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11.1: Prelude to Trade Empires and Early Capitalism

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    27165
  • In the Middle Ages, wealth, land, and power were intimately connected. Nobles were defined by their ownership of land and by their participation in armed conflict. That changed by the early modern period, especially as it became increasingly common for monarchs to sell noble titles to generate money for the state. By the seventeenth century the European nobility were split between “nobles of the sword” who inherited their titles from their warlike ancestors and “nobles of the robe” who had either been appointed by kings or purchased titles. Both categories of nobility were far more likely to be owners of land exploiting their peasants than warriors. Among almost all of them, there was considerable contempt for merchants, who were often seen as parasites who undermined good Christian morality and the proper order of society. Even nobles of the robe who had only joined the nobility within the last generation tended to cultivate a practiced loathing for mere merchants, their social inferiors.

    In addition, the economic theory of the medieval period posited that there was a finite, limited amount of wealth in the world, and that the only thing that could be done to become wealthier was to get and hold on to more of it. In the medieval and even Renaissance-era mindset, the only forms of wealth were land and bullion (precious metals), and since there is only so much land and so much gold and silver out there, if one society grew richer, by definition every other society grew poorer.

    According to this mindset, kingdoms could only increase their wealth by seizing more territory, especially territory that would somehow increase the flow of precious metals into royal coffers. Trade was only important insofar as trade surpluses with other states could be maintained, thereby ensuring that more bullion was flowing into the economy than was flowing out. Colonies abroad provided raw materials and, hopefully, bullion itself. As a whole, this concept was called mercantilism: an economic system consisting of a royal government controlling colonies abroad and overseeing land-holdings at home. The ultimate example of this system was the biggest owner of colonies that produced bullion: Spain.

    Mercantilism worked well enough, but commerce fit awkwardly into its paradigm. Trade was not thought to generate new wealth, since it did not directly dig up more silver or gold, nor did it seize wealth from other countries. Trade did not "make" anything according to the mercantilist outlook. Of all classes of society, bankers in particular were despised by traditional elites since they not only did not produce anything themselves, instead (seemingly) profiting off of the wealth of others.

    These attitudes started undergoing significant changes in the sixteenth and seventeenth centuries, mostly as a result of the incredible success of overseas corporations, groups that generated enormous wealth outside of the auspices of mercantilist theory. Many of the beneficiaries of the new wealth of the sixteenth and seventeenth centuries were not noblemen, but were instead wealthy merchant townsfolk, especially in places like the Dutch Republic and, later, England, men who amassed huge fortunes but did not fit neatly into the existing power structure of landholding nobles, the church, and the common people. These changes inspired an increasingly spirited battle over the rights of property, the idea that not just land but wealth itself was something that the state should protect and encourage to grow.

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