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?