European World View and European World View and ExplorationExploration

European World View and European World View and ExplorationExploration

From Mercantilism to From Mercantilism to Adam Smith:Adam Smith:

What was the motivation for What was the motivation for European Exploration?European Exploration?

What was the motivation for What was the motivation for European Exploration?European Exploration?

It has been argued that the motivation for Europeans to arrive in It has been argued that the motivation for Europeans to arrive in North America was spurred on by the North America was spurred on by the 3C’s of exploration3C’s of exploration::

CuriosityCuriosity – the opportunity to learn about the world. The – the opportunity to learn about the world. The desire to desire to learn. learn.

CommerceCommerce – the opportunity to make money through trade – the opportunity to make money through trade and and the discovery of valuable resources. the discovery of valuable resources.

ChristianityChristianity – the opportunity to spread the Christian faith – the opportunity to spread the Christian faith throughout the world and to aboriginal throughout the world and to aboriginal

peoples.peoples.

Source: Source: Sandwell, Ruth, Catriona Misfeldt and Roland Sandwell, Ruth, Catriona Misfeldt and Roland

Case, eds., Case, eds., Early Contact and Settlement in Early Contact and Settlement in New France New France (Vancouver, BC: The (Vancouver, BC: The Critical Critical Thinking Consortium, 2002).Thinking Consortium, 2002).

European World ViewEuropean World ViewEuropean World ViewEuropean World View

£ Explorers from Explorers from Europe regarded Europe regarded their culture as their culture as superior and superior and civilizedcivilized

£ It was easy for It was easy for Europeans to classify Europeans to classify all the people found in all the people found in North America as North America as ‘Indians’ and ‘Savages’‘Indians’ and ‘Savages’

£ Europeans saw an Europeans saw an natural order in natural order in which God has given which God has given man the authority man the authority to subdue the worldto subdue the world

European Concept of European Concept of OwnershipOwnership

European Concept of European Concept of OwnershipOwnership

EuropeansEuropeans£ land is to be exploited land is to be exploited

by manby man£ Individual Individual

ownership is ownership is fundamentalfundamental

£ Property=powerProperty=power£ Social structure Social structure

mirrored land mirrored land ownershipownership

£ Europeans came from Europeans came from a society with a large a society with a large population and a small population and a small amount of landamount of land

ReligionReligionReligionReligion

£ Natives were viewed as ignorant Natives were viewed as ignorant slaves of the devilslaves of the devil

£ Europeans had a clear sense Europeans had a clear sense of who God was through the of who God was through the scripturesscriptures

£ There was a formal relationship There was a formal relationship strengthened through clergystrengthened through clergy

Early GlobalizationEarly GlobalizationEarly GlobalizationEarly Globalization

£ Thousands of years ago, civilizations Thousands of years ago, civilizations developed land routes to encourage developed land routes to encourage international tradeinternational trade

£ The Silk Road, was an interconnected The Silk Road, was an interconnected series of ancient trade routes through series of ancient trade routes through various regions of the Asian continentvarious regions of the Asian continent

£ Nomads traded with the Chinese camels and Nomads traded with the Chinese camels and horses for silk, which they then traded with horses for silk, which they then traded with European merchantsEuropean merchants

£ Arabic governments, who were deeply Arabic governments, who were deeply involved in the international trade, became involved in the international trade, became extremely wealthyextremely wealthy

£ Many European rulers started to look for Many European rulers started to look for ways that they could benefit from the ways that they could benefit from the international demand for exotic goods international demand for exotic goods

MercantilismMercantilismMercantilismMercantilism

God, Gold and GloryGod, Gold and Glory

Characteristics of MercantilismCharacteristics of MercantilismCharacteristics of MercantilismCharacteristics of Mercantilism

1.1. ““Bullionism”Bullionism” power of a nation could power of a nation could be measured by the amount of precious be measured by the amount of precious metal [gold or silver] which it possessed.metal [gold or silver] which it possessed. ‘‘Hard’ money was the source of prosperity, Hard’ money was the source of prosperity,

prestige, and strength for a nation.prestige, and strength for a nation. ““favorable balance of trade.”favorable balance of trade.”

• Export more than you import [a trade Export more than you import [a trade surplus].surplus].

2.2. Each nation must try to achieve Each nation must try to achieve economic economic self-sufficiency.self-sufficiency. Those founding new industries should be Those founding new industries should be

rewarded by the state.rewarded by the state.

Characteristics of MercantilismCharacteristics of MercantilismCharacteristics of MercantilismCharacteristics of Mercantilism

3.3. Thriving agriculture should be Thriving agriculture should be carefully encouraged.carefully encouraged.

Less of need to import foods.Less of need to import foods. Prosperous farmers could provide a Prosperous farmers could provide a

base for taxation.base for taxation.

4.4. Sea power was necessary to Sea power was necessary to control foreign markets.control foreign markets.

Less need to use the ships of other Less need to use the ships of other nations to carry your trade goods.nations to carry your trade goods.

Your own fleet adds to the power and Your own fleet adds to the power and prestige of the nation.prestige of the nation.

5.5. Impose internal taxes of all kinds.Impose internal taxes of all kinds.

Characteristics of MercantilismCharacteristics of MercantilismCharacteristics of MercantilismCharacteristics of Mercantilism6.6. Colonies would provide captive Colonies would provide captive

markets for manufactured goods markets for manufactured goods & sources of raw materials.& sources of raw materials.

7.7. Trade is a Trade is a “zero-sum” game.“zero-sum” game. A nation can gain in international trade A nation can gain in international trade

only at the expense of other nations.only at the expense of other nations.

Manufactured goods

Raw materials

Mother

Country

Mother

Country

Colony

Colony

Cheap labor

Characteristics of MercantilismCharacteristics of MercantilismCharacteristics of MercantilismCharacteristics of Mercantilism

8.8. A large population was needed A large population was needed to provide a domestic labor force to provide a domestic labor force to people the colonies.to people the colonies.

9.9. Luxury items should be avoidedLuxury items should be avoided

10.10.State action was needed to State action was needed to regulate and enforce all of these regulate and enforce all of these economic policies.economic policies.

State-sponsored trade monopolies.State-sponsored trade monopolies.

The Governments RoleThe Governments RoleThe Governments RoleThe Governments Role

£ Mercantilism suggests that Mercantilism suggests that the ruling government the ruling government should advance these goals should advance these goals by:by:1.1.playing a protectionist playing a protectionist

role in the economy,role in the economy,

2.2. by encouraging exports by encouraging exports and discouraging imports, and discouraging imports,

3.3.especially through the especially through the use of tariffs. use of tariffs.

The Multinational CorporationThe Multinational CorporationThe Multinational CorporationThe Multinational Corporation

£ On December 31, 1600, On December 31, 1600, the King of England, the King of England, Charles I gave the British Charles I gave the British East Indian Company East Indian Company exclusive rights in Asiaexclusive rights in Asia

£ The Dutch East India The Dutch East India Company was Company was established in 1602, established in 1602, when the States-General when the States-General of the Netherlands of the Netherlands granted it a 21-year granted it a 21-year monopoly to carry out monopoly to carry out colonial activities in Asia. colonial activities in Asia.

£ What company was What company was given the monopoly by given the monopoly by James II in Canada?James II in Canada?

Government Protected Government Protected MonopoliesMonopolies

Government Protected Government Protected MonopoliesMonopolies

£ The The government government protected protected monopolies monopolies were the first were the first multinational multinational corporations corporations to issue to issue share holders share holders stock.stock.

Who Benefited Most From Who Benefited Most From Mercantilism?Mercantilism?

Who Benefited Most From Who Benefited Most From Mercantilism?Mercantilism?

£ Monarchs.Monarchs.

£ Merchant capitalists.Merchant capitalists.

£ Joint-stock companies.Joint-stock companies.

£ Government officials.Government officials.

The Move to The Move to CapitalismCapitalism

Adam Smith and the Market Adam Smith and the Market EconomyEconomy

The Move to The Move to CapitalismCapitalism

Adam Smith and the Market Adam Smith and the Market EconomyEconomy

Philosophical DifferencesPhilosophical DifferencesPhilosophical DifferencesPhilosophical Differences

““as every individual…necessarily labours as every individual…necessarily labours to render the annual revenue of the to render the annual revenue of the society as great as he can. He society as great as he can. He generally, neither intends to promote generally, neither intends to promote the public interest, nor knows how the public interest, nor knows how much he is promoting it…[He] intends much he is promoting it…[He] intends only his own security; and by only his own security; and by directing that industry in such a directing that industry in such a manner as its produce may be of the manner as its produce may be of the greatest value, he intends only his greatest value, he intends only his own gain, and he is in this, as in many own gain, and he is in this, as in many other cases, led by an other cases, led by an invisible handinvisible hand to promote an end which was no part to promote an end which was no part of his intention”of his intention”

- Adam Smith, Wealth of Nations, 1776

£ Invisible HandInvisible Hand: self regulating : self regulating power that ensures that as each power that ensures that as each individual pursues their own individual pursues their own interests, society in general interests, society in general benefitsbenefits

Adam Smith Adam Smith (1723-1790)(1723-1790)Adam Smith Adam Smith (1723-1790)(1723-1790)

£ 1776 1776 The Theory of The Theory of Moral Sentiments and an Moral Sentiments and an Inquiry Into the Nature Inquiry Into the Nature of Causes of of Causes of the the Wealth of NationsWealth of Nations was was published.published.

A vehement attack of A vehement attack of the mercantilist the mercantilist system.system.

£ He argued that the He argued that the basic unit for social basic unit for social analysis should be the analysis should be the nation, not the statenation, not the state..

£ Smith argued that all Smith argued that all parties benefited when parties benefited when trade occurredtrade occurred

The Reason We Trade?The Reason We Trade?The Reason We Trade?The Reason We Trade?

““Give me that which I want, and you Give me that which I want, and you shall have this which you want, is the shall have this which you want, is the meaning of every such offer; and it is meaning of every such offer; and it is in this manner that we obtain from in this manner that we obtain from one another the far greater part of one another the far greater part of those [things] which we stand in need those [things] which we stand in need of. It is not from the benevolence of of. It is not from the benevolence of the butcher, the brewer, or the baker, the butcher, the brewer, or the baker, that we expect our dinner, but from that we expect our dinner, but from their regard to their interest”their regard to their interest”

- Adam Smith, Wealth of Nations 1776

Capitalism is based on the assumption that the Capitalism is based on the assumption that the individualindividual producer and consumer will promote producer and consumer will promote their own intereststheir own interests

Basic Capitalist PrinciplesBasic Capitalist PrinciplesBasic Capitalist PrinciplesBasic Capitalist Principles

1.1. Goods and services are produced for Goods and services are produced for profitable exchange.profitable exchange.

2.2. Human labor power is a commodity for Human labor power is a commodity for sale sale LABOR IS THE SOURCE OF VALUE. LABOR IS THE SOURCE OF VALUE.

BusinessesBusinesses HouseholdsHouseholds

Goods & Service

Goods & Service

Labor & Investments

Labor & Investments

Consumer SpendingConsumer Spending

WagesWages