The influence of mercantile economics on European Colonial Expansion 1500-1800 Essay Example for Free

The influence of mercantile economics on European Colonial Expansion 1500-1800 Essay 1.0  Ã‚  Ã‚   Introduction   The Rise of Europe between 1500 and 1850 was largely accounted for by the growth of European nations which shared their borders with the Atlantic and, in particular, by those that engaged in colonialism and transoceanic trade. Europe was the gateway to the Americas for the Asian traders, and vica-versa. The fact that the economic performance among Atlantic trading nations blossomed due to their access to the Atlantic, is explained by the fact that countries with relatively non-absolutist initial institutions experienced faster growth[1].   Because of this, urbanisation in Western Europe grew significantly faster than in Eastern Europe after 1500 and due in large part to the growth of Atlantic traders (read countries). The process of European growth between 1500 and 1850 was attributed to those countries which had access to the Atlantic, and trade through these Atlantic ports accounted for most of the differential growth of   Europe; Western Europe in relation to Eastern Europe. With trade playing an important part in the economic and social development of most of Europe between 1500 and 1800, Europe witnessed a major revolution- The Price Revolution, starting about the 1520s to the 1630s. This long period, about 120 years in all, saw Europe undergo sustained economic growth and expansion that was marked by: A sustained demographic upsurge, in which European population about doubled By much urbanisation, expanded in scale, by a conspicuous growth of industries By dramatic overseas commercial expansion and colonial exploitation in first Africa, then Asia, the Americas: north and south, with the Caribbean Sea as the focal point A marked monetary expansion, from vast new supplies of both gold and silver from Africa and the Americas (Mexico and Peru), which fuelled an already on-going inflation (begun with earlier monetary expansion) These metals were vitally necessary for Europeans to expand their trade with Asia in particular (Asia being vastly greater in size, population, and economic wealth than the still underdeveloped west European economy), but also the Baltic regions of northern Europe and Russia, as well, where population was markedly too sparse and/or too poor to demand that much in the way of European goods (beyond salt, herrings, beer, woollens)[2]. 2.0  Ã‚  Ã‚   Overview Prior to the 19th century, agriculture played an important role in the lives of the Europeans. There was discrimination between the rich and poor. The poor had to work in the land held by the rich to make a living. There was a long period during which the wage-land rent ratio declined, that implied that there was a rise in inequality. Farmland owners were far closer to the top of the income distribution than were landless workers. At some point in the 19th century this pattern reversed, and wages started to rise relative to land rents, implying a decline in inequality. This pattern soon changed and the traditional link between factor prices and factor endowments was broken some time in the 19th century[3]. It was evident that with trade beginning to grow due to their proximity to the Atlantic, the European nations could not hold back on development. There was also the question of what caused the structural break in wage-rent ratio behaviour? The all important finger pointed to industrial growth; industrial revolutionary forces led to the break in living standards behaviour. Though the exact date or period is elusive, many scholars date the first industrial revolution in Europe from 1760, while some cited this to be from 1780. There were others who disagreed with these views altogether, but everyone were unanimous in their conclusion that, these changes came about due to the technological advance accelerated in English industry about this time (Mokyr 1990; Crafts 1994; Temin 1997)[4]. With trade growing and industrialisation taking place, the two commodities that could be produced simultaneously were: Agricultural products using land and employing labour Manufactured goods using capital and labour Though there were two options to choose from for the poor strata of society of the 1600 and 1700 Europeans, the most appealing aspect for the workers to turn away from agriculture was the sense of freedom and better life. Industries attracted the workers more, and drew them out of agriculture and into the cities, raising wages, lowering rents, and inflating the ratio of wages to rents[5]. Europe is well placed and accessible to the Americas, Asia, and within the whole of Europe itself. This was a distinct advantage that Europe had to encourage the Europeans to bolster exports. This gave rise to industrialisation and pushed trade beyond their borders. Intercontinental trade rose and this influenced prices too. It could be reasoned that trade could have influenced price factors for several centuries before the structural break occurred. However, it turned out that the growth in European overseas trade was not due to global commodity market integration, as measured by a decline in intercontinental price gaps, but rather to shift in demand and supply in Europe, Asia and the Americas (O’Rourke and Williamson 2002a)[6]. It was only in the 19th century that large-scale intercontinental trade became possible in such basic commodities as grain, animal products, coal and manufactured intermediates[7]. 3.0  Ã‚  Ã‚   The Influence Although Europe witnessed some improvements in economic institutions in the late medieval and early modern period, as mentioned earlier, rapid economic development did not begin until the emergence of political institutions providing secure property rights to a broader segment of society and allowing free entry into profitable businesses (North and Thomas, 1973, and North and Weingast, 1989)[8]. Most European countries were under the power of the monarchy. With the rise of political institutions, the power of the monarchy was constrained along with their supporters. The political institutions began to show their strength to control the power of the monarchy, and prerogatives emerged when groups that favoured change, that is commercial interests outside the royal circle, became sufficiently powerful politically. Starting 1500, and more so from 1600 onwards, countries with non-absolutist institutions and easy access to the Atlantic, trade across the Atlantic rose, that enriched and strengthened commercial interests outside the royal circle, enabling them to demand and obtain the institutional changes necessary for economic growth. This was the beginning of the shift from monarchy rule to political rule in these parts. Although profits from Atlantic trade were relatively small in terms of GDP, they were still substantial, and much greater than what was witnessed earlier. By the end of the 17th century, the volume of trade across Atlantic was much larger than that of long-distance Mediterranean trade seen ever before. Those who stood to gain by these initiatives became very rich by 17th- and 18th-century standards in Europe, and were without doubt politically and socially very powerful. What was surprising was that these changes did not take place in countries with highly absolutist institutions, such as, Spain, Portugal, and to a large extent France. The monarchy was able to suppress any political arising and control the expansion of trade. They along with their allies were the main beneficiaries of the early profits from Atlantic trade and plunder; with groups favouring change in the political arena not becoming powerful enough to induce change[9]. The path to development and growth has not always remained the same. The dynamics of accumulation, the agents of expansion, and opposition have not always been the same. There has been a great difference in the various phases of the development of capitalism through this period. We note that different rules and regulations were employed by the European nations in their quest for expansion (Aglietta 1979; Lipietz 1987, 1988). The period 1500-1800 popularly called as the mercantilist phase, trade played a pivotal role in defining the way the European nations concentrated on global mercantile economics. Merchant capital began to ex ­pand on a global scale through state-chartered companies. As Colonial expansionism was the goal of most these European countries, commerce had a big hand in pushing this initiative. The countries in Western Europe accu ­mulated capital through com ­merce, colonial plunder, slave trade, and de-farming. The European traders reached far corners of the globe in their quest and they began to specialize in the production of consumer items such as sugar, coffee, spices, fabrics, salted fish, fur, and later wheat and timber. While the production of consumer items expanded in the colonies, giving way to their colonial expansion, the effects of these measures led to the downfall of other subsistence economies in Europe and the rest of the world. In the industrial phase (1800-1890), the engine of global expansion was the industrial capital of Western Europe. A particularly important feature of this phase of capitalist development was a change in the dominant eco ­nomic discourse from protectionism to free trade and competition. The vic ­tory of the manufacturing class over the landowners and mercantile bour ­geoisie in repealing restrictive trade practices, such as the corn laws in Britain (which meant lower costs of production), marked the victory of the free traders[10]. Note: â€Å"There is a tendency among mercantilist (Krasner 1985) and regulationist (Ag ­lietta 1979) scholars to overemphasize the national dimension by regarding the world economy as a system of interacting national social formations (Aglietta 1982: 6). Although the role of the nation-state in modern societies has been very important, treating nation states as actors having connections with each other and with other organizations in the international arena makes it difficult to deal with social relations that are not between or outside states, but simply crosscut state divisions (Giddens 1990: 67). As some of the twentieth-century nation-states are torn apart by ethnic and religious conflicts, and as new social identities organized around religion or re ­gionalism are emerging, insistence on the nation-state as the unit of analysis will sig ­nificantly limit in our understanding of the political and ideological dimensions of globalization†-Mustafa Koc. The title ‘Atlantic traders’ referred to Britain, France, the Netherlands, Portugal and Spain, which were the nations most directly involved in trade and colonialism with the New World and Asia. These nations maintained a rigorous attitude towards trade and expansionism. These countries, because of their proximity to the Atlantic Ocean, traded far and wide, to Asia and Americas. They were very aggressive and wanted to expand their presence around the world and were involved in colonialism-and slavery-related activities as well as trade[11]. The Rise of Europe between 1500 and 1850 is largely due to the Rise of Atlantic Europe[12]. In order to study the influence of mercantile economics on European colonial expansion, Acemoglu, Johnson and Robinson used three data series to measure economic development. The three data series were: Constructed estimates of urbanisation based on the urban population of Bairoch, Batou and Ch`evre (1988)[13], which was a comprehensive dataset with information on all 2,200 European cities which had, at some time between 800 and 1800, 5,000 or more inhabitants. This data was then divided by the population estimates of McEvedy and Jones (1978)[14] to calculate urban population growth. The second in this series was to use estimates of GDP per capita from Maddison (2001)[15]. To continue with the research, the estimates chosen were from 1500, 1600, 1700, 1820, and then more frequently. Finally, the third data used was the use of European city-level data from Bairoch, Batou and Ch`evre (1988), to investigate which urban centers were driving demographic and economic growth, and also to contrast the growth of Atlantic ports to other ports and to inland cities[16]. The research was conclusive in determining whether there was a significant growth pattern based on the period 1500 1800. There were significant positive estimates to imply that Atlantic traders started to grow in 1500-1600. The estimates confirmed the positive growth pattern in large effects from the interaction between the Atlantic traders from 1600. These effects become statistically significant after 1750; the effects are statistically significant starting 1700. An important revelation from this exercise was the explicit sign that showed that perhaps the only countries with high growth potential, or those that were going to grow, engaged in substantial Atlantic trade and colonial activity. Belgium, Ireland, Denmark, Germany and Norway, despite having access to the Atlantic, either directly or via the North Sea, are stark representation of countries that did not take a major part in long distance oceanic trade or expansionism[17]. This evidence established a significant relationship between the potential for Atlantic trade and post-1500 economic development, and suggests that the opportunities to trade through the Atlantic, and the associated profits from colonialism and slavery, played an important role in the Rise of Europe[18]. 4.0  Ã‚  Ã‚   Observation We see that the influence of Atlantic trade; the opening of the sea routes to the New World, namely, Africa and Asia, and the building of colonial empires contributed to the process of West European growth between 1500 and 1800 not only through its direct economic effects, but also indirectly by inducing fundamental institutional changes, with Britain and the Netherlands (Duchy of Burgundy) leading from the front. Through their rigorous initiatives in Atlantic trade, both Britain and the Netherlands altered the balance of political power by enriching and strengthening commercial interests outside their royal circles. Through this channel, they contributed to the emergence of political institutions protecting merchants against royal power. The tendency for institutional change to emerge became more evident in societies which already had checks on royal power than in countries with absolutist regimes and monarchy-controlled trade monopolies. Those countries with easy access to the Atlantic and without a strong absolutist monarchy, Atlantic trade provided substantial profits and political power for merchants outside the royal circle. This group could demand and obtain significant institutional reforms protecting their property rights. With their newly gained power and property rights, these merchants took advantage of the growth opportunities offered by Atlantic trade, invested more, traded more, and fueled the First Great Divergence.[19]. Another point of contention in the theory of European colonial expansion was the search for precious metals and gun powder trade. Folasade Ifamose of the University of Abuja contents that, the whole region between the Volta and Niger area was acutely convulsed and destabilised by the direct involvement in the gun and gun powder trade across the Atlantic between 1500 and 1800 by the British, Dutch and Portuguese traders. The desire to capture cities with precious metals as well as those with direct access to the Atlantic coasts directly affected and influenced many of the Atlantic access nation kings to participate actively in the trans-Atlantic trade. The ultimate desire of the traditional rulers was to acquire, among other things, firearms from the triangular trade through the Portuguese, the Dutch, and the British[20]. 1590-1621 saw the Dutch swarm out all over the European, Atlantic and Asian seas and established new overseas markets. The Dutch state supported their traders in overseas trading operations and in a decisive movement accelerated the production of more ships to enhance trade and changing market opportunities. Moreover, the build-up of a reorganised army and navy in the Dutch Republic stimulated the growth of a new infrastructure of arms trade and arms production, which provided an important condition for the expansion of Dutch interests overseas[21]. The Sea is the only Empire which naturally belongs to us, conquest is not in our interest, wrote the Englishman Andrew Fletcher in 1698[22]. Few of the great ancient empires relied so much on sea power; Europe used the one resource that gave it an advantage, namely its skill in shipbuilding and navigation, to create something quite unprecedented, seaborne empires[23]. When trading possibilities proved disappointing or local populations proved hostile, Europeans turned to conquest (expansionism), along with forced extraction of resources. Next was the importation of European herds and crops, altering forever the ecological balance of these places. The production of sugar using slave labour, already perfected on Mediterranean isles, was first transferred to the near Atlantic islands and then to the Caribbean. And islands were to remain the preferred destinations for plantation economies for centuries. When one thinks about the expansion of Europe we often conflate an oceanic presence or a bounded presence on an island or a littoral, with continental territorial control, wrote Elizabeth Mancke[24]. 5.0  Ã‚  Ã‚   Conclusion During the period 1500-1800, the world saw the expansion of trade beyond the borders of most Western European nations. Countries like Britain, Spain, Netherlands, Portugal, and France began to explore the other side of the world through the sea. The Atlantic was a convenient way for these European traders to reach beyond boundaries. Their expertise in ship-building helped them establish trading ports in Africa and Asia. However, when the local population of the African and Asian countries began to revolt, the European traders with the help of their respective rulers began to exploit and embark on a conquest policy. This way, some of the Western European nations, including Britain, Portugal and the Netherlands began to show their ascendancy in forging expansionism roles. It was from its mastery of the seas, not land, that Europe experienced its first great economic boom. The wealth accumulated through its archipelagic empires of access found its way back to Europe, partly to be invested in land, partly to capitalise new industrial enterprises that would ultimately overturn the old order of things. By the late eighteenth century the boundary between land and sea became more definite and during the nineteenth century new nation states concentrated their energies on their own interiors. The European plunderers forced many Asian and African peasants to bonded labour and took back with them all possible resources available (John R. Gillis, 2003). 6.0  Ã‚  Ã‚   Bibliography â€Å"Daron Acemoglu, Simon Johnson and James Robinson†, The Rise of Europe: Atlantic Trade, Institutional Change, and Economic Growth, [electronic bulletin board] May 4, 2004, [cited 27 February 2007] available at econ-www.mit.edu/faculty/download_pdf.php?id=1181 â€Å"O’Rourke Kevin H and Williamson Jeffrey G†, From Malthus to Ohlin: Trade, Growth and Distribution since 1500, [electronic bulletin board] April 2003, [cited 27 February 2007] available at www.tcd.ie/Economics/TEP/2002_papers/TEPNo5KO22.pdf â€Å"O’Rourke Kevin H and Williamson Jeffrey G†, After Columbus: Explaining the Global Trade Boom 1500-1800, [electronic bulletin board] February 2001, [cited 27 February 2007] available at www.tcd.ie/Economics/TEP/2001_papers/TEPNo6KO21.pdf â€Å"Prof. Munro John†, ECONOMICS 303Y1, The Economic History of Modern Europe to1914, [electronic bulletin board] September 2001, [cited 27 February 2007] available at eh.net/coursesyllabi/syllabi/munro/01dutcom.pdf â€Å"Engerman Stanley L†, The big picture: how (and when and why) the West grew rich, Policy Research, Vol. 23, 1994, 547-559, [electronic bulletin board] 1994, [cited 28 February 2007] available at www.compilerpress.atfreeweb.com/Anno%20Engerman%20The%20big%20picture%20Research%20Policy%201994.htm â€Å"Koc Mustafa†, Globalization as a Discourse, [electronic bulletin board] [cited 2 March 2007] available at www.mrs.umn.edu//chollett/anth%203204/Course%20Readings/Globalization%20as%20a%20Discourse.rtf Acemoglu Daron, Johnson Simon and Robinson James, The Rise of Europe: Atlantic Trade, Institutional Change and Economic Growth, [electronic bulletin board] p.6, September 10, 2003,[cited 3 March 2007] available at http://web.mit.edu/sjohnson/OldFiles/www/attach/Rise20%20of%20Europe%20final%20revision.pdf Harvard University, 1999 WP Abstracts, [electronic bulletin board] December 9, 1999 [cited 3 March 2007] available at www.fas.harvard.edu/~atlantic/abst99.html Gillis R. John, Islands in the Making of an Atlantic Oceania, 1400-1800, [electronic bulletin board] 2003 [cited 4 March 2007] available at www.historycooperative.org/proceedings/seascapes/gillis.html [1] Daron Acemoglu, Simon Johnson and James Robinson, Abstract, p.2, The Rise of Europe: Atlantic Trade, Institutional Change, and Economic Growth [2] John Munro, The Dutch and the Macro-Economic Trends of the 16th, 17th, and 18th centuries, p.2, The Economic History of Modern Europe to1914 [3] Kevin H. O’Rourke and Jeffrey G. Williamson, 2003, Introduction, From Malthus to Ohlin: Trade, Growth and Distribution since 1500, p.2-3 [4] N.F.R. Crafts, The Industrial Revolution in R Floud and D. McCloskey, The Economic History of Britain Since 1700, Vol.1, Cambridge University Press J Mokyr, The Lever of Riches: Technological Creativity and Economic Progress, Oxford University Press Temin, Two Views of the British Industrial Revolution, Journal of Economic History, 57 (March) 63-82 [5] Kevin H. O’Rourke and Jeffrey G. Williamson, 2003, Introduction, From Malthus to Ohlin: Trade, Growth and Distribution since 1500, p.3 [6] K. H.O’ Rourke and J. G. Williamson, After Columbus: Explaining the Global Trade Boom 1500-1800, Journal of Economic History 62 (March), 1-31 [7] Kevin H. O’Rourke and Jeffrey G. Williamson, 2003, Introduction, From Malthus to Ohlin: Trade, Growth and Distribution since 1500, p.2-3 [8] Douglass C. North and Robert P. Thomas, The Rise of the Western World: A New Economic History, Cambridge University Press Douglass C. North and Barry R. Weingast, Constitutions and Commitments: Evolution of Institutions Governing Public Choice in Seventeenth Century England, Journal of Economic History, 49, 803-832 [9] Kevin H. O’Rourke and Jeffrey G. Williamson, 2003, Introduction, From Malthus to Ohlin: Trade, Growth and Distribution since 1500 [10] Mustafa Koc, Phases of Global Expansion, p.266, 13 Globalization as a Discourse [11] Atlantic trade opportunities became available only during the late 15th century, thanks to the discovery of the New World and the passage to Asia around the Cape of Good Hope. This resulted due to a series of innovations in ship technology, pioneered by the Portuguese that changed rigging and hull design of ships and developed the knowledge of oceanic navigation. [12] Daron Acemoglu, Simon Johnson and James Robinson, The Rise of Europe: Atlantic Trade, Institutional Change and Economic Growth, p.6, 2003 [13] La Population des villes europ ´eenees de 800 `a 1850: Banque de donn ´ees et analyse sommaire des r ´esultats, Centre d’histoire  ´economique Internationale de l’Uni. de Gen`eve, Libraire Droz, Geneva [14] McEvedy, Colin and Richard Jones (1978) Atlas of World Population History, Facts on File, New York [15] Maddison, Angus (2001) The World Economy: A Millennial Perspective, Development Centre of the Organization for Economic Cooperation and Development, OECD, Paris [16] Atlantic Trade and the Rise of Europe, Data, p.7 [17] Ch.1.2, Economic Growth in Europe, p.10, Atlantic Trade and the Rise of Europe [18] Ch.1.5 Interpretation, p.15, Atlantic Trade and the Rise of Europe [19] The establishment of political institutions limiting the power of the monarchy must have created positive spillovers on the rest of the economy of the rest of the non-Atlantic British cities, especially on the industrial capitalists, Ch.2.1, The Argument, p.17, [20] Folasade Ifamose, The Indigenous Aristocracy, the Atlantic trade, and the Gunpowder Economy, University of Abuja, Nigeria, www.fas.harvard.edu-1999 WP Abstract [21] Michiel de Jong, The Role of the State in the Expansion of the Dutch Overseas Trade Networks, 1590-1630, Universite it Leiden, The Netherlands, www.fas.harvard.edu-1999 WP Abstract [22] Quoted in Anthony Pagden, Peoples and Empires: Europeans and the Rest of the World from Antiquity to the Present (London: Weidenfeld and Nicoloson, 2001), p. 94. [23] C.R. Boxer, The Dutch Seaborne Empire, 1600-1800 (London: Penguin, 1973) [24] Elizabeth Mancke, Early Modern Expansion and the Politicization of Oceanic Space,†Ã‚   The Geographical Review, 89, nr. 2 (April 1999), p. 227