History Of Capitalism

According to some[which?] historians, the modern capitalist system has its origin in the "crisis of the fourteenth century", a conflict between the land-owning aristocracy and the agricultural producers, or serfs. Manorial arrangements inhibited the development of capitalism in a number of ways. Serfs had obligations to produce for lords and therefore had no interest in technological innovation; they also had no interest in cooperating with one another since they produced to sustain their own families. The lords who owned the land[citation needed] relied on force to guarantee that they were provided with sufficient food. Because lords were not producing to sell on the market, there was no competitive pressure for them to innovate. Finally, because lords expanded their power and wealth through military means, they spent their wealth on military equipment or on conspicuous consumption that helped foster alliances with other lords; they had no incentive to invest in developing new productive technologies.

The demographic crisis of the fourteenth century upset this arrangement. This crisis had several causes: agricultural productivity reached its technological limitations and stopped growing, bad weather led to the Great Famine of 1315–1317, and the Black Death of 1348–1350 led to a population crash. These factors led to a decline in agricultural production. In response, feudal lords sought to expand agricultural production by expanding their domains through warfare; they therefore demanded more tribute from their serfs to pay for military expenses. In England, many serfs rebelled. Some moved to towns, some purchased land, and some entered into favorable contracts to rent lands from lords who needed to repopulate their estates.

The collapse of the manorial system in England enlarged the class of tenant farmers with more freedom to market their goods and thus more incentive to invest in new technologies. Lords who did not want to rely on renters could buy out or evict tenant farmers, but then had to hire free labor to work their estates, giving them an incentive to invest in two very different kinds of commodity owners: those who had money, the means of production, and subsistence, who were eager to valorize the sum of value they had appropriated by buying the labor power of others[citation needed]; and the free workers, who sold their own labor power and, therefore, labor. The free workers were "free workers" in the double sense that they neither formed part of the means of production nor did they own the means of production that transformed land and even money into what we now call "capital". Marx labeled this period the "pre-history of capitalism".

In effect, feudalism began to lay some of the foundations necessary for the development of mercantilism, a precursor of capitalism. Feudalism was mostly confined to Europe[citation needed] and lasted from the medieval period through the sixteenth century. Feudal manors were almost entirely self-sufficient, and therefore limited the role of the market. This stifled any incipient tendency towards capitalism. However, the relatively sudden emergence of new technologies and discoveries, particularly in agriculture and exploration, facilitated the growth of capitalism. The most important development at the end of feudalism[citation needed] was the emergence of what Robert Degan calls "the dichotomy between wage earners and capitalist merchants". The competitive nature meant there are always winners and losers, and this became clear as feudalism evolved into mercantilism, an economic system characterized by the private or corporate ownership of capital goods, investments determined by private decisions, and by prices, production, and the distribution of goods determined mainly by competition in a free market