7. Absolutism - An Obstacle to Economic Development

The fable of the nationalist state as a furtherer of cultural development- the decline of industry and decay of economy
The period of wars and reversion to barbarism
Commercial Capital and Absolutism
Manufacture and Mercantilism
The State as creator of economic monopolies
Regimentation of economics by monarchies
Colbert and the economic dictatorship in France
The English monarchy and traffic in monopolies
The East India Company and the Hudson Bay Company
The French Revolution as a pioneer of new economic organization
The national state in Spain and the decay of economy and culture

Submitted by Toms on September 5, 2011

The "mesta" and the exploitation of spanish peasants
Philip II and the introduction of the "alcavala." Wallenstein and Gustavus Adolphus
The thirty years' war and the decay of culture in Germany
The founding of manufactures as a speculation by the State

It has often been asserted that the development of the social structure in Europe in the direction of the national state has been along the line of progress. It is, significantly, the protagonists of "historical materialism" who have most emphatically defended this concept. They try to prove that the historic events of the time were caused by economic necessity, demanding a broadening of the technical conditions of production. In reality, this fable arises from no serious consideration of historical facts, but rather from a vain desire to see the social development of Europe in the light of an advancing evolution. In that important reconstruction of European society associated with the growth of nationalism, the struggle of small minorities for political power has frequently played a much more important part than alleged "economic necessity." Quite apart from the fact that there is not the least reason to suppose that the evolution of technical methods of production could not have gone on just as well without the creation of the national state, it cannot be denied that the foundation of the national absolutist states of Europe was associated with a long series of devastating wars by which the economic and cultural development of many lands was for a long time, yes, even for centuries, completely inhibited.

In Spain the rise of the nationalist state led to a catastrophic decay of once flourishing industries and to a complete disintegration of the whole economic life, which has not been restored to this day. In France the Huguenot wars, waged by the monarchy to fortify the unified state, most seriously injured French industries. Thousands of the best artisans left the country and transplanted their industries to other states. The cities were depopulated and most important lines of industry began to decline. In Germany where the machinations of the princes and nobles did not permit a unified national state to arise as in Spain, France, and England, and where, consequently, a whole set of small national states developed, the Thirty Years' War devastated the whole land; decimated the population, and inhibited every cultural and economic development for the next two hundred years.

But these were not the only obstacles to economic evolution presented by the rising national state. Wherever it arose it tried to inhibit the natural course of economic progress by prohibition of imports and exports, supervision of industry, and bureaucratic ordinances. The guild masters were given orders regarding their methods of production, and whole armies of officials were created to supervise the industries. Thereby all improvements in production were limited, and only by the great revolutions of the seventeenth and eighteenth centuries was industry freed from these burdensome shackles. The rise of the nationalist states not only ; did not further economic evolution in any way whatever, but the endless wars of that epoch and the senseless interference of despotism in the life of industry created that condition of cultural barbarism in which many of the best achievements of industrial technique were wholly or partly lost and had to be rediscovered later on. 1

To this must be added the fact that the kings were always suspicious of the citizens and the artisans of the towns, who were the real representatives of industry. They united with them only when they had to break the resistance of the nobles, who were not favourably inclined to the monarchists' efforts at unification. This will appear especially clear in French history. Later, when absolutism had victoriously overcome all opposition to national unification, by its furthering of mercantilism and economic monopoly it gave the whole social evolution a direction which could only lead to capitalism; and degraded men became galley slaves of industry instead of economic leaders.

In the already existing states, originally founded on ownership of soil, the rising world commerce and the growing influence of commercial capital effected a profound change, for they broke the feudal bars and initiated the gradual transition from feudalism to industrial capitalism. The absolutist national state was dependent upon the help of the new economic forces, and vice versa. By the importation of gold from America the development of money economy in Europe was enormously enhanced. Money became, from now on, not only an ever larger factor in industry itself, but it developed into a political instrument of the first order. The boundless profligacy of the courts in the epoch of absolute monarchy, its armies and fleets, and lastly its mighty official apparatus, devoured enormous sums which must be ever newly procured. Furthermore, the endless wars of that period cost a mint of money. These sums could not be raised by the half-starved serf population of the country in spite of all the arts of exploitation of the financial magicians of the courts. Hence, other sources had to be sought. The wars themselves were largely the result of this political-economic evolution and of the struggle of the absolutist states for the hegemony of Europe. Thereby the original character of the old feudal states was thoroughly changed. On the one hand,, money made it possible for the king completely to subjugate the nobles, thus establishing firmly the unity of the state; on the other hand, the royal power gave the merchants the protection necessary to escape the confiscations of the robber barons. From this community of interests evolved the real foundation of the so-called nationalist state and the concept of the nation in general.

But this selfsame monarchy, which for weighty reasons sought to further the aims of commercial capital and was, on the other hand, itself aided in its development by capital, grew at last into a crippling obstacle to any further reconstruction of European industry; and by unbridled favouritism it converted entire industrial lines into monopolies and so deprived the people at large of their benefits. Especially disastrous was the senseless regimentation imposed upon industry whereby the development of technical skill was forcibly inhibited and every advance in the field of industrial activity was artificially checked.

The further commerce spread, the more interest its leaders naturally had to have in the development of industry. The absolutist state, whose coffers the expansion of commerce filled by bringing into the country plenty of money, at first furthered the plans of commercial capital. Its armies and fleets, which had reached considerable proportions, contributed to the expansion of industrial production because they demanded a number of things for whose large-scale production the shops of the small tradesman were no longer adapted. Thus gradually arose the so-called manufactures, 2 the forerunners of the later large industries, which were developed, however, only after the great scientific discoveries of a later period had smoothed the way by their application of new techniques to industry.

Manufactures developed as early as the middle of the sixteenth century after certain separate branches of production-especially ship-building, mining and ironworks-had opened the way for wider industrial activity. In general, the system of manufactures followed the line of rationalising the increased productive forces achieved by the division of labour and the improvement of tools, a matter of great importance for the growing commerce.

In France, Prussia, Poland, Austria and other countries, the state had for financial reasons, side by side with private manufacture, itself started large enterprises for the exploitation of important industries. The financiers of the monarchies, indeed the kings themselves, gave the greatest attention to these enterprises and sought to advance them in every way for the enrichment of the state treasury. By prohibition of imports and by high tariffs on foreign goods they tried to protect native industry and keep money in the country. To do this the state sometimes used the most curious means. Thus, in England, an ordinance of Charles I commanded that the dead must be buried in woollen clothes in order to aid the cloth industry. A similar purpose was aimed at by the Austrian "mourning ordinance" of 1716 which, very businesslike, proclaimed that long mourning was prohibited to the citizens, since thereby the demand for coloured clothing would be injuriously affected.

To make manufacture as profitable as possible every state sought to attract good workers from other countries, with the result that the emigration of artisans was soon prohibited by strict law; in fact, transgressors were even threatened with the death penalty, as in Venice. Furthermore, to the possessors of political power all methods were justifiable to make labour as cheap and as profitable as possible to the manufacturers. Thus Colbert, the famous minister of Louis XIV, gave special prizes to parents who sent their children into the factories. In Prussia, an ordinance of Frederick the Great commanded that the children in the Potsdam orphanages should be employed in the royal silk factories. As a result the mortality among the orphans increased fivefold. Similar ordinances existed also in Austria and Poland. 3

Nevertheless, no matter how the absolutist state strove, in its own interest, to meet the demands of commerce, it still put on industry countless fetters which became gradually more and more oppressive. The organization of industry cannot be pressed into definite forms by bureaucratic dictates without detrimental consequences. This has again been seen recently in Russia. The absolutist state which tried to bring all activities of its subjects under its unlimited guardianship became in time an unbearable burden, an incubus upon the people which paralysed all economic and social life. The old guild, once the pioneer of handicraft and industry, had been robbed by the arising despotism of its former rights and of its independence. What remained of it was incorporated into the all-powerful state machine and had to serve it in raising taxes. Thus the guild gradually became an element of reaction, bitterly opposed to any change in industry.

Colbert, who is usually exalted as the cleverest statesman of the despotic age, while he sacrificed France's agriculture to trade and industry, yet never really understood the nature of industry. It was for him only the cow which absolutism could milk. Under his regime definite ordinances were instituted for every trade with the alleged purpose of keeping French industry on the height it had attained. Colbert actually imagined that any further perfection of industrial processes was impossible. Only thus can his so-called industrial policy be understood.

By these artificial means the inventive spirit was strangled and every creative impulse smothered at its birth. Work in its every phase became unintelligent imitation of the same old forms, whose constant repetition crippled all inner incentive. Until the outbreak of the great revolution work was done in France by exactly the same methods that had been in vogue at the end of the seventeenth century. During a period of a hundred years not the slightest changes were made. Thus it happened that English industry came gradually to excel the French, even in the production of those goods in which France had formerly held an undisputed leadership. Of the countless ordinances, with their mass of the most senseless details concerning the clothing, dwellings, social activities, and so on, of the members of each calling, we are not going to speak. True, when the intolerable condition had become all too evident, an attempt was made from time to time to obtain some relief by new ordinances, but such decrees were as a rule soon superseded by others. Furthermore, the courts' continual need of money enticed the governments into all kinds of roguish tricks to fill again their empty coffers. Thus a whole series of ordinances was proclaimed purely so that the guilds would get them rescinded again, for an appropriate payment-which always happened. On the same principle many monopolies were granted to individuals or corporations, seriously affecting the development of industry.

The French Revolution swept away the whole mass of oppressive royal ordinances and freed industry from the fetters that had been Imposed on it. It was certainly no nationalistic reason which led to the creation of the modern constitutional state. Social conditions had gradually become so horrible that they could no longer be endured if France was not to be wholly ruined. It was the recognition of this fact which set the French bourgeoisie in motion and forced it into revolutionary paths.

In England also, industry was for a long time supervised by decrees of state and royal ordinances, although there the rage for regimentation never assumed such peculiar forms as in France and in most of the countries of the continent. The decrees of Edward IV, Richard III, Henry VII and Henry VIII burdened industry severely and greatly hindered its natural development; nor were these rulers the only ones who put brakes on industry. Kings and parliaments constantly issued new ordinances by which the economic situation was made increasingly difficult. Even the revolutions of I642 and I688 were not able completely to abolish these stacks of senseless rules and bureaucratic regulations, and considerable time had yet to pass before a new spirit became prevalent. For all that, England never had such a governmental supervision of its complete economic life as Colbert achieved in France. On the other hand, countless monopolies greatly hindered the development of industry. To put new money into its coffers the court sold whole branches of industry to natives and foreigners and continued to allot monopolies among its favourites. This had already begun during the Tudor dynasty, and the Stuarts and their successors continued in the same path. The government of Queen Elizabeth was especially profligate in the granting of monopolies, about which Parliament frequently complained.

Whole industries were given over to exploitation by individuals or small companies, and no one else dared to engage in them. Under this system there was no competition, nor any development of forms of production or methods of work. The Crown was concerned purely about the payment. About the inevitable consequences of such an economic policy it cared very little. This went so far that during the reign of Charles I a monopoly for the manufacture of soap was sold to a company of London soap-boilers, and a special royal ordinance forbade any household to make soap for its own consumption. Likewise, the exploitation of the tin deposits and the coal mines in the north of England was for a long time the monopoly of a few persons. The same is true of the glass industry and several other trades of that epoch. The result was that for a long time industry could not develop as a determining factor in national economy being for a large part in the hands of privileged exploiters who had no interest in its further development. The state was not only the protector p but also the creator of monopoly, whereby it received considerable financial advantages, but also burdened industry continually with new fetters.

The worst development of the monopoly system in England occurred after the commencement of its colonial empire. Immense territories then came into the possession of small minorities, who in return for ridiculous payments were given monopolies from which they derived enormous riches in the course of a few years. Thus, during the reign of Queen Elizabeth the well-known East India Company was born, originally consisting of only five hundred shareholders to whom the government granted t sole rights of trading in the East Indies and all lands east of the Cape of Good Hope and west of the Strait of Magellan. Every attempt to break this monopoly was severely punished, and citizens who took the risk of trading in such waters on their own account were subject to seizure. That these were not mere paper ordinances the history of those times eloquently testifies. 4

Charles II gave Virginia to his brother's father-in-law for exploitation. Under the same king the famous Hudson Bay Company was formed, and endowed by the government with incredible powers. By a; special royal ordinance this company was given the exclusive and perpetual monopoly of trade and industry in all coastal waters, natural channels, bays, streams and lake territories of Canada in all latitudes up to Hudson Strait. Furthermore, this company was given possession of all lands adjoining these waters so far "as it is not in the possession of one of our subjects or those of some other Christian prince or state." 5

Even under James II, the successor of Charles II, the barter in overseas monopolies went merrily on. The king sold whole colonies to individuals or companies. The possessors of these monopolies suppressed the free settlers in the most abominable manner without interference from the Crown so long as it received 20 percent of the profits for its favours. In the same manner, special privileges were granted for ocean transportation, for the exploitation of colonial lands, for the mining of precious metals and much else. Thus it came to pass that for a long time industry could not keep pace with the mighty foreign development commencing for England after the civil war of 1642. Even in I688 the value of imported products was -7,120,000. while exports amounted to only -4-310,000-a relationship characteristic of the conditions prevailing at the time. Not until 1689 did the new parliament that resulted from the revolution of the preceding year put a curb on the royal power and take decisive steps to end once and for all the monopoly peddling of the court and the arbitrary restriction of industry and trade. From that time dates the mighty development of English social and economic life, so greatly furthered by a whole line of epoch-making inventions, such as cast-steel, the mechanical loom, the steam engine, and so on. But all this was possible only after the last remnant of absolutism had finally been buried and the fetters it had put on industry had been broken. Just as later in France, so also in England, this development of affairs overshadowed the revolution.

However, such a development was possible only where the rule of the absolute state had not completely crippled the vital forces of the people nor by a senseless policy destroyed every prospect for the further development of industry, as, for instance, had been done in Spain. In a previous chapter it has been shown how ruthless despotism, by the cruel expulsion of the Moors and Jews, had robbed Spain of its best artisans and agriculturalists. By the brutal suppression of communal freedom the economic decline of the country was still more enhanced. Blinded by the golden flood streaming into the land from Peru and Mexico, the monarchs gave no value whatever to the development, or even the maintenance, of industry. True, Charles I had attempted to further Spanish wool and silk industries by prohibition of imports and regulation of production, but his successors had no understanding of such matters. The position which Spain had attained as a world power also gave it first place in world commerce, but it played the part of a middleman who only provided the necessary commercial connections between the industrial countries and the users of their products. Even its own colonies were not permitted to establish trade enterprises without the intervention of the mother country.

Added to this was the fatal agrarian policy of the absolutist state which had freed the nobility and the clergy of all land taxes, so that the whole burden of the impost had to be borne by the small farmers. The great landed proprietors united into the so-called "Mesta," an association which made a profession of robbing the peasants and compelled incredible concessions from the government. Under the rule of the Arabs there had existed in Andalusia a class of small farmers, and the land was one of the most productive territories in Europe. But now it had actually come to pass that five noble owners held all the land of the whole province, cultivated primitively by the work of landless serfs, and to a large extent used as pasture for sheep. In this manner the cultivation of grains continually declined, and in spite of the importation of precious metals the rural population sank into the deepest poverty.

The continual wars swallowed immense sums, and when, after the revolt of the Netherlands and the destruction of the Armada in 1588 by the English and the Dutch, Spain's sea power was broken and its monopoly of world commerce went over to the victors, the country was so frightfully exhausted that no revival was possible. Its industry was almost completely destroyed, its land laid waste. The great majority of its inhabitants were living in pitiful misery, completely under the dominance of the church, whose representatives in the year 1700 made up nearly one thirtieth of the population, consuming the people's substance. Between 1500 and 1700 the land lost nearly one-half of its previous population. When Philip II assumed his father's heritage, Spain was regarded as the richest land in Europe, although it already contained the germs of its decline. At the end of the long reign of this cruel and fanatical despot it retained merely the shadow of its former greatness. And when Philip, to cover the enormous deficit of the state budget, instituted the notorious alcavala, a state tax which compelled every inhabitant to deliver 10 percent of any profits to the government, the realm was wholly given over to destruction. All attempts of later rulers to curb the evil were vain, although here and there they could record a few temporary successes. The consequences of this catastrophic decline are even today everywhere observable in Spain.

In Germany, the creation of a great national state with unified administration, coinage and regulation of finances was inhibited for manifold reasons. The dynasty of the Hapsburgs had with premeditation worked toward the creation of such a state, but it had never been able to subjugate the nobility and the small princes of the land as the monarchy had succeeded in doing in France after a long struggle. In fact, in Germany the princes managed to confirm their territorial powers ever more strongly and to foil successfully all plans for the erection of any centralised power. Nor had they compunctions about betraying emperor and realm at every favourable opportunity to unite themselves with the most dangerous enemies in other countries, when this was useful to their special interests. National limitations were wholly foreign to them, and the internal discord in German industry was very favourable to their ambitions.

Doubtless the Hapsburgs were concerned about safeguarding their special dynastic aims, but most of them lacked greatness and political vision. As a result, they frequently sacrificed their plans for unification to small temporary successes without being clearly aware of what they were doing. This was most clearly apparent when Wallenstein, after four years of war, in the treaty of Lubeck obligated the Danes not to interfere in German affairs. Then was offered the most favourable opportunity, also the last one, for a successful attempt at the erection of a centralised power with the emperor at its head. In fact, the victorious Wallenstein had visions of a goal similar to that which Richelieu at that time strove to obtain for France and gloriously achieved.

But Ferdinand II, influenced by short-sighted counsellors, knew of nothing better than to follow the treaty of peace, which had virtually given all North Germany into his hands, with the Edict of Restitution of 1629, which commanded the return of all church and monastic property confiscated since the treaty of Passau. Such an ordinance naturally had an explosive effect. It aroused the whole Protestant population of the country against the emperor and his counsellors -- most of all, the Protestant princes, who never dreamed of returning their acquired church property. And this happened just at the time when the conquest-hungry king of Sweden Gustavus Adolphus, had already made all preparations for his incursion into Pomerania.

The Protestant princes were thus concerned about very earthly matters for whose ideological embellishment Luther's doctrines proved very suitable. After the bloody suppression of the German peasants in the year 1525 the Reformation could no longer be dangerous to them. But even the "religious conviction" of the powerful opponents of Protestantism was no more genuine. For them, too, it was in the first place a question of power and economic interest-for all the rest they cared very little. It caused Richelieu, who was then guiding the interests of the French monarchy, no qualms of conscience to encourage Gustavus Adolphus to fight against the emperor, the Catholic Church and the Catholic League although he was himself a cardinal, a prince of the Catholic Church. He was simply concerned to prevent the creation of a German national state thus freeing the French monarchy from an inconvenient neighbour. Quite as little had Gustavus Adolphus the interests of the German Protestants at heart. He had his own dynastic interests and the interests of the Swedish state in view and cared only for these. For the Sultan, as well as for the then-reigning Pope Urban VIII, the Swedish king's Protestantism was no reason for their withdrawal of expressed good will, as long as he was combating the House of Hapsburg, the thorn in the flesh of both of them for political reasons.

After the Thirty Years' War, from whose devastating consequences Germany had hardly recovered after two centuries, every prospect for the foundation of a German unified state completely vanished. For all that, the course of political development there was similar to that in most of the other European states. The separate territorial states, more especially the larger ones, like Austria, Brandenburg-Prussia, Saxony, Bavaria, strove to imitate the monarchies of the West in their inner structure and to make their economic-political plans effective within their own borders. Of course their rulers could not think of playing the same part as their great neighbours in the west-the economic lag of the German countries and the terrible wounds the long war had inflicted on the whole land did not permit it. So they were frequently compelled to put themselves under the protection of existing great states.

As the disastrous war had robbed Germany of almost two-thirds of its population and laid waste enormous sections of the land, the separate states had to be principally concerned about population; for with the increase of the inhabitants the power of the state grows. So taxes were imposed upon unmarried women, and even polygamy was flirted with, in order to put the country on its feet again. Most of all, they strove to build up agriculture, whereby the home policy of most of the German states received an impulse toward feudalism, which in the absolute states to the west had been more and more forced into the background by increasing mercantilism.

At the same time the larger German states pursued the policy of transforming their lands into self-contained economic territories. To this end the commercial prerogatives of the cities were abrogated, and every trade was subjected to a special ordinance. Thus, above all, they strove for the development of trade and manufactures by commercial treaties, prohibition of imports and exports, protective tariffs, premiums for exports, and so on, to put fresh money into the state treasuries. Thus, William I of Prussia, in his political testament, strongly urged his successor to concern himself about the success of manufactures, assuring him that he would thereby increase his revenues and put his country into a flourishing condition.

But while, on the one hand, the speculations of the smaller rulers for the increase of their revenues helped to further the few manufactures of their countries to a certain degree, on the other hand, the whole flood of senseless ordinances made certain that industry could not really develop, but must for hundreds of years remain fettered by these old legal forms. It is, therefore, a complete misconception of historical fact to maintain that production was furthered by the rising of the nationalist states of Europe and especially that their existence provided the conditions necessary for the development of industry. The very contrary is true. The absolutist national state artificially inhibited and hindered for centuries the development of economic institutions in every country. Its barbarous wars, which wasted many parts of Europe and furthered rapine, caused the best achievements of industrial technique to be forgotten, often to be replaced by antiquated, laborious methods. Senseless ordinances killed the spirit of economy, destroyed all free incentive and all creative activity, without which a development of industry and economic reforms is quite unthinkable.

The present time affords the best possible illustration of such action. Right now, when a crisis of unheard-of extent has smitten the whole capitalist world and is pushing all nations equally toward the abyss, the structure of the nationalist state proves an insurmountable obstacle to relieving this frightful condition or even temporarily suppressing its evils. National selfishness has thus far blocked every earnest attempt at reciprocal understanding and has constantly striven to make capital out of its neighbours' needs. Even the most pronounced advocates of the capitalist order recognise more and more the fatality of this condition. But "national considerations" tie their hands and condemn to sterility in advance every proposal and every attempt at solution from whatever source they may come.

  • 1Kropotkin has set forth in very convincing form how by the collapse of the medieval city culture and the forcible suppression of all federalist cooperative arrangements the industrial evolution of Europe received a blow which crippled her best technical forces and put them out of service. How great this set-back was can be measured by the fact that James Watt, the inventor of the steam engine, was for twenty years unable to make use of his invention because he could find in all England no mechanic able to bore a true cylinder for him, though he could have found many such in any of the larger medieval cities. (Peter Kropotkin, Mutual Aid-a Factor in Evolution.)
  • 2The word "manufacture" is derived from manu facere, "to make things by hand."
  • 3Rich material concerning this epoch is contained in the great work of M. Kowalewski;, The Economic Development of Europe till the Beginning of the Capitalist Era. Berlin, 1901-1914.
  • 4Very complete information concerning the history of this company, which was to play so important a part in English foreign commerce, is contained in the books of Beckle Wilson, Ledger and Sword, (London, 1903), and W. W. Hunter, History of British India (London, 1899).Commendable books about the development of English industry, monopolies and ordinances of the ancient regime, are T. E. Rogers, Six Centuries of Work and Wages, The Economic Interpretation of History and A History of Agriculture and Prices in England. Much instructive material is contained in Adam Smith's An Inquiry into the Nature and Causes of the Wealth of Nations, and the first volume of Marx's Capital.
  • 5Rich material concerning the history of the Hudson Bay Company is contained in the excellent work, History of Canadian Wealth, by Gustavus Myers (Chicago, 1914).