The economic system dominant in Europe prior to the Industrial Revolution was feudalism. This system was characterized by a hierarchical structure where land was owned by nobles who granted portions to vassals in exchange for military service and loyalty. Peasants, or serfs, worked the land and owed obligations to their lords. Feudal society was based on agriculture, local economies, and personal bonds rather than a large-scale capitalist market. The transition to industrial capitalism marked a significant shift away from these socio-economic structures.