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CONTTRIBUTION OF MERCANTILISM TO THE DEVELOPMENT OF CAPITALISM IN EUROPE

Mercantilism is economic nationalism for the purpose of building a wealthy and powerful state. Adam Smith coined the term “mercantile system” to describe the system of political economy that sought to enrich the country by restraining imports and encouraging exports. This system dominated Western European economic thought and policies from the sixteenth to the late eighteenth centuries. The goal of these policies was, supposedly, to achieve a “favorable” balance of trade that would bring gold and silver into the country and also to maintain domestic employment. In contrast to the agricultural system of the physiocrats or the laissez-faire of the nineteenth and early twentieth centuries, the mercantile system served the interests of merchants and producers such as the British East India Company, whose activities were protected or encouraged by the state.Mercantilism had a great impact in the development of industrial revolution and the eventual transformation of European countries into big powers .The European countries accumulated capital for around 300 years. It should be noted that mercantilism was a blessing to Europe, but a tragedy to Africa.
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The contribution of mercantile trade to the development of European industrial capitalism included the following:
  • It led to the accumulation of capital; The European countries acquired a lot of capital from mercantilism. The countries were able to accumulate a lot of capital throughout the 300 years of mercantilism through unequal exchange. They obtained precious metals such as gold, silver and diamond which facilitated the industrial revolution.
  • It was the source of cheap labor; Mercantilm was associated with slave trade. During this period millions of Africans were uprooted and exported to Ameisrica where they provided cheap labor in mines and plantations of sugarcane and coffee belonging to European capitalists.
  • it facilitated the upply of raw materials; Mercantilism contributed to the rise of capitalism by supplying raw materials that were needed by European industries. Raw materials such as gold, tobacco, sugarcane and cotton were obtained from Africa and America. These raw materials played a great role in the rise of the industries revolution.
  • It contributed to the development of science and technology; Mercantilism was associated with maritime technology that led to the development of science and technology. The ships enabled the transportation of large quantities of raw materials and manufactured goods over long distances. This played a great role in the rise of the industrials revolution.
  •  Contributed to the development of towns and cities ; Mercantilism contributed to the development of towns and cities Europe. These towns developed due to the booming trade that existed in that period. The towns include the following; Manchester, Liverpool, Nantes and Bordeaux. These towns attracted the establishment of industries which contributed to the rise of capitalism.
  • Facilitated the development of financial institutions; Mercantilism contributed to the development of financial institutions. Part of the money which was used to establish Barclays bank in England was obtained form slave trade during merchantalism. These financial institutions played a great role in the rise of capitalism by providing loans and credits to people who wanted to invest.
  • It led to the development of agricultural sector; Mercantilism was associated with new farming methods in the agricultural sector. The wealth accumulated from mercantilism was invested in agricultural sector, thus contributing to agragarian revolution. Agrarian revolution played a great role inthe development of capitalism


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