ABSTRACT
Of those agricultural goods exported to the towns, some are used as raw materials in the manufacture of urban goods and services and others are directly consumed by the urban populace. Except for wages below the malnutrition margin, the demand for food and other agricultural products is highly inelastic. As real wages fall, the budget is dominated by agricultural goods and the elasticity of demand falls to perhaps one. Increases in the scale of commerce might bring the scale of financial transactions to the level at which formal banking could facilitate capital movements. Population increases alone could lead to such a market. The capital market might develop only late in the history of Feudalism. Differential capital accumulation between classes could have the same effect. Many feudal businesses operated with capital borrowed from the wealthy.
