Merchant Capitalism in Europe

According to Greaves, capitalism involves having and investing capital for profit, private ownership of production and distribution, and a division of the distributive process between the owners and the laborers (Greaves et al 484). These concepts represent a change from the economics of medieval times, during which usury was considered wrong, as well as charging a price that would allow for a profit.

The European states somewhat centralized during the fifteenth and sixteenth centuries and several changes occurred. Credit and interest became accepted; prices rose; coins were stabilized in value; and crown patronage of business shifted to merchant ownership. As the demand for weapons, supplies, and luxury items expanded, merchant capitalists saw the potential for financial gain, and overseas opportunities grew for those interested in those expanding markets. At the same time, the governments established some economic policies, which strengthened the respective states. All these forces and changes became merchant capitalism (Greaves et al 484).

Free enterprise, as we know it today, was not a part of merchant capitalism. The sellers and manufacturers did not set prices according to wh

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