Abstract This thesis argues that the formation of community in Shakespeare's The Merchant of Venice is based on economic exchange and examines how economic exchange entangles characters in legal, national and interpersonal relations. The Merchant of Venice dramatizes a confrontation between two religiously demarcated bourgeois groups in Venice, which in turn, allegorizes the changing socio-economic situation in Tudor England. This thesis aims to employ the economic and exchange perspectives and argues the formation of community in Shakespeare's The Merchant of Venice is based on economic exchange and how human relations through exchange are reified in a nascent capitalistic society. This thesis contains two main chapters. Chapter One examines how the shift of wealth and social power--from possession of land to accumulation of money--had greatly impacted the social order, and given rise to anxiety between social classes. I take into account the historical context of a developing capitalist economy in early modern England--a context for which Shakespeare uses Venice as a foreign and substitute site to reflect on his contemporary England. Chapter Two argues that the formation of community in The Merchant of Venice is based on economic exchange. I draw on C. L. Barber's “The Merchant and the Jew of Venice: Wealth’s Communion and an Intruder” and W. H. Auden's "Brothers and Others" to examine how the formation of community is dictated by economic relations. I also examine how the characters enact and embody the economic conceptions in Tudor England and how the reified value system influences the social relations of the characters, such as commodified father/daughter relations, master/servant relations, love relations, and marriage relations.