Economic History Lesson 7 PDF

Economic History Lesson 7 Assoc. Prof. Dr. Işıl Alkan 1 INDUSTRY IN THE MIDDLE AGES  Textilewas the main industrial economic activity in the middle ages. Cloth or fabric was produced in every region and in every household in Europe. Beginning from 11th ce...

Economic History Lesson 7 Assoc. Prof. Dr. Işıl Alkan 1 INDUSTRY IN THE MIDDLE AGES  Textilewas the main industrial economic activity in the middle ages. Cloth or fabric was produced in every region and in every household in Europe. Beginning from 11th century, specialization occured in some regions. In this framework North France, East Flanders were producing high quality textiles.  Metallurgy was an other important industrial sector in this term. Iron was abundant in middle ages, so many equipments were made of iron in addition to weapons and armours(zırh). 2  Leather production was an other significant form of industry. Leather was used in clothes, furnitures and some industrial equipments.  Woodworking (ağaç işçiliği) was widespread in middle ages. It was performed both for practical equipments and ornament (süsleme).  Manors were the main industrial production centers in the early mediaeval. Clothes, iron equipments and woodworking were realised by serfs in manures in early middle ages. 3 However, between 10th and 12th century, the scale and organization of industry changed. The industrial production moved to city centers from manures. Specialization took place and various facilities was undertaken by their experts. The scale of production increased. Periodicalfairs and regular markets were established. 4  Despiteall, industrial production units were small until 16th century. Their scales were still far from the scales of even small factories.  Dueto inadequate investment capital, industrial production could not develop in middle ages.  Productiontechniques were substantially labour-intensive and the productivity of the labour was low. 5  The Guild System İn Middle Ages  Theguild is a medieval association, as of merchants or artisans, organized to maintain standards and to protect the interests of its members.  Theguilds in the Middle Ages were an important part of life in Medieval times. A higher social status could be achieved through guild membership, and feudalism encouraged people to do this.  Therewere many advantages of becoming a member of a guild. Guild members in the Middle Ages were supported by the Guild if they became sick. 6  Besides, guilds were providing protections both for consumers and workers as follows:  Many craft regulations prevented poor workmanship. Each article had to be examined by a board of the guild and stamped as approved.  Because of lack of artificial light, work at night was prohibited.  To regulate competition between members the guild forbade advertising.  All prices were regulated  Craftsmen could take work outside where it could be seen.  Price-cutting was strictly forbidden. 7  Briefly, guilds were important constitutions in middle ages which control the quality of production and improve the stability in labour and commodity markets.  Industry in Late Middle Ages  The production and the demand of manufactured goods was significantly decreased after the big epidemic in middle ages.  Thus, production was limited and regulations concerning working conditions were implemented effectively.  Entering a profession became difficult. 8  On the other hand, real wages increased, hence laboursaving new technologies became widespread.  The increase in labour demand encouraged female participation to labour markets.  Especially, in late terms of middle ages (beginning from 16th and 17th century), craft activities (esnaf faaliyetleri) has expanded to rural area from urban area.  In 18th century, most craft activites were realised in rural area, in other words villages. 9  Especially, textile industry was performing in rural. The other industries performed in rural were iron and metalware (madeni eşya) industries.  The stated expansion was due to several factors. Firstly, the usage of some simple machines working with water power became widespread. So, industrial facilities moved to places near water resources.  Secondly and most importantly the cost of labour was cheaper in rural compared with urban. The primary activity for rural people was agriculture and other activities were extra works for them. Thus, they consented (razı olmak) lower wages. 10  Thenew form of industry caused a new production type which is named as the putting-out system.  Thissystem was widespread especially in 17th century in Western Europe. It is a type of subcontracting work in which merchant-employers “put out” materials to rural producers who usually worked in their homes but sometimes laboured in workshops.  Finished products were returned to the employers for payment on a piecework 11  We can consider the putting-out system as a transitional stage from conventional production to modern industrial production (factory production).  Inputting-out system; the production was organized by the entrepreuner similar to the factory system. The person providing raw- material and paying salaries was the entrepreuner.  The main difference between the factory and putting-out system was that the production was not realised in a production center in the putting- out system. 12  The Socio-Economic Structure in Asia, Africa and America Before Modern Times.  Forhundreds of years Europe had been suffering through a difficult period known as the Dark Ages. During this time the lives of the people who lived in Europe were hard. They lived in poverty, with little food, poor shelter and constant disease. Crime and war was everywhere.  On the other hand, during the Dark Ages, life in Asia was not so difficult as in Europe. On the contrary, Asia thrived. Many of those who lived in the great civilizations of Asia enjoyed a much higher standard of living. 13 The population in Asia was five times more than the population in Europe. Medieval Asia had far surpassed the West in the development of warfare, communication and science. Gunpowder (barut) was widely used as early as the 11th century and they were using moveable type printing five hundred years before Gutenberg created his press. Buddhism, Taoism, Confucianism were the dominant philosophies of the Far East during the Middle Ages. 14 China in the Middle Ages was viewed as a country that had a much better standard of living than many of the other leading countries. The reason that China has been able to continue building on its standard of living since the Middle Ages is because it simply avoids many of the major items that corrodes (yıpratmak, aşındırmak) country such as war, governmental changes and the division of state. 15  The Islamic World  The Islamic Golden Age is traditionally dated from the mid-7th century to the mid-13th century at which Muslim rulers established one of the largest empires in history.  During this period, artists, engineers, scholars, poets, philosophers, geographers and traders in the Islamic world contributed to agriculture, the arts, economics, industry, law, literature,navigation, philosophy, sciences, sociology, and technology, both by preserving earlier traditions and by adding inventions and innovations of their own. 16  The borders of the Islamic World was so large. Spain and North Africa in the west and India in the east was performing the Islamic world borders.  The Arabian community was mainly a nomadic (göçebe) community. However, they develop advanced agriculture methods in places they settled. Southern Spain was a place in which the Muslims develop advanced agriculture methods. 17 Araps carried various species of plants which they taken from ındia and southeastern Asia to Iran,Iraq and Syria and later to some regions on Mediterranian. Rice, sugar cane, cotton, citrus and watermelon were some of these products. Thus, they performed a “green revolution” in terms of agriculture in the places where they settled. 18 Trade was an important economic activity for Muslim community. They constituted caravansaries, bazaars.Until the geographical discoveries, the Muslims are the sole mediators in the trade between Asia and Europe. The Muslims developed financial instruments like bill of exchange. 19  Partnerships similar to commenda was also developed in the Arabian community.  China  China in the Middle Ages was viewed as a country that had a much better standard of living than many of the other leading countries. The reason that China has been able to continue building on its standard of living since the Middle Ages is because it simply avoids many of the major items such as war, governmental changes, and the division of state. 20 China's economy began to grow during the Tang and Song dynasties. Trades, farming and new technologies helped with China's economy. New technology such as: gunpowder, weapons, compass, and printing press were first invented in China in middle ages. Roads and waterways were built for trades. 21 The Silk Road is one of the main trading routes in ancient China. These routes allow travel within and outside of China. They traded: tea, steal, paper, and porcelain in return for : gold, silver, precious stones, fine woods. The Tang dynasty strengthened China's economy by supporting farming and trade. 22 The Song dynasty strengthened China's economy by supporting technology and management. During the Tang and the Song dynasties, China enjoyed a golden age of economy. Trade and agriculture was advanced during this period of time. 23 During the 13th century, China encountered with Mongol invasion (Moğol istilası) and this event affected the progress of China adversely. However, later on the Ming dynasty improved China’s development again. A remarkable economic growth has been performed in the first 150 years of Ming dynasty. 24 India  Agriculture was the main activity in India in middle ages. Majority of the population was living in the villages and making their living by agriculture.  However, low efficieny was the reality of Indian agriculture. The main agricultural product was rice in regions which received rain. In arid regions wheat, barley and corn were the primary agricultural products.  On the other hand, cotton was a significant product of the region. 25 Cotton weaving was a widespread and important economic activity in the country.  India was exporting weaving products and spices (especially black pepper) and in return could improve silver and gold substantially. In other words, India could enhance foreign trade surplus mainly by cotton weaving and spice production. 26 The caste system was the distinctive feature of Indian society. The caste system is a class structure determined by birth. The Indian caste system divides economical and social functions sharply. The castes were classified according to jobs. 27 28 According to the caste system, marriage between different castes is forbidden. People from different castes could not be together in social life and could not even eat meal with each other. The caste system prevented social mobility and efficient distribution of resources. Reincarnation thought was widely adopted in India. 29 Japan The society and the economy of Japan was similar to Chinese society and economy in many aspects. For instance, both Japan and China were suffering from land scarcity. However, China was a more developed country because Chinese government supported technological advances more than the Japanese government. 30 China benefitted more from efficient agricultural methods and books. Urbanization level was lower in Japan in comparison with China. Agricultural specialization and monetary progress were inadequate in Japan. Many technologies like navigation and mining falled behind the China. Thus, Japan could not be a superior country in Asian region like China. 31 Africa The economical characteristics of Africa was varying across regions. North Africa was a rich region in comparison with the south region. Agriculture and trade were the main economic activities in the North Africa. Wheat was the primary agricultural product in regions receiving rain. 32 In arid regions, migrant husbandary (göçebe hayvancılık) was widespread. Trade was active and the industry was realizing in households at a great scale. On the other hand, plant cover and the economy of Sub-Saharan Africa was different. 33 The land of Sub-Saharan Africa was infertile, thus agricultural productivity is very low. Limited species of agricultural products could be cultivated. For instance, banana was one of the major agricultural products. Technology was outdated, hence production capacity of the region was inadequate. The region can export only some gold and ivory (fildişi) beside the slaves. 34 America Red-Indian population was the local population of the America continent. Central America was the most developed region due to fertile land. Thus, the most crowded region was the Central America. The main agricultural product was corn. Tomato, potato and bean were the other major agricultural products. 35 Gold,silver, copper were widespread, however iron was unknown in the region. Bazaars and trade were advanced in the region. Inca,Mayan and Aztec civilisations were the important civilisations dominating in the region. 36 AGE OF DISCOVERY The Geographical Discoveries of the 15th and 16th centuries constitute an important chapter in the history of the modern world. It is also known as the Age of Discovery. 37 The new sea routes to the East as well as the discovery of new continents like the America radically transformed the course of history. The adventurous spirit of the sailors like Bartholomew Diaz, Christopher Columbus and Ferdinand Magellan ultimately led to these historic discoveries. There are several causes that led to these discoveries. 38 Causes for the Geographical Discoveries  In 1453, the Ottoman captured Constantinople, the important trade route to the East. Thus, the Ottoman began to control the European trade with the East.  They imposed heavy duties on the goods. On the other hand, the Arab traders continued their trade through the Coasts of India and got huge profits in spice trade. Therefore, the Europeans were forced to find an alternative route to the East. 39 The Renaissance spirit and the consequent scientific discoveries were also responsible for geographical discoveries. The art of ship-building developed along with the invention of Mariner's Compass. The astronomical and other scientific discoveries raised the hope of the adventurers to explore new sea routes. 40 The travel accounts of Marco Polo and Nicolo Polo about China and India kindled great enthusiasm among the Europeans about the fabulous wealth of the Eastern countries. Other accounts of the voyages also encouraged explorations. A Merchants Handbook described all known trade routes between Europe and the Far East. 41 Other factors such as the spirit of adventure, desire for new lands and competition for exploration between European nations had also stimulated the explorers venturing into the seas. 42 Portugal  The first great wave of expeditions was launched by Portugal. Its ruler was Henry (1394-1460) generally known as 'the Navigator'.  As a result of his efforts, the Madeira and Azores Islands were discovered. The main project of Henry the Navigator was the exploration of the West Coast of Africa. His sailors discovered the Cape Verde Islands. Although Henry died in 1460, his zeal provided stimulus to the Portuguese for further explorations. 43  In1487 Bartholomew Diaz reached the southern trip of Africa and called it 'the Cape of Storms' due to a terrible storm he experienced there. Later it was renamed as 'the Cape of Good Hope' because it provided hope that access to the Indian Ocean was possible. Vasco da Gama successfully used this route and reached India in 1498. Vasco da Gama's discovery of a new sea-route to India was a most significant event in the history of Europe and Asia. 44 Spain Next to Portugal, Spain began to explore the sea route to the east. Christopher Columbus, a Genoese sailor, planned to discover a new sea route to the East by traveling westwards. 45 After securing monetary assistance from King Ferdinand and Queen Isabella of Spain, he set sail on August 3, 1492 across the Atlantic. After a long and difficult voyage he reached an island of the Bahamas on Oct 12, 1492. He thought that he had reached the shores of India. 46  He made three more voyages and explored the islands in the Caribbean Sea and Central America. These islands are even today called as the West Indies.  Laterin 1501, Amerigo Vespucci, an Italian navigator, with the support of the king of Spain explored the areas of South America. He came to the conclusion that what Columbus discovered was not India but a 'New World'. Therefore the new continent was named as America. However, Columbus is considered as the discoverer of America. 47  On August 10, 1519, Ferdinand Magellan had sailed with five Spanish ships - namely, Trinidad, San Antonio, Concepcion, Victoria, and Santiago - from the port of Sevilla.  Then he entered an ocean which was calmer than the Atlantic. Therefore, he named it the Pacific Ocean. While crossing the Pacific, the sailors suffered for want of food and drinking-water. At last, on March 6, 1521, they reached the Philippines, where Magellan was killed by the natives. 48 Other Geographical Discoveries In 1534, Jacques Cartier from France went to the North America and explored the region. He found the Red Indian settlements and named that region as Canada. 49 Impact of the Geographical Discoveries The geographical discoveries had a profound impact on the economic, political and social conditions in most parts of the world. The most important among them are: There was a tremendous improvement in the trade and industry in Europe. It began to reach beyond the Oceans. 50  The expansion of trade provided a stimulus to the development of ship-building industry. Larger quantities of goods had to be carried in bigger ships.  Asthe trade developed in large scale, joint- stock companies and banking enterprises emerged. European companies established their trade centres in Asia, Africa and Latin America. 51 The trading companies slowly captured political power and established their rule in their respective regions. This led to Colonialism and Imperialism. Capitalism had grown in Europe along with the policy of Mercantilism. As a result, the colonies were exploited. 52  The system of slavery was followed. The European planters in America imported Negro slaves from Africa to work in their plantations.  The geographical discoveries solved the problem of over population in Europe and many Europeans began to settle in the American continents.  The culture of Europe had spread to Asia, Africa and other parts of the world very rapidly. 53 MERCANTILISM  The dominant system of economic thought that prevailed in Europe from 16th to 18th Century was Mercantilism.  Mercantilist policies are policies that advocate state intervention.  It was known by different names in different countries. In England it was called as commercial system or mercantile system because it emphasized the importance of commerce and free trade. 54  In France it was known as “Colbertism” after the name of Colbert, the Finance Minister of Louie the XIV. In Germany and Austria it was called “Cameralism”. It was also known as “Bullionism” because of the importance given to gold and silver.  Itwas also known as “Restrictive system” because its practical policies consisted of numerous restrictions and regulations on commerce. 55  Some economic, political, scientific and cultural factors were responsible for the emergence of mercantilism.  1-Economic factors: Towards the end of the 15th century changes were taking place in the economic life of the people. Domestic economy was giving way to an exchange economy. Agriculture was giving place to industry. Trade became very important and it changed the foundation of socio-economic set-up of the middle ages. 56 Trade necessitated the use of money which was available in the form of gold and silver. Along with the expansion of commerce there were improvements in transport, agriculture, population, etc., so the Mercantilist thought was the outcome of these developments. 57 2- Political Factors: Towards the end of the middle ages nationalism became the strong force. Europe changed greatly due to Renaissance. As a result, there was a fundamental political change. It resulted in the emergence of strong nations like England, France, Spain, etc., Feudalism came to an end and the King became more powerful.  Each nation wanted to preserve its independence and considered other nations as enemies. In order to create a strong and powerful state the Mercantilists tried to regulate the political and economic activities of the people 58  3)Scientific Factors: In the field of science and technology great improvements and inventions were made. The discoveries of compass and printing press were of great importance, with the help of compass navigation became easier and it led to the discovery of new countries. Thus new countries opened the gates to a variety of raw materials and markets. The invention of printing press helped the spread of new ideas and knowledge. 59 4-)Culturally also Europe was undergoing a sharp change. Renaissance gave a new light of learning to the people. People were made to realise that this worldly life was more important than the heavenly life. As a result, money came to occupy an important place in human activities. 60 Main features of Mercantilism 1) The source of wealth is money. Therefore, countries that want to prosper must have precious metals such as gold and silver. 2) Wealth of world is stable. In other words, while one country is getting richer, the other is getting poorer. For this reason, policies towards accumulating more precious metals should be implemented. 61 3) The state should take an active role in the economy. According to this view, it is essential to have an interventionist state that will implement protectionist policies for foreign trade surplus. 62 4) Since the aim is to give foreign trade surplus, exports should be more than imports. So exports should be encouraged. 5) Import should be prohibited, as this will lead to precious metal outflows from the country. Only raw materials and skilled labor can be imported. 63 6) The state must have a strong army and navy. In a period when geographical discoveries and colonial activities are in the foreground, a strong army is essential to obtain new colonies and control trade. 64 Itis observed that these policies will not work in the long term, as the foreign trade surplus will always be gathered on the same side, and will cause harm in the long run. The impoverishment of some countries reduced trade, and the enrichment of some countries caused inflation. 65 Industrial Revolution Industrial Revolution, in modern history, the process of change from an agrarian and handicraft economy to one dominated by industry and machine manufacturing. This process began in Britain in the 18th century and from there spread to other parts of the world. 66 Why did the Industrial Revolution take place in eighteenth century Britain and not elsewhere in Europe or Asia? 67 Britain had a long history of producing textiles like wool, linen and cotton. But prior to the Industrial Revolution, the British textile business was a true “cottage industry,” with the work performed in small workshops or even homes by individual spinners, weavers and dyers. 68  Starting in the mid-18th century, innovations like the flying shuttle, the spinning jenny, the water frame and the power loom made weaving cloth and spinning yarn and thread much easier. Producing cloth became faster and required less time and far less human labor.  More efficient, mechanized production meant Britain’s new textile factories could meet the growing demand for cloth both at home and abroad, where the nation’s many overseas colonies provided a captive market for its goods. In addition to textiles, the British iron industry also adopted new innovations. 69  The Industrial Revolution began in Great Britain, and many of the technological innovations were of British origin.  By the mid-18th century Britain was the world's leading commercial nation, controlling a global trading empire with colonies in North America and the Caribbean, and with major military and political hegemony on the Indian subcontinent, through the activities of the East India Company. 70 The development of trade and the rise of business were among the major causes of the Industrial Revolution. 71 Results of Industrial Revolution 1)Population has increased fastly. 2)The level of living of western world increased uniquely. 3)The agriculture sector gave its primary rank to industry and services sector. 72 4)The migration from rural to urban increased sharply. 5) Technological progress accelerated. 6) In industrial societies, equality in distribution of income has performed.However, since the mid 19th century inequalities in developing countries have accelerated. 73 Long Depression The Long Depression was a worldwide price and economic recession, beginning in 1873 and running either through March 1879, or 1896. 74 Itwas the most severe in Europe and the United States, which had been experiencing strong economic growth fueled by the Second Industrial Revolution in the decade following the American Civil War. The episode was labeled the "Great Depression" at the time, and it held that designation until the Great Depression of the 1930s. 75  Itis the crisis experienced due to surplus production on September 18, 1873.  As the factories increased their production, prices started to decrease due to the decrease in demand. This caused some factories to lay off workers and some factories to close due to their sales below their cost. Due to the collapse of their factories, the banks that were their financiers also went bankrupt. 76 This paved the way for the financial sector to collapse. A few banks that could survive without going bankrupt formed a monopoly by taking other banks and real sector companies. This situation is shown as the first example of transition from competitive market to monopoly market in history. 77 This is the first serious crisis that capitalism has experienced. 78