Emergence of the modern industrial economy

Economics

Emergence of the Modern Industrial Economy

Origins in the British Manorial System

Economic systems tend to reflect the societies of which they are a part. The medieval world was one of extreme localism and considerable division of power. Local lords dominated everyday life. The lord of the manor controlled, in one way or another, almost every aspect of the lives of ordinary men and women. Across much of Western Europe, the manor provided a framework for social and economic interaction. The manor was, in effect, a miniature state within a state. The central authority had lost power and influence through the delegation or seizure of responsibility. Local and regional magnates usurped the prerogatives of kings. The manor was self-sufficient - a unit of agrarian production that provided for virtually all of the basic needs of its residents. Manned largely by unfree labor, it fulfilled many of the functions that would today be filled by the marketplace. Such manufacturing as took place occurred within its territorial limits. Only commodities were usually traded from one manor to another, or across the continent. Yet, England was an unusual case. The Anglo-Saxon realm was well on its way to become a nation of great estates, after the continental model, when it was suddenly overwhelmed by the forces of William the Conqueror. William's Normans displaced the native lords as the new parceled out England among his followers. The system that was created was different from that known in most of the West - the king was established as supreme overlord. The new English Kingdom represented a reasonably orderly hierarchy that was well designed to meet the needs of political domination and economic exploitation.

In post-Conquest England, the King was ultimate overlord. Manors formed the bottom rung of an agrarian economy. Groups of manors joined together formed the baronies and counties - later earldoms - that comprised the English state. Manors were staffed by a population of serfs; men and women who were bound to the soil. Serfs received housing and certain rights in the fields and other resources, in exchange for military protection and a complex series of dues. The entire system was based on a web of interpersonal relationships and feudal oaths and obligations. The new arrangements quickly became customary. Little was done in the world of the High Middle Ages that did not depend on tradition. In its ideal form, life went on like clockwork. The lord of the manor was both business manager and source of justice for his serfs, and also for those free persons who happened to leave within the bounds of the manor. The manorial system encouraged exploitation, but did little to foster innovation. These essential conditions for industrialization existed only in germ form. The agrarian enterprises of the manor, together with its systems for exploiting the resources of field and forest, would develop only later into the source of England's industrial might. Conditions would need to change. Sweeping new laws would need to transform the countryside, and with it, English life. The old long stood in the way of the new. The fundamentals of industrialization existed, but they would take centuries to develop and expand. The largely subsistence economy of Norman England would, through the vicissitudes of the later Middle Ages and the Early modern period, create the England that was the "workshop of the world."

Sources of Wealth: National Income and Economic Exploitation

All states depend for their income on the exploitation of national resources. These resources are both human and material. In the Norman period, wealth was seen mostly as a matter of rights; of things "owed" to superiors. The king was the ultimate owner of all the land in England. Having apportioned the country among his noblemen, he expected certain services and moneys in return. In early times, the majority of these contributions came in the form of personal service in battle. But the king also controlled certain land son his own, in particular the forests and royal manors. These could easily serve as sources of revenue. In many ways, the royal revenue collection apparatus was hostile to the general population, the king collecting fees and fines from those who transgressed royal rights in the extensive forests; a system that was contrary to the continental Norman practice of selling forest produce to raise revenue.

In a similar fashion, the individual lords of the manor obtained needed funds by fining their villeins. The lord controlled the manorial court. It was here that virtually all disputes were heard. Infractions of manorial regulation typically resulted in economic gain for the lord. The manorial accounts of the Bishop of Winchester for 1209 contain a lengthy and detailed list of fines and amercements that had been imposed by the manorial courts.

The amercement was a highly arbitrary fine, with little purpose other than the raising of revenue - "an examination of an eyre roll leaves one with the impression that it was almost impossible, however much he might strive to do his duty, for a man to escape amercement at some stage."

Clearly, the ruling class did not consider it important to encourage real economic development. The villeins were essentially on their won, producing enough for their own sustenance and giving most of their surplus over to their lords. Shortfalls could easily be made up by finding imagined fault with tenants' performance. In neither direction, was there much incentive to produce more or develop new methods. Each party normally received only its share of a fixed resource. There might be years of good crops, or perhaps some additional resource, such as a mine, but these too provided only small additional sources of income through traditional forms of exploitation. "By keeping the peasants' share of their own product near the subsistence level, the ruling class is able to derive rent (or a surplus) from this scarce resource."

The entire system encouraged minimal levels of production. Further development could only occur when there was some external change, when the manor ceased to be a closed unit serving only the needs of its inhabitants and owner.

Economic Progress: The Late Medieval Wool Industry

The Black Death wrought havoc among England's population. Having climbed to at least five million by 1300, the epidemic slashed England's population by at least two-thirds by the middle of the following century.

The massive decrease in population completely altered the dynamics of the manorial system. Labor was suddenly scarce. Skilled laborers commanded twice the wages they did before the plague, while the price of wheat fell to half its former level.

A system that depended on a plentiful supply of cheap labor bound to the soil could no longer exist once that labor was scarce. Bonds began to loosen as ways had to be found around outmoded traditions. Not only did wages rise, but lords and peasants turned to new methods of supporting themselves. For the first time, embryonic industries appeared desirable as a means of raising revenue. Wool was an essential commodity in the production of textiles. Though finished cloth was not a major product of England, the raw material soon contributed a substantial source of funds. England's monarchs held a prerogative on taxing on wool and sheep pelts.

Both kings and lords had an interest in increasing the production of wool - the kings for the tax revenue it would produce and the lords for their "share" of the production on their estates. For ordinary Englishmen, sheep rearing provided a lucrative new source of income and employment. The English economy developed as, in effect, a colony of the more advanced territories of Flanders and Holland with England supplying the raw material i.e. wool for Flemish and Dutch looms.

The increasing emphasis on sheep helped to develop an early form of capitalist economy. London merchants, in particular, the Merchants of the Staple, sent their agents into the countryside to buy up the necessary wool. A sophisticated enterprise, the Merchants of the Staple controlled a network of routes throughout England that, while making many of their members rich, also connected the hinterland with the Channel ports and the Continent. The new system encouraged the best use of land - from a profit point-of-view.

Different segments of society increasingly contributed to the phenomenon of capitalistic growth. Cistercian monasteries, ostensibly centers of religious, were also major sources of economic change. Located in wild, out-of-the-way places, they encouraged the deforestation needed for the rearing of sheep as their monks excelled in the production of fine wool. Cistercians introduced to the English countryside a range of new techniques in wool production. They also helped to spread other agricultural improvements like the water mill.

Thus, economic growth became a nationwide industry involving multiple facets of society. Improved agricultural techniques helped the population recover from its post-plague lows. Expanded trade in wool spurred the development of foreign commerce in general. As more wool was produced, more markets needed to be found for this commodity. A feedback loop was created that began the transformation of the medieval manor into something more like a for profit agricultural estate. The process would take centuries, but by Elizabethan times it had surely begun. Serfdom had all but disappeared from England, and money rents and wages had largely replaced other forms of compensation and exchange. The new importance of trade contributed to a profound change in attitudes, one that was beginning to re-shape society itself. In 1579, Thomas Churchyard defined as nobles, "Merchauntes that sail forrain countreys," a statement that underscores the importance of generating wealth.

Though not legally noble, these individuals were already beginning to emerge as substantial players in English society.

Economic Expansion: The Manor as Productive Estate

The vast expansion of trade and commerce in Early Modern England found its fullest expression in the thirst for new outlets for national enterprise. England's growing collection of colonies represented an attempt to compete economically on a world stage. Rivalry with other European powers encouraged the discovery and settlement of the Americas and the establishment of trading posts in Africa and India. These new colonies could provide raw materials for the goods that were now beginning to be produced at home. By the Seventeenth Century, England was becoming a major producer of finished textiles. Grain, too, was marked for export, protected by the Corn Laws that made importation of foreign grain prohibitively expensive.

The Corn Laws were part of a structure designed specifically to safeguard landed estates. The landed estates - economic units designed more for profit than for simple social order - formed the backbone of the English state and economy. Proponents of this system would set up similar arrangements in the colonial world. The Southern colonies of the later United States would owe their prosperity directly to the raising of cash crops. Though many of the details of the system would be different - the South's dependence on unfree labor and its focus on the production of "exotic" crops like tobacco and indigo - the results would be similar. Throughout the English-speaking world the landed gentry and their allies in the growing merchant class came to wield the bulk of political power and influence. The Corn Laws, together with bounties for indigo and other colonial products, showed the ability of the owners of large estates to control the legal system and to legislate for their own benefit.

Legislating for its own benefit entailed the maximization of the profitability of each estate. Medieval manors had been worked according to tradition in two and three field systems whereby peasants held rights to scattered strips of arable land. By the Eighteenth Century, owners of manors had begun to experiment with more productive methods. Innovation demanded fields of considerable size. The old strip system was inefficient and only encouraged the preservation of traditional methods of labor organization. Landlords used the legal system to enclose their lands, thereby organizing it into compact blocks and encroaching on traditional rights to the commons. Ambitious peasants rented large farms and began to grow crops for the market rather than just their own use, while at the same time leasing excess land to other peasants. They also drained swamps, increased their use of manure, and began to specialize in growing fodder for ever larger flocks of sheep and herds of cattle.

Such yeomen participated in a vigorous cash and credit economy, borrowing money from aristocrats and well-to-do merchants. England's colonial entrepreneurs depended on these credit systems to establish their small holdings and plantations, and even simply to equip their migrations to the New World.

Agricultural expansion both at home and abroad contributed to a dramatic rise in the number of people the land could support. Towns grew rapidly. In 1500, London was not even among the twelve largest cities in Europe, but by 1700 it was far larger than any other.

Similar stories could be told of other English towns. The agricultural surplus was now able to support distinct populations of agricultural laborers and urban craftsmen, laborers, and merchants.

The larger the populations of these towns the more they transformed from simple agricultural centers or market towns into real urban centers. The new town dwellers were no longer engaged directly in the rural economy. They worked in association with it, but in capacities that were tending toward trade and manufacturing. The towns themselves became cities, growth itself feeding further development:

Greater efficiency was promoted, in part, by such developments as better market facilities, wider roads to cater to a greater volume and weight of traffic, new and enlarged bridges, and a host of other achievements. To some extent, therefore, capital was substituted for labor.

In other words, as successful businesspeople made money they invested it in other projects that tended to further encourage the development and growth of business facilities. The old manor, improved a sit was through agricultural innovation, was quickly becoming a foundation for growth in other areas. Its surplus population could people growing settlements the success of which was founded on non-agricultural enterprises. More people meant more goods produced. More people meant more settlers for overseas colonies and greater exploitation of raw materials. Greater amounts of raw materials contributed to the increase of manufactured goods that led to greatly increased trade and further explosive growth in capital sums available for more investment. The stage was being set for true industrial development.

The Birth of Industry

Thus, the stage was set for the dawn of a new era in the English economy. A still, primarily rural nation now served as support for a network of cities - including one of the largest urban centers of the time. The old manors, increasingly enclosed, and given over to scientific farming and stock-raising, could supply a large surplus population. Not only was the population exploding, but traditional agricultural operations were far more productive. It took fewer hands to produce a given quantity of food and fodder. The new class of unemployed needed work. The landlords possessed additional resources. Great landowners turned to the exploitation of coal and water power on their estates. They used the excess population to work the mines and mills, securing parliamentary sanction for acts that further increased their ability to exploit the land and its inhabitants.

Many of these occupations offered an opportunity for higher wages. Rural pay was notoriously low. Traditional arrangements certainly did not encourage workers to apply extra effort or work longer hours. According to theories popular at the time, poor workers labored only long enough and hard enough to obtain the small amount of extra funds they required for luxuries such as liquor and tobacco. Once these demands had been satisfied, they would lapse into a period of idleness, during which they gave themselves over to the enjoyment of these goods.

For industrialism to work; therefore, it necessitated the creation of an entirely new attitude among the rural and working poor. Studies have shown that, rural workers did indeed begin to change their ancient habits during the Eighteenth Century. Popular holidays were curtailed - institutions such as "St. Monday" that had served to create two day weekends when added to Sunday - fell into disuse.

Workers also begin to work longer hours. Wages rose only slowly and the extra hours were necessary to produce the increased income that workers felt was essential to maintaining a decent lifestyle. In fact, it was the change in lifestyle that contributed significantly to the development of industrialization. The luxury goods, the simple pleasures, that earlier moralists believed were the sole goals of mid-Eighteenth Century rural laborers, were gradually being superseded by various forms of consumer consumption. A decline in the price of food relative to industrial goods enhanced consumption of these goods as well.

These transformations in spending habits and consumer tastes show the industrial revolution to be a true revolution in daily life. The poor and working classes strove to emulate the lifestyles of the upper classes. Cheap industrial production made this dream possible:

Emulation of this kind, it is argued, led to penetration down the social scale in the ownership of various goods, with the proviso that this was made possible by price reduction or by increased availability of cheaper (but similar) versions of the same kinds of goods. The evidence quoted for this kind of process is usually based on contemporary observation of the habits of other (often lower) social ranks in copying specific fashions or clothing or adopting some specific new behavior, such as drinking tea.

Style and fashion are important attributes of consumer culture. The traditional world of rural England was giving way to a cosmopolitan realm of interrelated consumers. Rising incomes equaled rising desires. These desires rapidly became needs.

It is no coincidence that, during this period, advertising first became an important factor in the molding of consumer tastes. Industry was soon producing goods in such quantity that it was necessary to create a market for all of the additional products. Early advertising capitalized on the same social trends that were transforming the traditional rural world. Still, these advertisements played on the sentiments of a society that remained poised between two worlds. The lifestyle to which the newly "rich" were aspiring was that of their immediate social betters in the world they already knew. Workers in the countryside and in provincial towns tried to emulate the lives of the local gentry - or what they believed to be the lives of the local gentry; the very people who had controlled provincial life for centuries. The message was that these people, too, could move into the upper classes and become true consumers,

Testimonials from the gentry were highly prized by advertisers, elevating the brand by association with the great and the good and aligning the consumer with her betters. As Samuel Warren wrote in his satirical novel Ten Thousand-a-Year (1841), advertisers liked nothing better than to boast of 'the numberless instances of [their products'] efficacy' among the aristocracy, 'detailed in brief but glowing terms--as -- the "Duke of **** -- the Countess of **** -- the Earl of,

The hoped for alteration produced both the effect of keeping the masses striving for more, and thus working harder, while also continually adding strength to the existing social structures. Few rural laborers really moved from the lower class into the ranks of the landholders, but these economic dreams reinforced economic and social realities. The gentry and aristocracy remained, throughout this time period, prime movers of industrial and agrarian growth. Consumers still straddled the old world and the new. There was, in theory, a profound cleavage between those who produced and consumed. Nevertheless, economic realities were beginning to erode those differences. Eventually, those with money could hope to become something in between i.e. consumers who actually worked, rather than either the idle rich of traditional manor society, or the idle poor of the Eighteenth Century moralists. Industrial jobs, together with rising wages, were producing effects unimagined by those who had started the process. Industrialization had commenced as a way of further exploiting landed estates, and squeezing out additional rents and productive incomes. It would end as a force that would largely obliterate the old ways of life. In the Nineteenth Century, prosperous workers bought into the traditional dream of landed life. Their wealth; however, was based almost entirely on the fruits of the Industrial Revolution. Their real background was entirely different from those whom they were replacing. Soon, they would be in the majority, and their ties to the past would become more tenuous. With time, they would become the arbiters of taste. Manufacturers would produce for them and advertise to them. The working class would emulate their preferences and adopt their consumer habits. The world of the manor would be replaced by the world of the factory.