The Market Economy in 17th Century Europe

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  • 0:02 Feudalism vs. the…
  • 1:53 What is Capitalism?
  • 2:33 Capitalism in 17th…
  • 5:52 Lesson Summary
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Lesson Transcript
Instructor: Nate Sullivan

Nate Sullivan holds a M.A. in History and a M.Ed. He is an adjunct history professor, middle school history teacher, and freelance writer.

In this lesson, we will explore the role of market economics in 17th century Europe. We will see how early capitalism impacted European society during the 17th century.

Feudalism vs. the American Dream

Imagine for a moment that you had no hope of bettering yourself over the course of your life. Imagine you were forced to labor in the fields for minimal pay. You worked to the point of exhaustion and made barely enough to survive. You were malnourished and had no chance of improving your living situation. For hundreds of years, this is what life was like for most Europeans under the system of feudalism. Feudalism was a medieval system of social structuring based on land holdings. Basically, peasants (also called serfs) would work their bums off on a tract of land, in return for a small share of food and military protection provided by the owner of the land (who was called the lord).

Now think about your life, or the lives of average Americans. It's expected that you'll graduate high school. You'll probably get an entry-level job. If you work hard and do well, you'll probably have the opportunity for a pay-raise, a promotion or the chance to get a better job. You might go to college and specialize in a certain area. If you study hard and work hard, you'll be able to get a job you enjoy and earn enough to live comfortably.

This is the 'American Dream,' right? This is the idea that under our economic and social system, men and woman can better themselves through education, ingenuity and hard work. In this lesson, we are going to look back at the very early history of this system, and see how free market economics (also called capitalism) created conditions by which Europeans could better themselves.

What is Capitalism?

So what exactly is capitalism? Capitalism is an economic system in which industry, trade, production and other means of securing wealth are privately controlled for the purpose of making profit. This 'privately controlled' part is the key. An essential characteristic of capitalism is that trade, industry and production are conducted by private owners, not the state. Just so we are clear here, the word 'state' means the government. The term 'capitalism' and 'free market economics' are typically used interchangeably.

Capitalism in 17th Century Europe

Capitalism as we know it didn't pop up overnight. It emerged in Europe gradually as the feudal system broke down. It is difficult to determine exactly when modern capitalism first emerged in Europe, not to mention this issue is hotly debated by historians. That said, it is relatively safe to say modern capitalism, as we know it, emerged between the 16th-19th centuries.

One important event that helped to breakdown the feudal system and give birth to free market economics was the Protestant Reformation. The Protestant Reformation was an anti-Catholic movement sparked by Martin Luther in 1517. Many Protestant Christians held to a revolutionary new view of work and wealth. They regarded hard work and thrift as traits which pleased God, and they regarded material wealth not as an evil, but rather a gift from God.

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