The rise of capitalism in Europe resulted in the transformation of the European economy during the middle ages and the renaissance era. Capitalism emerged due to the changes in the nature of the economy as there was emergence of transition from feudalism to the advanced economic institutions like international trade and banking which contributed to the expansion of commercial practices in the different parts of the Europe.
Signs of emergence of capitalism can be noticed during the 15th and 16th century although in the 13th and 14th centuries also one comes across the primitive form of capitalistic practices such as commercial capitalism. Capitalism involves the investment of capital by the private trading communities. This capital is obtained through personal savings and loans borrowed from banking institutions. Expansion of international trade, geographical discoveries, and establishment of colonies in the different parts of the world such as Asia contributed to the further expansion of capitalism from the Middle Ages to the renaissance period.
For instance, the Portuguese navigators established their colonies in the Asian countries such as Asia which contributed to the enhanced revenue of the Portuguese state as the Portuguese traders could capture the major market share of the European spice market. International trade led to transformation of the predominantly agricultural economies to trade-based capitalistic economy. The establishment of trading companies in the European countries such as England is an example of this major development.Emergence of capitalism led to decline of the merchant guilds and encouraged the growth of large scale capitalistic enterprises.
Capitalism also led to the emergence of primitive form of modern factory system where there was the large scale manufacture of commodities. This led to the differentiation between the capital and the labor. Capitalism also affected the agricultural sector as there was the beginning of capitalistic investment in this sector.This led to increase in the agricultural production to cater to the needs of the urban population. In the European countries there emerged difference between producing and non-producing groups.
After 1500 there was the emergence of the banking houses such as Medicis of Florence and Fuggers of Augsberg. With the introduction of free enterprise there was the emergence of the competition in the European countries. Capitalism led to the emergence and expansion of the towns in Italy, Flanders and north Germany.Capitalism led to the emergence of new ideas, new markets, and new professions in the different European countries. This also resulted in the spirit of competition among the traders and among the European countries.
The rise of capitalism resulted in the growth of the bourgeoisie class in the European countries. Individualism, an important renaissance idea, led to the emergence of competitive capitalism as there was transition from group life to individual life.One can notice this development in the European countries like Italy. There was the introduction of the commercial techniques such as bills of exchange in the European countries such as Italy. One can also notice the emergence of market network which comprised the European economies such as Italy, Germany, and France.
All the different European countries benefited from the expansion of urban centers and increase in the standard of living of the people leading to increased demand for goods in the urban markets.The emergence of capitalism resulted in the rise of the monetary economy in the different European countries. The states began to give importance to the theory of mercantilism as they wanted to preserve their self-interest through the activities of the traders. The above study shows that the rise of capitalism during the Middle Ages and renaissance period led to transition of the feudal economies leading to the emergence of capitalistic enterprises which resulted in the rise of international trade, urbanization, and new business practices.
