We can understand more clearly the sixteenth century development of Northwestern Europe in the context of the emerging world economy by focusing on the role of American gold and silver (see “The origin of the modern world-economy" 8/6/2013; “The modernization of the West” 8/7/2013). Large quantities of gold and silver were in the hands of Spain, as a result of the Spanish conquest of America and the extraction of the bullion through the forced labor of the indigenous population. The gold and silver were used to maintain the Spanish military as well as other state expenditures, including the salaries of middle class state bureaucrats, and to support a lavish lifestyle of the aristocracy. However, Spain did not modernize its production to respond to the increased demand caused by the gold; rather, it purchased textiles and other manufactured goods from Northwestern Europe and grains from Eastern Europe. In response to this expanded market stimulated by the Spanish colonial empire, Northwestern Europe modernized agriculture, consolidating land and converting serfs into tenant farmers. As a dimension of these transformations, Northwestern Europe also converted agricultural land into pasture, a dynamic made possible by the imposition of a“second serfdom” on the agricultural laborers of Eastern Europe, which facilitated the exportation of grains to Northwestern Europe (Shannon 1996:55-58).
In addition, in response to the increased market demand established by the Spanish colonial empire, Northwestern Europe expanded its craft manufacturing. But it did not modernize craft manufacturing during this time. The modernization of industry would occur later, during the great expansion of the world-system of 1763-1914, when European colonial powers conquered and peripheralized vast regions of Africa and South and Southeast Asia. This is what historians have called the Industrial Revolution, which has not been conventionally understood in the context of the expanding and developing modern world-economy.
Viewing Western development in the context of the expanding world-economy, we can see that the changes in Northwestern Europe in the sixteenth century were occurring because of the economic relations between Northwestern Europe and Eastern Europe and between Northwestern Europe and (indirectly) Hispanic America. Northwestern Europe was transforming itself into a core region in an emerging world-economy in which Hispanic America and Eastern Europe were functioning as peripheral regions. The key to the economic development of Northwestern Europe is not its technological or cultural innovation but its capacity, by virtue of its function in the developing world-economy, to benefit from the conquest and exploitation of other regions.
Thus, during the period 1492-1640, the modern world-economy came into being. Northwestern Europe became the core, characterized by commercialization and centralization of agriculture; expansion of craft manufacturing; production of diverse products, including industrial, agricultural, and pastoral products; and free wage labor. Eastern Europe and Hispanic America were peripheralized, producing raw materials (gold, silver, grains, timber and wool) for the core, using various forms of forced labor.
The modern world-economy would develop and expand over the next four centuries and become a truly global enterprise. But during its expansion and development, the modern world-economy would continue to have a fundamental characteristic: the economic development of the core would be related to and made possible by the superexploitation and the underdevelopment of the periphery. The Third World revolutions of today can be understood as a reaction to this fundamental fact, and as a noble effort to establish an alternative foundation for global international relations.
Shannon, Thomas Richard. 1996. An Introduction to the World-System Perspective, 2nd ed. Boulder: Westview Press.
Key words: Third World, revolution, colonialism, neocolonialism, imperialism, democracy, national liberation, sovereignty, self-determination, socialism, Marxism, Leninism, Cuba, Latin America, Wallerstein, world-system, world-economy, Northwestern Europe, modernization, gold, silver, conquest, development, underdevelopment