This lesson traces the shift from mercantilism toward capitalism and introduces the ideas of laissez-faire economics and Adam Smith. Understanding this change helps explain why governments and businesses came to organize economies differently.
Mercantilism held that a nation could increase its power by expanding trade, especially by encouraging exports and seeking a favorable balance of trade. It helped motivate European colonial expansion, since colonies supplied resources and markets that could strengthen the mother country.
All flashcards
What is capitalism?
An economic system in which private individuals and companies generally own the means of production and markets shape the exchange of goods and services.
What is rational choice theory?
The idea that people consider their options and choose what they believe will help achieve their objectives.
What is a steam engine?
A machine that uses expanding steam to drive a piston and perform work.
Who were the Luddites?
British textile workers who resisted changes they believed threatened their livelihoods and skilled status.
What is Marxism?
An approach that explains historical change and social organization through conflict between social classes.
Quiz questions
What was a central goal of mercantilism?Answer: To strengthen a nation through trade, exports, and a favorable balance of trade.
Why did Adam Smith criticize slavery on economic grounds?Answer: He argued that enslaved labor was inefficient and incompatible with a free market.
What were Luddites primarily protesting in early nineteenth-century Britain?Answer: Industrial changes they believed threatened their work, wages, and skilled status.
In Marx’s terminology, which class owned the means of production?Answer: The bourgeoisie.
How did Marx and Engels distinguish socialism from communism?Answer: Socialism was a transitional stage; communism was envisioned as classless.
Based on World History Volume 2, from 1400 by Ann Kordas, Ryan J. Lynch, Brooke Nelson, Julie Tatlock (OpenStax), licensed CC BY 4.0. Adapted into a summary, flashcards and quizzes.