What effects did the rise of Capitalism have on European countries? What effects did it have on Non European Countries?
What bad effects did it have on Non European Countries such as Africa and what good effects did it have on European Countries in the 1500s?
Capitalist development in Europe began at the late Medieval Period (~1300's) when goods from Asia (silks, spices) began to be available after the Crusades. They were very expensive, in high demand, and consequently, trade increased, creating wealth in Italy, which was geographically ideally situated for the increased maritime trade to the East. In fact, this accumulation of wealth allowed for the richest merchant families to begin a banking system, and begin patronizing artists, which was one of the factors that brought about the Renaissance. This infusion of money (capital) began to stimulate commerce locally; to build merchant ships skilled craftsmen were in high demand, and this demand for labor caused the price of labor to rise, increasing the standard of living among laborers. To supply all the trading ships with food, farmers had to get more efficient; those that did so made more money than those that did not. This is just one example of the "ripple effect" that a Capitalist economy creates.
In response to #2 - Another tenet within The Wealth of Nations was the concept of supply and demand. Anyone supplying goods or services for a demand would make a profit. This stimulated trade, and encouraged innovation, improved the standard of living. The concept of the "Invisible Hand" of the market, or "What the market will bear" ties in with supply and demand in determining prices for goods and services, applicable today as it was back then.
Unfortunately, Africa at this time was in decline; the great civilizations that had existed were gone, civil and tribal warfare was rampant. Labor needs were great in Europe's burgeoning colonies, and the demand for labor being high, was satisfied by the supply of humans in the destroyed cultures of Africa. The slave trade, horrible as it was, does not invalidate the principles of supply and demand in particular and Capitalism in general; rather, it serves as a perverse, gruesome example of its efficacy. Where the fault lies therefore is not in the economic system, but in the poor morals of those who would choose to make money at all costs, incurring generations of suffering upon their fellow humans.
Capitalism, the economic theory that suggests the means of production are privately owned had profound effects upon Europe. Prior to Adam Smith's capitalist expose' A Wealth of Nations (1776) most of Europe governed their economics by the concentration of gold. Smith's argument in A Wealth of Nations was that wealth should not be measured in the accumulation of gold but the value of what a nation could produce. According to Smith, the true wealth of a nation can only be measured in terms of what it can produce for the given society. Smith argued that people cannot 'eat' gold therefore although considered a precious metal, gold can never be the determining factor in the true wealth of a nation. Only the fruits of the goods and services produced within a nation can accurately determine The Wealth of a Nation.