17th Century Europe: Economic Shift & Rise of Britain
The Seventeenth Century: A Time of Crisis and Transformation
In Europe, the 17th century witnessed significant changes that spurred economic growth, culminating in the structural transformations that led to the Industrial Revolution. The differences that exist in Europe today originated during this century. This transformation began in England, but other countries also contributed. It was a gradual, slow process, common to all Western European economies.
A significant shift also occurred in the structure of cities: a transition from a medieval model (with primarily local commercial trade relations) to an urban network model (with long-distance business relationships, increasingly located on the coast).
Great Britain emerged as a major economic power.
Institutional Framework of the Crisis
The last decade of the 16th century was difficult. There was an increase in the tax burden due to the needs of the Habsburgs. This coincided with poor harvests, epidemics, inclement weather, poor development of industrial activity, and the plague (1596-1602).
The expulsion of the Moriscos (converted Muslims) further exacerbated the situation.
This led to calls for reform. The Habsburgs acknowledged that their political and economic model was not functioning effectively and that they needed to help remove barriers to maintain economic growth.
Reforms had already begun during the reign of Philip II. The great reformer was the Conde Duque de Olivares during the reign of Philip IV, a period marked by numerous wars and losses. To prevent further decline, the Count articulated reforms based on three key points:
- Limiting feudal lords’ privileges (Mercedes): The aristocracy would be dealt with in court to carry out the king’s orders and generate revenue, although these were non-productive activities.
- Reducing conspicuous consumption: Addressing the reluctance to engage in economic activity.
- Auditing the Royal Treasury (Vacation): The tax collection system was corrupt.
Military needs increased, and the cost was divided among all the Spanish kingdoms. The nobility refused, leading to the failure of this initiative. Castile alone bore the burden of the expenses.
Ultimately, this policy did not encompass significant reformative changes. It aimed to adapt taxation to the need to continue funding the empire and, therefore, ran counter to economic growth.
Characteristics of the Old Regime (17th-18th Centuries)
- The pre-industrial economy was characterized by the hegemonic dominance of the agricultural sector, both in terms of income and employment.
- The secondary sector had little relevance and was primarily local. Manufacturing was located in cities, organized into guilds, and contributed little to the overall economy.
- The market was local and segmented due to high transport costs, trade uncertainty, and the escalating power of feudal lords, which increased prices, among other factors.
- There was little definition of property rights (land). Those who held land could only use its produce but could not dispose of it, meaning there was no land market. Property belonged to noble houses or convents. Peasants worked the land under duress.
- Continuous intervention by political powers existed. There was no free market to allocate resources. The economy did not hinge on the search for better productivity. Payments were made in kind rather than in cash.
These were highly structured societies. Feudal lords enjoyed privileges and paid no taxes, while peasants had no privileges and bore the economic burden of society. It was a hierarchically structured society.