Henri Pirenne

“ In their turn, and as we have seen it at each great crisis of economic history, they retire from business and transform themselves into an aristocracy. Of the powerful houses which are established on all hands and which give the impetus to the modern industries of metallurgy, of the spinning and weaving of wool, linen, and cotton, hardly one is connected with the establishments existing before the end of the eighteenth century. Once again, it is new men, enterprising spirits, and sturdy characters which profit by the circumstances. ”

“ It is capital which rules in inter-local commerce, which determines the forms of credit, and which, fastening itself on all the industries which produce not for the city market but for exportation, hinders them from being controlled, as the others are, by the minute regulations which in innumerable ways cramp the activity of the craftsmen. [8]
Let us recognize, then, that capitalism is much older than we have ordinarily thought it. No doubt its operation in modern times has been much more engrossing than in the Middle Ages. ”

“ At every change in economic organization we find a breach of continuity. It is as if the capitalists who have up to that time been active, recognize that they are incapable of adapting, themselves to conditions which are evoked by needs hitherto unknown [2] and which call for methods hitherto unemployed. They withdraw from the struggle and become an aristocracy, which if it again plays a part in the course of affairs, does so in a passive manner only, assuming the rôle of silent partners. ”

“ After this, how can we see, in Godric and any of those who led the same sort of life, anything else but capitalists? It is impossible to maintain that these men conducted business only to supply their daily wants, impossible not to see that their purpose is the constant accumulation of goods, impossible to deny that, barbarous as we may suppose them, they none the less possessed the comprehension, or, if one prefers, had the instinct for commerce on the large scale. ”

“ We can, without fear of pursuing a vain shadow, endeavor to discern what throughout history have been the successive stages in the social evolution of capitalism.
Of the period which preceded the formation of towns, that is, of the period preceding the middle of the eleventh century, we know too little to permit ourselves to tarry there. What may still have survived in Italy and in Gaul of the economic system of the Romans has disappeared before the beginning of the eighth century. Civilization has become strictly agricultural and the domain system has impressed its form upon it. ”

“ Side by side with the old privileged towns, which merely vegetate, younger manufacturing centres, full of strength and exuberance, arise; in England, Sheffield, and Birmingham, in Flanders, Hondschoote and Armentières. [28]
The spirit in which is now manifested in the world of business, is that same spirit of freedom which animates the intellectual world. In a society in process of formation, the individual, enfranchised, gives the rein to his boldness. He despises tradition, gives himself up with unrestrained delight to his virtuosity. ”

“ Thus, the early centuries of the Middle Ages seem to have been completely ignorant of the power of capital. They abound in wealthy landed proprietors, in rich monasteries, and we come upon hundreds of sanctuaries the treasure of which, supplied by the generosity of the nobles or the offerings of the faithful, crowds the altar with ornaments of gold or of solid silver. A considerable fortune is accumulated in the Church, but it is an idle fortune. The revenues which the landowners collect from their serfs or from their tenants are directed toward no economic purpose. ”

“ Instead of presenting the classical type of urban economy, they are merely examples of it incompletely developed; they present only certain manifestations; they lack others, and particularly those which belong to the domain of capitalism. Therefore in presenting as true of all the cities of the Middle Ages a theory which rests only on the observation of certain of them, and those the least advanced, one is necessarily doing violence to reality. ”

“ I have observed, in surveying this history from the beginning of the Middle Ages to our own times, a very interesting phenomenon to which, so it seems to me, attention has not yet been sufficiently called. I believe that, for each period into which our economic history may be divided, there is a distinct and separate class of capitalists. In other words, the group of capitalists of a given epoch does not spring from the capitalist group of the preceding epoch. ”

“ Force holds here the place of law, and whatever may be the differences of time and of environment, one cannot do otherwise than to compare the commerce of the eleventh and twelfth centuries to that bloody competition in which, in the sixteenth and seventeenth centuries, the sailors of Holland, England, France, and Spain engaged in the markets of the New World. ”

“ In the Mediterranean, commerce centres itself at Venice and at Genoa. On the shores of the Atlantic, Lisbon becomes the great market for spices, and Antwerp, supplanting Bruges, becomes the rendezvous of European commerce. The sixteenth century sees this movement grow more rapid. It is favored at once by moral, political, and economic causes; the intellectual progress of the Renaissance, the expansion of individualism, great wars exciting speculation, the disturbance of monetary circulation caused by the influx of precious metals from the New World. ”

“ I shall not enter into the question of the formation of capital itself, that is, of the sum total of the goods employed by their possessor to produce more goods at a profit. It is the capitalist alone, the holder of capital, who will hold our attention. ”

“ The commercial expeditions upon which its activity especially centres itself demand, for their successful conduct, an endurance, a physical strength, which the more advanced stages of economic evolution will not require. But they demand nothing more. Without the ability to plan and combine they would remain sterile. And so we can see that, from the beginning, what we find at the basis of capitalism is intelligence, that same intelligence which Georg Hansen has so well shown, long ago, to be the efficient cause of the emergence of the bourgeoisie. ”

“ Of course I do not at all intend to reject en bloc the ideas generally agreed upon concerning the urban economy of the Middle Ages. On the contrary, I believe them to be entirely accurate in their essential elements, and I am persuaded that, in a very large number of cases, I will even say, if you like, in the majority of cases, they provide us with a theory which is completely satisfactory. I am very far from maintaining that capitalism exercised a preponderant influence on the character of economic organization from the twelfth to the fifteenth centuries. ”

“ The free expansion of wandering commerce comes to its end in the urban economy, the individualistic ardor of the Renaissance leads to mercantilism, and finally, to the age of liberalism succeeds our own epoch of social legislation. ”

“ Whence came these pioneers of commerce, these immigrants seeking means of subsistence, and what resources did they bring with them into the rising towns? Doubtless only the strength of their arms, the force of their wills, the clearness of their intelligence. Agricultural life continued to be the normal life and none of those who remained upon the soil could entertain the idea of abandoning his holding to go to the town and take his chances in a new existence. ”

“ Here capitalism not only exists but develops toward perfection. Instruments of credit, such as the lettre de foire, make their appearance; a traffic in money takes its place alongside the traffic in merchandise and, despite the prohibition of loans at interest, makes constantly more rapid progress. The coutumes of the fairs, especially those of the fairs of the Champagne, in which the merchants of the regions most advanced in an economic sense, Italy and the Low Countries, meet each other, give rise to a veritable commercial law. The circulation of money expands and becomes regulated ”

“ Its harvests do not form material for commerce. If during years of exceptional abundance the surplus is transported to districts where scarcity prevails, that is all. In addition certain commodities of ordinary quick consumption, and which nature has distributed unequally over the soil, such as wine or salt, sustain a sort of traffic. Finally, but more rarely, products manufactured by the rural industry of countries abounding in raw materials, such as, to cite only one, the friezes woven by the peasants of Flanders, maintain a feeble exportation. ”

“ But whatever may be the favor which it still enjoys, the theory which refuses to perceive in the medieval urban economy the least trace of capitalism has found in recent times ever increasing opposition. I will not even enumerate here the studies which seem to me to have in an incontrovertible manner established the fact that all the essential features of capitalism—individual enterprise, advances on credit, commercial profits, [3] speculation, etc.—are to be found from the twelfth century on, in the city republics of Italy—Venice, [4] Genoa, [5] or Florence. ”

“ In those cities especially in which has occurred the popular revolution transferring power from the hands of the patriciate into those of the craft-gilds, distrust of capital is carried as far as it can go without entirely destroying urban industry. The craftsmen who produce for exportation—for example, the weavers and the fullers of the towns of Flanders—try to escape from their subjection, to the merchants who employ them. ”

“ Public authority assigns no limits to the activity of the merchants, does not restrict them to this or that kind of business, exercises no supervision over their operations. Provided they pay the fiscal dues (teloneum, conductus, etc.) levied by the territorial prince and the seigneurs having jurisdiction at the passage of the bridges, along the roads and rivers, or at the markets, they are entirely free from all legal obstacles. The only restrictions which hinder the full expansion of commerce do not come from the official authority, but result from the practices of commerce itself. ”

“ But while these first generations of capitalists are retiring from commerce and rooting themselves in the soil, important changes are going on in the economic organization. In the first place, in proportion as the wealth of the towns increases, and with it their attractive power, they take on more and more an industrial character, the rural artisans flocking into them en masse and deserting the country. ”

“ By protective duties and bounties on exportation, by subsidies of all sorts to manufactures and national navigation, by the acquiring of transmarine colonies, by the creation of privileged commercial companies, by the inspection of manufacturing processes, by the perfecting of means of transportation and the suppression of interior custom-houses, every state strives to increase its means of production, to close its market to its competitors, and to make the balance of trade incline in its favor. ”

“ In short, the permanence throughout the centuries of a capitalist class, the result of a continuous development and changing itself to suit changing circumstances, is not to be affirmed. On the contrary, there are as many classes of capitalists as there are epochs in economic history. ”

“ The exuberance of capitalism which reached its height in the second half of the sixteenth century was not maintained. Even as the regulative spirit characteristic of the urban economy followed upon the freedom of the twelfth century, so mercantilism imposed itself upon commerce and industry in the seventeenth and eighteenth centuries. ”

“ Admit these two statements, and the nature of early commerce is explained without difficulty. They account in fact both for the freedom of the merchants and for that character of wholesale exporters which they exhibit so clearly and which prevents our placing them in the category in which the theory of urban economy claims to confine them. Contrary to the general belief, it appears then that before the thirteenth century we find a period of free capitalistic expansion. No doubt the capitalism of that time is a collective capitalism: groups, not isolated individuals, are its instruments. ”

“ Doubtless the idea that "liberty is the soul of commerce" does not wholly disappear, but the endeavor is to regulate that liberty henceforward in conformity to the interest of the public weal. It is put under the control of intendants, of consuls, of chambers of commerce. We are entering into the period of national economy. ”

“ In their place arise new men, courageous and enterprising, who boldly permit themselves to be driven by the wind actually blowing and who know how to trim their sails to take advantage of it, until the day comes when, its direction changing and disconcerting their manoeuvres, they in their turn pause and are distanced by new craft having fresh forces and new directions. ”