Q1 - The feudal relations of production and the various theories on their breakdown.

Answers- 1

RELATIONS OF PRODUCTION:-
The relations of production were dominated by extra-economic force. No incentives were
given to the present army, instead, the lord used his non-economic powers (judiciary, military
and political) to extract from them.

TOOLS AND TECHNIQUES OF PRODUCTION:-

The tools and techniques of production were simple because the technology was basic. Due
to the basic nature of technology, there were a few specialists in feudal society (ex., smith,
and miller). When production grew, it grew due to an intensive application of labor and not
technological growth.

HOW FEUDALISM RESTRICTED LABOUR AND CAPITAL:-

The majority of peasants in feudalism were of a servile status (they were servile peasants).
They could not leave the manor, and they were not free to use their labor power as they
wanted to (since they had to perform tasks for the lord). Capital accumulation was very
difficult in the feudal economy. Most production was subsistence-based (it was not sold in
the market) because tools and techniques were basic and peasants were not free to innovate.
So, peasants could not accumulate capital. Also, when lords accumulated capital they did not
invest in economically productive activities. They spent it on showing off (expensive
clothing, horses, wine and food), warfare and construction(building castles and churches).
The second restriction on capital was that it was not used in the pursuit of profit by the
lords( it was not considered honorable).

BREAKDOWN OF THE FEUDAL RELATIONS OF PRODUCTION:-

The breakdown of the feudal relations of production created conditions suitable for the
emergence of capitalism in Europe. It removed restrictions upon labor and capital.
Feudalism began to break down over the 14th century (the 1300s). This resulted in greater
freedom being granted to the peasants and less application of extra-economic force by the
lords.
We do not know exactly why this happened. A different explanation is provided by
economists and economic historians. These explanations are called models. There are 3
models or explanations of the breakdown of the feudalism -

Model 1 - Commercialisation and Urbanisation model (developed by Maurice Dobb and

Paul Sweezy)
According to Maurice Dobb in the 14 century, the numbers of feudal lords' vassals (the
followers or retinue) increased. The lord increased their numbers to become more powerful.
This increased the financial burdens of the lords. Initially, the lords tried to exploiting the
peasants more to increase their income. This did not word because the limits of exploitation
had been reached (peasants had nothing more to give to the lord).
So, now the lords tried to cultivate the demesne on a commercial basis. Demesne cultivation
was not successful on the commercial basis - servile peasants worked badly (they were not
paid) and they began to run away from the manor. They were running away to the new
market towns. They were emerging because caravans of merchants and artisans were settling
down outside manors. These settlements were growing into towns. Since peasants were
running away to the new towns, lords had to treat them better and grant them freedoms. This
started the breakdown of feudalism according to Dobb.
Sweezy says that the market towns emerging outside the manors exposed the inefficiency of
the economy of the manor. The market towns were organized as per a system of
specialization and the manors lacked specialists. Secondly, the market towns made self-
sufficiency in the manors unnecessarily. Now the people residing in the manors could buy
things in the market towns.
As a result, a lot of peasants adopted specialization and began producing things for the
market. The lords wanted to buy the commodities in the market towns. They now needed to
raise the incomes and raised rents in the manor. As a result, an increasing number of
peasants began escaping to the towns since they were put under greater financial pressure.
This started the breakdown of Feudalism.

Model 2 – Class Relation model (Rodney Hilton)

There was little interaction between lords and the peasants, there was a big class difference
between them. Due to the class difference, the lords did not know what was going on in the
manor and if the peasants worked properly or not. The Lord's ability to regulate the economy
of the manor was limited. The lord could not fully control even the cultivation of the
demesne.

Even the day to day administration of the manor was left by the lords to some superior
peasants. The lord did not directly administrate the manor. In this situation, new market
towns were emerging in the 14th century. New garments, weapons, etc were available in the
market towns. To buy them the lords tries increasing their income and they raised rents. This
resulted in peasants rebellion ( the class difference resulted in the class struggle between the
lords and peasants). As a result of these rebellions, relatively independent peasants
communities emerged in France and Germany (not completely dominated by the lords). In
the meantime, black death plague Edepemic broke out in 1348. This greatly reduced the
members of the peasants. Now there were not enough peasants to work in the manor and the
lords had to reduce rents and give the peasants more freedom. Many peasants become more
prosperous and produced milk and meat. This started the breakdown of feudalism.

Model 3 - demographic model (Jason W. Moore)

According to Moore, there was a socio-ecological contradiction in feudalism. Feudalism
depended on the agricultural output of peasants but the peasants were not given any
incentives to increase their output. So the peasants were poor and did not have resources to
invest in agriculture.
The only way to increase agricultural output in the feudal economy was to increase the
numbers of labor. As a result, the peasants had big families and population growth was
continuous. This caused exhaustion of soil fertility because all land was always cultivated (no
plots were kept fallow). Exhaustion of soil fertility caused famines. There were famines from
France to Russia from 1315-17. Famines undernourished the population of Europe. This
made the population vulnerable to diseases. So, a lot of people dies in the plague epidemic of
1348. Due to this, there was a great reduction in the number of peasants and the lords had to
treat them better.
There was a forty percent reduction in the rents in England, France, and Germany after the
plague epidemic (Black Death). Wages rose by 400% in the same period. ( due to the labor
shortage people hired to work in the manors).
(END OF ANSWER ONE)

Q3- The trajectory of the Indian economy and business from the nineteenth century till
independence.

ANSWER 3

The depression in the USA – The “great depression” broke out in 1929. It was the first
major crisis in the capitalist world economy. It caused shrinkage and slowdown in all major
western economies and reduces the volume of world trade.

1) Recessionary conditions were building up in the USA over the 1920s: There was a
major expansion of the American economy in the 1920s due to high rates of
investments. It was because America business and industry adopted the 'maximization
of production’ and ‘maximization of consumption’ model (produce more and sell
more)
2) An increase in production was achieved through the adoption of the assembly line
technique mechanization of production, standardization of products, more rational
management practice.
3) As a result, industrial production grew by 90% between 1921 and 1929. The hourly
productivity of labor increased by 47%.
4) The maximization of consumption did not take place because wages remained
stagnant over the 1920s. As a result, consumptions fell and wholesale prices began to
fall after 1925.

Meanwhile, In Britain, recessionary conditions were created by increased export

competition with Germany.

1) In Britain, recessionary conditions were created by increased export competition with

Germany.
2) Germany was on the losing side in WW1 and was made to pay a reparation Britain
(compensation money).
3) To raise the sum, Germany began to export an increased quantity of industrial output.
4) British industry found it difficult to compete with German exports because British
industrial goods were costlier. This was due to the reason that wages were higher in
Britain.
5) To compete with the German industry, British industrialists reduced or stagnated
wages. This reduces consumption in the domestic market and recessionary conditions
were created.
 6) Secondly, British exports were suffering because the pound was an expensive
currency based on the gold standard. In 1925, one pound was equal to 4.87 dollars
This also caused a contraction in the British industry.
7) Recovery – The British pound was detached from the gold standard (lower value in
pee) and protective tariffs.
8) The British empire was reorganized as the ‘commonwealth’. Now Britain and her
colonies gave tariff preference to each other – British exports to the colonies (India,
Australia, New Zealand) gained a duty-free entry into the colonial market and
colonial exports (manufactured goods) to the British market were given a similar
duty-free entry.

The trajectory of the Indian economy and business from the nineteenth century till
independence.

1) In the 19th century India there was the emergence of a national capitalist structure
(there was the emergence of Indian capitalists).
2) The accumulation of capital was done by the moneylenders who lent to the
impoverished weavers and peasants. They charged very high rates of interest.
3) Sometimes, money lenders also acquired means of production (land and machinery)
when peasants and weavers failed to repay the sums borrowed.
4) In the second half of the 19th century, some of the moneylending capital was invested
in the industry. The first industries were established by Parsis who were into
moneylending. The first textile mill was set up by Cowasjee Nanabhoy in 1851.
5) Initially, Indian textiles were sold in the Chinese market because the Indian market
was captured by British textiles. However, by the start of the 20th century, the
Chinese market was captured by Japanese textiles. Consequently, Indian textile
producers had to compete with British textiles in the Indian market. As a result, the
British Government began to harass Indian business and industry in various ways.
Extremely high duties were imposed on the import of machinery, Indian industrialists
were made to pay very high railway freight charges, the price of auxiliary material
(fuel and raw material) was raised and the Indian industry was forced to hire British
technical staff.
6) As a result, the Indian industry and business became anti-British and anti-colonial. An
indigenization program was started in many areas of the economy (there was an
attempt to Indianize areas o of the economy). The banking sector was indigenized,
and Indian banks were set up. The bank of India was established in 1906 and the Bank
of Baroda in 1908.
7) By 1913, there were 18 Indian banks with total money deposits of 1 crore 51 lakhs.
By the end of WW1, there was considerable indigenization in small manufacturing
resulting in import substitution – the production of paper, sugar, glass, soap, etc, took
place in India.
8) At the same time, the overall character of the Indian economy began to change. The
export of raw materials began to decline and the production of finished goods,
 increased. Further, certain areas of the Indian economy were freed from the
dominance of British - example, the plantation industry.
9) By 1944, 62% of the industrial units employing more than 1000 workers were Indian,
95% of the industrial units employing less than 1000 workers, were Indian owned. By
1947, Indian banks controlled 83% of the money deposits, Indian insurance
companies controlled 90% of the insurance business.
10) These developments could take place because Indian business and industry allied with
the freedom movement. Indian business industry set up organizations that cooperated
with the Indian national congress. The Indian industrial and commercial congress was
established in 1920 (it was renamed FICCI in 1929). Allying with the freedom
movement generated goodwill for business and industry.
11) Secondly, Congress adopted peaceful nonviolent tactics which favored business and
industry
12) Thirdly, Indian business and industry had realized that economic and political
freedom must go hand in hand.

(END OF ANSWER 3)