European Feudalism to Capitalism: Economic Transformation

1.1 The Overseas Expansion of European Feudal Societies

The transition from feudalism to capitalism occurred as the feudal system, prevalent until the 11th century, began to wither away during the 13th, 14th, and 15th centuries. In Europe, absolute monarchies emerged, giving rise to the Old Regime. This marked the first phase of mercantile capitalism.

During the Modern Age (starting in 1492), capitalism consolidated as an economic system focused on maximizing profit. Spanish and Portuguese forces conquered the Americas using specific mechanisms:

• Conquest: Indigenous societies were forced to pay taxes through labor, such as the Mita, to maintain the state.
• Colonization: This involved the deculturation of native populations and the encomienda system, a feudal privilege allowing settlers to exploit indigenous labor.

The combination of resource exploitation, violence, and introduced diseases led to a sharp increase in mortality and a decline in birth rates.

Socio-Economic Context

The colonization of the Americas by Castile occurred during the decline of feudalism and the rise of absolute monarchies. While commodity exchange existed in ancient times, it was restricted in feudal societies. Markets included simple barter, merchant-led trade, and monetary exchange.

Accumulation of Capital

There were three primary ways to accumulate income and capital: the manor class, the state, and the bourgeoisie. The influx of gold and silver into Spain triggered the Hamilton Price Revolution. Inflation occurred because the increased circulation of precious metals, combined with agricultural production failing to keep pace with population growth, caused food prices to soar.

1.2 Agricultural Changes and Development

Historically, agriculture was focused on self-sufficiency. However, during the 16th, 17th, and 18th centuries, significant population growth stimulated innovations to increase production:

• Techniques: Transitioning from fallow land to the Norfolk system increased productivity and livestock numbers.
• Social Shifts: The emergence of housing and the beginnings of the proletariat class.
• Mechanization: The 18th century introduced advanced agricultural tools, serving as a decisive precursor to the Industrial Revolution.

1.3 The Evolution of Manufacturing

Throughout the 16th, 17th, and 18th centuries, a new production method known as protoindustry spread, remaining closely linked to agriculture. To meet rising demand, traders contracted farmers during off-seasons to produce manufactured goods within their homes.