Emergence of Capitalism in Western Europe in 17th to 19th Century - Example

Emergence of Capitalism in Western Europe in the 17th to 19th century Table of Content Introduction 3 2. Emergence of Capitalism in Western Europe in 17th to 19th century 3 3. Early feudal system as system for organizing the economy 5 4. Differences in the economy between capitalism and feudal system 6 4.1. Treatment of labour and laissez faire 7 4.2. Generation of economic growth 7 5. Conclusion 8 1. Introduction Development of economic system has been intrinsic part of social structure that has contributed to the development of society at large. The economic approach broadly provides framework of human interaction that result in production and consumption of goods as a means of securing optimal advantage for all individuals involved (Heilbroner & Milberg, 2009). The economic rationality becomes the critical tool that facilitates economic activities for sustenance. Consequently an economic system is evolved that promotes and supports human activities which rely on mutual interdependence of resources. The study of Europe shows that in sixteenth century, the feudal system of Western Europe was distinct in its Monarchy and landed gentry. It used decentralized power to streamline a system of economic activities based on agriculture. The decline of feudal system gave rise to capitalism. The paper would discuss the emergence of capitalism in Western Europe in the 17th to 19th century and the major elements that differentiated it from the earlier feudal system. 2. Early feudal system as system for organizing the economy Feudalism and feudal economy was land based and basically agrarian in nature. The relationship between peasants and landlords was hugely crucial issue for revenue generation and therefore emphasized the increased productivity. But at the same time, appropriation of surplus in terms of taxes, rent, extra levies on surplus etc. became key factors that considerably restrained the farmers in reinvesting on new tools, healthy cattle and other things for improving agricultural output (Katz, 1993). The lack of incentives and simmering discontent amongst the farming community emerged as important issue that led to the decline of feudalism in Western Europe. While the system highlighted new social economy that underlined the inter-relationship amongst the various processes of production, distribution, consumption and exchange, it was, nevertheless unable to visualize the importance of creating facilitating environment of growth through incentives to farmers. The farmers were therefore forced to produce not for profit but for sustenance. Another key factor that contributed to the decline of feudalism was its tendency to encourage population growth for both the peasants and the feudal lords (Dobb, 1963). The large peasant family helped in farming but it led to defragmentation of land holding and lower production in the long run. The enlarged family of local rulers strengthened their political power as the family members were absorbed in the military. This again put pressure on the farmers as surplus was used to support growing number of military. The enlarged family of rulers also witnessed reduced power as land was divided amongst larger number of inheritors. In order to strengthen the position of feudal lords, the major states of Western Europe like Germany, France, Italy, Portugal etc. raised taxes and appropriation on surplus that led to the widespread revolt of the peasant (Maddison, 2007). The revolt of peasants was joined by the proletarian class which significantly helped in the fall of feudal system in Western Europe. All these factors became key issues for the decline for feudal system in Western Europe. 3. Emergence of Capitalism in Western Europe in 17th to 19th century One of the most important factors that had emerged from the fall of feudalism was the development of bartering economy and expansion of trade over larger geographical areas (Ingram, 2008). The money was minted and used for payments in various economic activities like sale and purchase/ lease/ rent of land, goods and services. The peasants and farm workers were more motivated because of wage based labour. Most importantly, the payment system in standardized form of money made it easy to switch the occupation, the feudal soldiers and serfs could now be replaced with paid soldiers and peasants boasting greater skills. It helped to highlight the importance of labour and transition of social class or bourgeois peasantry that was forced to become wage labourer. Moreover, the urbanization and increased trade also created environment for improved productivity for economic surplus which could be reemployed for increased revenue (Cameron & Neal, 2003). Thus, it paved way for capitalist system of economy that was dependent on exigencies for improving economic activities. The industrial revolution, French revolution that empowered bourgeois class, wage based labour and expansion of trade were vital inputs of capitalistic economy (Bayly, 2004). The transition from agrarian society to trade and commerce which required skilled labour, led to higher productive outcome and surplus economy. The division of labour was focused on technology based specialized skills which could be efficiently used within the industries to enhance productivity. At the same time, commercialization of agrarian products greatly influenced and defined economic factors like market and opportunities. They also raised the importance of investment and creative input for improvements in agricultural processes. Karl Marx strongly asserted that capitalism thrived on exploitation of labour that resulted in accumulation of wealth for the capitalist society or the rich people (Heilbroner, 2000). Interestingly, while the basic tenets of Marx helped explain division of labour, the external factors could not be explained which influenced market exchange. 4. Differences in the economy between capitalism and feudal system The emergence of capitalism in Western Europe had considerable impact on the development processes of Europe at large. It differed vastly with that of feudal economy. While feudal economy was mainly agrarian, capitalism focused on wider aspects on market imperatives and focused on producing goods which would meet the needs of the people. Furthermore, it promoted economic activities through market exchange which relied on wage based division of labour, private ownership of land and machines, law etc. As such, under capitalism, the socio-economic development was significant in its treatment of labour and generation of revenue. As against the feudal system, it addressed hordes of issues like incentives for reinvestment of economic surplus for improved productivity, well defined division of labor, laissez faire, development of social class like bourgeois and proletarian. The feudal economy was more concerned with the organizational aspect of agricultural income whereas, capitalism addressed the issues which ensured that investments resulted in agricultural profits. Social division of class was important aspect of Marx’s capitalism. The bourgeois were the owner or capitalists who infused capital into the industry and exploited the proletarians or the working class to produce goods of great value. In capitalist economy, the owners as well as workers both benefitted from the economic activity that was also reflected in the development of society through trade and market exchange of commodities which met the requirements of the people. The doctrine of laissez faire was inherently linked with capitalist economy as it encouraged the concept of free trade as an essential mechanism to foster socio-economic development of the society. Eminent eighteenth century economist, Adam Smith emphasized private ownership and initiatives within a free enterprise system which was not bogged down by bureaucratic hurdles (Heilbroner, 2000). He believed that private ownership gets huge boost within a free enterprise system and contributes significantly to the growth of the nation. The market competition becomes the critical factor that regulates it operations which is better than government controls. Indeed, emergence of capitalism in Western Europe was central to the growth and expansion of European states across the world in the 17th to 19th century. 4.1. Treatment of labour and laissez faire Laissez faire was pertinent within the broader precinct of business imperatives where exploitation of labour could adversely influence market imperatives and performance. In the capitalist economy, market factors had been vital elements that influenced all aspects of business, especially the exploitation of labour. The labour or working class was motivated by wages and provided skilled, unskilled and semi-skilled workers with opportunities to improve their life and standard of living. 4.2. Generation of economic growth The feudal economy centred on the interests of the feudal lords and was not much concerned with the development processes of the society in general. The decentralized mode of functioning of the feudal system was primarily designed to strengthen monarchy through regular revenue from the feudal system. Thus, their main concern was exacting as much revenue from the peasants as possible. The peasants were therefore not able to reinvest in the farm as surplus was taken away in taxes, levies, rents etc. Capitalism on the other hand worked towards socio-economic development of the society. It investigated and tackled issues which could increase agricultural production. Capitalist economy also promoted wage based division of labour and created social class of bourgeois and proletarians so that society can benefit. People from different strata of society developed skills which could be exploited within new industries. Thus, capitalism gave impetus to development processes that helped Western Europe to grow and expand at faster speed. 5. Conclusion The emergence of capitalism in Western Europe was a vital economic process that gave new perspective to diversified economic activities that influenced development. The influx of capital and concept of investment along with employability within the production process was important paradigm for increasing profitability and efficiency of the workers. The transition from feudal system to capitalism in Western Europe was both a necessity as well as pre-requisite for consolidation of political power as feudal system had considerably weakened the states through land fragmentation and decentralization of power which had made feudal lords more powerful. The transformation to capitalism was therefore more dramatic in terms of people’s empowerment and re-distribution of economic resources amongst the people. Most importantly it helped evolve new methods of production and development of new social structure which was more egalitarian and promoted accumulation of wealth. 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