The emergence of capitalism had a deep impact on the existing social and political institutions in Europe. In the first instance its emergence gave a rude shock to the economic system of the medieval ages. The old Manorial system collapsed and the nobles shifted to towns. These nobles rented out their estates to the peasants and busied themselves with new- commercial enterprises.
Secondly, as a result of rise of capitalism the importance and prestige of the guilds was greatly undermined. As the capitalists possessed greater purchasing capacity they collected large stocks and succeeded in undermining the opposition of the guilds.
Thirdly, it led to increase in the power of the state. This was made possible due to the destruction of feudalistic system with the help of nationalistic business. The financial self-sufficiency attained by the state due to the mercantilist trade policy also greatly contributed to the strengthening of the state.
Fourthly, the increase in wealth led to radical changes in the social relations. There was a considerable increase in the wealth of almost all the countries of Europe. Though this increase cannot be exactly described, yet according to rough estimates the total wealth in England increased by nearly double, while in France it was more than double. Similar increase also took place in other countries of Western Europe.
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Fifthly, introduction of capitalism led to increase in the productive capacity of the state. This was made possible by the expansion of the enterprise and the increased labour supply (made possible by increase in population and employment of persons who were hitherto idle or half-idle people).
The other factors which contributed to the increased productivity were increase in the soil under cultivation, introduction of new products and improvement in roads and waterways. The improvements in the industrial techniques and organization also contributed to the increased productivity.
Sixthly, it made the society more mechanical by replacing the personal contact in the economic relations by impersonal market relations.
Seventhly, it affected a change in the social relationship due to the growth of a middle class. This class came to occupy a predominant position. The financiers of France and the nobles of England took over the titles and perquisites of the old aristrocracy. Soon the merchants and manufacturers came to dominate the English Parliament.
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Finally, the early capitalism gave rise to the class of proletariat. This class mainly consisted of propertyless labourers who were always available to the entrepreneurs through an impersonal wage system. However, the proletariat class of that period did not possess the consciousness of the present day proletariat class.