The Early Modern European Economy: A book review In “The Early Modern European Economy”, Peter Musgrave attempts to express and formulate an underlying pattern from modern studies of the early modern period. The underlying focus of the book is the transformation of the feudal system in the early modern period to the economy of the nineteenth and twentieth century. Musgrave attempts to conjoin new works on the topic of the early modern European economy by analyzing the key structures and arguments in recent material.
In doing this, Musgrave attempts to deviate from historical viewpoints by defining Europe and the early modern age, identifying turning points in economic development, and distinguishing this period from previous ones. “The Early Modern European Economy” reexamines our understanding of how the economy is shaped, and delves into new interpretations that suggest social and cultural aspects determine economic activity. This review takes the perspective of what the book gives is useful in understanding the development of the economic system in the early modern period.
However, it lacks a clear foundation in explaining the exact cause of how the transformation started feudalism to capitalism. Each chapter will be looked at in turn. Development and Change Although modern economic principles provide useful tools for the historian, the focus must be on the theoretical structure if we truly wish to understand the past. Musgrave states that we need to look past traditional perspectives that modern economic principles can be applied in this period. The reasons for using a theoretical approach lie in the fact that economics are very closely related to the social sciences.
A key figure in the foundations of economic development, Musgrave cites, belongs to Karl Marx. Separate from Marxism in the Soviet Union, he refers to Marx’s impact in stating the importance of the process of production. Factors such as what is produced, how it is produced, financed, and how organization and employment of labor give foundation to the roots of economic development (Musgrave 1999, 15). Marx states the polarization of wealth between classes brought upon economic, political and social tensions that produced change and growth. In understanding economic development in Europe as a whole, rganization of production plays a more crucial role than following the paradigm of the industrialized superpowers of Britain and Northern Netherlands. Stratagems and Spoils Instead of solely looking at development in the macroeconomic perspective, focus is shifted on individual choices. Musgrave highlights the importance that individuals and communities were not constrained by economic forces, rather they had choices between different courses of action that were determined by factors such as possible outcome, individual (or groups) aims and intentions, and the perception of the situation.
The traditional opinion that majority of the population endured poverty and had no economic opportunity is no longer a widely accepted view (Musgrave 1999, 36). Contrary to traditional views that Europeans stayed in only one village, Musgrave states that such issues as migration actually improved the state of the economy instead of hindering it, as it allowed for more prosperous choices to Europeans if they were restricted or otherwise not able to maximize prosperity and security. Choices were in a large part, strategic and involved the minimization of risk.
Climate, political structure, medical knowledge, and profit maximization are all factors that influenced decision making for Europeans, and these certainly helped shape and develop the economy. The Rise of a Consumer Society Thus far, issues of demand and consumption have largely been ignored in favor of production. Musgrave explains that this concentration on production is mainly due to the belief of a stagnant economy driven by poverty and subsistence; one that did not allow for questions of consumption to even be considered (Musgrave 1999, 59).
However, economic historians are gradually discovering increasingly large amounts of evidence that consumption expanded due to families buying goods not purely for survival. Due to increased international trade and production, there was a much wider selection of goods available that allowed Europeans the choice for different goods including clothing, textiles, and even raw materials. Musgrave argues that there is an increasing pattern in time spent on leisure activities and the demand for them (Musgrave 1999, 64).
A higher quality of life was now taking place because Europeans did not spend all their time on work. As the booming clothing and fashion industry continued, so did demand for innovation and change, which in turn helped produce change in the general pattern of industrialization in the early modern period. Transportation and communication systems evolved, which in turn greatly aided the development of European industry and commerce. The Role of the State An important yet scarce source of information comes from the role of the state within the economy.
What historians do know is that the role of the state was central to the development of the economy by creating greater pressure towards monetarisation of the economy; mainly from the switch of payment in cash rather than in kind (Musgrave 1999, 86). It is known that states had difficulty increasing income because of poor taxation methods and documentation, and therefore the only way to increase that income was to borrow money or subsequently reduce metallic content in coinage, which in turn reduced the value of currency.
Borrowing led to a dramatic increase in states’ refusal and inability to pay lenders, causing bankruptcies and further destabilizing the economy which encouraged the development of more modern banking systems (Musgrave 1999, 92). Taxation revenue used for financing the states own activities instead of being used as a tool of economic or social management resulted in frequent financial crises. It is not without saying that spending did not act as an economic stimulus however, as large infrastructure projects as well as war production created employment and improved production (Musgrave 1999, 100).
With the poor taxation and documentation system, it is very difficult to assess the overall effect of the state on early modern economic development. It is however of great importance that we do not assess the early modern state based on the same aims, principles, structure, and effects of the modern state. The Prosperity of the South Traditional historians believe that the downturn of the South happened because of the rapidly developing North, but Musgrave states that this is based on intellectual constraints imposed from outside (Musgrave 1999, 113).
Around the time of 1590, the South began to experience an economic decline while the North prospered with increased urbanization, migration, and agricultural systems. Musgrave states that the South was plagued by the Malthusian downturn, defined as an increase in demand and pressure on limited resources because of population increase (Musgrave 1999, 117). Agriculture was not specialized and in many cases, expansion into marginal land with low crop yields occurred which resulted in massive deforestation.
Southern banks were under increased pressure as well because of majority of Europe borrowing and not repaying, thus driving up interest rates and leading to unattractive investment opportunities within the South. Eventually, due to an improving climate and the South’s strong focus on finance and banking helped them re-emerge from this economic crisis (Musgrave 1999, 134). Although the South did not grow as rapidly as the North, Musgrave reinforces the notion that their ability to solve the crisis within their own system suggests it was in many ways more prosperous and successful than the North. The Prosperity of the North
Development of conveniently located port cities such as Amsterdam and London played a major part in the North’s prosperity. Additionally, changes in agriculture production greatly benefited the economy of the North. Joint stock financing also allowed companies to achieve much larger scale operations containing entrepreneurial goals, focusing on long-term profit and growth through mass production. Despite the advantages of joint stock financing and having such features as a Board of Directors, a Council, and dividend payments for investors, many companies still relied on financing through debt (Musgrave 1999, 151).
Bond investors were much more numerous, as receiving regular coupon payments was much more attractive in the eyes of investors seeking stability and security. “This was hardly a shareholding revolution, nor yet a revolution in economic attitudes”, Musgrave states (Musgrave 1999, 151). Rapid growth and development came at a cost however, and because of advancing technology, demand for labor decreased. This economic advancement created a more serious subsistence crisis and depressions than the South. Traditional historians have viewed Northern
Europe as more successful in economic development and growth but Musgrave however points out that majority of comparisons made between the two are based on comparing patterns of unlike to unlike (i. e. comparing leading sectors of the North with weak sectors of the South). Instead of viewing a North vs. South relationship, Musgrave states; they were in fact closely similar systems existing comfortably together, and if anything, the levels of prosperity in the South were higher until at least 1770 (Musgrave 1999, 159). Europe’s Place in the World
Many traditional historians viewed the rest of the world as not being nearly as developed as Europe. Europeans themselves believed that they were able transform the political, economic and cultural patterns of non-European nations. The assumption that Europe civilized Asia with financial and technological superiority is wrong (Musgrave 1999, 164). European trade with Asia became restricted due to different political ideologies; quotas and tariffs were placed on goods frequently, not to mention extremely risky trade routes by sea.
It was only due to Europe’s gold and precious metals/materials influx that made trade possible between the two regions. As Europe developed however, they were increasingly able to produce many goods that were sought after in Asian trade. At this same time, Europe was developing expansion in North America quite rapidly, and along with a booming textile and wool industry, slave trade became prominent. Musgrave argues that developments in the Americas were largely dependent on cooperation of the African states and slave traders (Musgrave 1999, 179).
Despite Europe’s internal difficulties with inflation and unemployment, wealth gained in the Caribbean from sugar plantations brought major stimulus to Europe’s economy and played a major role in industrialization. It was clear that although Europe had their own struggles, the rest of the non-European world was facing development issues too. European expansion proved to be of crucial historic importance and helped the region in terms of economic development well into the 19th century. After reading “The Early Modern European Economy”, it is hard not to agree with many of the viewpoints Musgrave offers. The strongpoints of this text re highlighted in Musgrave’s criticism of previous historical approaches. This book emphasizes what we often forget about; the economy is very much shaped by the individual choices made by consumers. It is true that we cannot compare our own society to that of the past, and for this I agree with Musgrave. However, I feel he does not nearly touch on the beginning transformations of feudalism to capitalism enough. Questions such as; how did feudalistic entrepreneurs react to the increasingly changing economy, and the exact spark that set off the capitalistic venture, were not explained thoroughly enough.
I feel that this was vital to the subject in understanding how such change developed. Despite this, I would highly recommend this book to readers interested in the subject of the early modern European economy. Peter Musgrave conceives patterns from the most up to date research, dispelling myths that have bedeviled the study of early modern Europe. “The Early Modern European Economy” is an invaluable resource in gaining resourceful insights on early economic development. Bibliography Musgrave, Peter. The Early Modern European Economy. Vol. 1. 1 vols. New York, N. Y. : St. Martin’s Press, Scholarly and Reference Division, 1999.