Changes

A related economic theory known as “mercantilism” also became popular.  Mercantilism was a policy for a nation (such as Britain) to increase its own national wealth based on trade with other nations and territories.  Under mercantilism, a nation should accumulate gold by exporting more goods than it imported, and by using colonies (such as the English colonies in America) to ship raw materials to the mother country that could be manufactured and exported to other peoples.  Another key component of mercantilism was establishing foreign trading monopolies that would have unfair advantages over competitors in other countries.  One such British monopoly was the East Indian Tea Company, and its unfair business advantage caused the colonists in Boston to revolt in the form of the Boston Tea Party.

A related economic theory known as “mercantilism” also became popular.  Mercantilism was a policy for a nation (such as Britain) to increase its own national wealth based on trade with other nations and territories.  Under mercantilism, a nation should accumulate gold by exporting more goods than it imported, and by using colonies (such as the English colonies in America) to ship raw materials to the mother country that could be manufactured and exported to other peoples.  Another key component of mercantilism was establishing foreign trading monopolies that would have unfair advantages over competitors in other countries.  One such British monopoly was the East Indian Tea Company, and its unfair business advantage caused the colonists in Boston to revolt in the form of the Boston Tea Party.

While Adam Smith’s “invisible hand” was positive in almost every way, mercantilism did have a dark side of exploitation of colonies for the benefit of the mother country.   

While Adam Smith’s “invisible hand” was positive in almost every way, “mercantilism” did have a dark side of exploitation of colonies for the benefit of the mother country.   

Adam Smith did not invent capitalism, but gave it a powerful intellectual justification.  In 1607 -- over 150 years before Adam Smith -- capitalism had already played a prominent role in the first settlement of North America at Jamestown, which was funded by a joint-stock company (a privately owned company having a structure similar to the corporations of today).  Joint-stock companies or corporations were (and are) a form of capitalism; decisions are made privately by those acting on behalf of the owners, without any direct control by government.

Adam Smith did not invent capitalism, but gave it a powerful intellectual justification.  In 1607 -- over 150 years before Adam Smith -- capitalism had already played a prominent role in the first settlement of North America at Jamestown, which was funded by a joint-stock company (a privately owned company having a structure similar to the corporations of today).  Joint-stock companies or corporations were (and are) a form of capitalism; decisions are made privately by those acting on behalf of the owners, without any direct control by government.