Download From Feudalism to Mercantilism –History and Economics

12/06/13
From Feudalism to Mercantilism –
History and Economics
I. The Nature of Feudal Economies



A very small scale of economic activity
Generally speaking, the range of effective economic
interaction was about 20 miles
Primary emphasis on agricultural production
Five Primary groups: kings, nobles, merchants, priests, and serfs





Kings controlled money and security
Nobles controlled agriculture
Merchants controlled trade
Priests controlled behavior or souls
Serfs controlled nothing but served as the labor force
Feudal economy characterized by:
1.
2.
3.
4.
Lord-vassal relationship
Authority extremely local
Authority based on landholding
The emergence of landlord rights
The Breakdown of Feudal Economies




Decreased supply of labor caused by the Black Death
Increased trade possibilities caused by travel
Reformation—increased break from authority of the Church
The idea of private property and its clash with the idea of sovereignty
II. The emergence of mercantilist thought


Not a single, unified body of thought at the time—really more practical politics at
work. Nation states in competition with one another.
Broad agreement that economics should be subordinated to the interests of the
state.
How mercantilist thought evolved:
Three powerful forces
1. the rise of the nation-state = New countries/had lots of power
2. the commercial revolution = $$/Bullion
3. the decline of the medieval economy = End to Feudalism/Manorialism
III. The rise of the Nation-state and the Commercial Revolution
A. The Rise of the Nation-state



Problems of scale (empires vs. city-states or larger nation-states)
Loyalty issues—was the ultimate loyalty to a local lord, a city-state or an empire
(nation-state)?
At same time nobles demanded protection for their property, which placed new
demands on larger empires and their institutions. Emerging nation-states had
many responsibilities and demands put on them. Example?
Magna Carta
B. The commercial revolution




Increase in the volume of trade
Widened geographical scope of trade
Introduction of new products
The decline of the medieval economy
New ways of thinking about economic activity-emphasis on production
IV. Mercantilism:
Wealth = power
₪
Wealth is finite.
₪
One state’s gain is another’s loss.
₪
Principles of Mercantilist thought:
1.) Aggressively exploit natural resources abroad. Build colonies to extract wealth.
2.) Maximize export-to-import ratios and attempt to build up trade surpluses with
other countries. Possible strategies:
a. Raise protective tariffs and/or quotas on foreign imports.
b. Erect non-tariff barriers on foreign imports.
c. Dump exports on foreign markets by pricing them below cost so as to
drive foreign companies out of their own domestic markets.
3.) Prevent other states from obtaining wealth.
a. Create exclusive trading relationships with weaker states so as to deny
more powerful states access to their resources.
b. Attack and capture foreign colonies.
c. Attack and capture other countries.
d. Harass foreign shipping, preventing wealth gathered abroad from reaching
rival countries. Incidentally, this is what pirates often did during the period
between the 16th and 18th centuries. They would hire themselves out as
privateers (mercenaries) to a country like England and be commissioned to
attack, say, Spanish ships and towns in the Caribbean, their pay being a
portion of the wealth plundered. Argh!
Needs for Mercantilism:
A. Policies dealing with other nations:
a. Favorable balance of trade
b. Merchant marine
c. Colonial system
B. Policies dealing within your own nation:
a. regulation of prices and wages
b. regulation of labor
This results in: poor laws and regulation of consumption
Political implications of mercantilist economics




The assertion of national power and the presumption of right
Assumption that the welfare of the community would follow from the pursuit of
national strength and power (sound familiar?)
The duties of the classes and the harmony of interests
o The laborer's lot--workers were to be poor but not impoverished
o The responsibilities of the rich--to consume but only to increase the power
of the state
o The merchant's duty was to produce article for trade --to enhance the store
of gold
o The obligations of the nobility --to produce sufficient food and raw
materials
The harmony of interests = well-ordered national community-no inherent conflict
between or among the groups --a moral community-- a visible and omnipresent
hand.
The international anarchy among states



Assumption of nothing but conflict and war
Economic competition was political rivalry
Commercial transactions are always political
Increase in Military Manpower, 1470-1710
Date
Spain
1470
Dutch
France
England
20,000
40,000
25,000
1550
150,000
50,000
20,000
1590
200,000
20,000
80,000
30,000
1630
300,000
50,000
150,000
1650
100,000
1670
70,000
110,000
120,000
1700
50,000
100,000
400,000
100,000
Sweden
15,000
45,000
70,000
87,000
Russia
35,000
70,000
63,000
130,000
100,000
170,000
Source:Geoffrey Parker and Lesley M. Smith, "Introduction," in The General Crisis of
the Seventeenth Century, Geoffrey Parker and Lesley Smith, eds., (London: Routledge &
Kegan Paul, 1978), p.14.