⚔️Early Modern Europe – 1450 to 1750 Unit 5 – Commercial Revolution & Rise of Capitalism

Key Concepts and Definitions

• Commercial Revolution refers to the period of European economic expansion, colonialism, and mercantilism from the 16th to 18th centuries
• Capitalism is an economic system based on private ownership of the means of production, capital accumulation, wage labor, and competitive markets
• Mercantilism is an economic theory and practice that emphasizes the importance of a favorable balance of trade and the accumulation of wealth through exporting more than importing
• Joint-stock companies are business organizations in which ownership is divided into shares that can be bought and sold by shareholders (Dutch East India Company, British East India Company)
• Bourgeoisie refers to the emerging middle class of merchants, bankers, and entrepreneurs who gained wealth and influence during the Commercial Revolution
• Putting-out system is a method of production in which merchants provide raw materials to rural workers who manufacture goods in their homes
• Triangular trade refers to the transatlantic trade routes that connected Europe, Africa, and the Americas, involving the exchange of manufactured goods, enslaved people, and raw materials

Historical Context and Background

• The Commercial Revolution emerged in the context of the Renaissance, the Age of Exploration, and the rise of nation-states in Europe
• The fall of Constantinople to the Ottoman Empire in 1453 disrupted traditional trade routes and encouraged Europeans to seek new maritime routes to Asia
• The Protestant Reformation challenged the authority of the Catholic Church and fostered a spirit of individualism and entrepreneurship
• The Columbian Exchange, initiated by Christopher Columbus's voyages to the Americas, led to the exchange of crops, animals, and diseases between the Old World and the New World
• The Treaty of Tordesillas in 1494 divided the New World between Spain and Portugal, setting the stage for colonial rivalries and competition for resources
• The decline of feudalism and the rise of centralized monarchies in Europe created a more stable political environment conducive to economic growth
• The Renaissance emphasis on humanism, individualism, and rational inquiry encouraged a more secular and materialistic worldview that valued wealth and success

Major Economic Changes

• The influx of precious metals from the Americas, particularly silver from the mines of Potosí in present-day Bolivia, led to the Price Revolution, a period of inflation in Europe
• The growth of international trade and the emergence of a global economy connected Europe, Asia, Africa, and the Americas
• The rise of mercantilism led to the adoption of policies aimed at increasing exports, limiting imports, and accumulating bullion (gold and silver)
• The putting-out system and the growth of cottage industries in rural areas marked the early stages of industrialization and the transition from feudalism to capitalism
• The development of new financial instruments and institutions, such as joint-stock companies, stock exchanges (Amsterdam Stock Exchange), and banks (Bank of Amsterdam), facilitated the growth of trade and investment
• The enclosure movement in England, which involved the consolidation of small landholdings into larger, more efficient farms, displaced many peasants and created a landless labor force
• The Atlantic slave trade, which involved the forced migration of millions of Africans to the Americas, provided a source of cheap labor for plantation economies and contributed to the accumulation of wealth in Europe

Key Players and Institutions

• The Dutch East India Company, established in 1602, was the first multinational corporation and played a key role in the spice trade and Dutch colonial expansion in Southeast Asia
• The British East India Company, founded in 1600, was instrumental in establishing British colonial rule in India and facilitating the trade of textiles, tea, and opium
• The House of Fugger, a German banking family, financed the rise of the Habsburg dynasty and the exploration voyages of the 16th century
• The Medici family of Florence, Italy, were influential bankers, patrons of the arts, and political leaders during the Renaissance
• The Hanseatic League, a confederation of merchant guilds and towns in Northern Europe, dominated Baltic trade from the 13th to the 15th centuries
• The Muscovy Company, an English trading company, held a monopoly on trade between England and Russia in the 16th and 17th centuries
• The Levant Company, another English trading company, controlled trade with the Ottoman Empire and the Eastern Mediterranean

Technological and Scientific Advancements

• The invention of the printing press by Johannes Gutenberg around 1440 revolutionized the dissemination of knowledge and facilitated the spread of ideas
• Improvements in shipbuilding and navigation, such as the carrack and the galleon, made long-distance sea travel and trade more feasible
• The development of the magnetic compass and the astrolabe allowed for more accurate navigation and the exploration of new trade routes
• The invention of double-entry bookkeeping in Italy during the 14th century provided a more sophisticated method of accounting and financial record-keeping
• The Scientific Revolution of the 16th and 17th centuries, led by figures such as Galileo Galilei and Isaac Newton, challenged traditional beliefs and laid the foundation for modern science
  • This period saw advancements in mathematics, physics, astronomy, and other fields that had practical applications for trade, navigation, and industry
• The Agricultural Revolution of the 18th century involved the adoption of new farming techniques (crop rotation, selective breeding) and technologies (seed drill, horse-drawn hoe) that increased agricultural productivity

Social and Cultural Impacts

• The Commercial Revolution led to the rise of the bourgeoisie, a new middle class of merchants, bankers, and entrepreneurs who challenged the traditional social hierarchy
• The growth of cities and the expansion of urban populations created new markets for goods and services and fostered a more cosmopolitan culture
• The spread of Protestantism, particularly Calvinism, emphasized hard work, thrift, and the accumulation of wealth as signs of divine favor, providing a moral justification for capitalism
• The Enlightenment of the 18th century promoted ideas of individual liberty, progress, and the power of reason, which challenged traditional authorities and supported economic and political reforms
• The consumer revolution of the 18th century, characterized by the increased availability of luxury goods (coffee, tea, sugar) and the rise of fashion, transformed patterns of consumption and social behavior
• The Atlantic slave trade and the plantation system in the Americas had devastating consequences for African societies and created a racial hierarchy that persists to this day
• The Columbian Exchange introduced new crops (potatoes, maize, tomatoes) and animals (horses, pigs, cattle) to Europe, transforming diets, agriculture, and ecosystems

Global Consequences

• The Commercial Revolution marked the beginning of European dominance in the global economy and the rise of the West as a world power
• The Columbian Exchange and the Atlantic slave trade created an interconnected world economy based on the exploitation of natural resources and human labor
• The rise of mercantilism and colonial rivalries led to numerous wars and conflicts between European powers, such as the Dutch-Portuguese War and the Seven Years' War
• The exploitation of indigenous peoples and the destruction of traditional societies in the Americas, Africa, and Asia had long-lasting impacts on global demographics and cultures
• The influx of New World silver into Europe and Asia led to the globalization of the monetary system and the emergence of a world currency
• The Commercial Revolution and the rise of capitalism contributed to the Great Divergence, the economic and technological gap between Europe and the rest of the world that emerged in the 19th century
• The legacy of colonialism and the unequal distribution of wealth and power in the global economy continue to shape international relations and development to this day

Legacy and Long-Term Effects

• The Commercial Revolution laid the foundation for the Industrial Revolution of the late 18th and 19th centuries, which transformed the global economy and society
• The rise of capitalism as the dominant economic system has led to unprecedented economic growth, technological innovation, and material prosperity, but also to inequality, exploitation, and environmental degradation
• The legacy of European colonialism and imperialism, rooted in the Commercial Revolution, continues to shape global politics, economics, and culture, as evidenced by ongoing struggles for decolonization and self-determination
• The Atlantic slave trade and the racial hierarchies it created have had enduring impacts on race relations, social justice, and economic inequality in the Americas and beyond
• The globalization of trade, finance, and culture that began with the Commercial Revolution has accelerated in the 20th and 21st centuries, creating new opportunities and challenges for individuals, nations, and the planet
• The Enlightenment ideas of individual liberty, progress, and the power of reason, which emerged in the context of the Commercial Revolution, continue to shape modern political and social movements, from liberalism to socialism to environmentalism
• The consumer culture and the emphasis on material wealth and success that originated in the Commercial Revolution have become defining features of modern capitalist societies, influencing values, lifestyles, and identities around the world