{ Capitalism 7-1.4: Analyze the beginnings of capitalism and the ways that is was affected by mercantilism, the developing market economy, international trade, and the rise of the middle class.

 Capitalism: system in which people, rather than governments, own property, make goods, buy and sell them freely.  Based upon private ownership of resources and production that is driven to make a profit  Capitalism grew out of mercantilism What is Capitalism?

 Mercantilism  International Trade  Rise of the Middle Class  Developing Market Economy Factors that led to Capitalism

Capitalism  Build up capital: or money…that’s more to invest in business  Growth of middle class supported business  Raw materials from colonies were cheap…mother countries produce manufactured goods  Markets sell those goods

 Merchants and ship owners took risks and enjoyed profits from the growing international trade  These merchants and business men were the beginnings of the growing middle class in Europe  Led to growing market economy in which individuals interact in the market place to exchange goods and services

 Merchants and ship owners took risks and enjoyed the profits of growing international trade.  Merchants and ship owners formed the backbone of a growing middle class in the towns and cities.  Middle class could now contribute to the economy since they were starting their own businesses. Middle Class Business Owners

 System where individual buyers and sellers interact in the marketplace to exchange goods and services.  The development of mercantilism, international trade and the rise of the middle class and the developing market economy was critical to the advancement of capitalism. Market Economy

Adam Smith  English philosopher  Said government needed to change for capitalism to be successful  Government needed to stay out of business  Led to free enterprise: idea that private businesses could compete for profits without government involvement.

Main Ideas  Capitalism benefited the people as individuals, not the country  Fairer system, more competition, but fairer