The decline of the western part of the old Roman Empire left Europe without the laws and protection the empire had provided. The vacuum was filled by the creation of a feudal hierarchy. In this hierarchy, the serf, or peasant, was protected by the lord of the manor, who, in turn, owed allegiance to and was protected by a higher overlord. And so the system went, ending eventually with the king. The strong protected the weak, but they did so at a high price. In return for payments of money, food, labor, or military allegiance, overlords granted the fief, or feudum – a hereditary right to use land – to their vassals.
At the bottom was the serf, a peasant who tilled the land. The vast majority of the population raised crops for food or clothing or tended sheep for wool and clothing. Custom and tradition are the keys to understanding medieval relationships. In place of laws as we know them today, the custom of the manor governed. There was no strong central authority in the Middle Ages that could have enforced a system of laws. The entire medieval organization was based on a system of mutual obligations and services up and down the hierarchy. Possession or use of the land obligated one to certain customary services or payments in return for protection.
The lord was as obligated to protect the serf as the serf was to turn over a portion of his crop to or perform extensive labor for the lord. Customs were broken; of course, no system always operates in fact as it is designed to operate in theory. One should not, however, underestimate the strength of custom and tradition in determining the lives and ideas of medieval people. Disputes between serfs were decided in the lord’s court according to both the special circumstances of each case and the general customs of the manor for such cases. Of course, the lord would usually decide a dispute between a serf and a lord in his own favor.
Even in this circumstance, however, especially in England, an overlord would impose sanctions or punishments on a lord who, as his vassal, had persistently violated the customs in his treatment of serfs. This rule by the custom of the manor stands in sharp contrast to the legal and judicial system of capitalism. The capitalist system is based on the enforcement of contracts and universally binding law, which are softened only rarely by the possible mitigating circumstances and customs that often swayed the lord’s judgment in medieval times.
The extent to which the lords could enforce their “rights” varied greatly from time to time and from place to place. It was the strengthening of these obligations and the nobleman’s ability to enforce them through a long hierarchy of vassals and over a wide area that eventually led to the emergence of the modern nation-states. This process occurred during the period of transition from feudalism to capitalism. Throughout most of the Middle Ages, however, many of these claims were very weak because political control was fragmented.
The basic economic institution of medieval rural life was the manor, which contained within it two separate and distinct classes: noblemen or lords of the manors, and serfs (from the Latin word servus, “slave”). Serfs were not really slaves. Unlike a slave, who was simply property to be bought and sold at will, the serf could not be parted from either his family or his land. If his lord transferred possession of the manor to another nobleman, the serf simply had another lord. In varying degrees, however, obligations were placed upon the serfs that were sometimes very onerous and from which there was often no escape.
Usually, there were far from being “free”. The lord lived off the labor of the serfs who farmed his fields and paid taxes in kind and money according to the custom of the manor. Similarly, the lord gave protection, supervision, and administration of justice according to the custom of the manor. It must be added that although the system did rest on reciprocal obligations, the concentration of economic and political power in the hands of the lord led to a system in which, by any standard, the serf was exploited in the extreme. The Catholic Church was by far the largest owner of land during the Middle Ages.
While bishops and abbots occupied much the same place as counts and dukes in the feudal hierarchy, there was one important difference between the religious and secular lords. Dukes and counts might shift their loyalty from one overlord to another, depending on the circumstances and the balance of power involved, but the bishops and abbots always had (in principle at least) a primary loyalty to the church in Rome. This was also an age during which the religious teaching of the church had a very strong and pervasive influence throughout Western Europe.
These factors combined to make the church the closest thing to a strong central government throughout this period. Thus the manor might be secular or religious (many times secular lords had religious overlords and vice versa), but the essential relationships between lord and serfs were not significantly affected by this distinction. There is little evidence that serfs were treated any less harshly by religious lords than by secular ones. The religious lords and secular nobility were the joint ruling classes; they controlled the land and the power that went with it.
In return for very onerous appropriations of the serf’s labor, produce, and money, the nobility provided military protection and the church provided spiritual aid. In addition to manors, medieval Europe had many towns, which were important centers of manufacturing. Manufactured goods were sold to manors and sometimes, traded in long-distance commerce. The dominant economic institutions in the towns were the guilds – craft, professional, and trade associations that had existed as far back as the Roman Empire. If anyone wanted to produce or sell any good or service, he had to join a guild.
The guilds were as involved with social and religious questions as with economic ones. They regulated their members’ conduct in all their activities: personal, social, religious, and economic. Although the guilds did regulate very carefully the production and sale of commodities, they were less concerned with making profits than with saving their members; souls. Salvation demanded that the individual lead an orderly life based on church teachings and custom. Thus the guilds exerted a powerful influence as conservators of the status quo in the medieval towns.
Any account of medieval social and economic thought must also stress the great disdain with which people viewed trade and commerce and the commercial spirit. The medieval way of life was based on custom and tradition; its viability depended on the acceptance by the members of society of that tradition and their place within it. Where the capitalist commercial ethic prevails, greed, selfishness, covetousness, and the desire to better oneself materially or socially are accepted by most people as innate qualities. Yet they were uniformly denounced and reviled in the Middle Ages.
The serfs (and sometimes the lower nobility) tended to be dissatisfied with the traditions and customs of medieval society and thus threatened the stability of the feudal system. It is not surprising, therefore, to find pervasive moral sanctions designed to repress or to mitigate the effects of these motives. One of the most important of such sanctions, repeated over and over throughout this period, was the insistence that it was the moral duty of merchants and traders to transact all trade or exchanges at the just price. This notion illustrates the role played by paternalistic social control in the feudal era.
A just price was one that would compensate the seller for his efforts in transporting the good and in finding the buyer at a rate that was just sufficient to maintain the seller at his customary or traditional station in life. Prices above the just price would, of course, lead to profits, which would be accumulated as material wealth. It was the lust for wealth that the Christian paternalist ethic consistently condemned. Thus the doctrine of the just price was intended as a curb on such acquisitive and socially disruptive behavior.
Then as now, accumulation of material wealth was a passport to greater power and upward social mobility. This social mobility was eventually to prove totally destructive of the medieval system because it put an end to the status relationships that were the backbone of medieval society. Another example of this condemnation of acquisitive behavior was the prohibition of usury, or the lending money at interest. A “bill against usury” passed in England reflected the attitudes of most of the people of those times. It read in part:
But forasmuch as usury is by the word of God utterly prohibited, as a vice most odious and detestable . . . which thing, by no godly teachings and persuasions can sink in to the hearts of divers greedy, uncharitable and covetous persons of this Realm. . . be it enacted… that… no person or persons of what Estate, degree, quality or condition so ever he or they be, by any corrupt, colorable or deceitful conveyance, sleight or engine, or by any way or mean, shall lend, give, set out, deliver or forbear any sum or sums of money. . to or for any manner or usury, increase lucre, gain or interest to be had, received or hoped for, over and above the sum or sums or lent… as also of the usury. . . upon pain of imprisonment. The church believed usury was the worst sort of acquisitive behavior because most loans on which interest was charged were granted to poor farmers or peasants after a bad crop or some other tragedy had befallen them. Thus, interest was a gain made at the expense of one’s brother at a time when he was most in need of help and charity.
Of course, the Christian ethic strongly condemned such rapacious exploitation of a needy brother. Many historians have pointed out that bishops and abbots was well as dukes, counts, and kings often flagrantly violated these sanctions. They themselves granted loans at interest, even while they were punishing others for doing so. We are more interested, however, in the values and motives of the period than in the sins and infractions of the rules. The values of the feudal system stand in stark, antithetical contrast to those that were shortly to prevail under a capitalist system.
The desire to maximize monetary gain, accumulate material wealth, and advance oneself socially and economically through acquisitive behavior was to become the dominant motive force in the capitalist system. The sins that were most strongly denounced within the context of the Christian paternalist ethic were to become the behavioral assumptions on which the entire capitalist market economy was to be based. It is obvious that such a radical change would render the Christian ethic, at least in its medieval version, inadequate as the basis of a moral justification of the new capitalist system.
The ethic would have to be modified drastically or rejected completely in order to elaborate a defense for the new system. THE TRANSITION TO EARLY CAPITALISM The medieval society was an agrarian society. The social hierarchy was based on individuals’ ties to the land, and the entire social system rested on an agricultural base. Yet, ironically, increases in agricultural productivity were the original impetus to a series of profound changes. These changes, occurring over several centuries, resulted in the dissolution of medieval feudalism and the beginnings of capitalism.
CHANGES IN TECHNOLOGY The most important technological advance in the Middle Ages was the replacement of the two-field system. Although there is evidence that the three-field system was introduced into Europe as early as the eighth century, its use was probably not widespread until around the eleventh century. Yearly sowing of the same land would deplete the land and eventually make it unusable. Consequently, in the two-field system, arable land was divided into three equal fields. Rye or winter wheat would be planted in the fall in the first field.
Oats, beans, or peas would be planted in the spring in the second, and the third would lie fallow. In each subsequent year there was a rotation of these positions. Any given piece of land would have a fall planting one year, a spring planting the next year, and none the third year. A dramatic increase in agricultural output resulted from this seemingly simple change in agricultural technology. With same amount of arable land, the three-field system could increase the amount under cultivation at any particular time by as much as 50 percent.
Improvements in agriculture and transportation contributed to two important and far-reaching changes. First, they made possible a rapid increase in population growth. The best historical estimates show that the population of Europe doubled between 1000 and 1300. Second, closely related to the expansion of population was a rapid increase in urban concentration. Before the yearn 1000, most of Europe, except for a few Mediterranean trade centers, consisted of only manors, villages, and a few small towns. By 1300, there were many thriving cities and larger towns.
The growth of towns and cities led to a growth of rural-urban specialization. With urban workers severing all ties to the soil, the output of manufactured goods increased impressively. Along with increased manufacturing and increased economic specialization came many additional gains in human productivity. Interregional, long-distance trade and commerce was another very important result of this increased specialization. THE INCREASE IN LONG-DISTANCE TRADE Many historians have argued that the spread of trade and commerce was the single most important force leading to the disintegration of medieval trade and customs.
The importance of trade cannot be doubted, but it must be emphasized that this trade did not arise by accident or by factors completely external to the European economy, such as increased contact with the Arabs. On the contrary, it was shown in the previous section that this upsurge in trade was prepared for by the internal economic evolutions of Europe itself. The growth of agricultural productivity meant that a surplus of food and handicrafts was available for local and international markets.
The improvements in power and transportation meant that it was possible and profitable to concentrate industry in towns, to produce on a mass scale, and to sell the goods in a widespread, long-distance market. Thus the basic agricultural and industrial developments were necessary prerequisites for the spread of trade and commerce–which then further encouraged industry and town expansion. The expansion of trade, particularly long-distance trade in the early period, led to the establishment of commercial and industrial towns that serviced this trade.
And the growth of these cities and towns, as well as their increased domination by merchant capitalists, led to important changes in both industry and agriculture. Each of these areas of change, particularly the latter, brought about a weakening and ultimately a complete dissolving of the traditional ties that held together the feudal economic and social structure. From the earliest part of the medieval period, some long-distance trade had been carried on throughout many parts of Europe. This trade was very important in southern Europe, on the Mediterranean and Adriatic seas, and in northern Europe, on the North and Baltic seas.
Between these two centers of commercialism, however, the feudal manorial system in most of the rest of Europe was relatively unaffected by commerce and trade until the later Middle Ages. From about the eleventh century, the Christian Crusades gave the impetus to a marked expansion of commerce… The development of trade with the Arabs–and with the Vikings in the North–led to increased production for export and to the great trade fairs that flourished from the twelfth through the late fourteenth centuries.
Held annually in the principal European trading cities, these fairs usually lasted for one to several weeks. Northern European merchants exchanged their grain, fish, wool, cloth, timber, pitch, tar, salt, and iron for the spices, silks, brocades, wines, fruits, and gold and silver that were the dominant items in southern European Commerce. By the fifteenth century the fairs were being replaced by commercial cities where year-round markets thrived. The trade and commerce of these cities was incompatible with restrictive feudal customs and traditions.
Generally the cities were successful in gaining independence from church and feudal lords. Within these commercial centers there arose complex systems of currency exchange, debt-clearing, and credit facilities, and modern business instruments like bills of exchange came into widespread use. New systems of commercial law developed. Unlike the system of paternalistic adjudication based on custom and tradition that prevailed in the manor, the commercial law was fixed by precise code. Hence it became the basis of the modern capitalistic law of contracts, negotiable instruments, agency sales, and auctions.
In the manorial handicraft industry, the producer (the master craftsman) was also the seller. The industries that burgeoned in the new cities, however, were primarily export industries in which the producer was distant from the final buyer. Craftsmen sold their goods wholesale to merchants, which, in turn, transported and resold them. Another important difference was that the manorial craftsman was also generally a farmer. The new city craftsman gave up farming to devote himself to his craft, with which he obtained a money income that could be used to satisfy his other needs.
THE PUTTING-OUT SYSTEM AND THE BIRTH OF CAPITALIST INDUSTRY As trade commerce thrived and expanded, the need for more manufactured goods and greater reliability of supply led to increasing control of the productive process by the merchant-capitalist. By the sixteenth century the handicraft type of industry, in which the craftsman owned his workshop, tools, and raw materials and functioned as an independent, small-scale entrepreneur, had been largely replaced in the exporting industries by the putting-out system.
In the earliest period of the putting-out system, the merchant-capitalist would furnish an independent craftsman with raw materials and pay him a fee to work the materials into finished products. In this way the capitalist owned the product throughout all stages of production, although the work was done in independent workshops. In the later period of the putting-out system, the merchant-capitalist owned the tools and machinery and often the building in which the production took place. He hired workers to use these tools, furnished them with the raw materials, and took the finished products.
The worker no longer sold a finished product to the merchant. Rather, he sold only his labor power. The textile industries were among the first in which the putting-out system developed. Weavers, spinners, fullers, and dyers found themselves in a situation where their employment, and hence their ability to support themselves and their families, depended on the merchant-capitalists, who had to sell what the workers produced at a price that was high enough to pay wages and other costs and still make a profit. Capitalist control was, then, extended into the process of production.
At the same time, a labor force was created that owned little or not capital and had nothing to sell but its labor power. These two features mark the appearance of the economic system of capitalism. Some writers and historians have defined capitalism as existing when trade, commerce, and the commercial spirit expanded and became more important in Europe. Trade and commerce, however, had existed throughout the feudal era. Yet as long as feudal tradition remained the organizing principle in production, trade and commerce were really outside the social and economic system.
The market and the search for money profits replaced customs and tradition in determining who would perform what task, how the task would be performed, and whether a given worker could find work to support himself. When this occurred, the capitalist system was created. Capitalism became dominant with the extension to most lines of production of the relationship that existed between capitalists and workers in the sixteenth-century export industries. For such a system to evolve, the economic self-sufficiency of the feudal manor had to be broken down and manorial customs and traditions undermined or destroyed.
Agriculture had to become a capitalistic venture in which workers would sell their labor power to capitalists, and capitalists would buy labor only if they expected to make a profit in the process. A capitalist textile industry existed in Flanders in the thirteenth century. When for various reasons its prosperity began to decline, the wealth and poverty it had created led to a long series of violent class wars, starting around 1280, that almost completely destroyed the industry. In the fourteenth century a capitalist textile industry flourished in Florence.
There, as in Flanders, adverse business conditions led to tensions between a poverty-stricken working class and their affluent capitalist employers. The results of these tensions were violent rebellions in 1379 and 1382. Failure to resolve these class antagonisms significantly worsened the precipitous decline in the Florentine textile industry, as it had earlier in Flanders. In the fifteenth century England dominated the world textile market. Its capitalist textile industry solved the problem of class conflict by ruralizing the industry.
Whereas the earlier capitalist textile industries of Flanders and Florence had been centered in the densely populated cities, where the workers were thrown together and organized resistance was easy to initiate, the English fulling mills were scattered about the countryside. This meant that the workers were isolated from all but a small handful of other workers, and effective organized resistance did not develop. The later system, however, in which wealthy owners of capital employed propertyless craftsmen, was usually a phenomenon of the city rather than of the countryside.
From the beginning, these capitalistic enterprises sought monopolistic positions from which to exploit the demand for their products. The rise of livery guilds, or associations of merchant-capitalist employers, created a host of harriers to protect their position. Different types of apprenticeships, with special privileges and exemptions for the sons of the wealthy, excessively high membership fees, and other barriers, prevented ambitious poorer craftsmen from competing with or entering the new capitalist class.
Indeed, these barriers generally resulted in the transformation of poor craftsmen and their sons into a new urban working class that lived exclusively by selling its labor power. THE DECLINE OF THE MANORIAL SYSTEM Before a complete system of capitalism could emerge, however, the force of capitalist market relations had to invade the rural manor, the bastion of feudalism. This was accomplished as a result of the vast increase of population in the new trading cities. Large urban populations depended on the rural countryside for food and much of the raw materials for export industries.
These needs fostered a rural-urban specialization and a large flow of trade between the rural manor and the city. The lords of the manors began to depend on the cities for manufactured goods and increasingly came to desire luxury goods that merchants could sell to them. The peasants on the manor also found that they could exchange surpluses for money at the local grain markets; the money could be used by the peasants to purchase commutation of their labor services. Commutation often resulted in a situation in which the peasant became very nearly a independent small businessman.
He might rent the land from the lord, sell the produce to cover the rents, and retain the remaining revenues himself. This system gave peasants a higher incentive to produce and thereby increased their surplus marketing, which led to more commutations, more subsequent marketings, and so forth. The cumulative effect was a very gradual breaking down of the traditional ties of the manor and a substitution of the market and the search for profits as the organizing principle of production. By the middle of the fourteenth century, money rents exceeded the value of labor services in many parts of Europe.
Another force that brought the market into the countryside and was closely related to commutation was the alienation of the lords’ demesnes. The lords who needed cash to exchange for manufactured goods and luxuries began to rent their own lands to peasant farmers rather than having them farmed directly with labor service obligations. This process led increasingly to a situation in which the lord of the manor was simply a landlord in the modern sense of that term. In fact, he very often became an absentee landlord, as many lords chose to move to the cities or were away fighting battles.
The breakup of the manorial system, however, stemmed more directly from a series of catastrophes in the late fourteenth and fifteenth centuries. The Hundred Year’ War between France and England (1337-1453) created general disorder and unrest in those countries. The Black Death was even more devastating. On the eve of the plague of 1348-1349, England’s population stood at 4 million. By the early fifteenth century, after the effects of the wars and the plague, England had a scant 2. 5-million population.
This was fairly typical of trends in other European countries. The depopulation led to a desperate labor shortage, and wages for all types of labor rose abruptly. Land, now relatively more plentiful, began to rent for less. These facts led the feudal nobility to attempt to revoke the commutations they had granted and to reestablish the labor service obligations of the serfs and peasants (peasants were former serfs who had attained some degree of independence and freedom from feudal restrictions). They found, however, that the clock could not be turned back.
The market had been extended into the country-side, and with it had come greater freedom, independence, and prosperity for the peasants. They bitterly resisted efforts to reinstate the old obligations, and their resistance did not go unchallenged. The result was the famous peasant revolts that broke out all over Europe from the late fourteenth through the early sixteenth centuries. These rebellions were extreme in their cruelty and ferocity. England experienced a series of such revolts in the late fourteenth and fifteenth centuries.
But the revolts that occurred in Germany in the early sixteenth century were probably the bloodiest of all. The peasant rebellion in 1524-1525 was crushed by the Imperial troops of the Holy Roman emperor, who slaughtered peasants by the tens of thousands. Over 100,000 persons probably were killed in Germany alone. These revolts are mentioned here to illustrate the fact that fundamental changes in the economic and political structure of a social system are often achieved only after traumatic and violent social conflict.
Any economic system generates a class or classes whose privileges are dependent on the continuation of that system. Quite naturally, these classes go to great lengths to resist change and to protect their positions. The feudal nobility fought a savage rearguard action against the emerging capitalist market system, but the forces of change ultimately swept them aside. Although the important changes were brought about by aspiring merchants and minor noblemen, the peasants were the pathetic victims of the consequent social upheavals.
Ironically, they were usually struggling to protect the status quo. OTHER FORCES IN THE TRANSITION TO CAPITALISM The early sixteenth centuries a watershed in European history. It vaguely marks the dividing line between the old, decaying feudal order and the rising capitalist system. After 1500, important social and economic changes began to occur with increasing frequency, each reinforcing the other and together having the cumulative effect of ushering in the system of capitalism.
The population of western Europe, which had been relatively stagnant for a century and a half, increased by nearly one-third in the sixteenth century and stood at about 70 million in 1600. The increase in population was accompanied by the enclosure movement, which had begun in England as early as the thirteenth century. The feudal nobility, in ever-increasing need of cash, fenced off, or enclosed, lands that had formerly been used for communal grazing. Enclosed lands were used to graze sheep to satisfy the booming English wool and textile industries’ demand for wool.
The sheep brought good prices, and a minimal amount of labor was needed to herd them. The enclosure movement reached its peak in late fifteenth and sixteenth centuries, when in some area as many as three-fourths to nine-tenths of the tenants were forced out of the countryside and into the cities to try to support themselves. The enclosures and the increasing population further destroyed the remaining feudal ties, creating a large new labor force – a labor force without land, without any tools or instruments of production, and with only labor power to sell.
This migration to the cities meant more labor for the capitalist industries, more men for the armies and navies, more men to colonize new lands, and more potential consumers, or buyers of products. Another important source of change was the intellectual awakening of the sixteenth century, which fostered scientific progress that was promptly put to practical use in navigation. The telescope and the compass enabled men to navigate much more accurately for much greater distances. Hence the “age of exploration”. Within a short period, Europeans had charted sea routes to India, Africa, and the Americas.
These discoveries had a rapid and large flow of precious metals into Europe, and second, they ushered in a period of colonization. Between 1300 and 1500, European gold and silver production had stagnated. The rapidly expanding capitalist trade and the extension of the market system into city and countryside had led to an acute shortage of money. Because money primarily of gold and silver coin, the need for these metals was critical. Beginning around 1450, this situation was alleviated somewhat when the Portuguese began extracting metals from the African Gold Coast, but the general shortage continued until the middle of the sixteenth century.
After that date there occurred such a large inflow of gold and silver from the Americas that Europe experienced the most rapid and long-lasting inflation history. During the sixteenth century prices rose in Europe between 150-400 percent, depending on the country or region chosen. Prices of manufactured goods rose mush more rapidly than either rents or wages. In fact, the disparity between prices and wages continued until late in the seventeenth century. This meant that the landlord class (or feudal nobility) and the working class both suffered, because their income rose less rapidly than their expenses.
The capitalist class was the great beneficiary of the price revolution. They received larger and larger profits as they paid lower real wages and bought materials that appreciated greatly as they held them as inventories. These larger profits were accumulated as capital. Capital refers to the materials that are necessary for production, trade, and commerce. It consists of all tools, equipment, factories, raw materials and goods in process, means of transporting goods, and money. The essence of the capitalist system is the existence of a class of capitalists who own the capital stock.
It is by virtue of their ownership of this capital that they derive their profits. These profits are then plowed back, or used to augment the capital stock. The further accumulation of capital leads to more profits, which leads to more accumulation, and the system continues in an upward spiral. The term capitalism describes this system of profit-seeking and accumulation very well. Capital is the source of profits and hence the source of further accumulation of capital. But this chicken-egg process had to have a beginning.
The substantial initial accumulation, or primitive accumulation, of capital took place in the period under consideration. The four most important sources of the initial accumulation of capital were (1) the rapidly growing volume of trade and commerce, (2) the putting-out system of industry, (3) the enclosure movement, and (4) the great price inflation. There were several other sources of initial accumulations, some of which were somewhat less respectable and often forgotten–for example, colonial plunder, piracy, and the slave trade.
During the sixteenth and seventeenth centuries the putting-out system was extended until it was common in most types of manufacturing. Although this was not yet the modern type of factory production, the system’s increased degree of specialization led to significant increases in costs. Thus during this period capitalist production and trade and commerce thrived and grew very rapidly. The capitalist class (or middle class or bourgeoisie) slowly but inexorably replace the nobility as the class that dominated the economic and social system.