Economic Change and The Bi-Polar World Economy During the late Middle Ages and into early modern times, all economic patterns were constrained by a demographic fact: there were two great peaks of population growth. One was between 1150 and 1320 and the other one was between 1450 and 1610. These peaks of population prompted economic growth. These demographic peaks were also two periods of great inflation, prosperity, capital accumulation and the global spread of long-distance commerce. But between these peaks of population growth was a period of catastrophic population decline. This population decline prompted economic decline or depression. The Commercial Revolution The Renaissance followed the Commercial Revolution, which occurred between 1150 and 1320. This Commercial Revolution had fundamentally altered European economic patterns. A Bi-Polar World Economy had emerged during this period; it was a kind of proto-capitalist system. But declining agriculture, after the 1320's, combined with the Black Death after 1348, put an end to further capitalist development during the Renaissance period. From about 1320 to about 1450, the economy declined or lagged. That was, of course, the period of the Renaissance movement in Italy. The Northern Renaissance movement, beginning after 1480, coincided with the beginning of the rising population and prosperity of the long sixteenth century. The Bi-polar Capitalist World Economy What was this bi-polar capitalist world-economy? We must begin with a definition. Capitalism is a system of production for sale at a maximum profit in a world-market. The division of labor throughout the system produced for a profit on a world-market, even though most production was agricultural. Age of the Renaissance 1 Dr. W.J. Wright
Manorialism and the market exchange organization of labor, associated with the feudal system in the European context, are opposed to this capitalist organization. Feudalism is really one of two political and social forms of the tributary system or mode of production, in which most surplus production is raked off of coerced peasants by the ruling elite and most exchange occurred at transparent marketplaces within relatively small economic nodules, say 50 kilometers across. Hence, with feudalism, peasants worked for their local communities; they could think of themselves as working for the common good. Peasants produced a surplus because they were dominated by lords on the manor. In contrast, it is that world-market, an abstract, impersonal phenomenon, that is most important to capitalism. Working for the market is working for profit: in the core and semi-peripheral areas of the system, domination is not necessary. In fact, domination interferes with impersonal market forces and would undermine the motivation for working in a capitalist world market. Capitalism is further characterized by the following traits: 1. labor as commodity - piece workers, slaves, share-croppers, day-wage workers of all kinds 2. commercialized land - consider the enclosure of commons 3. multiple polities - one economic culture but many political ones 4. a central core - a directing and exploiting center extracting surplus from a periphery with a semi-periphery acting as a buffer zone. Capitalism is not to be thought of as destroying or eliminating, nor even necessarily crippling other modes of production, such as the feudal system. Capitalism appears as a separate level of economic activity which depends on and uses the other levels. There is always the level of everyday, locally self-sufficient life of many people within the system, who simply meet their biological needs. It is a world below economics and exchanges, as Fernand Braudel says. Above that level is the level of the market-exchange or market economy. It appeared wherever towns appeared. The market-exchange economy may operate in either the capitalist or tributary modes of production. We certainly see it operating with Feudalism Age of the Renaissance 2 Dr. W.J. Wright
(tributary mode). When the capitalist world market emerges, the marketexchange economy serves to facilitate the involvement of long-distance merchant capitalists in the regional exchanges already in place. Market towns arose serving geographical areas that surrounded them. The market town bound the world of production to that of consumption in the region. Agricultural and manufactured goods were exchanged in the market town. Some goods came from afar, mostly preciosities, but also salt and wines. Exchange at the market town was transparent. There was a specific marketplace, which was supervised by officials. There were laws regulating exchange so that the rules and standards of trade were clear and precise. Capitalism is, then, a third level of economic activity operating above, and using the market economy. Emergence of Modern Capitalism Mature capitalism did not emerge until the long-sixteenth century; that is, at the end of the Renaissance period. It was only then, that the European world economy, spawned by the Commercial Revolution, achieved a single core area: hence, the label bi-polar world economy for the protocapitalist system prior to 1480. Antwerp and the Low Lands were the first true core, beginning in the long-sixteenth century. The emergence of the Low Lands core was made possible by a special, historical set of circumstances: 1. the crisis of feudalism - weakened the lords, so that peasants were freed and new states could arise: lords and peasants seeking new wealth 2. modern states system - modern state powerful enough to aid capitalists; attempts at world-empire fail 2. imperialism, in West Africa, but especially in the Americas - this meant cheap goods with relatively inexpensive labor and raw materials and the great expansion of the area of productivity 4. the single core - Antwerp and Low Lands beat out Genoa, Venice and Italy. These phenomena are part of the subject matter of this course. Age of the Renaissance 3 Dr. W.J. Wright
As I said, the bi-polar world economy appeared in the twelfth century. It had two centers; the Flemish-Dutch and North Italian areas and within those areas the greater towns competed with one another. In these centers, capitalistic forms of organization of labor and exchange were developed and these forms affected all parts of the economy. But the depression and plague put a halt to economic growth. The Flemish area was all but knocked out of commission until the mid-fifteenth century. North Italian towns were badly hurt, too. Nevertheless, Venice and Florence managed to maintain predepression levels of commerce and production, although they could not grow. Venice managed to hang on by careful diplomacy and Florence by its special connections with Rome. But both of these towns were badly hurt by the rise of the Ottoman Empire in the Levant, which cut off the flow of relatively cheap Oriental and African products to Europe. Venice arranged special deals with Mamluk Egypt, which eased this problem, but this arrangement came to an end with the Ottoman conquest of Egypt in 1515. And both Florence and Venice were mortally injured by the shift of world trade conduits from the Mediterranean to the Atlantic Ocean. In most of Europe, the fourteenth and fifteenth centuries were the period of the agrarian crisis. It was a crisis of the entire agrarian order. The crisis involved the entire structure of relationships between the lords and peasants. It had to do with the rights of feudal lords in matters concerning land, serfs, and lower noble jurisdictions, on the one hand, and communal rights of the village and commoners, on the other hand. Above all, the agrarian crisis involved a struggle over feudal ground rents based on the product of the soil during a time of decreasing productivity. Declining agricultural prices during the Renaissance, due to declining population, caused lords to suffer grave losses of income, because their incomes were based on ground rents. Population in most towns decreased, too. The result was a decrease in agricultural prices because of the reduction of consumers and the reduced use of marginal lands in production. On the Age of the Renaissance 4 Dr. W.J. Wright
other hand, it led to urban labor shortages, which drove up artisanal wages. Hence, nobles had to pay more for manufactured goods while they reaped less from their ground rents. With regard to urban labor, however, this period was the golden age of the guilds for obvious reasons. As a result, peasants flocked to towns in search of opportunity. The lords were thus threatened with even more loss of labor and ground rents. They struck back with the "second serfdom" in many parts of Western Europe;" i.e., restrictions of mobility, marriage, and choice of lords. An ideological struggle also resulted as peasants began to question the raison d'être of the nobles; i.e., they questioned what was for the common good, an age-old value. What the nobles were doing was no longer for the common good. Simultaneously, the rising princely territorial states benefited from all of these developments. They were headed up by the few, fortunate lords who suppressed the lesser lords and "protected" the peasants so that the latter could now increase productivity. "Protected" peasants with increased productivity could then pay the new taxes necessary for modern state development. Intelligent lesser nobles whose fortunes had not been so good in Portugal and Spain sought out "new worlds" in exploration and emigration. This exploration and emigration, too, redounded to the benefit of the state-builders; i.e., new sources of goods and even new products raised wealth and with it taxes. The rise of the modern states system is an important phenomenon, which we shall examine later. Age of the Renaissance 5 Dr. W.J. Wright