Capitalism vs. Mercantile Capitalism

What's the Difference?

Capitalism is an economic system based on private ownership of the means of production and the pursuit of profit through competition in the marketplace. Mercantile capitalism, on the other hand, is a form of capitalism that emerged in the early modern period and is characterized by government intervention in the economy to promote exports and accumulate wealth through trade. While both systems prioritize profit and competition, mercantile capitalism relies more heavily on government regulation and protectionism to achieve economic goals, whereas traditional capitalism emphasizes free market principles and minimal government intervention.


AttributeCapitalismMercantile Capitalism
Economic SystemPrivate ownership of the means of productionEmphasis on trade and commerce
FocusProfit maximizationAcquiring wealth through trade
Government RoleMinimal government interventionGovernment involvement in economic activities
DevelopmentEvolved from feudalismDeveloped during the Age of Exploration

Further Detail

Definition of Capitalism

Capitalism is an economic system where private individuals or businesses own the means of production and operate for profit. In a capitalist system, the market determines prices, production, and distribution of goods and services. Competition is a key driver in capitalism, as it encourages innovation and efficiency.

Attributes of Capitalism

  • Private ownership of property
  • Market-driven economy
  • Competition
  • Profit motive
  • Individual freedom

Definition of Mercantile Capitalism

Mercantile capitalism is a form of capitalism that emerged in the early modern period, characterized by the dominance of merchant capitalists who controlled trade and commerce. In mercantile capitalism, the state played a significant role in regulating and promoting economic activities, often through protectionist policies.

Attributes of Mercantile Capitalism

  • State intervention in the economy
  • Focus on trade and commerce
  • Colonial expansion
  • Monopoly power of merchant capitalists
  • Protectionist policies

Comparison of Capitalism and Mercantile Capitalism

While both capitalism and mercantile capitalism share some similarities, such as the emphasis on profit and private ownership, they differ in significant ways. Capitalism is characterized by a free market economy where competition drives innovation and efficiency. In contrast, mercantile capitalism relies on state intervention and protectionist policies to promote trade and commerce.

One key difference between capitalism and mercantile capitalism is the role of the state. In capitalism, the state typically has a limited role in the economy, with minimal intervention in market activities. On the other hand, mercantile capitalism involves significant state intervention, with policies aimed at promoting domestic industries and protecting merchant interests.

Another difference between capitalism and mercantile capitalism is the focus of economic activities. Capitalism is driven by market forces and consumer demand, leading to a diverse range of industries and products. In contrast, mercantile capitalism focuses on trade and commerce, with merchant capitalists exerting significant control over the economy.

Additionally, capitalism and mercantile capitalism differ in their approach to competition. In capitalism, competition is seen as a positive force that drives innovation and efficiency. On the other hand, mercantile capitalism often involves the creation of monopolies or cartels to control markets and maximize profits.

Despite these differences, both capitalism and mercantile capitalism have played significant roles in shaping economic systems throughout history. Capitalism has become the dominant economic system in many parts of the world, promoting economic growth and prosperity. Mercantile capitalism, while less prevalent today, laid the foundation for modern capitalism through its emphasis on trade, commerce, and state intervention.


In conclusion, capitalism and mercantile capitalism are two distinct economic systems with their own attributes and characteristics. While capitalism emphasizes free markets, competition, and individual freedom, mercantile capitalism relies on state intervention, protectionist policies, and the dominance of merchant capitalists. Understanding the differences between these two systems can provide valuable insights into the evolution of economic thought and practice.

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