Merchant capitalism

Not to be confused with the Commercial Revolution of the 17th century.

Economic historians use the term merchant capitalism to refer to the earliest phase in the development of capitalism as an economic and social system. Merchant capitalism is distinguished from more fully developed capitalism by the lack of industrialization and of commercial finance. Merchant houses were backed by relatively small private financiers acting as intermediaries between simple commodity producers and by exchanging debt with each other. Thus, merchant capitalism preceded the capitalist mode of production as a form of capital accumulation. A process of primitive accumulation of capital, upon which commercial finance operations could be based and making application of mass wage labor and industrialization possible, was the necessary precondition for the transformation of merchant capitalism into industrial capitalism.

Early forms of merchant capitalism developed in the medieval Islamic world from the 9th century, and in medieval Europe from the 12th century.[1][2][3] In Europe, merchant capitalism became a significant economic force in the 16th century. The mercantile era drew to a close around 1800, giving way to industrial capitalism. However, merchant capitalism remained entrenched in some parts of the West well into the 19th century, notably the Southern United States, where the plantation system constrained the development of industrial capitalism (limiting markets for consumer goods) whose political manifestations prevented Northern legislators from passing broad economic packages (e.g. monetary and banking reform, a transcontinental railroad, and incentives for settlement of the American west) to integrate the states' economies and spur the growth of industrial capitalism.[4]

See also


  1. Jairus Banaji (2007), "Islam, the Mediterranean and the rise of capitalism", Journal Historical Materialism 15 (1), p. 47-74, Brill Publishers.
  2. Maya Shatzmiller (1994), Labor in the Medieval Islamic World, p. 402-403, Brill Publishers, ISBN 90-04-09896-8.
  3. Subhi Y. Labib (1969), "Capitalism in Medieval Islam", The Journal of Economic History 29 (1), p. 79-96.
  4. Headlee, S. E. 1991. The political economy of the family farm: The agrarian roots of American capitalism. Praeger series in political economy. New York: Praeger.


This article is issued from Wikipedia - version of the 7/28/2016. The text is available under the Creative Commons Attribution/Share Alike but additional terms may apply for the media files.