why did capitalism first flourish in europe? -- 3/14/16

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Today's selection -- from Capitalism by Jürgen Kocka. A nascent form of capitalism was present in China and Arabia before it appeared in Europe. And yet Europe is where it flourished most, leading to the Industrial Revolution itself. Why Europe? Kocka argues that it was because Europe was fragmented politically (which was in large part the result of its geographic fragmentation), and that allowed economies to gain greater independence from states:

"In the millennium between 500 and 1500[CE], merchant capi­talism was a global and not a specifically European phe­nomenon. Beyond the cases of China, Arabia, and Europe depicted here, it also existed in other regions of the world, for example in India and Southeast Asia. It evidently de­veloped under very different social, cultural, and religious conditions. In the comparative perspective of global his­tory, Europe was a latecomer that remained backward for a long time as far as the formation of the institutions of capitalism and its behaviors is concerned.

"The many types of capitalism in the world regions dis­cussed here, in China, Arabia, and Europe, did not exist in isolation from each other. Rather, they were aware of and influenced each other, even as early as the period regarded in the West as the High Middle Ages. As far as the history of these types of capitalism is concerned, it was Europe that learned and adopted more from the others than the other way around. But the linkages were not intensive enough so that one could speak of a 'world system' as early as the era around 1200 or 1300. Even if capitalist development in Europe lagged behind that of China and Arabia, it did soon appear to be the most dynamic of the three. This is most clearly demonstrated by the way Europe seized on a kind of capitalism that was initially characterized above all by long-­distance trade but slowly expanded into other areas: into an emerging financial system that included the financing of political powers as well as into the sphere of production, above all in cottage industry. Why? Explanations from the history of religion can be ruled out. For the moral teachings of Christianity impeded the way to capitalism's beginnings in medieval Europe more decisively and with greater inhi­bition than was done by Islam since the seventh century in Arabia and by the East Asian religions since the tenth century in China. Nor can the exploitation of non-European resources by Europe be invoked as an explanatory factor for the period prior to 1500. Undoubtedly, different factors played a role. Yet what proved decisive was the relationship between the economy and the state, between market pro­cesses and political power, at least in a Sino-European com­parison. And indeed, this distinctive relationship between economics and politics was already characteristic of the early phase that preceded European expansion into other parts of the world.

A depiction of a medieval market.

"Neither in China nor in Europe nor anywhere else did merchant capitalism develop at a clear remove from those who exercised political power, and nowhere in all those centuries did a clear differentiation between the economy and the state emerge. Both in China and in Europe (and to some extent in Arabia) there were close interconnections between the economic power of the merchants and the po­litical power of the authorities. State formation and market formation were jumbled together everywhere. But in Eu­rope the political system was intrinsically diverse and posi­tively fragmented, while in China there was a centralized empire. The hard, frequently warlike competition between city-states, principalities, territorial states, and other politi­cal units was a central part of the European, but not of the Chinese, configuration. At the same time, European cities had a great deal of civic political autonomy that was lack­ing in Chinese cities.

"It followed logically from the Euro­pean configuration that those exercising political rule com­peted with each other to promote economic potential in the territories they governed, while this motive did not animate China's civil service governments as much and receded even further into the background during the fif­teenth century. The merchants who supported capitalism in Europe, or at least their leading representatives, exer­cised direct influence on politics -- in part via a symbiosis with rulers in the city -- states and free cities that had civic rule, in part through close ties to those exercising political power and in need of financial support, in part through formal self-organization (guilds). By contrast, merchants in China, as well as in Arabia and India, were confined to the antechamber of power and were much less engaged in fi­nancing state formation than was the case in Europe. This explains how, in the final analysis and in spite of many countervailing trends, politics in Europe was decisive for promoting mercantile dynamism and a capitalistic kind of accumulation. By contrast, Chinese politics, although it in­itially allowed and supported commercial dynamism and major developments in accumulating large amounts of capital to inch forward a bit, then became strong enough and mistrustful enough to restrain both of these trends so that finally, when both domestic and foreign policy changed, these economic forces were ultimately thwarted."