent example of how state-based hierarchies and thus, large-scale economies were often created through agriculture. As people became less nomadic and began farming, rulers gained control over surplus food. Standing armies were created who guarded the food stores and escorted traders along the trade routes. Empires created systems of brutal laws and used their enforcers to keep subjects in line, and subjects benefitted the empire by working to grow the food surpluses, create profitable crafts, or labor to build the actual infrastructure of the empire.