Capitalism - Europe’s Enduring Economic Evolution
DescriptionAn essay that talks about the rise capitalism in Europe and how it has been one of the most enduring parts of their history.
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Between 1648 and 1815, Europe—and by extension, the world—underwent rapid change. For nearly two centuries, one economic theory dominated Western thought: mercantilism, the belief that wealth was finite and nations needed to hoard it. However, in 1606, the first stock exchange opened in Amsterdam, introducing a new economic shift emphasizing private ownership of goods and businesses to generate profit. The Age of Exploration accelerated this trend, as colonial trade sparked increased commerce and encouraged settlers and citizens to engage in risk-taking and wealth generation.The resulting economic boom brought both positives and negatives. On one hand, innovations like labor unions, banknotes, and free-market trade fostered unprecedented prosperity. However, early capitalism also introduced exploitative labor conditions. The Chapelier Laws of 1791, passed during the French Revolution, restricted workers' rights to organize despite mounting protests over poor conditions. Factory labor became brutal, with long hours, unsafe environments, and widespread child exploitation reducing life expectancy. These hardships ultimately drove the formation of labor unions, which fought for better wages and conditions. Despite resistance from factory owners, unions persisted and became a lasting force in economic reform. Without them, capitalism's early growth may have faltered, proving that cooperation—not exploitation—drives lasting economic success.One major innovation during this period was the introduction of the official state banknote. The first such note, issued by Sweden's Stockholms Banco in 1661, revolutionized trade by replacing cumbersome coins with paper currency representing gold or silver. This innovation simplified transactions across long distances and strengthened public trust in financial institutions. The concept soon spread across Europe, notably influencing England when Dutch-born King William of Orange endorsed the Bank of England's charter. This allowed the public and corporations to fund colonial expeditions through loans rather than relying solely on the crown. Together, the rise of banknotes and joint-stock companies spurred commerce and economic growth that still echoes in modern financial systems.Adam Smith's economic theories further defined this period. In The Wealth of Nations (1776), Smith championed labor specialization, arguing that individuals should focus on roles they excel at. He believed this not only improved productivity but also allowed people to pursue careers aligned with their passions. Smith's theories paralleled shifts in Europe as labor moved from farming to specialized trades like textile production. Smith's ideas, reflected in paintings like Emmanuel de Witte's 1653 depiction of Amsterdam's bustling stock market, illustrate capitalism's expanding influence. Additionally, documents like the Charter of the Carolinas (1663) promoted colonial privatization, encouraging individuals to capitalize on natural resources and trade opportunities. These changes fueled economic expansion and reinforced Smith's belief in the power of individual ambition.Ultimately, the rise of unions, banknotes, and free-market ideas reshaped European economies and left a lasting mark on global commerce. Nowhere is this clearer than in the United States, which adopted and expanded these principles to become an economic powerhouse. With a GDP exceeding $20 trillion, America's success underscores the transformative power of capitalism. Rooted in European innovation and guided by the "invisible hand," capitalism has proven to be one of Europe's most enduring economic evolutions and legacies, unlocking new opportunities for growth and prosperity worldwide.
Sources
Domain, Public. The First Banknote from the Stockholms Banco of Sweden founded by Johan Palmstruch. 1661. Accessed 13 March 2023.Florin, Franz Phillip. Oeconomus Prudens et Legalis (The Prudent and Legal Economist). 1719. Accessed 13 March 2023.French National Assembly. The Chapelier Laws. 1791. Accessed 13 March 2023.Governor of The Bank of England. The Charter of the Governor and Company of the Bank of England. 1694. Accessed 13 March 2023.II, Charles. Charter of the Carolinas. 1663. Accessed 13 March 2023.Smith, Adam. The Wealth of Nations. 1776. Accessed 13 March 2023.Witte, Emmanuel de. The Stock Market in Amsterdam. 1653. Accessed 13 March 2023.
