Economic medieval expansion: how it was possible economic growth during feudalism?

During the medium age there is an important growth (most of the cities founded during this period are the ones that we nowadays know).

What are the main reasons that produce this growth during this period?

Demographic expansion: along the IX and X centuries, the population has no growth, nevertheless during the centuries X to XIV the growth was higher.  Although this growth was difference if we take into consideration the country or area of study.

From the X century on, the peasant started to work in new lands.  Colonization enterprises were created by the lords to the detriment of hunting; law of diminishing returns explain this need to expand the land cultivated.

Agricultural expansion: to increase the agricultural production, it is needed an increase of the land, to be cultivated, trough the colonization.

There were three types of colonization:

• Enlargement of the land cultivated inside the area of the lords with major diversification of the goods, but the peasants must assume the cost of tilling the field (including the fallow).

• Foundation of new lands (Flandes, North of Italy, UK, Normandie,..).  New places, of hard access, are occupied by new enterprises, always funded by the Lords with the finality of collect the incomes from the work of peasants.

• Frontiers.  New lands are occupied beyond of current properties.  This fact allows to compensate diminishing returns and to increase the trading because of the excedent.

Technological change:

Introduction of heavy plow that allows a better and deeper furrow. Besides, the use of heavy plough makes that the land extracted is put out the furrow.  Another important introduction was the use of horses in detriment of oxes.

The culture system changes from a biennial rotation to a triennial rotation (wheat, legumes, fallow). The legumes allows that the land are not overusing (legumes have nutrients good for the land).

Both modifications allow an increase of the land productivity: the land cultivated is bigger and the farmers has the chance to organize the production in two periods of time: winter and spring.  Both periods allows too a better organization, and diversification of the land cultivated (it reduces the risk associated to bad crops).

The consequence of this change is well known: the population increase mean that the scarce resource, as labour, becomes abundant and the abundant resource, as the land, becomes scarce.  

The Lords are the owner of the lands, as consequence any excedent will be property of the people who has the lands, and not the ones who works in that lands.

Bibliography:

CAMERON, R. (1992): Historia Económica Mundial, Alianza (Madrid), caps. 1, 3, 5-10 y 12.

Population: cause or consequence of economic change?

There are some theories to explain how the population is related to the economic change. We are going to expose two theories: the pessimist, from Malthus, and the optimist, from Boserup.

Thomas Malthus (1766 - 1834): the main ideas about their theory are included on "an essay on the principle of population" where the malthusian trap is the base of his principles:

"Population, when unchecked, increases in a geometrical ratio. Subsistence increases only in an arithmetical ratio. A slight acquaintance with numbers will shew the immensity of the first power in comparison of the second."

The population grows steadily whenever there are resources, however the productivity could be increased whenever the law of diminishing returns allows it.

To explain this, the author uses two factors: land and work.

The main critique to this theory is that the author does not take into consideration neither the technology nor the demographic changes that could have any kind of consequence on technology or production.

Ester Boserup (1910 - 1999): The production could be increased as an answer to a demographic growing.  In a following step, the jump from a small society to another big one will be determined by resources increase, at consequence, the population could increase more.

Her arguments are defended through the scale economics that appears when the population grows. The scale economics allows to develop the specialization and the trade.

However with this growth, it appears a unequal distribution of incomes.  There is more habitants by area.  As consequence the value of the land will be increased, and the propietaries of land will have more incomes.

Bibliography:

Cameron R. (1992).  Historia Económica Mundial.  Alianza.  Capítulo 1.

North, D.C.,  y Tomas, R.P. (1989).  El nacimiento del mundo occidental.  Una nueva historia económica (900-1700).  Capítulos 1 y 2.

Theories of economic change: environment.

Regarding to theories of economic change the problems of the environment can be focused on: differences among the regions and how the environment changes affects to the development of a country.



Different authors have written about the environment and the economical change.  Let us see three opinions.

Karl August Wittfogel (1896 - 1988): he analyzed the ancient and modern era. His conclusions are related to the development of different cultures around rivers and deltas needed to make it work the irrigation systems.  These kind of systems brought about a centralization where the autor based his ideas about the oriental despotism. The one who has the control of the irrigation systems has the control of the economy.

The environment factors determine the kind of economic organization. This organization affects to the results of an economy.

The main critique to this theory is that the factors are independent each others, that is to say, for the develop of the despotism, it does not suggest the existence of irrigation systems and vice versa. Besides, at the old chinese empire, the peasants organized their own irrigation systems, without any control of the goverment.

     

Eric Jones (1936): he analyzes and explains the origin of the industrial revolution in Europe.  The differences in the XIV century between Europe and Asia were not very big, however, different environmental factors make this differences started to be relevant:

Europe has the luck of to own fertile and separated areas by natural barriers, that it did not allow contact among them. This fact means to develop a decentralized power (unlike that Asia where the population was concentrated around the deltas).  The european natural disasters kept untouched the physical capital.  It had the consequence to develop an increase of productivity and per capita income.  

The demographic european model is different from the asiatic (It easiest to recover than the asiatic).

The climate is much more varied in Europe than in Asia.  The consequence for Europe is more oportunnities regarding natural resources.

Finally, the physical european situation allow to this continent, to be isolated from invasions (mongols and turks). 

Jones considers countries as enterprises. These countries competed among them with the end to achieve the richness of each others.

Besides the countries started to developed a kind of organization where the goverments supplied defense and justice in exchange for a tax.  This situation allows to develop scale economics (the largest the population, the lower the cost associated to this population).  However there is a point where the increase of this population is negative.  This point is negative proportional to technology (how much more is invested in technology later this point appear.

There is another theories that try to explain the economic change regarding the environment by the climates change. However this theories are not adequate because of the lack of predictive.

Bibliography:

Cameron R. (1992).  Historia Económica Mundial.  Alianza.  Capítulo 1.

North, D.C.,  y Tomas, R.P. (1989).  El nacimiento del mundo occidental.  Una nueva historia económica (900-1700).  Capítulos 1 y 2.

Offer and Demand factors

We can not undersantd the economic development in historical perspective without the mention of offer and demand factors (population, capital, natural resources, organization, incomes,... and so on).

Offer factors:

• Population: when the population is growing the offer of the work market is also increasing. Apart of this, we have take into consideration other factors:

• Demographic structure: developed countries have less young population that undeveloped countries.  This issue affects to the amount of active population.

• Employed population structure: it is regarding the amount of people working in primary sector, secondary or tertiary.

• Capital - investments:  the investment depends of savings.  In pre-industrial countries the accumulation of capital is small.  Regarding the capital we must distinguish two kind of capital: fixed capital (it is normally used during the production: machinery) and changeable capital which is used only one time (for example the raw materials, the existences or the surplus or excedents).  Inside the investment, we have to take into consideration the human capital investment, to adquire more skills, knowing or capacitations.

• Natural resources: it depends of the demand, the technology used to extract them, respect for sustainable development, etc.

• Technology: it is included next to capital and shows us the way that the production is achieved. Inside the technology we must distinguish innovation from invention: 

• invention is the development of something new or different, meanwhile
• the innovation is the difusion of the new technology or invent something.

• Economical organization: the organization gives an incentive structure.  This structure allows people to produce, more and better, or less and worse, or the same level.

Demand factors:

• Population: the amount of population produces an increase of demand.  This demand produces also an increase of the offer.  As consequence, more quantity produced induces a decrease in the prices at the long term.

• Per capita income: an income increase produces a demand increase.  When the richness is growing the consequence is a decrease of primary products and an increase of secondary products (for example luxury goods): "the smaller is disposable income, the higher the proportion spent on food"(Engel's law).

• Distribution of income: for example if the income is equally distributed and the population is not very rich, the savings are smaller.

• Savings-Investments: in undeveloped countries the interest type is higher than in developed countries, because of the lack of savings and high demand. If saving flows into investing the financial system will work properly.

• Market organization: the emergence of cities entails the concentration of the population, and thus the existence of physical markets where trading (at the begginig of Industrial Revolution London concentrated the 10% of the consumption).

Bibliography:
Cameron R. (1992).  Historia Económica Mundial.  Alianza.  Capítulo 1.
North, D.C.,  y Tomas, R.P. (1989).  El nacimiento del mundo occidental.  Una nueva historia económica (900-1700).  Capítulos 1 y 2.