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Create a 2 pages page paper that discusses mercantlism and capitalism. Mercantilism and Capitalism Q1: Both capitalism and mercantilism are economic systems whose make focus are on making profits thou

Create a 2 pages page paper that discusses mercantlism and capitalism. Mercantilism and Capitalism Q1: Both capitalism and mercantilism are economic systems whose make focus are on making profits though they differ in wealth accumulation. Capitalism philosophy stresses on the importance of wealth creation as a tool for pursuing a nation’s economic growth (Degen 13). On the contrary, mercantilism philosophy emphasizes on wealth accumulation and believes that wealth extraction is the basis for economic growth always measured in the amount of gold that a nation possesses (Degen 13). Capitalism supports individual property ownership as the philosophy relies on the assumption that individualism is good for fostering competition in the society where people further their skills to increase their competitiveness thus resulting in economic growth.

However, mercantilism philosophy encourages monopoly where property is controlled by influential people who receive protection and support from the government through subsidies (Degen 13). Capitalism, therefore, gives individuals freedom as well as equal opportunities to create wealth in a free market. In this case, the philosophy gives the right to private property where an individual’s freedom to consume preferred encourages more production resulting in more wealth for the nation. Nonetheless, mercantilists propose restrictions and regulations on private ownership since it is a way individuals amass wealth for themselves at the expense of economic growth (Degen 14). Therefore, capitalism theory encourages private property ownership and advocate consumer spending and enjoying of life as a road to economic growth while mercantilism philosophy perceives individualism as extravagant and that consumers should stop spending to prevent the flow of wealth from the economy.


Mercantilism was common during the colonization periods where the governments enacted laws and policies to regulate the economy for their benefits (Degen 16). They believed that mercantilism philosophy of accumulation wealth would increase net inflow into their nations. The best ways that the mercantilists ensured wealth accumulation included controlling their shipments, stopping importation of goods and services, and increasing tax on imports. The mercantilism philosophy was a disadvantage to the poor as the governments would grant monopoly charters where trade was concentrated within an easily controlled group with restrictions on participation in trade. British East India Company is among the international traders that benefited from the mercantilism or monopolistic economic activities (Degen 16). At this point in history, other colonial powers like Spain and Portugal had been enjoying the spice trade in India but when the British India company entered the trade as an individual entity, where the believe was that monopoly was the only source of sovereign power over international rivals and domestic traders.

In the British East India’s case, English merchants had objected to forming a joint-stock company and would rather trade for themselves and strictly keep the profits for their enterprises (Degen 16). As countries like France, Portugal and Spain were fighting EIC dominance in the trade, private British traders further benefited from the trade by receiving grants from the Commonwealth government and later joined British East India Company to exercise more monopoly. In this case, it is the British who benefited while other less influential players lost the initial dominance and influence they had on the trade. Capitalism became popular with the industrial revolution where the western colonial powers especially Britain came with individual or private property ownership and gave power to citizens to own wealth (Degen 13). Throughout history, capitalism has been identified as an economic philosophy that benefits both the country and citizens as evident with the extent to which capitalist countries are happier and satisfied than the mercantilists.

Work Cited

Degen, Robert. A. The Triumph of Capitalism. New Jersey: Transaction Publishers, 2011.Print.

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