11.2: Early Capitalism

The growth of commercial wealth was closely tied to the growth of overseas empires. Whereas the initial wave of European colonization (mostly in the Americas) had been driven by a search for gold and a desire to convert foreigners to Christianity, European powers came to pursue colonies and trade routes in the name of commodities and the wealth they generated by the seventeenth century. In this period of empire-building, European states sought additional territory and power overseas primarily for economic reasons. Because of the enormous wealth to be generated not from gold and silver themselves, but from commodities like sugar, tobacco, and coffee (as well as luxury commodities like spices that had always been important), the states of Europe were willing to war constantly among themselves as well as to perpetrate one of the greatest crimes in history: the Atlantic Slave Trade.

In short, we see in the seventeenth and eighteenth centuries the first phase of a system that would later be called capitalism: an economic system in which the exchange of commodities for profit generated wealth to be reinvested in the name of still greater profits. In turn, capitalism is dependent on governments that enforce legal systems that protect property and, historically, by wars that tried to carve out bigger chunks of the global market from rivals. To reiterate, capitalism was (and remains) a combination of two major economic and political phenomena: enterprises run explicitly for profit and a legal framework to protect and encourage the generation of profit. The pursuit of profit was nothing new, historically, but the political power enjoyed by merchants, the political focus on overseas expansion for profit, and the laws enacted to encourage these processes were new.