Economics Review

The Commercial Revolution and the Columbian Exchange (Sixteenth Century)

What is the Commercial Revolution? “The shift from a town-centered economy to a nation-centered economy.” The emergence of commercial capitalism

Causes Population increase Inflation Europe in 1600: 90 million people 20 million of those added in the 16th Century Inflation Devaluing of currency Prices go up, wages go down Actually helped emerging entrepreneurs

Emerging Capitalism “Putting out” system New Monarchies New banking systems “commercial capitalism” Capital and labor Mercantilism “favorable balance of trade” “bullionism” Self-sufficiency Role of the government

The “Price Revolution” Population growth + rise in inflation Spain and the New World The Columbian Exchange From the New World To the New World Results for Europeans Results for Native Americans

The Cottage Industry (a.k.a. “putting out system”) Pros Avoided guilds Helped farmers supplement income Created entrepreneurs Created new consumer goods Work could be done at home Cons Inefficient Workers spread out in many places Labor wasn’t coordinated and organized Lack of capital

The Physiocrats Francois Quesnay (1694-1774) Pierre Dupont de Nemours (1739-1817) Anti-mercantilism Anti-regulation Concerned with agriculture Government’s role: protect property and enforce laws

The Economics of the Industrial Revolution “Classical Economics”

Adam Smith Laissez-faire capitalism Competition Self-interest Division of Labor

Supply and Demand The “Free Market”

Thomas Malthus (1766-1834) An Essay on the Principle of Population (1798) Population will outgrow the food supply Advocated a laissez-faire approach Don’t help the poor

David Ricardo (1772-1823) The “Iron Law of Wages” Wages will always be at a subsistence level

The “Utopian Socialists”

Robert Owen (1771-1858) “Paternalistic Capitalism” New Harmony, Indiana

Count de Saint Simon (1760-1825) Founder of French Socialism Public ownership of industrial capital Goal of society: improve conditions of the poor

Charles Fourier (1772-1837) Poverty is the cause of all social problems Social communities “Phalanxes”

The Utilitarians John Stuart Mill Jeremy Bentham “The Greatest Good for the Greatest Number”

Louis Blanc (1811-1882) “Social Workshops” Goal: out-compete private industries Played a role in the 1848 Revolution

“Scientific” Socialism

Karl Marx (1818-1883) and Friedrich Engels (1820-1893)

The Communist Manifesto (1848) Das Kapital (1867)

Main Ideas Class conflict Impact of Industrialization Alienation Labor Theory of Value Dialectical Materialism Hegel’s dialectic “turned on its head” An inevitable historical process (hence “scientific socialism”)

ALL OF THIS FUNCTIONS IN THE REALM OF IDEAS FOR HEGEL Thesis Antithesis Synthesis (New Thesis) Antithesis ALL OF THIS FUNCTIONS IN THE REALM OF IDEAS FOR HEGEL Synthesis (New Thesis) Antithesis ABSOLUTE IDEA The Ultimate Synthesis (Eventually)

The Ultimate Synthesis Master Slave F E U D A L I S M Nobility Peasants C A P I T A L I S M ALL OF THIS FUNCTIONS IN THE REALM OF ECONOMICS FOR MARX Bourgeoisie Proletariat COMMUNISM The Ultimate Synthesis (Eventually)

“Dialectical Materialism” Marx framed this in economics CLASS CONFLICT Stages of history (these are scientific) Primitive communism Slavery Feudalism Capitalism Communism “It is not the consciousness of humans which determines their being. It is their social being which determines their consciousness.”

Socialism After 1870 The First International (1864-1876) Trade Unions Legal in Britain, 1871 Legal in France, 1884 Most powerful in Germany “Revisionist” Socialism Jean Jaures (France, 1859-1914) Eduard Bernstein (Germany, 1850-1932) The Erfurt Program (Germany, 1891) Improve lives of workers, not work for revolution The Fabian Society (England, 1884) The Labor Party (England, 1906) The Second International (1889-1916) Denounced “opportunism” Bolshevism and Leninism Changes to Marxism

Sample Essay Questions

Describe and compare the differences among Utopian socialists, Karl Marx, and Revisionist Socialists in their critiques of 19th century European economy and society.

“In the 15th century, European society was still centered on the Mediterranean region, but by the end of the 17th century, the focus of Europe had shifted north” Identify and analyze the economic developments between 1450 and 1700 that helped bring about this shift.

How and in what ways were economic and political factors responsible for intensifying European imperialist activity in Africa from the mid-19th century to the beginning of the First World War?

Analyze changes in the European economy from 1450 to 1700 brought about by the voyages of exploration and by colonization. Give specific examples.

Describe and analyze the issues and ideas in the debate in Europe between 1750 and 1846 over the proper role of government in the economy. Give specific examples.

Analyze the common political and economic problems facing Western European nations in the period 1945-1960 and discuss their responses to these problems.

Analyze the influence of the theory of mercantilism on the domestic and foreign policies of France, 1600-1715.

Analyze the key developments that characterized the European economy in the second half of the nineteenth century.

Both Jean-Baptiste Colbert (1619-1683) and Adam Smith (1723-1790) sought to increase the wealth of their respective countries. How did their recommendations differ?

Explain the reasons for the rise of the Netherlands as a leading commercial power in the period 1550-1650.

Discuss the economic policies and institutions that characterized mercantilist systems from 1600-1800.

How and to what extent did the Commercial Revolution transform the European economy and diplomatic balance of power in the period 1650-1763?

Describe and analyze economic policies in Eastern and Western Europe after 1945.

Compare and contrast the social and economic roles of the state in seventeenth and eighteenth century Europe (before 1789) to the social and economic roles of the state in Europe after the Second World War.