Lesson 2.1

Capitalism is generally understood as an economic system based on four characteristics:

• People have the right to private property.
• The necessities of production, distribution, and ownership were in the hands of individuals and companies.
• Individuals engage in economic activity primarily for profit.
• Individuals compete to reach their economic goals.

Understandings of Mercantilism

• The wealth of a country like Spain could be measured by the amount of bullion such as gold or silver that it possessed, supported by influx of bullion from the New World.
• It was necessary to export more than import in order to maintain a balance of gold in its possession.
• A system of international business ventures sponsored by the monarch to ensure the supply of bullion
• Trade activities were strictly regulated.
• Naval power was essential to maintaining the wealth and power, especially overseas.
• Colonies could provide captive markets for manufactured goods and sources of raw material.
• A large population was needed to provide a domestic labor force to people the colonies.