Economic Systems

Mercantilism Mercantilism

Early CapitalistsEarly Capitalists

Etc.Etc.

Population & Urbanization as Factors

•Population growthPopulation growth•American food cropsAmerican food crops•Increased resistance Increased resistance to epidemic diseases to epidemic diseases after the mid-after the mid-seventeenth centuryseventeenth century•European population: European population: 81 million, 1500 < 180 81 million, 1500 < 180 million, 1800million, 1800

Population & Urbanization as Factors

• Urbanization Urbanization • Rapid growth of major citiesRapid growth of major cities

• Paris: 130,000 in 1550 < 500,000 in 1650Paris: 130,000 in 1550 < 500,000 in 1650

• Cities: administrative and commercial centersCities: administrative and commercial centers

Why build an empire?• New or more trade goodsNew or more trade goods

• FurFur• CoffeeCoffee• SugarSugar• TeaTea• Etc.Etc.

Mercantilism !• What’s that?What’s that?

• An economic philosophy of the 16th and 17th An economic philosophy of the 16th and 17th centuries that international commerce should centuries that international commerce should primarily serve to increase a country's primarily serve to increase a country's financial wealth, especially of gold and financial wealth, especially of gold and foreign currency. foreign currency.

• Exports viewed as desirable and imports as Exports viewed as desirable and imports as undesirable unless they lead to even greater undesirable unless they lead to even greater exportsexports

Settler colonies in North America• Foundation of colonies on Foundation of colonies on

east coast, exploration of east coast, exploration of west coast west coast • France and England came France and England came

seeking fur, fish, trade seeking fur, fish, trade routes in the early routes in the early seventeenth centuryseventeenth century

• NW Passage, anyone?NW Passage, anyone?

• Settlements suffered Settlements suffered isolation & food shortagesisolation & food shortages

Settler colonies in North America• Colonial government different from Iberian colonies Colonial government different from Iberian colonies

• North American colonies controlled by private investors with little North American colonies controlled by private investors with little royal backingroyal backing

• Royal authority and royal governors, but also institutions of self-Royal authority and royal governors, but also institutions of self-governmentgovernment

• Iberian Colonies:Iberian Colonies:• Royal control: ViceroysRoyal control: Viceroys• You remember what those were, right?You remember what those were, right?

Settler colonies in North America• Relations with indigenous peoples Relations with indigenous peoples

• Settlers' farms interrupted the migrations of Settlers' farms interrupted the migrations of indigenous peoplesindigenous peoples

• Settlers seized lands, then justified with Settlers seized lands, then justified with treatiestreaties

• Natives retaliated with raids on farms and Natives retaliated with raids on farms and villagesvillages

• Attacks on European communities brought Attacks on European communities brought reprisals from settlersreprisals from settlers

• Between 1500 and 1800, native population Between 1500 and 1800, native population of North America dropped 90 percentof North America dropped 90 percent

Early capitalism & protoindustrialization

• The nature of capitalism The nature of capitalism • Private parties sought to take advantage Private parties sought to take advantage

of free market conditionsof free market conditions• Economic decisions by private parties, Economic decisions by private parties,

not by governments or nobilitynot by governments or nobility• Forces of supply and demand Forces of supply and demand

determined pricedetermined price

• Supply and demand Supply and demand • Merchants built efficient transportation Merchants built efficient transportation

and communication networksand communication networks• New institutions and services: banks, New institutions and services: banks,

insurance, stock exchangesinsurance, stock exchanges

Early capitalism & protoindustrialization• Joint-stock companies like EEIC and Joint-stock companies like EEIC and

VOC organized commerce on a new VOC organized commerce on a new scale scale

• Capitalism actively supported by Capitalism actively supported by governments, especially in England and governments, especially in England and Netherlands Netherlands • Protected rights of private property, Protected rights of private property,

upheld contracts, settled disputesupheld contracts, settled disputes• Chartered joint-stock companies and Chartered joint-stock companies and

authorized these to explore, authorized these to explore, conquer, and colonize distant landsconquer, and colonize distant lands

Early capitalism & protoindustrialization• The putting-out system, or protoindustrialization, of seventeenth The putting-out system, or protoindustrialization, of seventeenth

and eighteenth centuries and eighteenth centuries • Entrepreneurs bypassed guilds, moved production to Entrepreneurs bypassed guilds, moved production to

countrysidecountryside• Rural labor cheapRural labor cheap• Cloth production highly profitableCloth production highly profitable

Social change in early modern Europe• Early capitalism altered rural society: Early capitalism altered rural society:

• improved material standards improved material standards • increased financial independence of rural workersincreased financial independence of rural workers

• Profits and ethics Profits and ethics • Medieval theologians considered profit making to be selfish Medieval theologians considered profit making to be selfish

and sinfuland sinful• Adam Smith: society would prosper as individuals pursued Adam Smith: society would prosper as individuals pursued

their own intereststheir own interests• Capitalism generated deep social strains also: bandits, Capitalism generated deep social strains also: bandits,

muggers, witch-huntingmuggers, witch-hunting

Social change in early modern Europe• The nuclear family strengthened by capitalism The nuclear family strengthened by capitalism

• More independent economically, socially, and More independent economically, socially, and emotionallyemotionally

• Love between men & women, parents & Love between men & women, parents & children became more importantchildren became more important

• Shift is reflected in literature (Jane Austen Shift is reflected in literature (Jane Austen ring a bell?)ring a bell?)

So what?• By 1750, a whole new economic By 1750, a whole new economic

worldworld• New alliancesNew alliances• World beginning to be divided upon World beginning to be divided upon

current economic boundariescurrent economic boundaries