Nicholas Marx Sociology 4094: Term Paper Rough Draft Dr.

Vern Baxter April 21, 2011 The Founders of Capitalism The merchant class is overlooked in importance within the study of industrialism and the growth of the social hierarchy of the early European societies. Fewer people have studied the effects of the merchant class as the ultimate victors in the demise of the feudal system and rise of industrial civilization. The merchant class evolution of the common practices of the world at the time is based mainly off the economic rather than the social movements. Through the economic motivations that the merchant class instilled on the public they were able to move up in class and power, and to establish a more free market economy and lay groundwork for political reform. It is easy to see through the readings of Braudel and Polanyi that the merchant class was indeed one of the most important powers behind the rise of industrialization and capitalism. It was not an easy road to the top for the merchant class as they had to navigate to overcome restrictions from higher political powers before being able to take control of their fates. This can easily be over-simplified and antagonized by such theorists as Marx and Engels, but even they talked about the motivation and impressive perseverance known by these men as the bourgeoisie. Yet, it is still hard to find abundant details or specific examples of how these low ranked classes obtained such prestige. They are a mysterious class and through the generic groupings it is possible to study their emergence as one of the powerhouses of social and economic change that emerged from medieval times.

Many historians put the importance of different divisions of life on the peasantry and nobility, and they casually overlook the powers of the merchant class that was opposed economically. Also, historians like to focus on the social reasons for the evolution of the market and politics and tend to shy away from the economic with exception of Marxist theory. Even Marx puts strong emphasis on social mobility as the merchant and more so the peasantry overthrew of the old restrictive ways. Marx showcased the empowerment of the merchant class in overcoming social stratifications as the result in overtaking the feudal system. However, he also put strong emphasis on the peasantrys rise against the nobility and took control of their labor. They overthrew the feudal ideals of old Europe and their government restrictions that had held each class down. Other theorists such as Smith put a heavy burden on the roles of economy in shaping the organizations of social life. Braudel gives an impressive view into both sides of this argument in his book (Braudel 1992). He gives a definitive outlook on the history of the merchant class and their buildup in Europe into production facilitators. Through this book, a lot of theoretical examples are shown and a sense of the early merchants emergence can be seen. It is not completely known as to where or when the merchant class first formed, but there are many different implications to draw a start from. The first people to have shops then were the artisans. Real shopkeepers arrived later: they were the middlemen of exchange, inserting themselves between producers and consumer, and confining their activities to buying and selling: the goods they sold were not (or not entirely at any rate) the work of their own hands (Braudel 1992, p. 62) It wasnt until around the late thirteenth to early fourteenth centuries that artisans acquired shops to sell goods in cities. It was likely that the merchant class arising from feudalism branched out of the peasantry or artisan classes. It is easier to assume they came from the artisans because they shared similar social restrictions and conduct. They were both on the lowest rungs

of the social pyramid of feudal Europe almost all the way across the board. Many believed that they were the lowest because they had no hand in production or communal help. The merchant didnt produce or serve in any stage of the production process; so many societies looked down upon them. It is easy to see from which groups the merchants were most likely branches out of. It is also good to note that artisans and merchants were on the same level on the European social pyramid. The peasant, by contrast, usually comes to sell his goods on the market in order to buy immediately whatever he needs: he begins with goods and ends with goods: GMG [Goods Money Goods]. And the artisan, who also has to go to the market for his food, does not long remain in the position of holding money. But exceptions were possible. (Braudel 1994, p. 64) The merchants work on a MGM [Money Goods Money] trading basis. They use money to get goods to sell for a higher quantity of money resulting in profit. It is inversely related to that of the artisan who trades goods for money to get goods like food. The artisan doesnt keep money long for they need to buy necessities while the merchant deals in money and growing that money through means of buying and selling. It is easy to see how the artisan relates to the merchant compared to the peasant. The merchant is just switching the means of obtaining capital to that of the artisan. The merchants capital is money while the artisans capital is goods. The peasant doesnt quite fit in as they engage in direct hand to mouth forms of trading. They get money for service and buy goods without a second form of trading. Their preliminary trade is substituted by their service work in which they are compensated with either foods or, as in later centuries, currency. It is still hard to say where the merchant class arose from; his origins remain obscure, although the process was probably a simple one: the travelling merchants, who survived the decline of the Roman empire were surprised in the eleventh century and no doubt earlier too, by the rise of the towns: some settled down and joined urban guilds. The phenomenon cannot be

precisely dated nor located. (Braudel 1994, p. 64) They didnt just pop out of nowhere though. It is assumed that the urban merchants came from trading merchants that were dated farther than the time of the Roman Empire. They eventually found their homes later in towns in mass no earlier than the 13th century. It is notable that the transformation from travelling to city merchants happened some time from the thirteenth century on. (Braudel 1994, p. 64) This occurred in many cities that were quick to expand. The merchants moved in and with them of trade cities expanded as the quantity and importance of merchants started to rise. The merchant class battled frequent social strife in which they were restricted and were held in low regard. They were in the social group with artisans, but below that of peasants that worked the land. It wasnt until much later that they had gained some social mobility. In some countries such as England the hierarchy forbade mobility, economically or socially, so the growing merchant wealth upset the hierarchy, leading to strict restrictions and higher taxes levied on merchants. It was also against the precepts of the church which supported feudalistic ideals. If social mobility were allowed based on wealth, it would throw a curveball at the hierarchy of the times. Moreover, the Churchs conception of the world was admirably adapted to the economic conditions of an age in which land was the sole foundation of the social order. Land had been given by God to men in order to enable them to live here below with a view to their eternal salvation. The object of labour was not to grow wealthy but to maintain oneself in the position in which one was born, until mortal life should pass into life eternal. (Pirenne 1956, p. 13) For later merchants, the capitalists, it was also ungodly to lend money with interest and many times illegal. Lending at interest, or bursary, was an abomination. (Pirenne 1956, p.13) Their emergence into the social hierarchy did not come till much later, centuries after the class emerged largely into society. He retained from his origins and the confusions surrounding them

a kind of original sin. As late as 1702, a French report argues: It is true that the merchants are considered as the first among the artisan, as being a little above others, but no more. (Braudel 64) It wasnt until some centuries after their emergence where they started to move up even a little. Being the top of the artisans was being the best of the worst since the artisan class was of the lowest social class in Europe. The representatives of commerce were still bewailing the fact in 1788 that even at this date, negociants were considered as occupying one of the lower classes of society. (Braudel 64) The emergence of merchants did not become a large part of the economic movement until the fall of feudalism in most of Europe. They did hold wealth in feudal societies and sometime even became land owners, but they were not elevated to high positions of power. Another restriction that limited early merchant growth was that, since they were of low class, they had to put their markets in the poorest areas of cities at first which was off-putting to the wealthy buyers. Early merchants started with small amounts of accumulated wealth and often bartered until they had enough goods to attain currencies. They started by doing whatever they could for money, often selling random assortments of products. In the early days, and often until the nineteenth century, shopkeepers would sell, indiscriminately, goods obtained at first, second or even third hand. (Braudel 1992, p. 64) Within the early merchants we find the strangest assortment of goods (Braudel 1992, p. 64) The merchants, at first, had to make money so they sold just about anything they could grow their business capital. They had to accumulate wealth to be able to grow to accumulate more wealth. Merchants are in a business where they must have money to make money no matter what it is. If it sells they sold it, it wasnt until later on that the merchants started to specialize. According to Braudel, it wasnt until much later where the merchants specialized, probably until the seventeenth century, and definitely was not

prominent in numbers until the eighteenth century. Economic development was creating other forms of specialized shops. Gradually a distinction appeared between those who sold by weight: grocers, epiciers; those who sold by measure: drapers and tailors; those who sold objects: ironmongers; those who sold used utensils, clothes or furniture: second-hand dealers. (Braudel 1992, p. 67) The emergence of specialization had changed the merchant class and established them in communities. It was easier to monopolize a market in specialized goods, leading to more independent wealth for merchants. Money soon introduced distinctions; almost immediately it led to a hierarchy in the old trade of shopkeepers: at the top, a few very rich merchants, specializing in long-distance trade; at the bottom, the poor pedlars of needles and oilcloth (Braudel 1992, p. 68) Not only was there a specialization in products, there soon became a well separation of wealth. The big players started to dwell in long-distance trading because the farther materials went the more their price went up. They moved large amounts of goods in bulk all over the place that made it extremely cost efficient and an excellent way to increase wealth. The problem was to move goods like this required a large starting cost that most merchants did not have. This also gave incentives for merchants to start lives as creditors loaning money to these smaller merchants to get a start. With these creditors began the emergence of early banking systems that are in todays society. The middle class merchants were found in the cities selling their moderately specialized products. The poorest of merchants, the pedlars, sold what they could on the streets and lived quite a poor lifestyle. The wealthier merchants began to sell across borders and with this money they started to find place in the hierarchy of the state. The new merchants emerged into a strong wealthy class, even with little social power, that was well off and lived extremely well. With all medieval civilizations came wars and wars cost money. The lack of political power led to high taxes on the wealthy merchants, but they

benefited with stability and order. If the kings were to effectively challenge the military power of the nobility and thereby establish their authority across their realms, they needed to raise their own mass armies. To do so, they needed to extract resources from the prosperous urban areas, drawing especially on the wealth of the commercial classes. Merchants, bankers, and others benefiting from the economic expansion could, for their part, enjoy the order and stability that came with the establishment of a single political authority in their territory. (Russett, Starr, Kinsella 2004, p. 56) Some kings even used the successful merchants for munitions and weapons, but they also were used as economic mediums between nations and economic groups. Edward I had brought the countrys wool merchants into the limelight by consulting them on the question of supply, and trade for the financing of war, followed his example.(Thrupp 53) This gave an identity to the merchant class and bolstered their social prospects with political strength. The king often employed merchants in diplomatic negotiations abroad concerning trade (Thrupp 1989, p. 56) They were used to help developing nations economies in an age where technology and currency were rapidly expanding. The merchants who played the role of creditors to the monarchs utilized money as an instrument to gain more privileges from the State. (Social Origins of Democracy) Since they funded these governmental powers they had the ability to rule through their money. This led to the emergence of a politically conscious merchant class that began to lobby for their own rights. Many merchants demanded communal freedom of the towns from the feudal lords. The English monarchs granted the communes charters of limited self-government in return for their support against the nobility. (MSS Research 2007) They used tactics such as government reliance on their wealth to shape the political system into one that favored them. The monarchs began to centralize authority and with this the political

pressures on the merchants started to lessen and they were able to strengthen their standings in the social and economic sectors. One way merchants put themselves in place of power was by investment in land. If they were able to purchase large amounts of land they could increase capital fairly risk free since land inside cities was coming into use and the land outside cities could hire workers to produce. Merchants who had grown rich on commerce did not employ all their profits in business or in loans. The safest investment was to buy land, which with the rapid growth of the urban population became building sites, to be rented to the new inhabitants. (Pirenne 1956, p. 135) Land did not directly give them any social or political power, but it was a step since they could now employ workers. With wage laborers the merchants could accumulate a following and with land and money they could build importance within the social order. Since they are employing peasants, they are now of a higher social standard than the peasant that works for them. They are now the bosses of people in a higher social order than them. One way to social mobility is to create dependence on oneself. Land did not instantly confer titles of nobility, but it was a step in the right directions, a means of social promotion. Economic reasons, though certainly not the only ones, did however play some part. I might buy an estate near my home town simply to ensure a food supply for my household acting as a provident paterfamilias. Or it could be a way of investing money safely: land never tells lies, as they used to say and as merchants well knew. (Braudel 1992, p. 249) It was one of the safest investments of the time since land was of importance and the land around towns was selling out fast. This commodity allowed merchants a greater sense of importance in the community and gave them leverage on many other people of the area.

With the political and social powers the merchants had obtained, a lot of the heavy restrictions were lifted giving them more economic opportunities. One of these was to expand from the old cottage industry to a simple factory system. Since the merchants had previously invested money in land they could not outfit this land with tools of manufacturing and employ labour units. The accumulation of financial capital by the merchant class enabled it to extend the simple factory system it did increase the degree of Smithian specialization and productivity. (Canterbery 2001, p. 34) This is one of the first steps into industrialization in European cities. The merchants became a part of a free market capitalist ideology that was presented by Adam Smith. The merchants and the rising manufacturing class seized on those ideas from Smith that provided justification for a growing economy in which money facilitates the efficient market exchange of goods and services. (Canterbery 48) Behind Smiths ideas they were able to provide to the public means as to why this system was most effective and with the increase in supply of jobs the lower classes had a difficult time objecting to its claims. At first the weaver had furnished himself with warp and weft, worked it up and brought it to the market himself; but by degrees the system grew too cumbersome, and the yarn was given out by merchants to the weaver, and at last the merchant got together a certain number of looms in a town or village, and worked them under his own supervision. (Starr 1918) This can be seen in this passage from Gibbins as quoted by Starr that explains how the thinking of this system brought about a change in the minds of the merchants. It became much simpler for the merchant to be the producers of such product so he directly worked with multiple looms, most likely by buying them. Behind this new labor force employed by the merchants in these factories surplus was created backed by that of the working class, who at the time was prospering from this newfound

wealth.He pays them the value of their labour-power and retains the surplus value which they create; the labour of transporting and storing commodities is, of course, included in the socially necessary labour which determines a commoditys value. (Starr 1918) At the same time the merchant class was making money, the working-class grew dependent on the products and wages they were being paid. There was a mutual necessity for both parties involved in the production of goods. [M]odern capital cannot have a beginning before there is a working-class dependent upon it for wages as the only way in which this class can live. (Starr 1918) Polanyi describes the situation where it is easier to make gains while being part of production. If the merchant can control production he, in turn, can control the supply. He will sell the goods in the same manner in which he would otherwise sell goods to those who demand them; but he will procure them in a different way, namely, not by buying them ready-made, but by purchasing the necessary labor and raw material. (Polanyi 1992, p. 43) It is key to note that Polanyi uses merchant capitalist with domestic industry. This turn of industry was heavily if not almost entirely based off the provisions of the merchants and their turning from simple buyers and sellers to producers and sellers. It was then that industrial production was definitely and on a large scale put under the organizing leadership of the merchant. (Polanyi 1992, p. 77) The merchant class was able to organize great amounts of industrial production through the employment of many others who depended with the rise of currency exchange to make wages. Although the new productive organization was introduced by the merchant a fact which determined the whole course of the transformation the use of elaborate machinery and plant involved the development of the factory system and therewith a decisive shift in the relative importance of commerce and industry in favor of the latter. Industrial production ceased to be an accessory of commerce organized by the merchant as a buying and selling proposition; it now involved long-term

investment with corresponding risks. Unless the, continuance of production was reasonably assured, such a risk was not bearable. (Polanyi 1992, p. 78) With this the role of the merchant began to shift; where they previously did not invest long-term they now took risks that could either make or break them. With this new system a higher division of wealth emerged among merchants as the successful merchants became wealthy and the unsuccessful remained moderate to poor. This research has shown that the economic importance of the merchant class indeed propelled the transition to industrialization and capitalism and gained them position in political and social affairs that they were restricted from in earlier periods. Marx claims that the ruling class creates the laws for those under, but the ruling class he speaks of is the merchants that worked their way up from the absolute bottom of society and became the fueling factor in a new type of capitalist economic ideology. There arent many economic theories as to why the emergence of merchants fueled the rules of capitalism, but Braudel lays out the best explanation for the cause. Economically, Braudel leads the best example into the role of merchants and their importance in the evolution of society. There, indeed, needs to be more research done on the merchant class immersion in the market and their history and origins would give a good example as to why they could move up so with so much perseverance. The economic role of the merchant class seemed to fuel their mobility even though it took a couple of centuries. The merchant class is one of the more underrated and lesser talked about classes of society in popular culture where the warrior, kings, nobility and peasant classes conquer. There seems to be a lot of interesting and important aspects to the merchant class that arent concretely laid out by any one source. To say that social standing means everything would be implying that the merchant class could not have moved upward where the social stature of a man is heavily dependent on their

class. The independent merchants fueled themselves to become one of the most powerful groups in the world.

Works Cited Braudel, Fernand. The Wheels of Commerce. Berkeley: University of California, 1992. Print. Canterbery, E. Ray. A Brief History of Economics: Artful Approaches to the Dismal Science. River Edge, NJ: World Scientific, 2001. Google Scholar. Web. 2 Apr. 2011. <http://books.google.com/books?id=lTlCaXVcjAoC&lpg=PP1&pg=PA97#v=onepage& q&f=false>. Pirenne, Henri. Economic and Social History of Medieval Europe. New York: Harcourt, Brace, 1956. Print. Polanyi, Karl. Great Transformation: The Political & Economic Origins of Our Time. 2nd ed. Beacon, 2001. University of New Orleans. Web. 02 Apr. 2011. <http://site.ebrary.com/lib/uneworleans/docDetail.action?docID=10014733>. Russett, Bruce Martin, Harvey Starr, and David Todd Kinsella. World Politics the Menu for Choice. Belmont (CA): Thomson/Wadsworth, 2004. Print. "Social Origins of Democracy." MSS Research. 2007. Web. 2 Apr. 2011. <http://www.mssresearch.org/?q=Social_Origins_of_Democracy>. Starr, Mark. "Ch. 9." A Worker Looks at History: Being Outlines of Industrial History Specially Written for Labour C.L.C.-Plebs Classes. Sheffield [England: Plebs League, 1918. Histomat: Adventures in Historical Materialism. Web. <http://histomatist.blogspot.com/2006/08/12-beginnings-of-modern-capitalism.html>. Thrupp, Sylvia L. The Merchant Class of Medieval London: (1300-1500). Ann Arbor: University of Michigan, 1989. Print.