History Of Economics
Birth of Capitalism
There are several examples of maintained economic growth throughout the history, for example, the wool industry in 13th century Flanders and 14th century Florence. It started in the 11th century when long distance transaction flourished, connecting ways to success between Netherlands and Venice. For a majority of the world’s population, living standards remained mediocre until mid of the 18th century.
As commerce eventually grew over the centuries, the authority of feudal system declined and was replaced by merchants. Long distance trading became common when innovations were introduced in sailing techniques. The new prospects and encounters of sending a ship overseas for years at a time put in place the establishments which assisted the progression of the modern capitalist system.
Following mentioned are the factors that contributed to these changes.
- The Reformation of Protestant
- Growth of strong nation states from16th to 19th century
Industrialization first began in Northern Europe. The work ethics of protestant encouraged hard work, efficiency, frugality and sobriety which aided in the process of capitalism.
The growth of strong nation-states made conditions favourable for capitalism. It made local markets free of obstructions to exchange products, an identical monetary system, property laws and contracts, forces and local militia protection, as well as, basic conveyance and transportations infrastructure. At first monarchs fought for power from town authorities and feudal lords joined terrain into nation states. In due course, as the influence of the middle class and capitalists grew, the monarchs surrendered authority to a more representative organization.
Great social and scientific advances took place in 17th and 18th century that included discoveries of electricity, calculus, oxygen and many other discoveries that led to practical implementations in industry and agriculture. This era placed the scientific foundation for industrial revolution. David Hume, Adam Smith and Thomas Jefferson gave huge importance to responsibilities and rights of an individual person. This weakened the power of institutions like church and state which had a condescending behaviour with the masses.
The revenues gained by capitalist from flow of gold and silver and international trade from the Americas funded and supported the increase of capital that promoted and protected industrialization and capitalism.