Features of Capitalism vs. Features of Mercantilism

Attribute	Features of Capitalism	Features of Mercantilism
Private ownership of property	Yes	No
Free market economy	Yes	No
Competition	Yes	No
Government intervention	Minimal	High
Focus on individual profit	Yes	No

Definition of Capitalism

Capitalism is an economic system where private individuals own the means of production and operate them for profit. In a capitalist system, the market determines prices, production, and distribution of goods and services. Competition is a key feature of capitalism, as businesses strive to offer better products or services at lower prices to attract customers.

Definition of Mercantilism

Mercantilism is an economic theory that emphasizes the importance of accumulating wealth through trade. In a mercantilist system, the government plays a significant role in regulating and controlling the economy to ensure a favorable balance of trade. Mercantilism focuses on exporting more than importing to increase a nation's wealth.

Ownership of Means of Production

In capitalism, the means of production are owned by private individuals or corporations. This allows for competition and innovation, as businesses strive to improve their products and services to attract customers. In contrast, in mercantilism, the government often plays a more significant role in controlling and regulating the means of production to ensure a favorable balance of trade.

Role of Government

In capitalism, the role of government is typically limited to enforcing contracts, protecting property rights, and ensuring fair competition. The government's involvement in the economy is minimal, allowing businesses to operate with minimal interference. On the other hand, in mercantilism, the government plays a more active role in regulating and controlling the economy to ensure a favorable balance of trade.

Trade and Commerce

Capitalism promotes free trade and open markets, allowing businesses to compete globally and consumers to benefit from a wide range of products and services. Competition drives innovation and efficiency in a capitalist system. In contrast, mercantilism focuses on accumulating wealth through trade, often through protectionist policies that restrict imports and promote exports to maintain a favorable balance of trade.

Wealth Accumulation

In capitalism, wealth accumulation is driven by individual initiative and entrepreneurship. Businesses compete to offer better products or services at lower prices, leading to economic growth and prosperity. In mercantilism, wealth accumulation is often achieved through trade surpluses and government intervention in the economy to promote exports and limit imports.

Impact on Society

Capitalism is often associated with economic growth, innovation, and prosperity. The competitive nature of capitalism encourages businesses to improve their products and services, leading to higher standards of living for consumers. In contrast, mercantilism can lead to protectionist policies that restrict trade and limit economic growth, potentially harming consumers and businesses in the long run.

Conclusion

In conclusion, capitalism and mercantilism are two distinct economic systems with different features and impacts on society. While capitalism promotes competition, innovation, and economic growth, mercantilism focuses on accumulating wealth through trade surpluses and government intervention in the economy. Understanding the differences between these two systems can help policymakers and individuals make informed decisions about economic policies and practices.