Although the topic is somewhat self-explanatory, bear in mind that economics or economic systems do not exist in a vacuum. That is, the economic life of a particular society often depends on numerous factors including access to both natural and man-made resources, the advent of war or conflict between civilizations and the political goals of the government in power. By considering economics as just one part of an interconnected whole, we can begin to more fully appreciate the role of economics in the success or failure of any given society.

European society underwent a major change during the early modern period with regard to its outlook on wealth and property. Along with that change came the growth of a new kind of state and society, one not only defined by the growth of bureaucracy seen in absolutism, but in the power of the moneyed classes whose wealth was not predicated on owning land. The rise of that class to prominence in certain societies, especially those of the Netherlands and England, accompanied the birth of the most distinctly modern form of economics: capitalism.

In the Middle Ages, wealth, land, and power were intimately connected. Nobles were defined by their ownership of land and by their participation in armed conflict. That changed by the early modern period, especially as it became increasingly common for monarchs to sell noble titles to generate money for the state. By the seventeenth century the European nobility were split between “nobles of the sword” who inherited their titles from their warlike ancestors and “nobles of the robe” who had either been appointed by kings or purchased titles. Both categories of nobility were far more likely to be owners of land exploiting their peasants than warriors. Among almost all of them, there was considerable contempt for merchants, who were often seen as parasites who undermined good Christian morality and the proper order of society. Even nobles of the robe who had only joined the nobility within the last generation tended to cultivate a practiced loathing for mere merchants, their social inferiors.

Beginning in the late 15th century and continuing on until the 18th century, European countries based their commercial policies on a series of assumptions about the operations of the world’s economic system. These policies were defined as mercantilism. Mercantilism is an economic theory that views the world as a collection of civilized states whose governments actively compete for shares of a finite amount of wealth. Although wealth in this case does not necessarily mean precious metals, Mercantilism served to transform the understanding of wealth to one based on an accumulation of gold and silver.

In other words, according to mercantilist theory there is finite amount of wealth in the world. Civilized countries compete with one another for their share of this wealth. What one country gains, another loses. Each country must become as self-sufficient as possible, while maintaining trade with other countries by exporting more than they import. A nation or state’s prosperity and power is determined by the total volume of trade and is dependent on investment, not demand.

Initially, mercantilism meant that a government must support the rise of industry within their borders to ensure that goods are produced within the country, thereby eliminating the need to import and allowing money to remain within the country. According to this mindset, kingdoms could only increase their wealth by seizing more territory, especially territory that would somehow increase the flow of precious metals into royal coffers. Trade was only important insofar as trade surpluses with other states could be maintained, thereby ensuring that more bullion was flowing into the economy than was flowing out. Colonies abroad provided raw materials and, hopefully, bullion itself. The underlying premise of mercantilism was that the more wealth a country possesses, the more powerful it is. Thus, mercantilism became economic warfare, another type of “cold” war. States promoted exports through direct regulations and subsidies of commerce and industry.

The ultimate example of this system was the biggest owner of colonies that produced bullion: Spain. Mercantilism worked well enough, but commerce fit awkwardly into its paradigm. Trade was not thought to generate new wealth, since it did not directly dig up more silver or gold, nor did it seize wealth from other countries. Trade did not “make” anything according to the mercantilist outlook. Of all classes of society, bankers in particular were despised by traditional elites since they not only did not produce anything themselves, instead (seemingly) profiting off of the wealth of others.

These attitudes started undergoing significant changes in the sixteenth and seventeenth centuries, mostly as a result of the incredible success of overseas corporations, groups that generated enormous wealth outside of the auspices of mercantilist theory. Many of the beneficiaries of the new wealth of the sixteenth and seventeenth centuries were not noblemen, but were instead wealthy merchant townsfolk, especially in places like the Dutch Republic and, later, England, men who amassed huge fortunes but did not fit neatly into the existing power structure of landholding nobles, the church, and the common people. These changes inspired an increasingly spirited battle over the rights of property, the idea that not just land but wealth itself was something that the state should protect and encourage to grow.