[It’s been nearly a year, I just noticed, since I last posted something, so to make up for it, here are two rather lengthy musings on a topic that, to put it mildly, appears to have at least some contemporary relevance….]
As every introduction to the economic history mentions, Karl Marx developed the concept of processes in the means of production: from slave-holding societies, via feudalism, to capitalism. This tripartite scheme (slavery, feudalism, capitalism) is of course an abbreviation, short-hand for a much more complex social and economic history, as medievalists grappling with the term “feudalism” know only too well.
And in that more complex historical picture, capitalism did not arrive overnight, nor was the coming of capitalism welcomed by all concerned. “In medieval and early-modern Europe, avarice was regarded as the foulest of vices. From that to the Wall Street slogan “greed is good!” involved an intensive process of reeducation. What did the reeducating was not in the first place schoolteachers or propagandists but changes in our material forms of life. … There were medieval ideologues who viewed profit-making as unnatural, because human nature for them meant feudal nature. Hunter-gatherers probably took an equally dim view of any possibility of any social order but their own.”  The free market and capitalism had to be slowly introduced to people, against much initial reluctance. “Free markets are in fact a recent historical invention, and were confined for a long time to a minor region of the globe.”  The “invention” of the free market is credited to Adam Smith in the later eighteenth century, which in historical terms is quite recent, and the “minor region of the globe” refers, of course, to that small chunk of off-shore Europe known as Britain.
The origins of banking and merchant capitalism may lie in the Middle Ages, but they were the exception rather than the rule for most areas of production – like the towns which have famously been described as “islands in a feudal sea”. Feudalism, in short, is a form of production centred on landholding and associated obligations. The classic feudal example is that of, say, a peasant who works the land which is owned by a knight. In return for his work, the peasant is (theoretically) under the protection of the knight. The knight in his case has to be loyal to his superior (be it higher-ranking noble, or king) from whom he holds the land, and perform a range of services, mainly military, in return for the land. Towns and cities, with their mercantile activities, sat uneasily within this “feudal pyramid”, hence the simile of the islands. Trade, a money economy and the merchant class could develop slowly but steadily in these urbanised regions and with it the primitive accumulation of capital. Before the capitalist system had developed to the stage where it could sweep away all earlier modes of production through the spontaneous operation of the market, it had to establish an initial accumulation of wealth.
What is important to remember is that different socio-economic systems can occur side by side in the same place at the same time. Therefore you can find both so-called feudal modes of production as a majority in rural areas and mercantile production in towns, as well as a few rare, emerging capitalists in major cities in Europe during the Middle Ages. With regard to the simultaneous development of different economic and productive systems Eric Hobsbawm has remarked that “any transition from one socio-economic formation to another – say from feudal to capitalist society – must at some stage consist of such a mixture.” 
Just because a medieval Italian merchant was making lots of money in, say, the thirteenth century, that did not make him a fully-fledged capitalist. As Terry Eagleton put it, you need to know about the concept of something before you can be that thing: “But one cannot desire something of which one has no notion. I cannot hanker to become a stockbroker if I am an Athenian slave. I can be rapacious, acquisitive and religiously devoted to my own self-interest. But I cannot be a closet capitalist, just as I cannot aspire to be a brain surgeon if I am living in the eleventh century.” 
The basic idea of the free market is, in fact, older than the theories of Adam Smith, the best-known of the early exponents of the free market as the most “rational” economic system (and as the original form of capitalism). Already in ancient Rome an idea existed of a market in which all the parties partaking of commercial activity could trade, exchange and barter for goods freely, meaning without hindrance to the pursuit of trade. Roman jurists wrote about this principle of a free market in legal texts that have been copied in later times, such as the Middle Ages, and hence preserved for historians to study today. During the Middle Ages, a branch of law called canon law developed, which dealt with the laws, structures and regulations of the Christian church, termed canonical, hence the name. Canon lawyers were complemented by civil lawyers, whose sphere of action was in the legal systems imposed by secular rulers and structures. Together, canon and civil law looked at the moral implications of the free market principle. 
When property and goods stopped being exchanged by a system which was heavily tied up with the social status of people, namely a system of gift-exchange, patronage, or grants of land, money or spheres of influence – what has in Marxist economics been summarised as the “feudal” system – and instead a cash sale between two parties whose social status was irrelevant became a new means of exchange, the moral or ethical problem of how to determine what was or was not deemed a “fair” price arose. The early market had no controls other than the most basic control over the principle of free exchange, which meant that freedom to bargain, barter and exchange needed to be protected from fraud and severe harm (laesio enormis in Latin). Fraud was understood to mean charging a price for goods that was out of proportion with the goods being sold; for example, selling defective, leaky pots for the same price as intact pots would be considered fraudulent, because the value of the defective pots was obviously not comparable with that of the intact pots. If you up the scale from simple, utilitarian items such as pots sold by the dozens at a local market to an entire shipload of (defective) pots that a Roman or medieval merchant might have invested in, then you get an example of how fraud could lead to “severe harm”.
Now the idea of a fraudulent price, as something that leads to harm and needs to be avoided or even controlled, implies its opposite: a “just price”. Trying to determine philosophically, morally, and even in rudimentary economic terms what exactly was meant by a “just price” was a task that the schoolmen of the Middle Ages, as Marx called them, expended a fair amount of time and energy on, in the writings of scholars and intellectuals of the thirteenth century in particular, such as Albertus Magnus or Thomas Aquinas.
“They invoked Aristotle to argue that human need – demand – was the chief determinant, but they added also the available supply as a factor and, subsumed in supply, the value of labour. The result was a clear definition of the just price as the going market price, with the limitation that a manipulated market price, for example due to monopoly or hoarding or speculation, could not qualify as just. Not every price higher than the just price had technically to be considered illegal and immoral, but one that was 50 per cent higher than the just price was manifestly unjust. In cases of dispute, the current market price would be determined in the streets by a group of upstanding citizens (boni viri).” 
What this brief summary of early free-market theories indicates is that even some eight centuries ago two points arise: firstly, that a primitive form of capitalism (proto-capitalism if you like) was already in existence in the sense that goods were exchanged for cash in a free market, and secondly, that equally for the past eight hundred years or so people have been trying to regulate that free market. Eric Hobsbawm’s analysis can be applied quite neatly to the description of merchants versus religion, as given in Lester Little’s book, as “dialectics in action” or “applied dialectics” in the Marxist sense, highlighting the simultaneity of apparently contradictory elements. 
 Terry Eagleton, Why Marx Was Right, New Haven and London: Yale University Press, 2011, pp. 96 & 97
 Eric Hobsbawm, On History, London: Weidenfeld & Nicolson, 1997, p. 160
 K. S. Cahn, ‘The Roman and Frankish Roots of the Just Price of Medieval Canon Law’, Studies in Medieval and Renaissance History, vol. 6, 1969, pp. 1-52.
 Quotation from: Lester K. Little, Religious Poverty and the Profit Economy in Medieval Europe, London: Elek, 1978, p. 177. Prof. Little refers the reader on to J. W. Baldwin, The Medieval Theories of the Just Price: Romanists, Canonists, and Theologians in the Twelfth and Thirteenth Centuries, Transactions of the American Philosophical Society, n. s. 49(4), Philadelphia, 1959.
 Eric Hobsbawm, On History, London: Weidenfeld & Nicolson, 1997, p. 202