Changes Within Europe: Government and Economics

ECONOMICSECONOMICS

Mercantilism

Characteristics of Mercantilism 1. Power = wealth [gold or silver bullion] Export more than you import [a trade surplus]. 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 Raw materials Mother Country Colony Cheap labor

Capitalism: a.k.a. Laissez Faire Economics

Adam Smith ( ) £ 1776  wrote The Wealth of Nations

1.Individuals driven by self-interest 2.The “Invisible Hand” (consumer’s choices)  the economy is self-regulating! Basic Capitalist Principles

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. Basic Capitalist Principles

4. Law of Competition  Ensures production of needed goods 5. Government interference = low  Laissez faire [“Leave things alone.”]

GovernmentGovernment

Absolute Monarchy £ Absolute Monarchy =  A ruler with total power  Ruler backed by “divine right” (God-given right to rule)  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

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

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

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 rule TOGETHER Boo Hoo. My heads are ALL gone.

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  European nation-states’ boundaries and identities being built at this time