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Capitalism in Economics

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Today’s system of capitalism came out of many parts of economic systems over the past few centuries. In the Middle Ages, manorialism was a system where nobles who owned land granted to peasants the chance to work their lands in return for a fixed payment. Improvements in technology and agriculture were very important developments. These led to population growth and eventually to increased trading as well. People started to put money into new businesses to make profits. The power of landowners declined, and the power and influence of merchants rose.

During the Renaissance, the banking families’ growth and power (like that of the Medicis of Florence) let monarchs and other rulers who supported trade and development of new businesses borrow money. Mercantilism defined how much power a nation had in terms of its supply of silver and gold. The Europeans thought that a nation could grow more powerful by gaining wealth. Through trade and the establishment of colonies, this was accomplished and further provided a source of reliable raw materials.

Adam Smith defined

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