CAPITALISM IS THE IDEL SOCIL SYSTEM

2 Pages 595 Words

From the 1400’s to the 1700’s, the major European trading nations

used an economic system known as mercantilism. Under this system,

governments made sure to manage their economic situation so that the

amount of exports exceeded the amount of imports. They placed high tariffs

(taxes) on imported goods so that they would cost more at home, and gave

financial aid to local farms and industries so they could lower the prices of

their exports. Nations made themselves rich by selling more goods than they

bought.

During the mid-1700’s, a group of French economists also known as

physiocrats urged the government to stop making foreign trade its business.

Their policy, called laissez faire ( a French phrase that meant allow to do.)

demanded an end to the high tariffs and other trade restrictions.


With the help of Adam Smith capitalism soon spread to other large

trading countries. Smith’s book The Wealth Of Nations (1776) gave the

basic argument for capitalism. In the book it was said that a government

should not interfere with a nation’s economy but instead should let

individuals act as “free agents” who look out for their own interests. These

“free agents” Smith said would naturally bring a greater good to society “as

if guided by an invisible hand.”


The early growth of capitalism was based on the use of privately

owned property to make money. The growth of markets encouraged men to

invest capital- (goods or money devoted to making goods or money.)

capitalists made two new systems of manufacturing. In one of them a

capitalist would employ a large amount of journey men and helpers in his

workshop for money. This helped make large workshops so, the work was

divided, men no longer had to carry out manufacturing on their own like in

the old system. The capitalist boss p...