17th Century Economy: Downturn, Social Changes, and Rise of Capitalism
Item 9: The 17th Century Economy and Social Transformations
Most of the seventeenth century experienced an economic downturn, with varying impacts across different regions.
The concept of state wealth varied. Spain, for instance, initially thrived on gold from America. The Dutch, with their unique geography and flooded areas, developed a distinct economy. England’s wealth was rooted in trade and industrial production.
The economy saw an upswing around 1620, but a crisis emerged by 1650, leading to a decline and low levels between 1660-1680 due to reduced rural income.
Land management faced challenges, including how to recover fallow land. The nobility, with limited funds, struggled to make investments or provide credit. This situation was prevalent in both Western and Eastern Europe. Waves of epidemics emerged, exacerbated by poor hygiene. Extended droughts, coupled with poor governance and wars, worsened conditions. Tax burdens on the populace increased. The quality of life declined even in powerful states like Spain and France, though it was somewhat better in the Netherlands. The influx of American gold diminished as it fell into the hands of kings who spent it on luxury goods. This, along with the depletion of precious metal mines, contributed to the economic decline. Demographic decline due to wars and famine affected Italy and Spain until the mid-17th century, with recovery only beginning in the mid-18th century. Paradoxically, economic systems like capitalism began to gain strength.
Origins of Capitalism
According to Weber, Protestantism played a significant role. Protestants, upon leaving traditional conceptions, were encouraged to distribute money. Protestant individualism allowed individuals to shape their own lives. Calvinism, while initially associated with fleeing the city, remained concerned with economic success. Calvin linked saving and success, suggesting that success in business was tied to salvation, fostering a hard-working society.
Some argue that capitalism originated with Jews and those who conducted business with them, focusing on hoarding money to accumulate capital. Key features of capitalism include: 1. Rationalization and exaltation of economic activity. 2. Exaltation of individualism, without the Church’s emphasis on helping the less fortunate. 3. Orientation towards profit. 4. Legitimization of wealth accumulation. 5. Complete autonomy of moral objectives from economic activity.
Mercantilism vs. Capitalism
Mercantilism differs from capitalism in its primary focus. While capitalism emphasizes wealth production, mercantilism demands that the state leads economic life to achieve a favorable trade balance. The state should create and support companies involved in overseas trade, establish royal factories and shipyards, and reduce imports. Regulations, such as acts of navigation, should control trade flow.
Mercantilism in Practice
Mercantilism flourished particularly in the Netherlands, where the East India Company (founded in 1602 with headquarters in Amsterdam) and the West India Company (founded in 1621 for American trade, lasting until 1684) were established as joint-stock companies.
- England: The Society of London emerged, along with various sects like the Puritans, who emigrated to America. The East India Company was established for Asian trade.
- France: Focused on trade with North America, especially Canada. Minister Colbert, a key advocate of mercantilism, aimed for commercial dominance in the Mississippi region. The French East India Company was also founded, leading to social conflicts and transformations.
Social Transformations
Shifting Power Dynamics
Nobles were forbidden from acquiring wealth through trade, leading to a critique of social institutions. Society became increasingly divided into rich and poor based on wealth. Mixed marriages occurred, and the concept of nobility declined while the bourgeoisie rose. Christian values diminished, and individualism was promoted, giving rise to modern class society.
Social Groups
Dominant social groups included the high nobility (Marquises, royal relatives, etc.), but a fracture emerged. A new nobility began to appear, and the administrative bourgeoisie grew. The peasantry remained the foundation of society, enduring poor conditions. Urban workers increased in number, as did pauperism. The principles of humanism declined, and constant violence occurred among the nobles.