1.8 Mercantilism in France
Trade Empires and Early Capitalism
During the 16th and 17th centuries, the finance ministers in France realized that a large amount of money was being sent out of the country to pay for glass needed for the great cathedral and other building projects such as the Palace of Versailles. Around 1665, Jean-Baptiste Colbert, the finance minister for King Louis XIV, decided to coerce master Venetian glass blowers into teaching Frenchmen glass guildwork. With King Louis XIV’s approval, Colbert issued the Manufacture Royale de Glaces de Miroirs, letters of patent establishing the trade in France. In this way, France built a solid glass-working industry and was no longer forced to import this expensive product. Also beginning in the 1660s, Colbert authorized the taxing of foreign imports while removing all barriers to trade within French colonies. Colonies provided raw materials that could be used to produce manufactured items for sale.
Early Capitalism
Mercantilist thought led to the expansion of an early capitalist system and the creation of a new class commonly called by its French name – the bourgeoisie. This class made money through trade, and then by saving and investing this money in yet further money-producing endeavors (rather than simply purchasing land as did those in the past). This class, the bourgeoisie, provided the spirit for the Industrial Revolution in the 18th century that we explore later.
Gold and God, among other reasons, spurred European exploration of the world, and especially the Americas. European states embraced mercantilism. Gaining wealth from outside Europe, it was believed, would solve endemic trade deficits. While European kingdoms are often painted as being greedy and thus taking what they wanted, what exactly they were looking for in this quest differs quite a bit. For example, most have a vision of Spain seeking gold, which they did, but gold itself wasn’t that important until they discovered an abundance of gold in the New World. And, of course, once one European kingdom had it, the rest needed it because of mercantilist theory.
Mercantilism is the precursor to capitalism in the modern age. Both are loosely based on Scottish economist Adam Smith’s ideas.
Watch this video clip on mercantilism and capitalism in the Early Modern Era.
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The growth of commercial wealth was closely tied to the growth of overseas empires. Whereas the initial wave of European colonization (mostly in the Americas) had been driven by a search for gold and a desire to convert foreigners to Christianity, European powers came to pursue colonies and trade routes in the name of commodities and the wealth they generated by the seventeenth century. In this period of empire-building, European states sought additional territory and power overseas primarily for economic reasons. Because of the enormous wealth to be generated not from gold and silver themselves, but from commodities like sugar, tobacco, and coffee (as well as luxury commodities like spices that had always been important), the states of Europe were willing to war constantly among themselves as well as to perpetrate one of the greatest crimes in history: the Atlantic Slave Trade.
In short, we see in the seventeenth and eighteenth centuries the first phase of a system that would later be called capitalism: an economic system in which the exchange of commodities for profit generated wealth to be reinvested in the name of still greater profits. In turn, capitalism is dependent on governments that enforce legal systems that protect property and, historically, by wars that tried to carve out bigger chunks of the global market from rivals. To reiterate, capitalism was (and remains) a combination of two major economic and political phenomena: enterprises run explicitly for profit and a legal framework to protect and encourage the generation of profit. The pursuit of profit was nothing new, historically, but the political power enjoyed by merchants, the political focus on overseas expansion for profit, and the laws enacted to encourage these processes were new.
