Commercial Revolution: Economics changing from Traditional Economies to

Market Economies

Commercial Revolution: Economics changing from Traditional Economies to

Market Economies

During the Middle Ages…During the Middle Ages…

Economies were self sufficient and traditional. Most people grew own crops and created own goods in manor system. Does this happen today?

Economies were self sufficient and traditional. Most people grew own crops and created own goods in manor system. Does this happen today?

How had life changed during the Middle Ages?

How had life changed during the Middle Ages?

Man had found better way to produce food and be more efficient 3 field system Horse power Iron Plow

All this lead to a surplus in food. Which means?

Man had found better way to produce food and be more efficient 3 field system Horse power Iron Plow

All this lead to a surplus in food. Which means?

Impact of Crusades Impact of Crusades

Crusades opened Europeans eyes to goods of the Islamic (Muslim Empire)- trade routes to East began

As a result this increased trading between East and West---> people began to trade for a living and produce goods Growth of businesses (people could survive because others were

producing enough food) This is known as the COMMERCIAL

REVOLUTION!!

Crusades opened Europeans eyes to goods of the Islamic (Muslim Empire)- trade routes to East began

As a result this increased trading between East and West---> people began to trade for a living and produce goods Growth of businesses (people could survive because others were

producing enough food) This is known as the COMMERCIAL

REVOLUTION!!

Results: Beginning of Modern Banking

Results: Beginning of Modern Banking

People began to exchange credits (money) in exchange for goods and services Banks were set up to stabilize money

source

People began to exchange credits (money) in exchange for goods and services Banks were set up to stabilize money

source

Results:Results: People began to settle towns and

rely on trading and business for a living--> Town and cities grow

Feudalism system declines Growth of Middle Class Money becomes source of power Became foundation of modern day

capitalism

People began to settle towns and rely on trading and business for a living--> Town and cities grow

Feudalism system declines Growth of Middle Class Money becomes source of power Became foundation of modern day

capitalism

If money = power, how can a country get more $$$?

If money = power, how can a country get more $$$?

Get more resources--> make more goods--> trade more -->make more $$---> have more power

This concept will help lead European leaders into Age of Exploration and Mercantilism System

Get more resources--> make more goods--> trade more -->make more $$---> have more power

This concept will help lead European leaders into Age of Exploration and Mercantilism System

Age of ExplorationAge of Exploration

European countries wanted to find an easier way to trade with East so Kings hired sailors to find a new, quicker method to trade.

Avoid Middle Man (Muslims) and price increase

European countries wanted to find an easier way to trade with East so Kings hired sailors to find a new, quicker method to trade.

Avoid Middle Man (Muslims) and price increase

ExplorersExplorers

Vasco DeGama Magellan Columbus

What were they looking for? Routes to the East

Vasco DeGama Magellan Columbus

What were they looking for? Routes to the East

ExplorationExploration

Leads to the establishment of colonies in the New World and Mercantilism

Leads to the establishment of colonies in the New World and Mercantilism

What is Mercantilism? Countries power depends on wealth

What is Mercantilism? Countries power depends on wealth

Why would they do this?Why would they do this? Mother countries would use colonies for

resources. Take resources and manufacture them into a finished product. Then sell finished product to colony.

Example: Take cotton from US --> ship to England----> England turns cotton into clothes--> sell clothes to US

England gets more $$$ and power

Mother countries would use colonies for resources. Take resources and manufacture them into a finished product. Then sell finished product to colony.

Example: Take cotton from US --> ship to England----> England turns cotton into clothes--> sell clothes to US

England gets more $$$ and power

Columbian ExchangeColumbian Exchange

Led to the development of Modern Day Capitalism

Led to the development of Modern Day Capitalism

What is a Market economy again?

Individuals begin making decisions Businesses Grow Adam Smith and the “Invisible Hand”

What is a Market economy again?

Individuals begin making decisions Businesses Grow Adam Smith and the “Invisible Hand”