Economic Change in Europe

Joe Schurer

In this paper I seek to discuss to what extent the advent of Capitalism and Mercantilism
affected Europe. Capitalism is an economic and political system in which trade and industry are
controlled by private owners for a profit. Mercantilism is an economic theory that the wealth of a
country is generated by the accumulation of goods such as gold and silver, and that a country
must export more than it imports to generate wealth. During primarily the 17th and 18th Century,
these new ideas rose in popularity. They had a large impact on Europe and on the rest of the
world. I argue that Capitalism and Mercantilism is the reason Europe grew to be so dominant
during this period. I will prove this by discussing how these economic changes brought about
Imperialism, political changes, and the rise of the modern nation-state.
Let me first discuss how Capitalism and Mercantilism led to the rise of Imperialism in the
17th and 18th Century. Brittanica.com wrote about Mercantilism Precious metals, such as gold
and silver, were deemed indispensable to a nations wealth It was believed that trade balances
must be favourable, meaning an excess of exports over imports. Many European countries
saw the path to achieving this through Imperialism. Imperialism is extending a nations power
and influence, usually through the acquisition of territory. This led European countries to expand
their use of colonies. Colonies have the potential to supply resources that the mother nation does
not possess, such as gold or silver, and they can provide a reliable market for the mother nation
to export to. The idea of Capitalism just furthered this. Entrepreneurs set up businesses in the

colonies and investors invested in merchants and new businesses that appeared because of the
colonies. These economic changes also had an effect on politics in Europe.
Next, I will analyze the political changes Mercantilism and Capitalism caused. The
Feudal System describes a system in Western Europe where leaders traded land for service of
people under them. Mercantilism would follow a long period of Feudalism in Europe.
Encyclopedia.com wrote, Since Mercantilism at base postulated increased royal control over
both the internal and external economic policies of the state, it found easy acceptance among the
"new" monarchies of the late fifteenth century and the sixteenth century. These leaders changed
their countries to fit this ideal which they believed would make their countries stronger. But
because of these changes, new social classes emerged due to ideas of Capitalism, which were
previously impossible because of the contracts between lords and dependents. In this new system
merchants, entrepreneurs, and investors all gained prevalence and found a way to thrive in the
new system Europe was developing. Capitalism and Mercantilism also led to the rise of the
modern nation-state.
Now I will discuss how these changes brought about the rise of the modern nation-state.
A nation refers to a single or multiple nationalities that are joined in a union, which determine a
system of law, manages a currency, uses bureaucracy to order the elements of their society, and
manages a military. Newworldencyclopedia.com wrote, Isolated feudal estates were being
replaced by centralized nation-states as the focus of power. While trying to achieve mercantilist
and capitalist ideas, many European nations like Britain, France, Spain, and the Netherlands
became much more like the nation-state we are familiar with today. They developed larger
centralized military to take over land for colonies, protected investments in their colonies, and

battled other nation-states for control. During this period, military conflict became much more
common because now the militaries of European nation-states were no longer only raised
because of a singular objective, these militaries were now professional forces that existed
permanently. These new nation-states also had to develop more of a centralized government and
bureaucracy to manage the larger and larger economies that formed as a result of new businesses
from Capitalism and Mercantilism.
Without Capitalism and Mercantilism our world would be very different. For centuries,
Europe had been defined by the Feudal System. The advent of Mercantilism and Capitalism
brought massive changes to the region. European countries projected their force all over the
world and became much more imperialistic. European countries founded colonies all over the
world so that they could gain access to resources they did not have and obtain markets for export.
The effects of Mercantilism and Capitalism did not end there; these ideas completely
revolutionized the political scene in Europe and changed who held power. These changes would
be the catalyst for the formation of the modern nation-jklstate. These would lead to the nationstate we are familiar with and the economic system many people live in today.