The Birth of the Theoretical System of Capitalism

The first major school of economic theories was mercantilism. It grew for two and a half centuries following the explosive expansion of world trade with the discovery of the new continent and worldwide sea routes up until the middle of the eighteenth century. It was also a period of the formation of rival modern nation states in Western Europe through a continuous process of civil and international wars. In order to strengthen the fiscal basis of nation states by various custom duties and levies on monopoly traders, mercantilist policies were called for. The systematic development of such policies had been unnecessary in the preceding feudal period. Mercantilist theoretical observations more or less expressed the interests of an expanding merchant class and the state protection necessary for them.