Global Economy: Mercantilism, Colonialism, and the Industrial Revolution #2

Global Economy: Mercantilism, Geographic Discoveries, Colonialism, and the Industrial Revolution 

The global economy is the product of a gradual and complex historical process that began in the 15th century, connecting different continents, cultures, and resources. The sources you have provided detail how the Age of Discovery, Mercantilism, Colonialism, and the Industrial Revolution—the cornerstones of this process—worked in a mutually reinforcing cycle.

Geographical Discoveries and the Rise of Mercantilist Nation-States

The starting point of the global economy was the Geographical Discoveries, led by nation-states such as Spain and Portugal in the late 15th century. Christopher Columbus' arrival in America in 1492 was not only the discovery of new lands but also a revolutionary turning point in world trade. These discoveries enabled Europe to find direct sea routes to Asia, thereby reducing its dependence on costly and risky overland trade. These new trade routes led to the beginning of a global flow of goods, capital, and even people.

The pursuit of wealth brought about by these discoveries gave rise to an economic ideology and policy system known as mercantilism in Europe. As clearly stated in Thomas Mun's work, mercantilists measured a nation's power and wealth by the amount of gold and silver it possessed. Therefore, states aimed to maintain a constant surplus in foreign trade, that is, to sell more goods and buy fewer goods. To this end, policies that encouraged exports (tariff reductions) and restricted imports (high tariffs) were implemented. According to Mun, foreign trade was a kingdom's “great source of wealth” and “lifeblood of wars.” This idea was not only an economic goal but also a strategic approach that reinforced national power and military hegemony. Monopolistic trading companies established during this period (e.g., the British East India Company) obtained commercial privileges in overseas territories with the support of the state.

The Economic and Social Imbalance of Colonialism

The new lands made possible by geographical discoveries enabled colonialism, the primary mechanism for mercantilist states to achieve their objectives. The analyses in Daron Acemoğlu and James Robinson's book The Rise and Fall of Nations emphasize that colonialism was based on the establishment of “exploitative” political and economic institutions, which ruthlessly exploited local populations and resources. Sugar plantations in the Caribbean or mines in South America relied on enslaved labor working under horrific conditions to enrich European elites.

This process led to deep economic stagnation and persistent poverty in the colonized regions, while accelerating the accumulation of capital and the flow of resources vital to the Industrial Revolution in Europe. Raw materials obtained from the colonies (cotton, sugar, tobacco, etc.) and manufactured goods sold to these regions created a cycle for European economies. Colonialism financed this process by providing the raw materials and markets necessary for the Industrial Revolution.

The Industrial Revolution and the Birth of the Modern Capitalist System

The capital accumulation provided by colonialism and the wealth created by global trade prepared the necessary environment for the Industrial Revolution, which began in England in the 1750s. As David Landes notes in his work Unchained Prometheus, the Industrial Revolution was not merely a technological leap, but also a transformation that completely changed production processes, labor relations, and social structures. Innovations such as the steam engine and new textile machines increased production and productivity at an unprecedented rate.

The statistics presented in Angus Maddison's work The World Economy illustrate the economic impact of this transformation. Between 1820 and 1913, per capita income worldwide grew at an unprecedented rate of 0.9% per year, representing a tremendous acceleration compared to the stagnation of the 1500-1820 period.

The social and global consequences of the Industrial Revolution can be summarized as follows:

• Global Integration: New transportation (railways and steamships) and communication technologies (telegraph) accelerated international trade and tied different regions more closely together. As Eric Hobsbawm explains in his book The Age of Capital, in the 19th century, a Londoner could order products from anywhere in the world via telegraph.

• The Rise of New Social Classes: The Industrial Revolution created a new social structure. The old feudal structure was replaced by a polarized society consisting of “a large exploited wage-earning working class and a small exploiting group of production means owners.” This situation laid the foundation for the modern capitalist system.

• Global Expansion: Industrial techniques from Britain rapidly spread to other European countries (such as Germany, France, and Belgium), and industrialization became a global phenomenon. This expansion initiated a worldwide economic transformation process, paving the way for a world order where economic power was not concentrated in a single nation.

With the convergence of these factors, the formation of the global economy emerges as a multidimensional process involving not only a series of economic events but also technological advances, institutional changes, social conflicts, and global power dynamics.