BUS613: Advanced International Business

One of the unifying features of the North American colonial world was mercantilism, an economic doctrine that held that a nation's power depended on the value of its exports. The role of government in a mercantilist age is to control all foreign trade to achieve a highly positive balance of exports over imports. Under mercantilism, nations sought to establish colonies to produce goods over which the home economy had monopolistic control. Mercantilists believed that colonies existed not for the benefit of settlers, but for the benefit of the imperial centre. Britain and France embraced mercantilism, hoping to run trade surpluses, so that gold and silver would pour into London and Paris. Governments took their share through duties and taxes, with much of the remainder going to merchants.

This accumulation of wealth enabled the building of remarkable navies and land armies. It led to a level of ostentatious living that had not previously been witnessed, including building palaces for monarchs and ruling classes, evident in the grand manorial estates of the era. It also stimulated the growth of a class of merchants, or bourgeois, based in port towns and wherever manufacturers converted colonial raw materials into value-added products. These port towns with access to colonial materials became prosperous hubs of activity protected by the monarch. The loyalty to the Crown by the merchant class was to prove pivotal in the evolution of European absolutism in the 17th and 18th centuries. It allowed Louis XIV of France to neuter the political threat posed by a troublesome aristocracy while intensifying a network of national economic and military purpose. It also required the establishment of banking systems to both preserve and lend out the hard currency coming into the home countries. In the 18th century, these changes were key to the emergence of both modern capitalism and the beginnings of the Industrial Revolution.