This section is a draft.
The rise of the sovereign state in Europe. The connection to the new commercial world economy. How revenues from trade made it possible for the state to establish its independence.
Medieval kings were really quite powerless. They had no proper bureaucracies at their disposal, no standing armies and few ways of raising money. In fact, there were few good roads, ports and not many large cities. What was not there, however, soon came to be constructed. From the sixteenth-century onwards the states established the rudiments of an administrative system and raised armies, both in order to fight their own peasants and in order to defend themselves against other states. Since such state-building was expensive, the search for money became a constant concern. The early-modern state was more than anything an institutional machinery designed to develop and extract resources from society. The early modern state operated much as a protection racket ― people were asked to pay taxes in return for defence, and if they refused to pay up, state officials had various unpleasant ways to make them suffer.
Once the state had made itself sovereign by defeating both its universal and its local rivals, the only problem was that it was surrounded by other states which they too thought of themselves as a sovereign. Since there no longer was a all-European power that could regulate their common affairs, there was no one to keep the peace. Each state had to look after itself, assure its own security. They did this by establishing armies, training soldiers, building fortifications and amassing weapons. All of this cost money of course and the search for money was the state’s constant concern. It was with this aim in mind that the state became an active sponsor of economic activities. It is possible to think of the state in early modern Europe as a kind of machine which locates various resources of society, mobilizes them, and eventually turns them into military hardware. Economic development meant higher revenues from taxes and it gave the kings access to more resources which they could use in their wars.
The state was keen to encourage trade, not least since taxes on trade were a lot easier to collect than taxes on land. It was now that a search began for natural resources ― agricultural land, forests, iron and copper ore, but also manpower ― which the state might make use of. Maps were drawn up which located these resources within the country’s borders, and lists were made of births, marriages and deaths in order to better keep track of the population. Domestic industries were set up and given state subsidies, above all in military significant sectors such as metalworks and in sectors that were easy for the state to tax. In addition, various “useful sciences” were encouraged by the newly established scientific academies, and prizes were given to innovations and discoveries. In state-sponsored universities, future members of the emerging administrative class were taught how best to regulate society and assure peace and social order.
New commercial society. Above all, by the Verenigde Oostindische Compagnie, the Dutch East India Company, founded in 1602.[Read more: The East India companies] All over Europe similar trading companies were soon established and they were all granted monopolies on the highly profitable East Asian trade. These monopolies were sold, and for European kings this was an easy and quick way to raise revenue. Connection to the development of the European state. The first corporations, financial institutions. People were investing in the lucrative trade. The development of stock markets, insurances, the corporate form of running a business. They took the surplus profits and lent the money to the state. A founded debt, state banks. The whole system of financial institutions. There were great profits to be made in the Asian trade. The goods were light-weight and easy to store. They were dry. You could reap great profits on the successful return of a ship. The only problem was the long and uncertain journey. The state would sell monopolies, the exclusive right to trade with a particular part of the world. We usually think of monopolies as bad, and they often are, but in a situation where there is no existing market, they can help create the market which is not there. It was too risky to trade with far-away continents. It took too long to get there. You had to invest now for a very uncertain return sometimes in the rather distant future.
The problem was only that even this frantic activity never was sufficient to guarantee peace. In fact, the more one state was arming itself, the more it developed its economy and rationalized its administrative procedures, the more of a threat it posed to its neighbors. This might not actually have been the case, but this at least is what the neighbors thought. Better safe than sorry; we had better arm ourselves too so that we are prepared if an attack comes. Often enough threats of war turned into the real thing. From the early seventeenth-century onwards Europe was in a more or less continuous state of warfare.
The Thirty Years War, 1618-1648, was the bloodiest and most protracted military confrontation of the era. The Thirty Years War is often called a religious conflict since Catholic states confronted Protestants, yet Protestant and Catholic countries sometimes fought on the same side, and besides religious dogma was clearly not the first thing on the minds of the combatants. Instead the war concerned which state should have hegemony over Europe; that is, which state, if any, that would take over from the universal institutions of the Middle Ages. The main protagonists were two Catholic states, France and Austria, but Sweden — a Protestant country — intervened on France’s side, and in the end no hegemonic power emerged. As a result of the war Germany’s population was reduced by perhaps a third, and in the region of Brandenburg ― today’s Berlin ― the male population was decimated by half. What the Swiss or the Scottish mercenaries did not steal, the Swedish troops destroyed, and the people who did not die on the battlefield, died of the plague.
The Treaty of Westphalia, 1648, which concluded the thirty years of warfare, has come to symbolize the new way of organizing international politics which emerged at this time. From now on international politics concerned relations between states and no other political units. All states were sovereign, meaning that they laid claims to the exclusive right to rule their own territories and to act, in relation to other states, as they themselves saw fit. All states were formally equal and they had the same rights and obligations. Taken together the states interacted with each other in a system in which there was no overarching power. Sovereignty and formal equality led to the problem of “anarchy”: to the problem, that is, of how to assure peace and order in a situation where everyone looked after themselves and no one looked after the system as a whole. There were no institutions that could enforce the peace or stop a war once it had begun. As a result states had to rely on their own resources, to look after themselves, or to form alliances through which the power of one alliance of states could be balanced against the power of another alliance. Yet such power balances were precarious, easily subverted, and given the value attached to territorial acquisitions, states had an incentive to engage in aggressive wars.
At the same time various practices developed which helped regulate common affairs. The foremost example were perhaps the practices of diplomacy, as exemplified, by the way peace treaties were negotiated. From the early modern period onward, European states met after each major war in order to reach a settlement and lay down the terms of their future interaction. These diplomatic practices had their origin in relations between the city-states of northern Italy. Once they became independent both of the pope and the emperor, these city-states discovered that their relationship with each other had become vastly more uncertain. In order to avoid misunderstandings and unnecessary wars, the various rulers began dispatching ambassadors to each other’s courts. This network provided a means of gathering information, of spying, but also a way of keeping in touch with one another, of carrying out negotiations and concluding deals. The practices of diplomacy soon expanded to include a number of mutually advantageous provisions: the embassies were given extraterritorial rights and legal immunity for the diplomats themselves, diplomatic dispatches were regarded as inviolable, and ambassadors had the right to worship the god of their choice. These originally north-Italian practices gradually expanded to embrace more states and by the middle of the seventeenth-century the system included France, Spain, Austria, England, Russia, Poland, Denmark, Sweden and the Ottoman empire. The diplomatic practices were never powerful enough to prevent war ― indeed wars continued to be common ― but they did provide Europeans with a sense of a common identity. There were common rules to play by, even if they often were broken.