Were there capitalistic economies before the 18th century?

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    $\begingroup$ Contra to my earlier comment, it turns it is helpful to look at this question, as it reflects the disagreements on what what capitalism is really about, i.e. its definition. $\endgroup$ – Fizz Sep 14 at 5:44

According to some yes. In this (historically oriented) view, whatever succeeded feudalism is called capitalism.

Capitalism, broadly accepted as a phase of history, is dominating the last half-a-millennium. It has also become conventional that capitalism itself had various phases and stages. Its antecedents go back to ancient history. Barter and exchange of one thing for another, as Adam Smith, the main advocate and ideologue of market capitalism argued, are a part of human nature. The pockets of private-market economy and its institutions, especially in urban settlements, flourished in medieval Europe. Moneylenders and urban merchants were its main representatives.

Its continuous development, however, began mostly from the sixteenth century. Historiography produced a vast literature on the transition from feudalism to capitalism. These writings maintain that declining productivity, a demographic crisis, and the scarcity of peasant labor generated the lowering of rents, a decrease of labor services, and an increase in peasant mobility and freedom in Western Europe. In most of these countries, consequently, serfdom was gradually loosened and disappeared by the sixteenth century. Commercialization of agriculture played a central role in the development of capitalism. The flourishing textile industry in Britain with an excess production over consumption led to the enlargement of productive capacities in an unheard scale and made England the ‘workshop of the world.’

This stage between the sixteenth and eighteenth centuries is often called ‘commercial capitalism’ in history. The system was based on private ownership of warehouses and ships and buying and selling goods all over the world. The merchants also lent out money at interest and established connections with production. They bought and distributed raw materials for peasants who worked at home in the traditional way (putting-out system), and gradually subordinated the rural cottage industry. It led to a proto-industrialization, the development of a decentralized putting-out system coordinated by merchants, and later the establishment of (nonmechanized) factories, which introduced division of labor in the production procedure.

Quoted from I.T. Berend, "Capitalism" in International Encyclopedia of the Social & Behavioral Sciences, 2001

Alternatively, what he calls "commercial capitalism" is called "merchant capitalism" by others. And as the Wikipedia article linked shows, others (Ellen Meiksins Wood in particular) disagree on whether that was really capitalism.

She argues that commerce is not equivalent to capitalism and does not produce it because 'the dominant principle of trade everywhere was not surplus value derived from production but "profit on alienation", "buying cheap and selling dear" ': that is, although trade involves the seeking of profits, it does not in itself affect how goods are produced. Wood argues that polities which flourished from trade such as medieval Florence and the early-modern Dutch Republic that did not become capitalist are not examples of a 'failed transition', but rather examples of how trade and urbanisation has flourished widely in human history without capitalism developing. She likewise argues that various past societies, such as early modern France, had peasantries with ample opportunity to enter into commercial production, which, however, did not take this opportunity. Thus Wood concludes that capitalism must have arisen from changing imperatives in fundamental relations of production.

Both Berend and Woods have serious Marxist leanings, so even in this relatively narrow camp there's disagreement on when capitalism bagan...

In yet other terms, this is the divergence of views between the "commercialization" vs the "agrarian" model of the emergence of capitalism. It seems to me that the latter is mainly favored by Marxists, while the former has a broader appeal (so Berend is a bit of a heretic among Marxists in this respect.)


The German mathematician-turned-economist William Lexis (1837-1914) considered capitalism as "dat[ing] back to the Middle Ages":

Large-scale enterprise based on the ownership of money, and operating on the basis of such monetary power; and its beginnings which date back to the Middle Ages are to be found in commercial and banking enterprises. Also, so far as labor was concerned, capitalism first appeared as a commercial operation in the putting-out system. Craftsmen were inclined or forced by circumstances to work as hired craftsmen for large-scale business, and commercial capital took over the distribution of their products in a wide market for which they, by themselves, would not have access to. In the factory system, capital then itself assumed the leadership of the productive enterprise; and it thereby achieved the potential for exploiting its economic power to a greater degree as opposed to the property-less worker. […] Before that there were masters and workers too, but they regarded themselves as members of the same species; whereas now capital emerged as a power that was dominant in production, was in a realm apart from the workers, and controlled their destiny like some transcendent power, even if pro forma, there was still a free contract between the two.

—Pesch, Lehrbuch, Vol. IV, book 2, pp. 156-7, as quoted in Jones, Barren Metal, p. 21


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