III (2 b)Earlier economic systems were based on customs, conventions and traditions.
The feudal mode of production consumption & distribution prevailed in most European countries during the middle ages. The fundamental feature of feudalism was that the society was divided into different layers or strata’s & each strata enjoyed certain rights, and were subject to certain obligations to the strata above it. Eg in England the stratas were the Serf—Lord — Count/Duke — Earl — King.
This system was based on land tenure. Land was a major source of production of wealth. The owner of land preserved a certain portion for personal cultivation & the remaining was given to other people for cultivation, these people were known as “serfs”. They also worked for the owner on his land. The owner was known as the land lord or just “lord”.
The relation between the serfs and lords was such that the lord provided protection and subsistence to the serfs in return for certain prescribed services & obligations from them such as providing service to the landlord for a specified number of days and sharing the produce.
This whole institutional arrangement was based on mutual obligations enforced by custom. The manorial system which prevailed in England could be sited as the best possible illustration of the economic system based on rights and obligations.
In this system there was no incentive to accumulate invest & innovate. Productivity suffered. Eventually this was felt that they were being oppressed. With growth of trade, commerce, industry, introduction of money economy, growth of towns this system outlived its utility & disappeared.