Merchant Capital

World trade arose in a number of cities because of specially favourable historical and geographical conditions. It started in Lower Italy through the overseas trade with the Orient, with Constantinople and Egypt, but spread from there to the North. It brought into circulation great fortunes which seemed almost immeasurable at the time and aroused the greed of all the ruling classes of Europe.

Here modern capital appears for the first time, and it appears still essentially as merchant capital. But it immediately exerted a disruptive effect on the feudal mode of production. The more commodity exchange developed, the greater became the power of money, for which anybody could obtain anything, which everybody needed and everybody took. At the source of the capitalist mode of production stood not the craft guild master, who with his limited number of journeymen could only achieve moderate prosperity, but the merchant whose capital was capable of unlimited expansion and whose lust for profit was therefore boundless. With merchant capital – the revolutionary force of the 14th, 15th and 16th centuries – new life came into medieval society and new ways of viewing things were born.

In the place of the narrow-minded particularism peculiar to the Middle Ages, there came a cosmopolitanism that was at home wherever there was money to be made. In contrast to the guild burgess, who often never left the boundaries of his town his whole life long, the merchant was ceaselessly pushing into unknown territory, overstepping the frontiers of Europe and opening the age of discoveries that reached its peak in the finding of the sea route to India and the discovery of America. On the other hand, however, the merchant opposed to the universality of the medieval Church a national feeling that had only been very weakly developed in the little, self-sufficient communities of the Middle Ages.

In world trade the opposition between buyer and seller became opposition between nations. The mightier the community was to which either belonged, the greater were the prospects of profit. Thus there arose out of world trade a mighty economic interest that, bit by bit, consolidated the loose structure of the medieval states, but also shut them off more abruptly from one another, so that Christianity was divided into sharply distinct nations.

Internal trade contributed in the same measure as world trade to the strengthening of the national state. It lies in the nature of trade that it is concentrated in nodes where commodities from abroad gather to be spread over the whole land by a wide-ranging network of routes and where commodities from inland accumulate to be sold abroad. The whole area dominated by such a node becomes an economic organism which grows more and more integrated and dependent upon the node, the more commodity production drives out production for personal consumption. Thus it also becomes the centre of the cultural life of the area it dominates and the national language begins to supplant, on the one hand, the universal Latin of the medieval church and, on the other, the dialects of the peasants.

It is also obvious that the administration of the state had to fit this economic organization and reinforce the power of the national ruler wherever this power retained some remnant of strength. Trade needed a reliable military commander and a strong army which, in accordance with the character of the economic power it was to serve, was hired for money – an army of mercenaries as opposed to the feudal army of knights. Trade needed such an army to protect its interests at home and abroad, to defeat competitor nations, to conquer new markets, to burst the barriers that the small communities within the state erected against free traffic and to police the roads against the feudal lords, great and small, who proposed to take possession of the profits of trade by the simple method of highway robbery. In short, the unification of all administrative and military power in one hand, princely absolutism, was an economic necessity.

Care was taken however that this modern absolutism never outgrew the power of capital, however forcibly it was applied to peasants and craftsmen, the nobility and the clergy. On the contrary, the more its power came to depend not on landowning but on money, the more dependent it became upon capital. The armies that the prince had to maintain cost a good deal of money and the upkeep of the court, whose pomp and luxury was intended to tempt the rebellious nobility from their castles to the prince’s side, was no less expensive. Insane luxury that swallowed monstrous sums flourished at the princely courts. The princes therefore began to raise taxes with the result that they became more or less dependent on the rich cities, which in return purchased themselves new rights. But even the granting of taxes was not always enough to fill up the holes that constant wars and the extravagance of the courts made in the princely finances, and despite their apparently unlimited power, the modern princes fell into the toils of capitalist creditors.

Revolutionary merchant capital not only created modern absolutism but also transformed the medieval classes of society according to its needs. The lust for gold and silver, the commodity that buys everything, attacked the countryside. Agriculture threw itself into commodity production. Even though the farmer continued to produce for his own consumption, he had in addition to produce a surplus that could be brought to the urban markets in the form of commodities. Agriculture, too, became a source of money and, where conditions were especially favourable, the peasants were able to free themselves from the feudal yoke by converting their fees and services into money payments. But in general, and particularly in Germany, the money payments became a scourge that drove them to desperation without being much use to the feudal lords. Commodity production gave the land itself the character of a commodity, and thus a value that was determined not by the size of the population it could sustain but by the surplus it could deliver. The smaller the number of cultivators in relation to the output, and the more modest their standard of living, the greater was the surplus and with it the value of the land.

Thus a land hunger arose throughout the whole of Western Europe, particularly for woodlands and pastures, whose upkeep required few hands. The medieval nobleman aimed to have land and people. He was richer with every peasant he could chain to the soil and every new settler he could attract. The modern nobility had different aims. They tried to seize the peasants’ land for themselves, particularly the common woods and meadows which were indispensable to peasant production, but also to depopulate the stolen land as much as possible without endangering agricultural activity as a source of money for the nobles. The compulsory labour of those peasants whom the aristocracy still tolerated was raised to the limit. The peasants fell victim to that most oppressive and shameless form of exploitation that is always tied up with the production of commodities based on forced labour. The lust for profit does not even encounter the resistance free workers can put up against capitalist exploitation.

But from the masses of peasants driven from the soil arose the beginnings of the modern proletariat. This proletariat was distinguished from the proletarians of antiquity in that it was not formed from the dregs of exploiting and ruling classes, but from the dissolution of exploited and oppressed classes. For the first time in history there appeared as the lowest class in society a class of free proletarians, which of course as yet had no idea of the historical mission it was called upon to perform – and all the less so since its peasant nucleus was reinforced by elements with completely different social origins through the break-up of the feudal households, which were no longer needed by the aristocracy who had since become courtly parasites or speculative commodity-producers. In part this new proletariat was used by the warlords and the merchants – by the former in their armies, by the latter in the manufactories where the goods that had previously been fetched from abroad were beginning to be produced at home. But these channels were quite insufficient, particularly since the manufactories could only use skilled labour and the majority of soldiers were usually demobilized when the wars were over. Therefore the proletariat in the mass fell victim to poverty and an unruliness that a fearfully cruel and bloody legislation tried in vain to stamp out.

To the extent that the nobility carried out this murderous and rapacious policy its own economic usefulness disappeared. The stronger the central state power grew, the more the police suppressed internal feuding and the nobility ceased to possess an independent military strength, the more superfluous it became for the peasant to have a lord who protected him against the mighty. The feudal aristocracy lay like a great barrier across the path of historical development which, indeed, soon swept aside its weaker elements, the knights and the lower nobility, who stood between the great landlords and the peasants as the petty bourgeois stands today between the big bourgeoisie and the working class.

Just like the modern petty bourgeoisie, the knights tried to prevent their destruction as an independent class through a policy that vacillated between the ruled and the ruling classes. Their death agony often took tragic forms, as with the knights Ulrich von Hutten and Franz von Sickingen, whom Ferdinand Lassalle made into the heroes of a tragic drama. But the literature of the rising bourgeoisie, arrogant in its expanding power, saw in the declining knights only comic figures like the Don Quixote of the Spanish writer Cervantes, and Shakespeare’s Falstaff.