6.3 Capitalism and the First Industrial Revolution

By the end of this section, you will be able to:

• Explain the evolution of economic theories from mercantilism to capitalism
• Analyze the ways in which mechanization challenged existing social, economic, and political structures
• Discuss the ideological responses to capitalism, including Marxism

Just as colonial empires were the crucible of new political ideas and gave rise to new forms of resistance to exploitation, they also inspired new economic ideas. Mercantilism, which advocated building a nation’s power by increasing trade through exports, had originally propelled colonization. But as people around the world gained their political freedom, they also became interested in economic freedom, and mercantilism fell out of favor. Capitalism, a system in which prices and costs, not government intervention, serve to regulate the supply and demand of goods traded for individual profit, became popular. However, not everyone agreed with this new economic order; Marxists critiqued it and proposed systems focused on equality rather than profit.