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Origins of Capitalism

Learn about the origins of capitalism, from mercantilism to market economies. Discover how trade routes and banking played a vital role, leading to the rise of capitalism as the dominant economic system in the Western world by the 1800s.

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Origins of Capitalism

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  1. Origins of Capitalism p. 459-463

  2. I. New Economy A. Mercantilism – gov. controls economy of country & colonies to make gov. stronger & richer 1. sought gold & silver 2. Wanted a positive balance of trade (sell more than you buy so you make $) 3. Got raw materials from colonies & sold them finished goods

  3. 4. Cottage industries grow in mother country 5. Didn’t allow colonies to make finished goods 6. Didn’t allow colonies to trade w/others

  4. B. Triangular Trade

  5. II. Northern Europe Trade Routes A. Improved atlas encouraged traders to find new sources of wealth B. England – trading posts in India & China, trade in North America C. Netherlands control islands of E. Asia, trade posts in India, Japan, & S. Africa

  6. III. Banking A. Dutch set up bank manned mostly by Jews 1. Jews had migrated to escape religious persecution 2. Jews only allowed to do certain jobs 3. Christians not allowed to lend $ (according to Church) B. English invited Jews to England to help in their business C. Banks helped economic growth

  7. IV. Market Economies A. New wealth could buy more manufactured goods • Population growth, farmers growing food at lower costs, colonies B. All led to increased demand for goods & people wanted to increase supply

  8. C. Capitalism – economic system where individuals & business run most industries. Competition dictates cost of goods D. Market economy – individuals determine what goods and services they buy • 1800’s capitalism becomes basis for most economic systems in Western world

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