1. European World View and Exploration From Mercantilism to Adam Smith:

2. What was the motivation for European Exploration? It has been argued that the motivation for Europeans to arrive in North America was spurred on by the 3C’s of exploration: Curiosity – the opportunity to learn about the world. The desire to learn. Commerce – the opportunity to make money through trade and the discovery of valuable resources. Christianity – the opportunity to spread the Christian faith throughout the world and to aboriginal peoples. Source: Sandwell, Ruth, Catriona Misfeldt and Roland Case, eds., Early Contact and Settlement in New France (Vancouver, BC: The Critical Thinking Consortium, 2002). Source: Sandwell, Ruth, Catriona Misfeldt and Roland Case, eds., Early Contact and Settlement in New France (Vancouver, BC: The Critical Thinking Consortium, 2002).

3. European World View £ Explorers from Europe regarded their culture as superior and civilized £ It was easy for Europeans to classify all the people found in North America as ‘Indians’ and ‘Savages’ £ Europeans saw an natural order in which God has given man the authority to subdue the world

4. European Concept of Ownership Europeans £ land is to be exploited by man £ Individual ownership is fundamental £ Property=power £ Social structure mirrored land ownership £ Europeans came from a society with a large population and a small amount of land

5. ReligionReligion £ Natives were viewed as ignorant slaves of the devil £ Europeans had a clear sense of who God was through the scriptures £ There was a formal relationship strengthened through clergy

6. Early Globalization £ Thousands of years ago, civilizations developed land routes to encourage international trade £ The Silk Road, was an interconnected series of ancient trade routes through various regions of the Asian continent £ Nomads traded with the Chinese camels and horses for silk, which they then traded with European merchants £ Arabic governments, who were deeply involved in the international trade, became extremely wealthy £ Many European rulers started to look for ways that they could benefit from the international demand for exotic goods

8. MercantilismMercantilism God, Gold and Glory

9. Characteristics of Mercantilism 1.“Bullionism”  power of a nation could be measured by the amount of precious metal [gold or silver] which it possessed.  ‘Hard’ money was the source of prosperity, prestige, and strength for a nation.  “favorable balance of trade.” Export more than you import [a trade surplus]. Export more than you import [a trade surplus]. 2. Each nation must try to achieve economic self-sufficiency.  Those founding new industries should be rewarded by the state.

10. Characteristics of Mercantilism 3.Thriving agriculture should be carefully encouraged.  Less of need to import foods.  Prosperous farmers could provide a base for taxation. 4. Sea power was necessary to control foreign markets.  Less need to use the ships of other nations to carry your trade goods.  Your own fleet adds to the power and prestige of the nation. 5.Impose internal taxes of all kinds.

11. Characteristics of Mercantilism 6.Colonies would provide captive markets for manufactured goods & sources of raw materials. 7.Trade is a “zero-sum” game.  A nation can gain in international trade only at the expense of other nations. Manufactured goods Raw materials Mother Countr y Colony Cheap labor

12. Characteristics of Mercantilism 8.A large population was needed to provide a domestic labor force to people the colonies. 9.Luxury items should be avoided 10.State action was needed to regulate and enforce all of these economic policies.  State-sponsored trade monopolies.

13. The Governments Role £ Mercantilism suggests that the ruling government should advance these goals by: 1. playing a protectionist role in the economy, 2. by encouraging exports and discouraging imports, 3. especially through the use of tariffs.

14. The Multinational Corporation £ On December 31, 1600, the King of England, Charles I gave the British East Indian Company exclusive rights in Asia £ The Dutch East India Company was established in 1602, when the States- General of the Netherlands granted it a 21-year monopoly to carry out colonial activities in Asia. £ What company was given the monopoly by James II in Canada?

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

16. Who Benefited Most From Mercantilism? £ Monarchs. £ Merchant capitalists. £ Joint-stock companies. £ Government officials.

17. The Move to Capitalism Adam Smith and the Market Economy

18. Philosophical Differences “as every individual…necessarily labours to render the annual revenue of the society as great as he can. He generally, neither intends to promote the public interest, nor knows how much he is promoting it…[He] intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention” - Adam Smith, Wealth of Nations, 1776 £ Invisible Hand: self regulating power that ensures that as each individual pursues their own interests, society in general benefits

19. Adam Smith (1723-1790) £ 1776  The Theory of Moral Sentiments and an Inquiry Into the Nature of Causes of the Wealth of Nations was published.  A vehement attack of the mercantilist system. £ He argued that the basic unit for social analysis should be the nation, not the state. £ Smith argued that all parties benefited when trade occurred

20. The Reason We Trade? “Give me that which I want, and you shall have this which you want, is the meaning of every such offer; and it is in this manner that we obtain from one another the far greater part of those [things] which we stand in need of. It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their interest” - Adam Smith, Wealth of Nations 1776 Capitalism is based on the assumption that the individual producer and consumer will promote their own interests

21. Basic Capitalist Principles 1.Goods and services are produced for profitable exchange. 2.Human labor power is a commodity for sale  LABOR IS THE SOURCE OF VALUE. BusinessesHouseholds Goods & Service Labor & Investments Consumer Spending Wages