Book contents
- Frontmatter
- Contents
- List of Illustrations
- Dedication
- Preface
- 1 The age of crisis
- 2 The agrarian economies on divergent paths
- 3 Restructuring industry
- 4 The dynamism of trade
- 5 Urbanization and regional trade
- 6 Capitalism creating its own demand
- 7 Capital accumulation and the bourgeoisie
- 8 Mercantilism, absolutism, and economic growth
- Notes
- Index
6 - Capitalism creating its own demand
Published online by Cambridge University Press: 28 May 2018
- Frontmatter
- Contents
- List of Illustrations
- Dedication
- Preface
- 1 The age of crisis
- 2 The agrarian economies on divergent paths
- 3 Restructuring industry
- 4 The dynamism of trade
- 5 Urbanization and regional trade
- 6 Capitalism creating its own demand
- 7 Capital accumulation and the bourgeoisie
- 8 Mercantilism, absolutism, and economic growth
- Notes
- Index
Summary
The character of demand
When examining an economy dependent upon human and animal power modestly supplemented by wind and water for the energy to produce its goods, we quite naturally assign special significance to those measures that raise output beyond the meager limits that seemed to be imposed by technology. But the feebleness of productive power was not the only obstacle to the attainment of higher living standards. Keynesian analysis makes us aware of the role played in the modern economy by the demand for goods in securing an economic state in which resources are fully utilized and investment plans are carried out.
In the preindustrial economy underutilized resources and chronic underemployment testify to the frequent inadequacy of demand. It might be judged uncharitable to accuse our ancestors – people whose labor was physically taxing in a way we hardly know – of idleness. But it existed, and for good reason, as Adam Smith explained: “It is better to play for nothing than to work for nothing.” Technical and natural constraints explain a part of this idleness: the rigors of winter bottled northern shipping fleets in their ports (typically only 2.5 percent of the ships passing the Danish Sound did so in the three winter months); the rhythm of agricultural production enforced seasonal unemployment on farm laborers. These constraints on economic efficiency are well-known.
Less well-known is the fact that failure of demand contributed heavily to this problem of underutilized resources.
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- The Economy of Europe in an Age of Crisis, 1600–1750 , pp. 176 - 209Publisher: Cambridge University PressPrint publication year: 1976
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