Causes of the Commercial Revolution

Commercial Revolution: Combination of Capitalism and Mercantilism

The goal of capitalism was a business system that made individuals wealthy. That is a system that was designed to reward the individual, so it encourages risk-taking. In contrast, mercantilism emphasized direct government intervention in economic policy to increase the general prosperity of the state. That is, one of its main goals is a system that would make the state powerful. Although the both were distinct until the end, the both systems continued to work together until the early-modern period. Indeed, governments and entrepreneurs designed new institutions of this type that facilitated the expansion of global trade during the fourteenth and eighteenth centuries, which has been called the Commercial Revolution.

Causes of the Commercial Revolution

The following factors significantly contributed to this transformative revolution:

1. Crusades
   The Crusades stimulated European interest in foreign goods and trade. Western European crusaders brought back knowledge of Eastern goods such as sugar, spices, silks, and gemstones. The growing demand for these items spurred European trade with the East, benefiting Italian cities, opening Mediterranean trade routes, and expanding Western Europe’s connections with Eastern merchants.

2. Renaissance
   The Renaissance ignited a new materialistic outlook, shifting focus from spiritual to worldly life. Individuals challenged superstitions and traditions, embracing personal wealth and economic ambition. This outlook fueled serious efforts to acquire material resources, setting the stage for widespread economic transformation.

3. Protestant Ethics
   During the Middle Ages, the Church discouraged materialism, emphasizing spiritual pursuits. However, Protestant ideals promoted worldly improvement alongside spiritual growth. As Max Weber noted, Protestants emphasized thrift, time management, hard work, and moderate interest-taking, fostering a cultural shift toward personal wealth accumulation and aiding the rise of capitalism.

4. Economic Conditions
   The circulation of money stimulated trade and commerce, while the discovery of new mines and the establishment of banks facilitated foreign trade. Countries now competed for gold and silver, further spurred by precious metal discoveries in the Americas, fueling the expansion of international commerce.

5. Political Climate
   Political thinkers like Machiavelli, in his work The Prince, underscored the primacy of state power, urging monarchs to consolidate authority. European states sought new revenue sources to fund armies and assert power, encouraging overseas exploration and foreign trade as a means to increase state wealth.

6. Hanseatic League
   Formed by cities in Northern Europe and Germany, the Hanseatic League organized trade across Northern Europe. From the 12th to the 16th century, this league fostered commercial networks, establishing trading centers and warehouses, facilitating trade in goods like grain, fish, leather, wool, and metals, thus enhancing the reach of European commerce.

7. Marco Polo’s Travels
   The travel writings of Marco Polo, who journeyed to China and the East in the 13th century, captivated Western Europeans with descriptions of Eastern wealth, including spices, silks, and precious stones. His accounts attracted European interest and investment in trade with the Far East.

8. Maritime Voyages
   The 15th-century sea voyages, driven by Spain and Portugal's ambitions to access Eastern trade routes, were essential in broadening the scope of the Commercial Revolution. These explorations opened direct sea routes to Asia, paving the way for global trade.

9. Influence of Economic Thinkers
   Economic thinkers like Sir Thomas Mun, Antonio Serra, and Jean-Baptiste Colbert articulated key principles of mercantilism, which advocated for policies like maximizing exports and minimizing imports, establishing strong domestic industries, and building infrastructure to support commerce. These ideas contributed to economic policy and institutional development, facilitating the expansion of trade and the accumulation of national wealth.

In conclusion, the Commercial Revolution was not merely an economic shift but a profound cultural and ideological transformation. It encouraged innovation, trade expansion, and wealth accumulation, while also giving rise to significant challenges, such as colonial exploitation and social inequality. Nonetheless, this period remains a cornerstone in the history of economic thought, influencing the formation of modern economic systems and practices that continue to shape global trade and relations today.