4. Mercantilism

The rise of the national state and the expansion of Europe, which have just been described, were accompanied by the further development of commercial capitalism along lines already laid down in the later Middle Ages. The most notable fact about capitalism between 1500 and 1789 was its overall growth, not so much in the development of new techniques (at least not until the very end of the period) as in the wider use and elaboration of old ones. The New Monarchy and its successors afforded protection to businessmen and something resembling a national market. In addition, the government with its military and other needs sometimes provided business with its best customer. The expansion of Europe stimulated capitalism by greatly increasing the physical volume of trade. Beyond that, the larger stock of money, for which this expansion was primarily responsible, encouraged business by fixing a money economy more definitely on Europe, contributing to a rising price level, and making available a larger supply of capital in a convenient form. All in all, capitalism affected directly the lives of a considerably larger percentage of Europe\u27s population in 1789 than it did in 1500, although most of the Continent was still definitely agricultural. Moreover, by 1789 the spirit of capitalism was much more commonly accepted than it had been three centuries earlier. Those who desired it could even find the profit motive now couched in religious terms. [excerpt