Agrarian Economics and the Crisis of the Old Regime in Europe

The Agrarian Question

The strengthening and consolidation of absolute monarchies in Europe were based on the economic theory of mercantilism. In opposition, the theory of physiocracy emerged, regarding trade as useful and necessary, but unproductive. For the Physiocrats, the decisive factor was agriculture, considered the productive sector that determined a country's economic development.

In the eighteenth century, the cultivated surface area generally increased, but production techniques remained stagnant, relying on traditional methods. Crops were still the same; the introduction of corn and potatoes in Galicia and northern lands in the late seventeenth century failed to alter the situation. Agrarian life housed over 80% of the population. The increase in population drove up prices, leading to a desire to break new land to boost total production. Large landowners—nobles, secular clergy, and the Church—were the primary beneficiaries of this increase.

This situation highlighted issues with land ownership and usage. Land remained in the hands of various entities: the Crown, the Church, the great nobility, municipalities, the wealthy bourgeoisie, and prosperous peasants. Most land was held by the Church (in mortmain), municipalities, or the nobility (through primogeniture). Only a fraction of the land could be freely bought and sold.

Learned individuals faced a difficult scenario where diverse regional forms of land exploitation prevented a unified settlement, which would have required a single law. Their reform efforts were consistently technical, failing to address the root problem. Enlightened governments were unwilling to disrupt the existing system or alter entailed property. Jovellanos's famous report on The Agrarian Law exemplifies this contradiction, attempting to reconcile necessary agrarian changes without significantly impacting the institution of primogeniture. Reforms were minimal, and the attempts by Charles III and Charles IV were too insufficient to change the landscape.

The Crisis of the Old Regime

Charles IV, despite being a capable politician, inherited a reign preceded by numerous external and internal difficulties. The French Revolution erupted just one year after his accession, causing widespread panic among enlightened rulers. In response, the government reversed its reformist policies, closed its borders with France, and erected a wall of silence, banning all publications referencing the events. The French Revolution also divided public opinion: some ranks closed in support of order and tradition, others clearly favored the revolution, and many remained hesitant.

Meanwhile, the country faced ongoing difficulties. Since the reign of Charles III, real wages had declined. Agricultural production struggled, and the prices of essential goods rose unstoppably. The agricultural crisis was not resolved by issuing currency or by forced confiscations, nor by the continued growth of fiscal pressure. Trade began to stagnate, and the balance of payments worsened.

This period of instability revealed two critical points:

• The fundamental infeasibility of enlightened absolutism in its aim to safeguard the Old Regime.
• The emergence of social confrontation.

Absolutism had achieved significant economic growth within a feudal system but proved ineffective in implementing the social and political changes necessary for sustained growth. It was imperative to liberalize the land market, break up guilds, consolidate a new property system, and remove internal customs to create a national market. In the American colonies, increasingly threatened by European powers and indigenous movements, particularly from the bourgeoisie, changes were proposed that absolutism could not deliver. It was within this context that the War of Independence against the French occurred.