Economy of the Old Regime

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An Old Regime economy is understood as that which precedes the French Revolution and the industrial revolution. This economic model was characterized by a strong weight of agriculture, a society organized in estates and little industrialization.

The economy of the Old Regime developed between the 15th and 18th centuries.

In the economy of the Old Regime, agriculture was the most important economic activity. Hence, up to three-quarters of the population worked in agricultural work. The industry was scarce, of an artisan character, while the trade was carried out with the colonial possessions in Asia and America.

To better understand the economy of the Old Regime, it should be noted that society was organized into estates.

Thus, the nobility and the clergy were part of a privileged group, while the people, devoid of privileges, made up what was known as the third estate. The difference between the estates was abysmal, since the nobility and the clergy had exemptions in the payment of taxes and important legal advantages.

Agriculture as the main economic activity

With an economy based on agriculture, the society of the Old Regime was a rural society, with a low concentration of the population in the cities.

The way in which European societies were organized was of great importance in the economy. Hence, two types of organization forms stand out:

  • The village: It brought together the families that worked in the fields and not only marked the way in which their day to day was organized, but also determined the organization of the lands and the way in which the fields were used for grazing.
  • The fiefdoms and lordships: The nobility and the monarchy could establish agricultural income and taxes on their subjects.

Trade in the Old Regime

Despite the fact that agriculture was the main economic activity, throughout the 18th century, trade with the colonies was gaining importance. Spices such as coffee, tea and sugar were imported from Europe. Meanwhile, new textile products entered long-distance trade, such as Indian textile manufactures or European wool and linen.

Precisely, the gradual development of trade, contributed among other factors to consolidate France and England as the great world powers. In this sense, it is worth noting the role of England, as it showed a great development of maritime trade. And it is that, only the English fleet represented more than a quarter of the European fleets. English ships were engaged in the export of manufactured products while importing raw materials.

Demography

In the 18th century, the evolution of demography was given by an always complicated balance between population growth and resources. In fact, periods of poor harvests caused severe famines, while disease punished a weakened population. Precisely the so-called subsistence crises enraged the population, provoking popular uprisings.

The stage of the Old Regime was characterized by high birth and death rates. In this way, the high number of births was offset by low life expectancy and, especially by food crises, which caused devastating mortality figures for demographics.

Economic thought of the time

In the 18th century important currents of economic thought flourished, among them the most important are:

  • Mercantilism: It was prevalent until the middle of the 18th century and held that the wealth of a country was measured in terms of accumulated precious metals. Therefore, it was essential to boost exports and reduce the level of imports. All this resulted in the kings trying to control trade through trading companies.
  • Physiocracy: Among its most distinguished economists, Quesnay stands out, who argued that the land was the main source of wealth. Thus, the peasants gave part of their income to the lords and to the merchants and artisans, from whom they bought manufactures. On the other hand, the Physiocrats were also in favor of not hampering the economy with regulations, which was what became known as laissez-faire, laissez-passer (let do, let through).
  • Adam Smith: He laid the foundations of capitalism, because for him, the key to wealth was in free trade and in the way in which individuals could complement each other through specialization and the organization of work. For Adam Smith there should be no state intervention in the economy, much less monopolies. For this reason, it will be the market that, by itself, orders economic relations, which is known as the invisible hand.

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