When reading the history of Europe from 1100 to 1600 one of the easiest observations is the realization that there were two poles of enlightened development which brought Europe into the modern world. The first is Northern Italy which starting in the 12th century, became the first region to develop the blessing of modern capitalism [see here]. The second pole was the axis running from England, through Holland and northern Belgium to the Rhine. This area combined with Italian capital developed the wool and textile industry, setting the stage for the establishment of modern methods of production and distribution. The wool industry was the first great market industrialization which assured the fortunes of both England and Holland.
Yet, very curiously, most history courses, academics and general social interest are focused on the anti-modern empires of France and Spain. This is rather insidious since both are examples of failures, despotism's, and anti-humanist governance. The apogee of these failed systems and theologies would be realized in the manic insanity of Napoleon, who raped, looted and destroyed Europe on behalf of himself, his family and the French elite. To Frenchmen, this emblem of terror, hate, and irrational bloodlust is a 'hero'. This is ridiculous. Napoleon retarded the development of Europe by generations.
French and Spanish despotism's were well established before the period of 1307 and the destruction of the Templars in France by the bankrupted Philip the 'Fair', [which was done in one day, on Friday October 13th]; and the consolidation of Castillian elitist power in Spain. By the 14th century both France and Spain were firmly established top-down, hierarchical and constricted Orientalisms, long on power and control; short on freedom, capitalism, innovation, and productivity. These despotic models could only lead to two derivatives. One was war. The second was bankruptcy.
Spain is the great exemplar of a 'glorious' empire which never had a 'golden age' and which was never really 'glorious'. Spain over its extended domination of European and perhaps world events from the 16th to the 18th centuries, never created, manufactured, or innovated anything. Nothing. It was just a large squatting owner of other people's land; with a massive impoverished peasantry; and little in the way of enlightenment in commerce, the arts, the sciences or in education. Imperial Spain was like Islam – a backwater which need war and plunder to survive.
The backwardness of Spain is well known and often-told. Imperial Spain at its height encompassed a large and variegated collection of lands and states. At its peak in the mid 16th century, the empire was immense. The Philippines, Austria, the Netherlands, parts of Germany, the Americas, North Africa, Portugal and parts of France and Italy, constituted an empire largely arrayed thanks to marriages, and dynastic inheritance. War of course also played a substantial role. The creation of imperial Spain through marriage alliances and selective wars created however a false impression. A poor, pre-modern state was suddenly in charge of a vast collection of satellites and vassals. The size of the Spanish empire did not mean it was 'modern' or wealthy. In fact the lack of real wealth creation, ensured its ultimate destruction.
Spain after the reconquest in 1492 became an absolutism. This strict and conservative governance had little patience for the unsettled and chaotic nature of market or political reform which was then in full train in northern Italy, England and Flanders. The Spanish avoided the dislocations caused by the revolutions in science, engineering, technology, capital and agriculture during this period. It became a poor state. By the 16th century Spain relied on imports to survive – even for food. Its politics were compromised rather bizarrely by the Spanish obsession with sheep and wool exports. Sheep were deemed the most primary and important of exports and the sheep rearing 'guild' controlled the government. State protection of this guild allowed millions of sheep to be roamed across the country, obstructing agricultural production and precluding the development of the land. Given this fact, food production was poor, the soil never developed, tools were never created, and foreign innovations to build up agricultural production and productivity were banned.
By the 17th century Spain was a great and very poor empire. It was a system of devastation created by poor governance and an anti-culture, hateful and suspicious of capital, freedom and free will. Geography also played a role. With few large rivers and many mountain ranges, Spain was an expensive place to produce and transport goods. Yet the salient fact was that Spanish backwardness was a political imposition – not a natural derivative of either topography or fate.
Travellers to 17th century Spain were amazed by its grinding and illiterate impoverishment. One English sojourner wrote home noting the defects of imperial Spain, listing inter-alia; 1. A bad religion. 2. Tyrannical Inquisition. 3. Multitudes of whores. 4. Lack of agriculture. 5. Laziness of the people. 6. No Jews or Moors. 7. Wars and plantations. This is a pretty apt summary of what ailed Spain. As historian Henry Kansen wrote – there never was a Spanish Golden Age. There was only a Spanish 'squatting' age. Like Islam the pre-modern Spanish state could only subsist through taxation, plunder and expansion. But premised on a poor, illiterate and stultified economy, its demise was assured.
The Spanish conquered Mexico and Peru and stumbled upon gold and silver. These commodities fuelled the empire's maintenance and expansion. Gold and silver paid the bills and the troops. But in essence New World riches brought few real benefits. In fact it made the reform of Spain's corrupt political and economic system unnecessary. As long as the Spanish could plunder the wealth of others, and tax foreign subjects, the creation of modern political, economic and religious reforms could and were avoided. Far from helping the empire, it could be suggested that the New World wealth ensured Spain's poverty and lack of development.
Spain never developed a merchant class. No banks existed. There was no manufacturing. Though it kept a regular army of more than 200.000 men, [the Romans had a standing army of 300.000], Spain made no weapons, and could not cast iron balls or cannon balls. Within Spain there were no mapmakers, and few ship builders. There was simply no industry. Spain was just a gigantic middle man – importing all necessary items for life and war; and using New World silver and gold to pay for the imports and pay for its far-flung army. Spain never retained or reinvested into Spanish industry or manufacture any 'profits' or wealth. It couldn't because the Spanish political-economy did not produce excess capital. The Spanish state was simply a conduit.
One thing the Spanish state did do very well, was tax. In fact the taxation was crushing. By 1600 over 1/3 of a peasant's gross income was consumed in taxes. Commerce such as it existed was heavily regulated and distorted by the state. A culture of Catholic fundamentalism existed and much like Islam, denied the ideas of innovation, freedom in thought and action, or the establishment of classes dedicated to manufacturing, banking or company creation. In fact throughout the Spanish empire capitalist effort was deemed beneath a true 'gentleman'.
Along with high taxes the Spanish state debt was extraordinary. The accumulation of debts for wars and to pay for annual deficits was enormous. In 1557 Spain declared bankruptcy. In 1575 it did so again. In 1596 yet again. Every 20 years Spain was going bankrupt. Interest on debts alone exceeded all revenues by millions of 'ducats' a year – billions in today's money. The Netherlands won their freedom during the late 16th century in large part because the Spanish crown could not pay the oppressing Spanish army, and the soldiers simply stopped fighting. Spain was a bankrupted empire.
And one can't make the claim that Spain was a 'special anomaly'. Where ever the Spanish empire ruled bankruptcy followed. Southern Italy tells the same story. Why did Northern Italy become rich whilst the south languished ? First Islam and than Spain ruled the south [see here also]. The Muslim invasion, occupation and subsequent rape of Sicily and southern Italy and the complete bastardization of human, economic and spiritual resources is a main reason why. The Muslims forever halted southern Italian development with their colossal pillage lasting from the mid 7th century to the mid 10th.
But the Spanish are also to blame. Sicily and Sardinia were added to the Spanish crown in 1295 by marriage. In the early 16th century after a series of wars, the Kingdom of Naples and the rest of southern Italy was appended to Spain. The same destructive forces which neutered and impoverished Spain were at work in Spanish Italy. A culture of violence, lassitude, a hatred of manufacturing, capital accumulation, and an intolerance towards rationality, science and spiritual free-will, dominated Spanish Italy. It was in effect a miniature Spain – oppressed, despotic, highly taxed and poor.
Spain is an obvious case example of what does not work. Oriental despotism's including that of Rome always fail. Spain's self-destruction was pre-ordained by the cultural, political and economic poverty of Spanish theology and despotic governance. If Spain had somehow managed to conquer Holland, invade and take-over England and used its southern lands in Italy as a launching pad to extirpate Northern Italian commercialism, modern Europe never would have emerged. Europe in this case would have ended up much like Islam – barren, poor, illiterate and with an animus to capitalism, wealth creation and freedom of thought.
Imperial Spain's demise was the West's gain.