Proto-industrialization is the regional development, alongside commercial agriculture, of rural handicraft production for external markets. The term was introduced in the early 1970s by economic historians who argued that such developments in parts of Europe between the 16th and 19th centuries created the social and economic conditions that led to the Industrial Revolution. Later researchers suggested that similar conditions had arisen in other parts of the world. Most aspects of the theory have been challenged by other historians.
The term was coined by Franklin Mendels in his 1969 doctoral dissertation on the rural linen industry in 18th-century Flanders and popularized in his 1972 article based on that work. Mendels argued that using surplus labor, initially available during slow periods of the agricultural seasons, increased rural incomes, broke the monopolies of urban guild system and weakened rural traditions that had limited population growth. The resulting increase in population led to further growth in production, in a self-sustaining process that, Mendels claimed, created the labour, capital and entrepreneurial skill that led to industrialization.
Other historians expanded on these ideas in the 1970s and 1980s. In their 1979 book, Peter Kriedte, Hans Medick and Jürgen Schlumbohm expanded the theory into a broad account of the transformation of European society from feudalism to industrial capitalism. They viewed proto-industrialization as part of the second phase in this transformation, following the weakening of the manorial system in the High Middle Ages. Later historians identified similar situations in other parts of the world, including India, China, Japan and the former Muslim world.
The applicability of proto-industrialization in Europe has since been challenged. Martin Daunton, for example, argues that proto-industrialisation "excludes too much" to fully explain the expansion of industry: not only do proponents of proto-industrialisation ignore the vital town-based industries in pre-industrial economies, but also ignores "rural and urban industry based upon non-domestic organisation"; referring to how mines, mills, forges and furnaces fit into the agrarian economy.
Some historians have identified proto-industrialization in the early modern Indian subcontinent, mainly in its wealthiest and largest subdivision, the Mughal Bengal (today's modern Bangladesh and West Bengal), a major trading nation in the world which had been in commercial contact with global markets since the 14th century. The Mughal region singly accounted for 40% of Dutch imports outside Europe. During the 17th–18th centuries, when the Indian subcontinent was ruled by Mughal Empire's sixth ruler Aurangzeb through sharia and Islamic economics, sustained growth was being experienced in manufacturing industries, exceeding China. India became the world's largest economy, valued 25% of world GDP, having better conditions than 18th-century Western Europe, prior to the Industrial Revolution.
The Kingdom of Mysore, a major economic and military power in South India, ruled by Hyder Ali and Tipu Sultan, allies of Emperor of the French Napoleon Bonaparte, also experienced massive growth in per capita income and population, structural change in the economy, and increased pace of technological innovation, most notably military technology.
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