• In the 16th century → the emergence of the European world economy based upon the capitalist mode of production

• Ideology at the time = raison d’état

• Capitalist world economy: economic decisions are oriented primarily to the arena of the world economy, while political decisions are oriented primarily to the smaller structures that have legal control, the states within the world economy

  • *Distinction of the economic and political!

• The states do not develop and cannot be understood except within the context of the development of the world system

• The modern class system began to take its shape in the 16th century

• 1450-1640: meaningful time unit during which was created a capitalist world economy

Where?

• European world economy: northwest Europe, Christian Mediterranean, Central Europe, Baltic region, regions in America, Atlantic islands, African coast

Expansion

• There was an expansion through formal overseas colonies of European powers

• Demographic scissors movement: demographic growth in Europe which is nullified at the planetary level by the decline in immense extra-European sectors

• Land/labor ratio of the European world economy was immensely increased

  • This sustained continued economic growth

  • It made possible the large-scale accumulation of basic capital used to finance the rationalization of agricultural production

• It is the overall system with its structured pressures for certain kinds of political decisions which is crucial to explain the expansion

• The ability to expand successfully depended on the ability to maintain relative social solidarity at home and the arrangements that can be made to use cheap labour far away

• Expansion involves unequal development and, therefore differential rewards

  • Differentials:

    • Core vs. peripheral areas

    • Between states

    • Within states, between regions

    • Within regions, between cities

    • Within local units

Secular inflation

• Fantastic spread of prices and eventually the closing of the gap

• Price rise in the 16th century

Economy

• In countries where industry expanded → it was necessary to turn over a larger proportion of the land to the needs of horses

  • But the men were still there only now they were fed increasingly by Baltic grain, which was more expensive

• Increased supply of bullion

  • Sustained the thrust of the expansion

  • Prevented the fall of prices

  • Cheapened money, leading to the decline of the interest rate

• Wage lag:

  • In England and France → prices rose, wages and rents failed

  • Not in Spain! This created a gap, which was the major source of capital accumulation in the 16th century

  • Dramatic drop in wages was caused by:

    • Money illusions + discontinuity of wage demands

    • Wage fixing by custom, contract, or statute

    • Delay in payment

• Inflation

  • Created a redistribution of incomes

    • Method of taxing the politically weakest sectors to provide a capital accumulation fund

  • It encouraged investment

  • Inflation was important because it was a mechanism of forced savings + capital accumulation and because it served to distribute these profits unevenly through the system, disproportionately into the core and away from its periphery and semiperiphery

• Rural exodus: provided the unskilled labour for the new industries

• In the areas of greater agricultural specialization, there was a thrust to industrialize

Division of labour

• Led to the specialization of labour

• The expansion of agricultural productivity opened the way to the expansion of real income

• Each mode of labour control is best suited for particular types of production

  • Slavery + feudalism (forced labour) → periphery

  • Wage labour + self-employment (free labour) → core

  • Sharecropping → semiperiphery

• Modes of labour greatly affect the political system

• World economy was based on the assumption that there were 3 zones and that they did have different modes of labour control

• In the peripheral areas, there were 2 primary activities: mines (for bullion) and agriculture (for food) → monoculture

• In the core areas: population density was higher → agriculture was more intensive + varied → more skilled labour → increased division of labour

• It was an economic expansion, a period of demographic growth, and increased productivity

  • It marked the establishment of regular trade between Europe and the rest of the inhabited world

Classes

• System of multiple layers of social status and social reward + complex system of distribution of productive tasks

• Types of workers:

  • Slaves

  • Serfs

  • Tenant farmers

  • Yeoman farmers

  • Intermediate personnel

  • Ruling classes: nobility + bourgeoisie

• The existence of a strong indigenous bourgeoisie had a particular impact on the development of agricultural production in times of distress

• New yeoman class became a significant economic and political force

  • They had every incentive to be entrepreneurial since they were seeking wealth and upward mobility

• New class of industrialists: committed to a modern economy, driven by profit

Rise of money tenancy

• There were extra-economic coercive forces that were pressuring the landowners to go further than they intended + there was competition for labour

• The English legal system allowed more flexibility for landlords, so money tenancy and wage labour continued to expand

• Northwest Europe = divided the use of land for pastoral and arable products because:

  • The widening market created a larger market for pastoral products

  • The periphery of the world economy provided cereal supplements for the core areas

  • The semiperiphery was turning away from industry and toward relative self-sufficiency in agriculture

General points

• The key was the emergence of capitalism as the dominant mode of social organization of the economy

  • There was not on capitalism but several European capitalisms each with its zone and its circuits

• The technology of business transactions had seen some important advances which enabled commercial capitalism to increase

• The 16th century is characterized by the diffusion of techniques from the core to the periphery of European civilization

Summary

• Europe expanded into the Americas

• Price revolution + wage-lag

• Rural labour: rise of coerced cash-crop labour in the periphery + yeoman farmer in the core