Evolution of Capitalism 2

Pre and Proto Capitalism 2
Hunt, Chapter 1
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The Pu7ng-Out System and the Birth of
Capitalist Industry
• By the 16th century the handicraB oriented industry, in
which individual craBsmen owned the means of
producEon and acted as individual entrepreneurs began to
die out.
• Instead, a “pu7ng-out” system, whereby the craBsman
would, for a fee, produce goods using tools and raw
material supplied by the merchant capitalist took hold.
The craBsman did not own what he produced.
• Under the pu7ng-out system the means of producEon
and Lnished output were owned by the merchant
capitalist while labour was provided by the craBsman.
Decline of the Manorial System
• A vast increase in the populaEon of the trading ciEes
led to a dependence of the urban populaEon on the
rural countryside for food and raw materials. This led
to a rural-urban specialisaEon and large Pows of
goods and services both ways.
• Peasants, in parEcular, found that they could
supplement their income through trading surplus
output of grain or other food.
• This led to a weakening of the tradiEonal Ees to the
manor.
• The lords of the manor, on the other hand, began to rent their
lands to the farmers for money instead of their labour
services.
• The lords of the manor became landlords in the modern sense.
OBen they were absentee landlords, having moved to the city
or being away LghEng wars.
• Furthermore, a series of historical events served to undermine
the manorial system.
• These events included wars (notably the 100 years’ war
between France and England), the plague and peasant revolts.
• A point to note is that fundamental changes in economic and
poliEcal structures oBen come about only aBer violent and
traumaEc social conPict.
CreaEon of the Working Class
• A working class, stripped of any control over the means of
producEon and forced to sell labour as the only means of survival
began to emerge in the 16th and 17th centuries.
• The enclosure movement, whereby former communal grazing land
was fenced oZ for sheep grazing only, also led to the creaEon of a
working class.
• Enclosed land where sheep would graze would require only a few
herders and not many workers.
• An increase in populaEon and limited employment opportuniEes in
rural areas meant that more and more people would migrate to
ciEes and join the working class.
• Thus there was more labour for capitalist industries , more men for
armies and navies, more men to colonise new lands and more
potenEal customers for products.
Other Forces to the TransiEon to Capitalism
• ScienELc developments led to improvements in

navigaEon enabling Europeans to sail farther aLeld
and colonise new lands.
• Gold and other precious metals began to Pow from
the colonies to Europe.
• The inPux of gold led to price inPaEon. Prices rose
much more rapidly than rent or wages.
• In fact both the landlords and the labourers suZered.
However, the trading capitalist class was a major
beneLciary.
• Hunt deLnes capitalism in a much broader
sense.
• Capital is not just the physical means of
producEon.
• The physical means of producEon becomes
capital only in a social context where
commodity producEon and private ownership
exist.
• Accumulated proLts are plowed back into the
system in a sort of spiral.
MercanElism
• Early mercanElism was called bullionism.
• Before the establishment of colonies, Europe
experienced a shortage of gold and silver bullion.
• Bullionist policies were designed to a_ract a Pow
of gold and silver into the country and to keep
them inside the country by prohibiEng their
export.
• MercanElism arose out of bullionism and took the
form of maintaining posiEve or favourable
balance of trade.
• In an a_empt to keep money in and not Powing out,
mercanEle countries would restrict imports but encourage
exports.
• Trade monopolies were created to increase the value of
exports and decrease that of imports.
• Instead of having several merchants bargaining with foreign
enEEes (which would raise prices) or several merchants trying
to sell to foreign enEEes (which would lower prices) it is be_er
to have one merchant doing the buying and selling. Hence the
creaEon of trading monopolies.
• The most famous trading monopolies were the BriEsh and
Dutch East India companies.
• The creaEon of trade monopolies beneL_ed the capitalist class
immensely.
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• ScienELc developments led to improvements in

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