Testing Smith’s Explanation for the End of Feudalism

wheat, wine and diamond buckles

Adam Smith, in The Wealth of Nations, proposes a simple and ingenious explanation for the end of feudalism:

But what all the violence of the feudal institutions could never have effected, the silent and insensible operation of foreign commerce and manufactures gradually brought about. These gradually furnished the great proprietors with something for which they could exchange the whole surplus produce of their lands, and which they could consume themselves without sharing it either with tenants or retainers. All for ourselves and nothing for other people, seems, in every age of the world, to have been the vile maxim of the masters of mankind. As soon, therefore, as they could find a method of consuming the whole value of their rents themselves, they had no disposition to share them with any other persons. For a pair of diamond buckles, perhaps, or for something as frivolous and useless, they exchanged the maintenance, or what is the same thing, the price of the maintenance of a thousand men for a year, and with it the whole weight and authority which it could give them. The buckles, however, were to be all their own, and no other human creature was to have any share of them; whereas in the more ancient method of expense they must have shared with at least a thousand people. With the judges that were to determine the preference this difference was perfectly decisive; and thus, for the gratification of the most childish, the meanest, and the most sordid of all vanities, they gradually bartered their whole power and authority. (The Wealth of Nations, Book III Chapter iv)

In my words:

It is sometime in the early Middle Ages. You are a feudal lord. What can you do with what your territory produces, mostly food? Some goes to feed the peasants who produce it, but not all. You consume some of it yourself. You use the rest to support retainers, people who owe their living to you, look up to you — we all like feeling important — and will, if necessary, fight for you. Every lord has an army more or less for free, since he has nothing better to do with his income. Hence the political system is a decentralized one where the King is not an absolute monarch but the leader of a coalition of lords.

Over time trade develops, along with an increased division of labor. Now the wealthy lord has something else to do with the surplus his land produces. He sells it and spends the money on luxury goods for himself, diamond buckles. His income is still supporting lots of people; someone has to mine, cut and set the diamonds. But the people it supports are dispersed about the world, not assembled in his hall. His private army shrinks because maintaining it now means giving up something else he values. The political system shifts from feudalism¹ to monarchy.

It is an interesting conjecture. How might one test it?

Consider two lords. One controls territory best suited to produce local subsistence goods: wheat, beer, cattle. The other controls territory best suited to produce goods for foreign trade: wine, say, or wool. In order for the beer lord to buy diamond buckles he has to bear the cost of exporting produce in exchange. Buying retainers, on the other hand, involves no similar transport costs, since the retainers are where their food, his income, is produced.

The wine lord is already engaged in the export industry, since his land produces more wine than he and his people drink, more wool than they wear. He could use the resulting income to import beer and wheat to support retainers but doing so would require him to pay two transport costs — wine out, wheat back. Diamond buckles involve only one transport cost, since the buckles themselves are high value to weight goods with negligible cost of transportation.

Hence the cost of retainers is higher for the wine lord than for the beer lord. Hence, if Smith is correct, we should have seen feudalism last longest in places poorly suited to produce export goods, well suited to produce subsistence goods. For similar reasons, we should have seen feudalism last longest in places where transport costs were high — most obviously places far from good water transport, which in the Middle Ages was typically much less costly than overland transport.

The theory is, at least in principle, a testable one. It has been waiting more than two hundred years for someone to test it.

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1. I (unconventionally) define feudalism as a system where control over the key resource is dispersed, making the ruler a coalition leader rather than a dictator. The key resource in medieval Europe was heavy cavalry. In the big city machine system of the 19^th century, entertainingly described by Plunkitt, it was votes.