Factors responsible for the transition to capitalism

The increase in long-distance trade 

                                               Long-distance trade is considered to be one of the prime factors in the transition from feudalism to capitalism by economists like Paul Sweezy. Hunt counter argues that increased agricultural output and productivity provided surplus food and raw materials for handicrafts. It also led to the rapid growth of towns and freed workforce for the manufacturing sector. In due course, while reducing the wage goods constraint, the changes in the agricultural sector, freed the workforce from agriculture. The additional workforce and increased output of raw material provided a growth impetus to the industrial sector. All these were prerequisites for long distance trade                                                                                                    .
                                                           Hunt further argues in both the young as well as the matured feudal states, trade did not lead to the dissolution of the manorial system. In the young feudal states trade was subordinate to the manors and in the mature systems the signs of weakening of the feudal ties started appearing much before trade became an integral part of Western Europe. In the latter states increased agricultural output could not keep pace with the increased size of the aristocratic families which strained the relationship between feudal lords and serfs. In this situation, trade had only expedited the fall of the feudal mode of production.

                                                      Hunt (04) argued that even in the earlier part of the feudalism trade flourished in northern and southern Europe, while the rest of Europe had a feudal system. He states that the holy crusades from France were also the outcome of its internal forces. They worked as a safety valve against its domestic unrest.                                                 .

                                                         The spread of trade caused some important changes in society. First, in the medieval time period, exchange took place at the annual trade fair, where people could exchange one commodity for another. The commodities could be grain, salt, spices, brocades, gold diamonds etc. by the fifteenth century these fairs were replaced by a round-the-year market. Secondly, these new emerging cities were free from all feudal ties. Similarly, unlike the feudal artisans the new artisans severed all their ties with the agricultural activities. Thirdly, in these upcoming trade centres the new and “complex systems of currency exchange, debt clearing, and credit facilities, and modern business instruments like bills of exchange came into widespread use.”(Hunt, p.13). Fourthly, unlike the manorial customs and practices, now commercial laws started taking shape to deal with commercial crimes. At the same time  capitalist negotiation, contracts, etc. started being formalized.

In the feudal system, the artisans and craftsmen worked with their own tools and raw materials and within their own precincts. They were the masters of their product throughout the production process. They finally sold their product to the merchant. With the rapid growth of trade merchants initially started providing raw material and tools to the artisans and they were supposed to give the final product to the merchant. The artisans were still working under their own roof. Throughout the production process, the merchant was the owner of the final product. In the later stage of the putting-out system the artisans were asked work at the place provided by the merchant. This marked the beginning of the present factory system. The textile industry was the first to experiment with it. Later it spread to all the other sectors. The putting out system brought about two important changesPutting-out system and the birth of the capitalist industry

1. It created a labour force which had little or no capital.
2. The labour had only his labour power to sell.
   Both the characteristics became the salient features of the capitalist system.

Decline of the manorial system 

                                                             Increased agricultural production initially encouraged the growth of trade and commerce. Later it led to the decline of the manorial system. The feudal lords started depending more on cities for their demand of luxury items. They needed money for the purpose. To meet their need for money they started renting their land to peasants in exchange for money rent. In this process they simply became the landlords and in most of the cases absentee landlords.
 
                                                                  Peasants, on the other hand, found it profitable to sell their grain in the market for money and use this money to commute their labour services. This way they were free from all ties to the manor. They were free to sell their surplus in the market and pay the rent to the feudal lord. All these changes led to weakening of feudal ties.

                                                                The dissolution of manorial system was further aggravated by disasters of the fourteen and the fifteen centuries. The hundred-year war between France and England (1337-1453) caused unrest in these two countries. Next, the bubonic plague of the 1350s reduced the English population by half. As we know, any disaster affects the poor more. The nobility tried to overcome labour scarcity by revoking the commutation of labour services. But all their attempts to revive the feudal ties were in vain. In some cases, peasants even resorted to violent revolts.

Creation of the Working Class                                                                                 .
                                                             The dissolution of the manorial system and changes in the economy in the sixteenth century created a class which owned no means of production and were forced to sell their labour power to the owners of the means of production for wages. Only with these wages could they buy necessities                               .
                                                                  The peasants used to collect food, fuel and fodder from the village common land. By the thirteenth century the feudal lord started enclosing this land to meet the increased need for money. They used this land for grazing sheep. As a result the village people were denied access to this land. They moved to cities  in search of jobs. Cities became a haven for these rootless people. Guilds in cities have started concentrating on the material well-being of their members. The unemployed started concentrating in the urban centres. There was strict punishment against unlawful farming and begging. These inimical situations created a working class.

Other forces in the transition to Capitalism                                          .
                                                                                             The discovery of some navigation devices (compass and telescope) helped in the transport of heavy precious metals and later in colonization

                         In the medieval times (1300-1500) money mainly consisted of gold and silver coins but the production of precious metals stagnated in Europe, causing a problem in transactions. The shortage eased when gold from the Americas travelled to Europe in the sixteenth century.

                       Europe experienced very high inflation during sixteenth century to the tune of 150-300%, depending on the region. The price rise was more for the manufacturing sector than for agriculture and wages. As a result farmers and wage earners suffered more capitalists. With higher profit, the capital stock of the merchants  rose which, in due course, was reinvested and led to more capital. This way the process of capital accumulation progressed. The capitalist class earns profit from its capital stock and more capital means higher profit in the future.

This period is also marked by the appearance of nation states. The monarchs needed support from the emerging capitalist class to fight the war with the feudal lords. Capitalists provided resources to monarch to fight wars and in return the monarch promised them military support and freedom from various rules and regulations of the manorial control. In addition a system of uniform weights and measures was introduced.

                      The initial phase of capitalism is known as mercantilism. Mercantilism originated simultaneously with scarcity of gold and silver in Europe. Mercantilist policies attempted to keep the gold and silver within the country and discouraged its outflow. Spain which experienced maximum gold and silver flow from Americas imposed various restrictions on its outflow. It even announced death penalty for illegal exporters. But, to meet the requirement of trade, the merchant class managed to smuggle it out by bribing the government officials.

The government adopted various other measures to encourage the inflow of gold and silver. First, the domestic shipping and insurance agencies were promoted both for exports and imports over the foreign counterparts. Second, the government encouraged domestic monopoly because a single seller could have more control over price in the international market than if there were more than one domestic seller. In order to control foreign competition it even went ahead with the colonization of economic important regions. The export of raw material was also prohibited.

Imports to the European countries, especially England, were restricted. If an industry was unable to withstand the foreign competition then the government provided various types of support and subsidies to overcome the setback.

In the opinion of Hunt (04), the resources necessary for capitalism could have been generated from trade and commerce, the putting-out system and the enclosure movement.

Professor Irfan Habib (95) contends that inner forces of feudalism could not have given birth to capitalism. He argues that the exploitation and subjugation of other countries was essential for the emergence of capitalism in England and Western Europe. He discusses the nature of the economy in the period between the dissolution of feudalism and the emergence of capitalism (period between 1400 and later half of the eighteen century) and critically analyses whether that system could change into capitalism.

During the transition period, the rent earning landlord class was still the dominant class. A small sector of commodity production also existed in this period. Dobb and other economists have called this as “petty mode of production period”. In this mode of production with artisans and peasants, who had turned into small capitalists, even with hired labour could not have changed this mode of production to capitalism. Prof. Habib suggests that the petty mode of production could have intensified landlord coercion and extension of merchant capital at the cost of small producer’s capital. This would only have delayed the onset of capitalism.

Capitalism requires labourers who could be hired and fired by the employers, and factories using machines. Machine-based division of labour is different from that in the previous modes of production. Factories dependent on machines became a dominant form of production in England by the early eighteenth century.

As Prof. Habib argues, even technological development could not have generated enough resources for the capitalist system. He suggests that the resources required for the growth of the capitalist system could only be made available from the primitive accumulation involving internal exploitation or control over other economies, for example, colonization.