Mercantile Capitalism - European Mercantilism

INT 200: Global Capitalism and
its Discontents
Mercantile Capitalism
Early Modern Europe
• The New World
18,000 tons of silver and 200 tons of gold
sugarcane for rum, molasses, and sugar, trade in African slaves
immense fortunes; wealth and enrichment; the Bourgeoisie
The strength of these merchant and banking bourgeoisie rested on
three pillars chartered trading companies, their financial institutions,
and the merchant fleet
• Charted Trading Companies
 The British East India Company (1600) and the
Dutch East India Company (1602)
 first multinational corporations in the world and
the first companies to issue stock
Early Modern Europe
• England
– collapse of the manorial system: wage-labor, cities, merchants
– Centralized state: London central market for the entire country and
large internal market
– Enclosure and Agrarian capitalism:
• polarizing agrarian population into larger landowners who lived on rents, capitalist
tenants living on profits, and propertyless laborers living on wages
– Long-distance trade re-emerged
Early Modern Europe
• Summary
– switch from tributary modes of production to voluntary market
exchange of goods, labor, land, and capital, radiated out from northern
Italy, the Low Countries, and Britain
– chartered joint-stock companies created by the state
– colonial and expansionary powers by states, powerful nation-states
sought that to accumulate precious metals, and so military conflicts
– merchants, who had previously traded on their own, invested capital
in the East India Companies and other colonies, seeking a return on
• Economic nationalism for the purpose of building a wealthy
and powerful state
– bullionism, a doctrine stressing the importance of accumulating
precious metals
– a state should export more goods than it imported so that foreigners
would have to pay the difference in precious metals
• only raw materials that could not be extracted at home should be imported
• Subsidies, monopolies, tariffs
– agrarian capitalism of the physiocrats: the wealth of nations was
derived solely from the value of "land agriculture“
• the production of goods and services as consumption of the agricultural surplus,
since the main source of power was from human or animal muscle and all energy
was derived from the surplus from agricultural production
• The consolidation of the regional power centers of the feudal
era by large, competitive nation-states; but also
establishment of colonies outside Europe
growth of European commerce and industry relative to agriculture
increase in the volume and breadth of trade
the increase in the use of metallic monetary systems, particularly gold
and silver
• military conflict between nation-states
– full-time professional forces
– sufficient quantity of hard currency to support a military that would
deter attacks by other countries
• Governments and Mercantile Classes
– In exchange for paying levies and taxes to support the armies of the
nation-states, the mercantile classes induced governments to enact
policies that would protect their business interests against foreign
– capital to new industries, exempt new industries from guild rules and
taxes, establish monopolies over local and colonial markets, and grant
titles and pensions to successful producers, etc.
– tariffs, quotas, and prohibitions on imports of goods that competed
with local manufacturers
– prohibited the export of tools and capital equipment
– Shipping vital to national power: strong merchant marines, port duties
on foreign vessels, restrictions on foreign vessels
• Zero Sum Game
• Protectionism:
– quotas, subsidies, tariffs, cabotage laws, devaluation