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 investment

Mercantilism 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 vs – 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

Mercantilism 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

Mercantilism 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 competition – 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