Economics Review

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Economics Review
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The Commercial Revolution and the Columbian
Exchange (Sixteenth Century)
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What is the Commercial Revolution?

• The shift from a town-centered economy to a
  nation-centered economy.
• The emergence of commercial capitalism

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Causes

• Population increase
• Europe in 1600 90 million people
• 20 million of those added in the 16th Century
• Inflation
• Devaluing of currency
• Prices go up, wages go down
• Actually helped emerging entrepreneurs

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Emerging Capitalism

• Putting out system
• New Monarchies
• New banking systems
• commercial capitalism
• Capital and labor
• Mercantilism
• favorable balance of trade
• bullionism
• Self-sufficiency
• Role of the government

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The Price Revolution

• Population growth rise in inflation
• Spain and the New World
• The Columbian Exchange
• From the New World
• To the New World
• Results for Europeans
• Results for Native Americans

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The Cottage Industry(a.k.a. putting out system)

• Pros
• Avoided guilds
• Helped farmers supplement income
• Created entrepreneurs
• Created new consumer goods
• Work could be done at home

• Cons
• Inefficient
• Workers spread out in many places
• Labor wasnt coordinated and organized
• Lack of capital

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The Physiocrats

• Francois Quesnay (1694-1774)
• Pierre Dupont de Nemours (1739-1817)
• Anti-mercantilism
• Anti-regulation
• Concerned with agriculture
• Governments role protect property and enforce
  laws

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The Economics of the Industrial Revolution

• Classical Economics

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Adam Smith

• Laissez-faire capitalism
• Competition
• Self-interest
• Division of Labor

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Supply and DemandThe Free Market
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Thomas Malthus (1766-1834)

• An Essay on the Principle of Population (1798)
• Population will outgrow the food supply
• Advocated a laissez-faire approach
• Dont help the poor

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David Ricardo (1772-1823)

• The Iron Law of Wages
• Wages will always be at a subsistence level

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The Utopian Socialists
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Robert Owen (1771-1858)

• Paternalistic Capitalism
• New Harmony, Indiana

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Count de Saint Simon (1760-1825)

• Founder of French Socialism
• Public ownership of industrial capital
• Goal of society improve conditions of the poor

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Charles Fourier (1772-1837)

• Poverty is the cause of all social problems
• Social communities
• Phalanxes

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The Utilitarians

• John Stuart Mill
• Jeremy Bentham
• The Greatest Good for the Greatest Number

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Louis Blanc (1811-1882)

• Social Workshops
• Goal out-compete private industries
• Played a role in the 1848 Revolution

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Scientific Socialism
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Karl Marx (1818-1883) and Friedrich Engels
(1820-1893)
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The Communist Manifesto (1848)Das Kapital (1867)
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Main Ideas

• Class conflict
• Impact of Industrialization
• Alienation
• Labor Theory of Value
• Dialectical Materialism
• Hegels dialectic turned on its head
• An inevitable historical process (hence
  scientific socialism)

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Thesis
Antithesis
Synthesis (New Thesis)
Antithesis
ALL OF THIS FUNCTIONS IN THE REALM OF IDEAS FOR
HEGEL
Synthesis (New Thesis)
Antithesis
ABSOLUTE IDEA The Ultimate Synthesis
(Eventually)
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Master
Slave
F E U D A L I S M
Nobility
Peasants
C A P I T A L I S M
ALL OF THIS FUNCTIONS IN THE REALM OF ECONOMICS
FOR MARX
Bourgeoisie
Proletariat
COMMUNISM The Ultimate Synthesis
(Eventually)
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Dialectical Materialism

• Marx framed this in economics
• CLASS CONFLICT
• Stages of history (these are scientific)
• Primitive communism
• Slavery
• Feudalism
• Capitalism
• Communism
• It is not the consciousness of humans which
  determines their being. It is their social being
  which determines their consciousness.

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Socialism After 1870

• The First International (1864-1876)
• Trade Unions
• Legal in Britain, 1871
• Legal in France, 1884
• Most powerful in Germany
• Revisionist Socialism
• Jean Jaures (France, 1859-1914)
• Eduard Bernstein (Germany, 1850-1932)
• The Erfurt Program (Germany, 1891)
• Improve lives of workers, not work for revolution
• The Fabian Society (England, 1884)
• The Labor Party (England, 1906)
• The Second International (1889-1916)
• Denounced opportunism
• Bolshevism and Leninism
• Changes to Marxism

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Sample Essay Questions
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• Describe and compare the differences among
  Utopian socialists, Karl Marx, and Revisionist
  Socialists in their critiques of 19th century
  European economy and society.

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• In the 15th century, European society was still
  centered on the Mediterranean region, but by the
  end of the 17th century, the focus of Europe had
  shifted north
• Identify and analyze the economic developments
  between 1450 and 1700 that helped bring about
  this shift.

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• How and in what ways were economic and political
  factors responsible for intensifying European
  imperialist activity in Africa from the mid-19th
  century to the beginning of the First World War?

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• Analyze changes in the European economy from
  1450 to 1700 brought about by the voyages of
  exploration and by colonization. Give specific
  examples.

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• Describe and analyze the issues and ideas in the
  debate in Europe between 1750 and 1846 over the
  proper role of government in the economy. Give
  specific examples.

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• Analyze the common political and economic
  problems facing Western European nations in the
  period 1945-1960 and discuss their responses to
  these problems.

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• Analyze the influence of the theory of
  mercantilism on the domestic and foreign policies
  of France, 1600-1715.

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• Analyze the key developments that characterized
  the European economy in the second half of the
  nineteenth century.

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• Both Jean-Baptiste Colbert (1619-1683) and Adam
  Smith (1723-1790) sought to increase the wealth
  of their respective countries. How did their
  recommendations differ?

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• Explain the reasons for the rise of the
  Netherlands as a leading commercial power in the
  period 1550-1650.

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• Discuss the economic policies and institutions
  that characterized mercantilist systems from
  1600-1800.

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• How and to what extent did the Commercial
  Revolution transform the European economy and
  diplomatic balance of power in the period
  1650-1763?

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• Describe and analyze economic policies in
  Eastern and Western Europe after 1945.

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• Compare and contrast the social and economic
  roles of the state in seventeenth and eighteenth
  century Europe (before 1789) to the social and
  economic roles of the state in Europe after the
  Second World War.