ECON.124.HISTORY OF WORLD ECONOMY
CHP.5.Europe’s Second Logistics
By the middle of the 15th and the middle of the 17th centuries delimit Europe’s second logistic. The period of demographic increase corresponded almost exactly with the great age of maritime exploration and discovery that resulted in the establishment of all water routes between Asia and Europe which provided Europe with a greatly ex panded supply of resources, and significant institutional changes in the European economy, especially with respect to the role of government in economy. Another major difference was a pronounced shift in the location of the principal centers of economic activity within Europe. In the 15th century the cities of northern Italy retained the leadership in economic affairs. Italians had reservoirs of capital, entrepreneurial talent, and highly refined economic institutions to carry them for several generations. Nevertheless, by the middle of the 17th century Italy had fallen until the 20th century.
Spain and Portugal enjoyed the fleeting glory as the leading economic powers of Europe. Lisbon replaced Venice as the great entrepot of the spice trade, and the Spanish Habsburgs, financed in part by the gold and silver of their American empire, became the most powerful monarchs in Europe until the 20th century. England at the time of the great discoveries was just emerging from the status of a backward,raw materials, producing area into something of a manufacturing country. Its agriculture was also becoming more market oriented. Amsterdam became the great commercial and financial metropolis of the 17th century. Technological changes in the arts of navigation and shipbuilding were vital to the success of exploration and discovery. The introduction of gunpowder and its application by Europeans to firearms were similarly vital to the success of Europeans conquests overseas.
Population and Levels of Living
In the middle of the 15th century the population of Europe as a whole was on the order of 50 million and 100 million by the middle of the 17th century. Higher real wages in the15th century, the consequence of the favorable shift in the population/land ratio. Population density was closely related to the productivity of agriculture. In some instances an increase in the urban population can be regarded as a favorable indicator of economic development. At that time towns functioned primarily as commercial and administrative rather than industrial centers. Many manufacturing activities as in the textile and metallurgical industries took place in the countryside. In the towns they formed a lumpenproletariat, a pool of casual, unskilled labor, frequently unemployed who supplemented their meager earnings by begging and petty thievery. The population grow more rapidly than agricultural output, the price of foodstuffs rose more rapidly than money wages, the situation that was exacerbated by the phenomenon of the “price revolution”.
Overseas Expansion and the Feedback to Europe.
Notable technological progress in ship design, shipbuilding and navigational instruments ocured in the later Middle Ages. Developments in cartography provided greatly improved maps and charts. The Italians had been leaders in the art of navigation (Columbus-Colombo, Vespuci, Verrazano, Caboto and others). The first century of European overseas expansion and colonial conquest thet is the 16th century belonged almost exclusively to Spain and Portugal. In the 16th century however their dominions were the most extensive and their wealth and power the greatest in the world.
*Aztec-Mexico and Inca Empire in Peru.
Some other features of European civilization that were introduced into America. On the economic side expansion resulted in a great increase in the volume and variety of goods traded. Coffee from Africa, cocoa from America and tea from Asiabecame staple European beverages. Cotton and sugar although they were known earlier in Europe had never been produced or traded on a large scale. When sugar was transplanted to America the production of sugar increased enormously and brought that delicacy within the budget of ordinary Europeans. The introduction of cotton goods from Indıa was the first luxury reserved for the wealthy which led to the establishment of one of Europe’s largest industries. Chinese porcelain had similar history. Tobacco one of America’s most celebrated and contributions to civilization.
The Price Revolution
The flow of gold and especially silver from the Spanish colonies greatly increased Europe’s supplies of the monetary metals at least tripling them into course of the 16th century. By the end of the 16th century prices were in general about 3 or 4 times higher than they had been at the beginning. In general the rise in money wages lagged far behind the rise in commodity prices resulting in a severe decline in real wages. It has been pointed out that a rise in silver production in central Europe beginning in the latter part of the 15th century and imports of gold from Africa by the Portuguese added to the money stock and contributed to the price rise.
Agricultural Productivity and Technology
For Europe agriculture was still the first economic activity and the average agricultural productivity as a whole in the 16th century was probably not higher than the 13th century. Italy likewise had the most diversified agriculture in Europe. Spain presented almost as much variety as Italy.
*The Open field system: is a system of agriculture in which large fields were divided into strips that were farmed by individual peasants from the middle ages until the 1800s. The peasant paid fixed rents either in kind or more often in cash furnished their own stock , equipment and seeds etc.
*tulip mania 1637 Dutch.
Industrial Technology and Productivity
The greatest invention of the 15th century indeed one of the greatest of all time printing with movable type increased productivity in the book trade. Other innovations of the period in navigational instruments, firearms, watchmaking, clock were of minor economic significance yet of enormous importance in political and cultural terms and thus indirectly economically as well. The market orientation of the European economy, greater in industry than in agriculture encouraged entrepreneurs who could reduce production costs and respond quickly to change in consumer demand. The reason of unemployment was a result of labor saving innovations. The large size and complexity of the machinery required them to be installed in factory type buildings making them some of the most important precursors of the modern industrial system.
In the late 15th century Flemish clothmakers introduced a lighter and cheaper fabric called “new draperies”. Their lower prices made them highly competitive in international markets. The textile trades remained collectively the largest industrial employer closely by the building trades. This is understandable when one remembers that in a pre industrial Europe the basic necessities are food, shelter and clothing. In the Middle Ages raw wool had been Englands principal export. Well before the rise of the modern industry England had already become the largest exporter in Eurpe’s largest industry.
*Dutch capital and technology.
The metallurgical industries although of relatively minor significance in terms of employment and output, acquired major strategic significance because of growing importance of firearms in 1450. The mettalurgical industries were important for the new age of industrialism. Iron was the most important. Timber was also great demand for construction, shipbuilding, metallurgy and most important domestic heating. The overseas discoveries, by providing new raw materials directly stimulated new industries: sugar refining and tobacco processing were most important but other manufactures ranging from porcelain developed to satisfy newly created tastes. In addition to this new industries a number of older industries in which production had been highly localized spread to other parts of the Europe. In the middle ages Italy had been the principal if not the only producer of luxury goods as fabcy glassware, high-grade paper, optical instruments and clocks. The invention of the printing press greatly increased the demand for paper.
In spite of this picture of varied industries one should bear in mind the still very imperfect degree of specialization in the european economy and its extreme dependence on low-productivity agriculture. Many industrial workers especially in the textile industries engaged part time in agriculture and most agricultural workers also had secondary occupations as woodworkers, leather workers and the like.