That’s right. Now, without getting too deep into the weeds, let me just make this argument here. In feudalism, you had plenty of money going around. In feudalism, you had plenty of markets as well. But the markets were very limited, and the money was deployed in a mostly nonproductive way. Why?
Well, who were the bulk of the producing class in feudalism? Who controlled production? It was peasants. Peasants with small plots of land. And those peasants with small plots of land overwhelmingly were geared toward what you might call a “safety-first” strategy. Instead of throwing themselves onto the market, trying their best to be as efficient as possible, or trying their best to outcompete other peasants, they tried to steer away from market competition and relied on their own crops, their own land, and even produced as many of their own manufactured goods as they could.
Now, because they’re making their own food and their own manufactures, it means that they don’t actually go to the market very often. They don’t have to buy things very often. Now, if every peasant is doing this — if every peasant is basically producing for himself — it means that they only take those things to the market that are left over after they’ve taken care of their consumption needs.
But if this is the case, it also means that markets are pretty thin. They don’t have a lot of goods coming to them because people only bring the tiniest fraction of all the goods they’re growing or making at home to the market. But this means, in turn, that the markets themselves are not very reliable. Peasants can’t count on finding everything they need there. And that reinforces peasants’ tendency to not rely on the markets.
So you have a situation where there are some markets, but they are not continually growing. This is the opposite of Adam Smith’s assumption. The same can be said regarding the nobility. They don’t control production the way capitalists control…
Auteur: Vivek Chibber
