The Rise of Capitalism

Definition

The Rise of Capitalism refers to the transition from feudal economies to market-oriented economies, characterized by private ownership, free markets, and profit motivation. This shift brought about significant changes in trade, agriculture, and industry during the late Middle Ages and into the modern period, influencing societal structures and leading to economic growth and innovation.

5 Must Know Facts For Your Next Test

1. The Rise of Capitalism was fueled by changes such as the expansion of trade networks and the discovery of new markets during the Age of Exploration.
2. As commerce grew, the middle class, or bourgeoisie, emerged as a powerful social group that played a key role in promoting capitalist values.
3. The invention of banking systems and financial instruments like bills of exchange facilitated investment and the accumulation of capital.
4. Capitalism led to urbanization as people moved to cities for jobs in emerging industries, fundamentally altering societal dynamics.
5. Philosophers like Adam Smith advocated for capitalism, arguing that free markets allow for competition and innovation, ultimately benefiting society as a whole.

Review Questions

• How did the rise of capitalism change the structure of society in Europe during the Enlightenment?
  • The rise of capitalism significantly altered European society by giving rise to a new social class known as the bourgeoisie, which consisted of merchants, bankers, and entrepreneurs. This emerging middle class gained economic power and challenged the traditional aristocracy's dominance. Additionally, as capitalism promoted urbanization and labor specialization, it led to shifts in societal roles and values, emphasizing individual achievement and competition over feudal loyalty.
• In what ways did mercantilism pave the way for the rise of capitalism during this period?
  • Mercantilism laid the groundwork for capitalism by encouraging states to regulate economies in a way that prioritized national wealth through trade. It spurred European powers to establish colonies and secure resources, creating a demand for market expansion. The emphasis on accumulating capital and wealth through trade helped shift focus towards individual enterprise and private ownership, which are key components of capitalist economies.
• Evaluate how the Industrial Revolution was both a product and a catalyst for the rise of capitalism.
  • The Industrial Revolution emerged as both a result of capitalist principles and a catalyst for further economic change. As capitalism took root, technological innovations led to increased production capabilities and efficiency. In turn, these advancements created new markets for goods and generated wealth, which further fueled capitalist expansion. The relationship between industrialization and capitalism was symbiotic; each drove growth in the other, reshaping economies and societies in profound ways.

Related terms

Mercantilism: An economic theory prevalent in Europe from the 16th to the 18th century that emphasized government regulation of the economy to augment state power, often through a favorable balance of trade.

Industrial Revolution: A period of major industrialization in the late 18th and early 19th centuries that marked a shift to powered, special-purpose machinery, factories, and mass production.

Joint-Stock Companies: Business entities where different stocks can be bought and owned by shareholders, allowing for the pooling of capital for large ventures such as exploration and trade.