Changes Within Europe: Economics and Government

ECONOMICS

Characteristics of Mercantilism 1. Power = wealth [gold or silver bullion] Export more than you import [a trade surplus]. 2. Needs = A strong state to control economics 3. Sea power = control foreign markets.

Characteristics of Mercantilism 4. Colonies = provide markets for manufactured goods & a supply of raw materials. 5. Trade is a “zero-sum” game. Manufactured goods Mother Country Colony Raw materials Cheap labor

Capitalism: a.k.a. Laissez Faire Economics Adam Smith (1723-1790) If individuals were allowed to seek personal gain, this would increase the general welfare. 1776  wrote The Wealth of Nations First book to explain the economy of a nation as a system Nation’s wealth is not in the amount of gold/silver but the amount of goods and services produced by a nation’s people.

Basic Capitalist Principles Individuals driven by self-interest The “Invisible Hand” the economy is self-regulating! 3. The Law of Supply and Demand Individuals free to pursue self-interest will produce goods and services that others want, at prices others will be willing to pay. You choose what you want to sell at prices others are willing to pay.

Government

Absolute Monarchy Absolute Monarchy = A ruler with total power Ruler backed by “divine right” (God-given right to rule) Everyone (essentially) believes the theory during this period If you question the king, you question God Tried to create trained bureaucracies, usually using the new middle class (bourgeoisie)

Louis XIV Best example of an absolute monarch "L'État, c'est moi" (I am the State) Called “The Sun King.” (b/c he gave light and life to his subjects). Often shown as the Sun God Apollo Maintained Versailles at a total cost of 25% of France’s total national income

Châteaux de Versailles King’s residence and center of government. Nobles required to live there Able to keep an eye on nobles…& therefore, power

Versailles

Henry VIII of England Broke with the Catholic Church b/c Pope wouldn’t grant him a divorce from his first wife – he wanted a male heir Founds and makes himself head of the Anglican Church (Church of England) Example of a monarch exerting personal power Elizabethan Age (1558-1603) Growth of exploration and colonization Golden Age of England

Constitutional Monarchies Some European nations developed Constitutional Monarchies, instead of Absolute Monarchies England is the best example English Civil War – 1640s – fought over who would hold more power, the King or the Parliament Parliament wins out (and chops off Charles I’s head)- - they would eventually rule TOGETHER William and Mary established a constitutional monarchy Limits on royal power increased Establishment of the English Bill of Rights

Spain Spain dominated the New World Charles V (Hapsburg) Philip II Holy Roman Emperor Controlled from Germany to Spain and colonies in the New World Got tired of ruling and gave Germany/Austria to Ferdinand I The rest went to Philip II Philip II Devout Catholic Led the Spanish Inquisition Spanish Armanda Controlling the Empire Dutch Protestants revolted and broke into the Netherlands Catholic Dutch became Belgium Spanish Armada was defeated Mid-17th c., Spain declines and England and France are rising

German Areas The Holy Roman Empire, Sort of HRE Centralized in modern Germany and Austria Pretty weak Feudalism and city-states Hapsburg intermarriages Catholic south vs. Lutheran north Remember 3 things HRE lost parts of Hungary to Ottomans 30 Years War was devastating By 1700’s Northern German States (Prussia) gaining power 1555 Peace of Augsburg 30 Years War (1618) Bohemian Protestants challenge HRE authority France, Denmark and Sweden get involved Left Germany depopulated and devastated (HRE lost 7 million people) Peace of Westphalia (1648) German states get independence (Prussia #1) HRE declines rapidly

Holy Roman Empire

Balance of Power Idea that Europe would remain more stable if no one family/nation had too much power Nations had quickly shifting alliances to prevent too much gain Modern European nation-states’ boundaries and identities being built at this time