The Effects of Mercantilism in the New
World
Today’s Objective:
• To define capitalism
• To explain how mercantilist & capitalist ideas
put European nations economically ahead of
the rest of the world
• To compare capitalism to feudalism
• To compare feudalism to slavery
What is mercantilism?
• Increasing the wealth of a nation by increasing
their gold and silver reserves
• Creating a favorable balance of trade
– balance of trade is essential to increasing a
nation’s wealth; a nation cannot become wealthy
with trade imbalance
• So how does one create trade balance?
Mercantilism
Balance of Trade
Pros/Cons of Mercantilism
•
•
•
•
•
Pros
Trade stimulated
Favorable balance of trade for
Europe
Low price for raw materials
Europe had a growing, stable
market for its finished
products
Taxes paid on goods were in
gold & silver making Europe
wealthier
•
•
•
•
•
•
•
Cons
Non-European nations exploited
The end goal is wealth at the
expense of other nations
Competition for colonies led to
wars
Colonies could only trade with
their colonizer/no free trade
High price for finished goods
Taxes only paid in gold & silver so
deplete the colonies resources
Leads to capitalism
What is Capitalism?
• A system where the capitalist/owner controls
all the means of production.
• Means of production are all of the necessary
elements in order to create a good or service.
i.e. all the factories, land, materials, etc.
• The capitalist gives a wage to the worker in
exchange for his/her labor but continues to
own all the MOP and the profit.
Capitalism vs Feudalism
• Capitalism replaces feudalism in Europe & intro’d in NW
– feudalism was based on a system of mutual obligations; a
military system for protection
– capitalism is based on profit
– capitalism divests workers from land ownership
• Feudal system was based on self sustenance/Capitalism is
based on the market or producing what other people need.
• Capitalism leads to Europe’s industrialization
– in order to turn raw materials into finished products factories
were necessary; factories created jobs and jobs created cities
• Money exchanged in capitalism but not in feudalism
– Shifts from barter economy and leads to creation of money as
common means of exchange needed
• Workers don’t receive wages in either system = Slavery
– workers in the colonies are slaves/workers in feudal system
receive protection but no wage or access to MOP
The Discovery of Cash Crops Combined w/
Mercantilist/Capitalist Ideas Leads to a New Slavery
Serf Vs. Slavery
• Both are restricted to the
land; need permission to
leave
• Both don’t receive pay
• Both need permission to
marry
• Both can scarcely improve
status
• Slaves are chattel =
property meaning
capable of being bought
and sold
• Slaves have no legal rights
over themselves or their
family
– No protection of humanity
– No protection under law
– No social status
• Slavery was
racially/ethnically based
Recap
•
•
•
•
What is capitalism?
How does capitalism differ from feudalism?
Why does capitalism lead to slavery?
How is New World slavery different than Old
World slavery?