The European Exploration established many colonies in Africa and the America. A new reservoir of revenue became a ready avenue, sparking the Commercial Revolution.
Raw materials, gold, and other precious metals poured into Europe, eventually becoming manufactured goods.
Slaves became a source of cheap labour and many Europeans spread Europe’s economic policies when they settled in the colonies. Mercantilism, which stated that a colony’s purpose was to benefit the mother country, shaped Europe throughout the revolution.
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From 1492 to 1870 a new gold-salt and silk trade route were established, creating an international economy. Most of the gold and salt came from Africa while Asia was then a major silk exporter. New business rules came into existence because of the influx of money. Joint-stock companies, as well as insurance companies, were created.
Joint-stock ventures were now insured for damages that any of their ships suffered. There was a new banking system, becoming more prominent than the system set up by the Medici’s during the early 1400s.Gold and silver coins were replaced by paper currency and bank credits were being introduced.
It was in this way that the stock market was born, drawing its life force from joint-stock companies and their speculations. Monopolies arose when joint-stock companies incorporated with each other. Some of the European companies tried to stop the rise of monopolies.
England passed the Bubble Act, restricted the rights of joint-stock companies to incorporate with each other. Economic competition found a new intensity which it never had before. The economic bourgeoisie rose to power through entrepreneurial business.
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Social and political revolutions, as well as the Industrial Revolution, planted the roots of modern capitalism. The Commercial Revolution continued into the 1900s with the spark of European Imperialism. The “Mad scramble for Africa” could best be related to bees in the spring. In the spring, flowers start blooming causing the bees to rapidly drink up their nectar.
In the same way, the Age of Exploration and Commercial Revolution were the spring boards of the “Mad scramble”. European countries went into the exterior of the blossoming continent and began tapping into its nectar: natural resources. Third world countries came into existence while European countries fought over trade agreements and resources. London became the financial capital of the world. Post War World II saw the last of colonial empires.
In fact, according to Sombart, Commercial Capitalism or ‘early capitalism’ operated within the feudal framework.
The feudal features are as follows:
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(1) Work was generally done in the homes of the producers and not under the factory shades of modern industries.
(2) Not full-scale machines, but simple tools were used for manufacturing. And many a times these factors of production were owned by the workers themselves.
(3) Since factors or production were limited, manufacturing was also on a much smaller scale as compared to goods produced in factories.
(4) One man, i.e., the merchant entrepreneur, controlled the whole process from start to finish.
The capitalist features were as follows:
(1) Incentive of profit was the main driving forces behind the entire process.
(2) With increasing desire for profit, the demand for labour was rising tremendously with the result that the merchant capitalists were hiring more workers.
(3) Financial advances were provided to the producers by the capitalists. These could be equated to wages under industrial capitalism.
(4) The final product as well as the entire profit was appropriated by the capitalist.
Conglomerates became the new empires of modern society. Nations had to play by conglomerate rules. A materialistic society became even more dependent on the economy. Many third world nations were suffering while Asian countries started to manufacture more goods, shifting jobs away from many European nations.
Economic competition was heated. In 1993 andl994 the North Atlantic Free Trade Agreement and General Agreement on Trade and Tariff were passed to help ease these economic tensions. They lowered tariffs and set up quotas allowing for trade with less trouble. The domestic system, created at the beginning of the revolution, had finally become the dominant policy of Europe rest of the world.
The Commercial Revolution lasted from the 1400s to present times. It gave rise to mercantilism and eventually planted the seeds that would rid many countries of communism.
The face of Europe changed forever when the Commercial Revolution provided the capital that was needed to start the Industrial Revolution. Today, the Commercial Revolution is still strong with the introduction of the Silicon Valley, the era of information highway, and the world of computers.