Download CAPITALISM AND EMPIRES: NEW ECONOMICS/OLD POLITICS

CAPITALISM AND
EMPIRES: NEW
ECONOMICS/OLD
POLITICS
Reading: Smith, et al., 672-673
How Did Economics Change
Around 1500?
• Mercantilism: traditional European economy
– European idea that economy of a society is
organized to benefit ruler
– Heavy involvement of government in economy
– Gold/silver – bullion central to economy
– With colonies – notion that colony exists for benefit
of “Mother” Country – ruler of mother country
• Colony provides raw materials
• “Mother” Country uses raw materials to make
manufactured goods that are sold to colony
• Capitalism: Private individuals or corporations have
clear ownership of property/means of production
– Individuals/Corporations act economically to make profits
for themselves
• Goal is to sell goods for more than it costs to produce them
• Profits can be used as capital to reinvest in economic
activities/production
• Belief in laws of supply and demand
• Belief (in theory) that the best economy is one with little or no
intervention of government
Who Is Rich and Who Is Poor?
• Society’s wealth in old economy: amount of bullion in
ruler’s coffers (could be product of trade or taxes)
• Society’s wealth in capitalist economy: GNP or GDP –
Gross National Product or Gross Domestic Product
(Both are simple measures of total amount of goods and
services a society produces) – usually measured as Per
Capita GNP or GDP which means that the total value
of the goods and services of a country are divided by
the total population of the country
What is the role of the individual in
society?
• In traditional economies: mostly to feed
themselves and families, provide taxes for rulers
– produce what they can, which is mostly
enough
• In capitalist economies: there is never enough –
wealth comes from individuals pursuing their
own self-interest to get the most possible by
exchanging their labor or goods in a “free”
market
Tensions from European Changes
• Europeans begin wild search for trade and territories
• Europeans begin to explore ways of gaining new
markets
• Traditional economies remain heavily influenced by
rulers – want taxes more than trade
• For traditional economies – what they produce is
enough – if Europeans want more of something that is
their problem
• For capitalist Europeans: there is never enough
Pyramid Shaped Societies
• Traditional Societies organized as Pyramids
– Ruler (King, Sultan, Czar, Emperor) at top
– Surrounded by very small group of elite advisors
– 90% of pyramid contains everyone else
• Society exists for benefit of ruler
• Biggest needs related to desire to expand
empires
• Religion often glue/ often largest problem ruler
needs to deal with
• People mostly do not matter
Problems with Pyramid Shaped
Societies
• When rulers good, can function very well
• When rulers weak, can have main problems
• How do you get rid of incompetent ruler?
Sovereignty
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What is sovereignty?
Where does it lie in a Pyramid-Shaped society?
Where does it lie in the contemporary U.S.?
Key problem 17th and 18th centuries (1600s1800s, even 1900s): moving toward popular
sovereignty
What is the relationship between Popular
Sovereignty and Capitalist Development?
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Great Britain 1500-1800
China 1500-1800
Contemporary U.S.
Contemporary China