INTRODUCTION

Capitalism, as we know, involves at least two classes: labourers and capitalists.1 Both Adam Smith and Karl Marx have fairly detailed accounts of where the labouring class came from: dispossession of land (Smith) and of the means of production (Marx). The origins of the bourgeoisie are a little murkier. We know a lot about what they do when they arrive on the scene, building markets and building capitalism – a process that is often dated to the early modern period (Braudel 1992 [1982]; Wallerstein 2011 [1974]). We are less secure in accounting for their origins. What historical processes brought them into being?

To get at this we have to step back in time to the early medieval period. This is when the foundations of local marketplaces, the establishment of towns and the origins of those people who would eventually become the capitalist class are to be found. This, at any rate, is what I will argue.

More specifically, I will argue that the needs of the ruling class of early medieval Europe (ninth to thirteenth centuries, more or less) led to the creation of cities and markets, essential precursors of genuine capitalism. These needs arose from the problems of acquiring and maintaining power, fighting wars, managing resources across space and competing with each other. The solution to these problems, in significant part, was liquidity.

This is why markets are so helpful. They permit the transformation of immobile or bulky assets into money that can be moved quickly anywhere. That is why the ruling class needed markets – a need that relatively few other people at the time would have actively felt. Once markets are there, others will use them; indeed, they will have to. But the seeds of the capitalist – and of capitalism – were planted quite deliberately by the ruling class, whom the capitalists would eventually replace. The aristocracy's goal was not to create a market economy – let alone a capitalist one – but to solve particular problems of their class.

The chapter starts with a discussion of barter and money-mediated exchange. Contrary to the conventional assumption that barter is a huge impediment to exchange, I suggest that it is in many cases rather easily managed.