Western Civilization II / Unit 4 WC2 0328 worked example, 60 to 90 seconds
Mercantilist or Capitalist: Who Profits, and What the State Protects
The idea
The exam describes an economic policy and asks whether it is mercantilist or capitalist, and the distinction is one of assumption. Mercantilism assumes wealth is fixed, so the state's job is to capture it: colonies, bullion, monopolies, exclusion. Capitalism assumes wealth grows through exchange, so the state's job is to protect property and profit. Ask two questions of any case: who profits, and what does the state protect.
In practice
Five cases. A crown reserving colonial trade to its own ships and taxing goods that pass through the home port: the crown captures, the state excludes; mercantilist, the Navigation Acts. Stockholders drawing thirty percent dividends from a chartered monopoly that reinvests in more ships: private profit reinvested under a charter; capitalist in operation, mercantilist in its monopoly, the Dutch company, and the exam accepts both halves. Silver shipped from Peru to Seville and on to China for luxuries, under royal control: bullion captured; mercantilist, Spain. A bank selling state-backed bonds to private investors: property protected, profit encouraged; capitalist, the Bank of England. Merchants despised as parasites because trade makes nothing: the mercantilist theory of value, the nobles' view.
Where people slip
The two coexisted for two centuries, and the anchor's point is that capitalism grew inside mercantilist states. Classify by the assumption behind the measure, and expect the exam to test the Navigation Acts as mercantilism and the chartered company as the bridge.
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