FEUDALISM

During the decline of the Roman Empire (around the 3d Century AD), increased
tax demands by Rome crippled the peasant class by reducing tenant farmer to serfs.
And this leads us into an economic model known as Feudalism. Feudalism was
prominent between the 9th and 15th Centuries. While it has no broadly accepted
definition, feudalism was common in Japan and Europe. There were three basic
components or attributes of Feudalism. First, you had a Lord, a nobleman, who
held huge tracts of land. The Lord granted possession of lands to a Vassal to
exploit, and in return the Vassal would pledge armies for the protection of the
Lord. The actual pieces of land granted to the Vassals were called fiefdoms, or
fiefs. And those fiefs were farmed by peasants known as serfs. The serfs farmed
in exchange for their keep (this is known as subsistence farming). Lord, Vassal
and Serfs were all loyal to the King.

Serfs could not abandon land without permission from the Lord, nor could they
hold title to any lands. There were also peasants known as Freeman, who were
rent paying tenant farmers. They owed little or no service to Lords. In 11th
Century England, 10% of peasants were Freeman. However, Freeman frequently
wound up serfs if economic conditions became harsh– crop failures, for example.
Serfs paid taxes and fees usually by working the fields or in the Lord’s manner for
a certain number of days (the rest of the days they worked to sustain their
families). Fees were normally paid in the form of crops.
Up until the 12th Century, less than 5% of Europe’s population lived in towns.
Skilled workers lived in the town, but still earned their keep from Lords rather than
a real wage.

So, what were the economic implications of feudalism?
For one thing, there was a lack of technological innovation. Since serfs were
merely subsistence farmers working for a Lord, they had no incentive for
technological innovation, nor incentive to cooperate with other serfs. The Lords
had no innovation incentive either since they did not produce goods to sell on the
market. Feudal manners and workers were self-sufficient.

What changed this dynamic? One of the largest transformational events affecting
Feudalism, was the Black Plague, aka The Bubonic Plague. The plague began
around 1346, and quickly killed 1.5 of 4 million Europeans. By 1400, 75-100
million people died worldwide. There would be more outbreaks from time to time,
and, in effect, the plague lasted until the 19th Century. And what does this have to
do with Economics, you might ask?
The plague created a tremendous labor shortage. Family guilds had to train and
hire outside workers, who were now moving into towns for a wage. Even Lords
had to pay to get labor. Birth rates exploded, and child labor became a huge
engine of economic development, as did a more active slave trade. Serfs were now
earning a real wage for their labor instead of simply subsistence farming.