State vs. Market

Let's start with sub-contracting war.  Start in the 15th century when a few modern conditions began.

War is expensive.  Princes had limited incomes, mostly from the rents and products of their own estates.  Obviously a wealthy prince had an advantage over one less wealthy.  His own subjects were more valuable to him working the estates, so if war it is, let's hire it out.

The first thing in those times was that soldiers were only enlisted for the campaigning season.  Saved money, but does anyone see a problem with that?

 

Hi,
To ataman:
Thank you. Unfortunately I'm not very knowledgeable about France, I'm
much more interested by Italy and England. Though your remark made
me think about something: 16th century Genoan bankers were the money
tank of Charles V el Emperador. After a while, French king Francis 1
realized the importance of this flow of money and asked Genoa to provide
loans for him too. This was very problematic for Genoa because this
republic was officially neutral in the struggle between Charles and Francis
(though a very close ally of Spain). But Francis constantly made the same
mistake: he asked the republic to lend him money. The answer was:
alwayys we don't have money, we are poor and weak. It never occured to
Francis' mind the state could be poor and the bankers rich.
I think here you have a very good insight of the conception this great king
(he arguably created modern France) had of private organisations and
market. He couldn't even imagine them. Most French nowadays still can't.
On the contrary Charles V had a much more decentralized mind. Other
examples of incapacity of thinking the state/market relationship?

to pikeshot:
Thank you as well. Mercenaries or not mercenaries? Here was the
question for most rulers in early modern Europe and as late as the Crimea
war. I think though one answer is of course impossible to give depends
on who, when, where. But I guess one rule can be seen: the more soldiers
on the field, the less mercenaries. An army of 10,000 mercenaies will
fight for you; an army of 100,000 mercenaries will betray you. And if you
see the mercenaries as a market, what about the ruler arriving a bite late?
"Sorry, we don't have anything left, the king of Sweden took the last
ones."
Also different types of ties united mercenaries, condottiere and their
employers.

Bye.

Edited by Maharbbal

I don't understand your posts, Maharbal.

Why "lesser" political entities are not counted as "organizations". What do you mean by relation between market and state, etc.

I really don't know what you mean to ask or say.

...

But I'll tell you one thing: following Polanyi, the market as physical space is opposed to the market as abstract entity. Market economies tend to have no markets but to be total markets themselves.

Now I don't know where you put the state, whose only role in this maccabre game of unequal trade is to protect and legitimize the private apropiation called Capitalism.

Hi all,

Originally posted by Maju Why "lesser" political entities are not counted as "organizations".

Well see, I know the term "organization" is a bite misleading and I'm not
much satisfied of it myself. But "firm", as the definition referes to as you
may have guessed is even worst because can we say a mercenary army
was an firm? Putting everything under the name of firm as people are
doing nowadays is I think bad for the general uuderstanding (in their
opinion a family's a firm and a state as well).

Originally posted by Maju What do you mean by relation between market and state, etc.

I mean the state always has two possibilities: do or make do. I'm
concidering why and how a state picks the second option. There is an
obviously problematic articulation there dealing with issues such as
sovereignty or sharing taxes between political and economical elite.

Originally posted by Maju But I'll tell you one thing: following Polanyi, the market as physical space is opposed to the market as abstract entity.

I've got the deepest respect for old Karl though on some matters he is
slightly outdatted. Beside that, he was talking about contemporary
tending to be "perfect" market, I'm talking about highly unperfect early
modern markets. So do not worry my posts are not slowly leading to
fascism (if it ever does, hire some basque killers and have me shot at
once please).

to Halevi:
Merci beaucoup for your post.

There were state owned firms in the early modern times because private
entreprises couldn't realize one task at a better price (Venitian arsenal
were workers were "paid" with social prestige and political power hence
the production costs were cheaper), when the state was taking risks as a
real entrepriser (the portugese way of discoveries and slave trade), or
simply to compete with foreign production (i. e. Colbertism in 17th
century France or some identical politics in some german places).

There are inbetween examples were the state organized and private
investors gave the money (English, French and Dutch chartered
companies), Or when the state delegated sovereignty to a private person,
here the most famous example being Christophus Colombus and the
Conquistadores. Others extremely interesting examples are the various
chatered companies: they were fighting under their own flag with
sometimes impressive forces and they were enjoying their own
diplomatic network. States were using both when they needed it.

Concerning the production of primary materials, I'm not very
knowledgeable but the few examples I know are in the minning industry
and basically states were grantting monopolies to big capitalists who
were paying them huge fines for it and than they tried to establish this
monopoly on an international level (papal alum) ot on the national level
(andalucian mercury) always with little success. More examples would be
need to make ourselves a real opinion.

This post is already too long. So bye and thanks.

Maharbbal:

Sorry I didn't get back sooner.

As we discussed above, the embryonic "state" was an extension of private interest, i.e. the estate(s) of a ruler.....prince/duke/king.  As a private interest, he can hire whomever he wants to manage his lands or collect rents or brew beer.  Same with a ruler who wars with others.  He hires or retains a few experienced soldiers to recruit troops.  Example #1 above.

In order to be able to hire and armed force, the ruler either pays for it himself, or borrows the funds from (A) the soldiers like Frundsburg or Wallenstein, or (B) banking houses as Spain mostly did.  Example #2

Example #3 seems to be an additional item, but I think another applicable example is "tax farming."  The ruler may have troublesome social estates (as opposed to his property) towns, freeholders, etc.  In order to collect as much as he can, he uses local connections to collect and remit money or in-kind payment for fees or commissions.  Private revenue raising for public purposes.

Example #3 is a good point.  In order to tap into sources of wealth and income, and as that became a more complicated enterprise, money and resources were needed.  Portugal and the Dutch relied on private resources more than did Spain, but still privately owned ships were utilized by the Spanish seaborne empire.  A good deal of the silver and other New World plunder was privately owned in addition to the royal bullion, etc.

Before capital markets were better established, Portugal used the private resources of her nobility for exploration, trade and even her crusading efforts.  The Dutch in the 1590s established stock companies (especially the VOC, East India Company) to raise capital for resource extraction overseas.  This thing of course was an armed corporation with miniature armies and navies, and although private, was still an extension of the new State.  Investors were industrial interests, Amsterdam bankers, wealthy rentiers and Maurice of Nassau, his relatives and other private persons and corporate bodies.  I am sure some overseas "workers" in the VOC invested as well.  If not in capital, in concessions in the Indies, etc.

And yes, church interests were investors too, and not restricted to the Protestants.

All this activity depended on markets.  How much could the ruler afford to pay for his mercenary captains?  Could someone else out bid him? 

Was his credit with bankers good or bad; how much of the future revenues did he need to encumber to finance his activities or wars?  How much would the money cost?

If harvests were bad or subjects were rebellious, could the tax farmer collect, or would the ruler have to use his soldiers?  That carried costs that could be much higher than the ordinary method.

The wealth of trade was dependant to a good degree on prices and that was dependant on demand.  The period around 1590 to 1620 was very unstable economically.  The conflicts of Thirty Years War and all the rebellions and civil conflicts pretty much impoverished everyone except the Dutch with their carrying trade quasi-monopoly...out on the periphery mostly away from the conflicts.

It was after the mid seventeenth century that many of these costs were starting to be transfered from private to public accounts.  Certainly before that happened, the market was a great determining factor in the success of state formation. 

This hasn't scratched the surface of the social costs of "state" and intensified war after 1500. 

 

I would have liked to teach, but there were no jobs.  Something else worked out (much better income).

There is still plenty to be said.  Let's go into the Portuguese and the Dutch.  I think the Portuguese experience is quite remarkable considering how small the country was.

Halevi:

I think there is a lot of misunderstanding about how the "state" as we understand it formed, and why it did so in the way it did.

People seem to think that governing and authority in the seventeenth century was not too different from now since that was the beginning of "modern" times.  People have a very skewed view of the "absolute" monarchy.

There also seems to be a great misunderstanding of how things got paid for, and what was acceptable as payment.  All part of the Market.  The multinationals of their day were the trading companies (and their armed forces).

 

Edited by pikeshot1600

Originally posted by pikeshot1600 Maju: Please join in again.  There is much to discuss about capital and capitalism's development in the early modern age.

Sorry. I can't really follow the logic of this thread. I'm missing something in the evry definiton of the topic.

Navarre was a non-feudal state for the most part. Navarrese or Basque law is not based in Roman law (at least as far as we know) and allows private property and the concept of indivisibility of the family property, so only one of the potential heirs get the house and the land (normally the youngest) - the rest had to search fortune elsewhere (military, sailing, priesthood, trade). Noblemen (lords, earls) were named by the King and were merely administrators with no possibility of transmission of their dignity to their heirs. This was actually behind many treasons of aristocrats that favored Castile and Aragon against Navarre. In the late centuries, Navarre slowly feudalized, but some detached Basque territories (annexed to Castile as separate states, like Biscay) kept a most pure form of the traditional law, with no feudalism or almost.

This allowed for a burgueois class and working class to appear rather easily, as what most hinders the developement of capitalism is the lack of "free" workforce. For this reason (plus iron deposits and strategic trade position), the Basque Country became one of the most developed areas in Spain, where most of the country was very feudal and, therefore, backwards.

...

I don't think that the options you show are realistic: there were just feudal regions and non-feudal or weekly feudal regions. The state was too weak anywhere to talk about such entity too much. Feudal regions were those not where the entral state was weak such as Germany or Poland, but those in which the workforce was tied to the land and great aristocratic property was dominant. Without a middle class of free peasants and burgueoises, those regions were bound to remain backwards until the force of the change in neighbour regions affected them indirectly.

That's why England and the Low Countries spearheaded the Industrial Revolution: because they had a more modern social composition with a relatievly strong middle class.

There was never any option for strong state nor remaining feudalist was any option that offered anymore than being a "thrid world country" of the time.

...

Only after England had completed the first phase of the Industrial Revolution, was the the state an important option: it became clear that open markets would only make the other countries dependent on British dominance in the global market and that the state had to protect national developement. Portectionism appeared as  trasitional tool for the local developement of capitalism, allowing continental states to reach up. The only exception to this rule may be the USA, but this was caused surely by the "unlimited" energy that the colonization of the West (a huge colonial area itself) introduced in the system.

...

Soon after the new powers were defying Britain for hegemony: race for Africa, WWI, WWII...

Originally posted by ataman Originally posted by Maju Feudal regions were those not where the entral state was weak such as Germany or Poland, Maju, what do you mean by 'entral state'?

He means central state.