In the seventeenth and early eighteenth centuries the majority of Europeans, at least those outside Holland, were engaged in agriculture. But industrial activity now formed an essential secondary sector, and a dynamic tertiary sector of service industries also emerged.
European agriculture was divided into two broad categories. Grundherrschaft was the system whereby the landowner received payment in kind and rent from peasant cultivators. This system, which consisted of various forms of dependence, including labour services, spread from the Mediterranean region to the British Isles, France, Netherlands and west-central Europe; there were great differences from one locality to another. In contrast, Schleswig-Holstein and the areas east of the lower Elbe, the lands of the Habsburg monarchy and east Europe generally used the system of Gutswirtschaft, based on the labour of serfs who could own their own little. Gutswirtschaft, demesne or latifundia farming was conducting by landlords or their managers with legal rights over their labour force. Peasants in this system had little or no status.
Free peasants formed only a small proportion of the total number and were mainly to be found in areas of cattle-ranching and in the border regions of mountain and marsh. Within the peasantry distinction must be made between those who worked a full peasant holding, or Hufe in the medieval sense, and those who only had a modest holding, often because of the effects of divided inheritance, they were forced to seek additional income as rural labourers. There also grew up a class of totally landless peasants and they, together with the gardeners and cottars, were by far the most numerous of all peasants. Finally there was the tenant who had no land rights of his own and who lived by his special skills, which enabled him to work in a rational