The Medieval period is my favorite time period to study (one of my Master's degrees actually focuses on the Medieval period), but it wasn't very nice for many people to live in. The economy of the early Medieval period, at least in Western Europe--in Eastern Europe, this economy lasted a lot longer; Russia, in particular, was RIDICULOUS about it--was de-centralized, and built on the unpaid, enslaved labor of the disenfranchised poor.
Essentially, the feudal system was a pyramid scheme, and one gloomy school day (as you'll see in the photos below), the children modeled it in Skittles.
At the bottom of the pyramid are the serfs. They are born and live their lives and die on the same estate; they do not have permission to move away from it. They are required to give labor, usually manual labor in farming and building, to the knight who "owns" their estate, although additional labor, such as serving in the knight's household or performing other services, is paid. They also may farm and labor for themselves in their free time, and indeed, they must, if they're to eat and clothe and house themselves.
Let's say that each serf household, then, can earn ten Skittles for themselves in a year. Skittles, for a serf, represents surplus food and goods, maybe a little cash money.
However, the knight who owns the estate that the serf lives on owns the land that the serf farms and the serf's house, etc. The serf must pay that knight rent. The serfs probably farmed some wheat for themselves, so that they could have bread to eat. The knight owns the mill; the serf has to pay to get the wheat milled. The serf probably traveled on a road or over a bridge to get to the mill or wherever else the serf needs to go. The knight owns that road and bridge, built with free serf labor; the serf has to pay a toll to use it.
This means that out of the ten Skittles that the serf's household was able to earn in a year, they're left with about...
Two. Two Skittles is not enough to live on for a year, and so the serf's family is abjectly poor. Their pigs and chickens live inside the hut with them to help keep them warm. When they're sick, they require charity from the knight's wife and daughters to feed and doctor them. Their lives are short and hard.
The knight, now, the knight does somewhat better. He doesn't actually farm his land; that's what the serfs are for. He has an estate manager to keep things running and profitable, but he's also expected to understand the workings of his estate and to gain the love and loyalty of his serfs. His first loyalty, however, is to his lord who gave him his estate. He probably served that lord well in some battle or other, and his prize was this land and its income, which makes him really more of a minor lord, now, rather than a knight, as such, but let's keep it simple for the children, shall we? The lord will still do the knight favors, and he'll participate in ceremonies and such.
The knight, too, is expected to pay fealty to his lord. Fealty is paid through labor, often fighting in whatever squabble or little war the lord has gotten himself into, but also through goods and money. The knight has to pay on some of what he got from his serfs, and some of whatever treasure or goods he was able to obtain during whatever fighting and looting he'd been involved with. This means that after a year, he's left with:
Seven or eight Skittles. That's not bad, and his household can live pretty well on that. But if he's got daughters, he'll need to marry them off as soon as they're old enough so that someone else can feed them, and if he's got sons, most of them are going to have to join the clergy or find other lords to serve as knights, because he doesn't have enough land to pass down a decent income to all of them.
The lord, now? The lord has it great. The lord has lots of knights paying him fealty, and those knights will also fight for him in his own squabbles, and when the king calls for soldiers to fight HIS petty squabbles, the lord can call on those knights, as well. The lord owes fealty to the king, getting presents and favors from him, paying him in goods and labor, but overall, he's high enough up the pyramid that after a year, he's left with:
Sixteen to twenty Skittles. That is PLENTY. The lord has enough of an income that he can divide his estates up a bit when he dies, although some sons are still going to have to think about becoming clergy or knights or marrying up. Daughters will generally be married off to similarly wealthy families, although their parents always have an eye on marrying them up. Life is generally pretty good when you're a lord. You've got fancy food, plenty of servants, nice clothes, etc. You spend a lot of your time overseeing your downline, and sucking up to the royals, and going to church, but you have a lot of free time, too, and a lot of parties.
The king, though. The king is where it is AT. Check out your spoils!
Every serf, every knight, every lord is paying up to you (unless you're in France. France is something else, and they'll have a whole revolution about it in about 400 years). Admittedly, you have a lot of politics and management to get done, you can't marry who you want, you're surrounded by toadies and spies, but eh. Look at all your Skittles!
Here, then, is all of early Medieval Europe at one table:
In Western Europe, this economic system didn't change until the Black Plague killed off most of the population. Afterwards, the labor shortage was so great that the serfs were able to agitate for reform, including the right to actually leave their estate for the first time. Some of them went to estates where there were better conditions, but some of them went their own way and found new land and made new economies among equals.
And boom! You've got towns.
Like the Medieval period? Here are some other resources we've enjoyed: