COMMERCIAL CAPITALISM: ORIGIN, CHARACTERISTICS AND IMPORTANCE - ECONOMY - 2025

The commercial capitalism or commercial is the term used by some economic historians to refer to the first period in the process of capitalism as a social and economic system.

The origins of capitalism have been hotly debated and depend in part on how the characteristics of capitalism are defined. The traditional story, originating in the classical liberal economic thought of the 18th century and still often discussed, is the commercialization model.

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According to this model, capitalism originated in commerce. Since trade is found even in Paleolithic culture, it can be seen as natural to human societies.

That is, capitalism arose after trading previously, after merchants acquired enough wealth, called "primitive capital," to begin investing in increasingly productive technology.

Thus, capitalism tends to be seen as a natural continuation of commerce, arising when people's natural entrepreneurship is freed from the constraints of feudalism, in part through urbanism.

Historical origin

Capitalism first emerged in its early mercantile form during the fourteenth century. It was a trading system developed by Italian merchants who wanted to increase their profits by selling in markets other than the local ones.

Capitalism was a system of trading goods outside the local market, in order to increase the profits of merchants.

However, this new trading system was limited, until the growing European powers began to benefit from long-distance trade, when they began the process of colonial expansion.

Colonial expansion

The true origin of capitalism is found in the great explorations of the 15th and 16th centuries. It was a process in which sailors from Italy, Portugal and Spain, later England and the Netherlands, opened the curtains of the world.

As time passed and the European powers rose to prominence, the mercantile period was marked by control of the trade in goods, of people as slaves, and resources previously controlled by others.

The Atlantic Triangle Trade, which moved goods and people between Africa, America and Europe, flourished during this period. It is an example of mercantile capitalism in action.

Some of the first stock exchanges and banks were also created during this period, in order to manage this new trading system.

Creation of commercial companies

The British East India Company and the Dutch East India Company ushered in an era of large state-licensed trading companies.

Recognized as joint stock companies, these companies enjoyed power, encompassing legislative, military, and treaty-making privileges.

They were the seeds of what would be a corporation. These companies were characterized by their monopoly in trade, granted by patent letters provided by the state.

When these companies were established, the capitalist system was already in operation. His magic formula poured wealth into the chests of the lucky participants.

End of commercial capitalism

The mercantile era came to an end around 1800, thus giving way to so-called industrial capitalism.

However, merchant capitalism remained entrenched in some parts of the West well into the 19th century, especially in the southern United States, where the plantation system confined the development of industrial capitalism, limiting markets for consumer goods.,

The business houses were backed by relatively small private financiers. These acted as intermediaries between the producers of basic goods, through the exchange of debt between them.

Thus, mercantile capitalism preceded the capitalist mode of production as a form of capital accumulation.

The necessary condition for mercantile capitalism to transform itself into industrial capitalism was that process of primitive capital accumulation, on which commercial financing operations were based. This made it possible to apply wage labor and industrialization en masse.

The American, French, and Haitian revolutions altered trading systems. The industrial revolution also significantly altered the means and relations of production. These changes ushered in a new era of capitalism.

characteristics

The hallmark of capitalism is the accumulation of capital. In all earlier ages, the purpose of seeking wealth was to enjoy spending it. In the capitalist age it was to accumulate and possess.

Mercantile capitalism is distinguished from a more developed capitalism by its orientation in simply moving products from a market where they are cheap to a market where they are expensive.

This instead of influencing the mode of production of these products, due to the lack of industrialization and commercial finance.

Commercial capitalism is a for-profit trading system. However, goods were still largely produced by non-capitalist methods of production.

Observing the various precapitalist characteristics of mercantilism, it was emphasized that this system, with its tendency to commercialize everything, never attacked the two basic elements of production, labor and land, to turn them into commercial elements.

State power

Mercantile capitalism emphasizes state power and the conquest of other lands abroad as the main objective of its economic policy. If a state could not supply its own raw materials, then it had to acquire colonies where they could be mined.

The colonies were not only sources of supply for raw materials, but also markets for finished products.

Because the state was not interested in allowing competition, it sought to prevent the colonies from engaging in manufacturing and trade with other foreign powers.

Characterized by colonial and expansive powers on the part of the states, these powerful nation-states sought to accumulate precious metals. Thanks to this, military conflicts began to emerge.

During this era merchants, who had previously done business on their own, invested their capital in the East India Companies and other colonies, seeking a return on investment.

Commercial and agrarian capitalism

Along with commercial capitalism, agrarian capitalism also began. This characterized Europe in the 16th, 17th and 18th centuries. Therefore, commercial capitalism and agrarian capitalism were two forms of capitalism that overlapped one another.

The difference between them can be found in that one arose from the trade surplus, while the other arose from the agricultural surplus.

Sometimes agrarian capitalism completely metamorphosed into commercial capitalism. This meant that all accumulated surplus from agriculture was invested in trade. Sometimes it was transformed directly into industrial capitalism, investing only in industrial development.

Importance

Commercial capitalism generated great social, economic and cultural changes during the times in which it developed. Without a doubt, the greatest importance of this economic system was to enable the progress of industrialized capitalism.

In addition to this, it allowed an expansion of the markets of America and the East, creating an important fleet of merchant ships, which allowed the use of maps, compasses, compasses and other instruments of scientific origin, as well as the application of mathematics in the explanation of reality and in daily life.

Another contribution of commercial capitalism was the development of an international framework of business ethics. This is one of the bases of industrial capitalism which, in turn, is the cause of the growth of large cities around industrial centers. Capitalism shaped the structure of modern cities.

The increased demand for items such as textiles, weapons, equipment of different kinds, wine, among others, as well as commercial services and transportation of manufactured goods, generated an interest in raw materials and encouraged the transportation of black people to be slaves. In America.

However, production did not increase in proportion to the high demand for goods. As there were fewer goods, there was inevitably a rise in prices.

Another contribution of commercial capitalism was that the accumulation of capital - in a broad or moderate way - allowed the development of more elaborate techniques of capitalism. The same happened with the credit system, which began to be implemented during the time of commercialism.

References

1. Wikipedia, the free encyclopedia (2018). Merchant capitalism. Taken from: en.wikipedia.org.
2. Guy Routh (2008). Merchant capitalism. Springer Link. Taken from: link.springer.com.
3. Nicki Lisa Cole (2018). The Three Historic Phases of Capitalism and How They Differ. Thought Co. Taken from: thoughtco.com.
4. Wikipedia, the free encyclopedia (2018). History of capitalism. Taken from: en.wikipedia.org.
5. Owlgen (2018). What do you mean by commercial capitalism? Taken from: owlgen.com.