94 CHAPTER 4 THE ECONOMIC FOUNDATIONS OF COLONIAL LIFE
transactions,^6 and the technical backwardness of
industry and agriculture, which refl ected the very
low level of investment in production and con-
trasted with the high levels of expenditure for con-
spicuous consumption, the church, and charity.
Regulations, such as those that forbade indígenas
to wear European clothes or to own land privately,
seriously hampered the development of a market
economy and may also be called feudal.
This predominantly feudal character of the
colonial economy refl ected Spain’s own backward-
ness. Indeed, in the course of the colonial period,
Spain became in certain ways more feudal, more
seigneurial. Part of the reason is that most of the
wealth that fl owed from the Indies to Spain went
to pay for costly wars and diplomacy, support a
parasitic nobility, and import goods from north-
ern Europe, leaving little for development. Spain’s
dependence on colonial tribute and colonial trade
monopoly inevitably strengthened the dominant
aristocratic ideology and discouraged the rise of a
dynamic entrepreneurial class. In fact, the passion
for noble titles infected many members of the small
middle class, who hastened to abandon their trades
and invest their wealth in a mayorazgo. If the no-
bility had lost their feudal power to the crown on
the national level, they were compensated, says
John Lynch, “by the extension of their economic
power, a process in which the crown itself was a
willing ally.” They also retained their feudal pow-
ers in their own districts, where they levied feu-
dal dues, appointed local offi cials, and meted out
justice. Indeed, under the last, weak Hapsburg
kings, the nobility regained much of their old po-
litical power. “By the late seventeenth century,”
writes Henry Kamen, “Spain was probably the
only west European country to be completely and
unquestionably under the control of the titled aris-
tocracy.” This aristocratic hegemony was a recipe
(^6) As late as the mid-eighteenth century, according to histo-
rian John Coatsworth, perhaps 10 percent of New Spain’s
internal trade was carried on in silver coins, and storekeep-
ers everywhere resorted to tokens in trading.
for economic decay and collapse. We shall see that
Spanish efforts in the eighteenth century to reverse
these trends were too little and too late.
The colonial economy also contained some
capitalist elements. Although based on such non-
capitalist labor systems as slavery and debt peon-
age, the gold and silver mines and the haciendas,
ranches, and plantations that produced sugar,
hides, cochineal, indigo, and other commodities for
external markets were fully integrated into the ex-
panding world market. These enterprises refl ected
the price fl uctuations and other vicissitudes of that
market and promoted the accumulation of capital,
not in Spain, but in England and other lands of ris-
ing capitalism. Some capitalist shoots appeared
in the colonies as well, notably in the great min-
ing centers, sugar mills, and workshops that were
marked by some development of wage labor and
division of labor.
But the development of colonial capitalism re-
mained embryonic, stunted by the overwhelming
weight of feudal relationships and attitudes and
the continuous siphoning off of wealth to Spain,
itself increasingly an economic satellite of the more
advanced capitalist countries of northwest Eu-
rope. The double character of the colonial planta-
tion—often self-suffi cient and nonmonetary in its
internal relations but oriented externally toward
European markets—refl ected the dualism of the
colonial economy.
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