Capitalism Is Based On The Same Principles As Mercantilism

The History of Capitalism

Capitalism is based on the same principles as mercantilism. The accumulation of means, materials, land and other things, this accumulation is called capital and “the property-owners of these means of production are called capitalists” (Hooker 2). Productive labor, human work that is necessary to make goods and distribute them, takes the form of wage labor. “The means of production and labor is manipulated by the capitalist using rational calculation in order to realize a profit” (Hooker 2).

Mercantilism is the earliest form of capitalism. Mercantilism can be simply defined as the allotment of trading goods for profit. Rome is credited with the first formation of a mercantile society. As the Rome Empire expanded,

The industrialist showed that they could produce far more products than their societies could afford, causing a major crisis between the times of 1918 to 1923. Germany lost the war and found themselves in a messy situation. They gave up some of their land, paid war reparations, and had to rebuild the destruction caused by the war. The Germany economy rapidly fell into a depression. Other countries, like the U.S., England, and Japan (victors of the war) went through a short time of affluence at the end of the war. Due to the lack of goods at the end of the war, factories were put into overdrive to meet a narrow expansion of consumerism. Because the path of capitalism had moved into a world market, little was know how an over supply of goods could cause a collapse in the system. This put the world market in a major crisis that broke out in 1920-1921 (“Kan”). In October 1929, the world bubble broke in the United States. Trading opened on the New York Stock exchange with orders to sell, and they never stopped. Banks were overrun by demands from depositors for their money, causing the financial system to collapse. All trust in the economy all but evaporated, collapsing consumer confidence, causing factories to close. People that had worked on the farms in the past, and moved to city to work in the factories had no jobs, and no where to

when Hitler, in Germany, pushed his country into a war economy, by declaring war on Poland. This created temporary prosperity for the Germans, but threw the whole world into war by 1942. The Second World War ended in a bigger disaster than the First World War. Sixty-seven million people were killed or injured in the war. “The destruction of material wealth totaled approximately 4 trillion dollars. Most of the countries suffered defeat and/ or serious damage, while the United States avoided any direct conflict on its soil. Being the only economy standing the world without any damage, American imperialism thrived. America’s economy expanded and the U.S. replaced German and Japanese fascism with Capitalism (“Kan”). One can assume that capitalism is the natural production of human nature. Of all the economic systems tried to date, Capitalism appears to be the only system that has endured many tests, and has grown to dominate the world. The fact that communism in Russia failed during the 1980 and 1990’s proves that capitalism is the outcome of human nature. Capitalism conforms to the natural laws and conditions of humanity and that anything that falls out of these conditions can only brings misery