9.3 Economic impacts of metal production and trade

Metal production and trade revolutionized economies worldwide. From the 16th to 18th centuries, mercantilism and bullionism shaped policies, emphasizing wealth accumulation through favorable trade balances and hoarding precious metals.

These economic shifts triggered massive changes. The Price Revolution caused inflation, urbanization accelerated, and labor specialization increased. Wealth inequality widened, but technological advancements like the steam engine spurred unprecedented economic growth and global trade expansion.

Economic Theories and Policies

Mercantilism and Bullionism

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• Mercantilism dominated economic thinking from 16th to 18th centuries emphasized accumulating wealth through favorable trade balances
• Governments implemented protectionist policies to increase exports and limit imports fostering domestic industries
• Bullionism viewed precious metals as the primary measure of a nation's wealth led to policies encouraging hoarding of gold and silver
• Colonial expansion driven by mercantilist principles aimed to secure raw materials and new markets for finished goods
• Trade monopolies (East India Company) established to control lucrative commodities and trade routes

Inflation and Price Revolution

• Inflation refers to the general increase in prices over time erodes purchasing power of currency
• Price Revolution occurred in Europe during 16th and 17th centuries saw significant price increases across goods and services
• Influx of silver from American colonies (Potosí mines) contributed to rapid inflation in Europe
• Increased money supply outpaced economic growth led to devaluation of currencies
• Price Revolution impacted wages, rents, and living standards differently across social classes

Societal and Economic Impacts

Urbanization and Labor Specialization

• Urbanization accelerated as economic opportunities in cities attracted rural populations
• Growth of urban centers (London, Amsterdam) created new markets and stimulated trade
• Labor specialization increased as urban economies diversified led to higher productivity
• Guilds evolved to regulate specialized trades and maintain quality standards
• New occupations emerged (bankers, merchants) to support expanding commercial activities

Wealth Inequality and Economic Growth

• Wealth inequality widened as merchants and early industrialists accumulated capital
• Enclosure movement in England displaced rural populations concentrated land ownership
• Economic growth stimulated by increased trade and technological advancements
• Rise of joint-stock companies (Dutch East India Company) allowed broader participation in lucrative ventures
• Banking systems developed to facilitate international trade and finance large-scale projects

Technological Advancements

Industrial Revolution and Manufacturing Innovations

• Industrial Revolution began in Britain in mid-18th century transformed production methods and economic systems
• Steam engine invention by James Watt revolutionized power generation for factories and transportation
• Textile industry innovations (spinning jenny, power loom) dramatically increased productivity
• Iron and steel production advancements (Bessemer process) enabled large-scale construction and machinery manufacturing
• Factory system emerged centralizing production and altering traditional labor relationships

Technological Diffusion and Global Impact

• Technological diffusion spread innovations across Europe and North America
• Transportation improvements (railways, steamships) facilitated faster and cheaper movement of goods and people
• Communication advancements (telegraph) enabled rapid information exchange across long distances
• Agricultural innovations (seed drill, crop rotation) increased food production supporting growing urban populations
• Global trade networks expanded as new technologies reduced costs and risks of long-distance commerce