The Transformation of Medieval Economy:

The new techniques led to greater production in  agriculture and, therefore, a surplus from the needs of  people. Increased productivity led to greater trade which was aided by better modes of  transport. Production of other articles such as cloth, chemicals, wine, and iron for tools and weapons also expanded, leading to a considerable increase and diversification in  trade. The more the trade grew, the more money it brought in by way of  profit to the merchants, who traded the goods produced by peasants and urban workers. The increased profit led to the manufacture of more goods and production of cash crops from the land. With better techniques, better modes of transport and ample markets, the production of commodities  for sale  increased considerably. Thus, a trading and urban manufacturing economy grew inside the feudal system. These changes succeeded in breaking down the local self sufficiency of feudal economy at the local village level. 

Although, the manufacture of commodities was carried on more often in the countryside  as a part-time peasant occupation, the markets were dominated by town merchants. By  the mid- thirteenth century, the merchants had become rich and powerful enough to acquire a monopoly position in trade. They had formed guilds and used their position to buy goods cheap, and sell them at huge profits. As the markets expanded, the merchants wanted freedom of movement as well as safety along the trade routes which passed  through numerous feudal estates with their own laws and restrictions. A clash of authority between the feudal landowners and the new-rich merchant class was taking place all over. Gradually, the merchants gained the upper hand. By  the fifteenth century, they had grown so strong that they were beginning to transform the economy. The feudal economy, characterised by agricultural production based on forced services of the serfs, was transforming  into one in which commodity production by craftsmen and hired workers, and money payments became dominant. 

These economic,  technical and political changes were accompanied by changes in the Church. Till this time the Church was all-powerful. It had a monopoly of learning and even of literacy. The Church had a hold on the state and was deeply involved in the maintenance of feudal order. As the rising merchants and artisans of  the towns threatened the feudal order, the might of the Church began to be questioned. The Church tried to suppress  all such people by branding them as heretics. However, in the last two centuries of  the Middle Ages, the Roman Church was considerably weakened. In some places, kings started asserting themselves against the central authority at Rome. In this  they were helped by merchants, though the country nobility was still aligned with the orthodox Church. Thus, the unity of  the Church began to be threatened. Between  1378  and 1418, the Christian Church was split between two or three Popes. More authority had  to be given to the general councils of  the Churches. Substantial movements of reform in the Church were initiated and there was soon to be a struggle for power between the Pope and the Emperors.