Money, Prices, Wages, and "Profit Inflation" in Spain, the Southern Netherlands, and England during the Price Revolution era: ca. 1520 - ca. 1650

Abstract

This article re-examines Farl Hamilton's famous 1929 thesis on "Profit Inflation” and the “birth of modem industrial capitalism” during the Price Revolution era (c. 1520 - c. 1650), and the views of his numerous critics. Based on new data, my conclusions differ from both: while finding more evidence for profit inflation in England for this era than his critics would admit, I found none for the southern Netherlands, where industrial wages tended to rise more than industrial prices. This study concludes with a brief examination of the effects on inflation on two other factor costs: land, in terms of real rents, and capital, in terms of real interest rates, which did fall with inflation. Both such costs did lag behind industrial prices in early-modem England and the Low Countries, though real interest rates lagged more than did real rents.