Changes

Beginning in the Early Modern Period of world history, roughly during the early sixteenth century, corresponding with the Age of Exploration and the rush to conquer and colonize the New World, a new economic system developed in Europe. The old feudal economy was replaced by mercantilism, which was an economic system whereby the mother country would exploit the resources of her colonies and then sell manufactured goods back to the colonies. The system worked well for some time, but by the eighteenth century numerous problems became very obvious. Eventually, Enlightenment philosophers such as David Hume and Adam Smith realized that not only was the mercantile system inefficient, it was in many way anathema to the basic ideas of the Enlightenment. The economic ideas of Smith, Hume, and others were ultimately championed by the leaders of the most powerful countries, which helped to usher in the Classical Gold Standard and modern capitalism.

The Enlightenment proved to be one of the most revolutionary periods in world history as it transformed the way in which societies viewed the relationship between the ruler and the ruled. The movement first began in Great Britain in the late seventeenth century, which was experiencing profound political change, and then spread to France and the German speaking kingdoms. Some of the basic ideas of the Enlightenment were increased political freedom for all classes, more political equality, and a diminished role of government. Many, but not all, of the most prominent Enlightenment philosophers were anti-monarchy and most were ardent believers in free trade. In terms of economics, Enlightenment thinkers believed that although commerce often promoted self-interest and sometimes greed, it also helped to mitigate other negative aspects of society, particularly concerning governments, thereby ultimately promoting social harmony. As the eighteenth century progressed, economics played an even greater role in the Enlightenment due to the drastic changes that were taking place in society from the onset of the Industrial Revolution. <ref> Coker, Edward W. “Adam Smith’s Concept of the Social System.” <i>Journal of Business Ethics</i> 9 (1990) p. 139</ref> In order to keep up with the rapid technological changes that were affecting European society, especially in the realm of the economy, Enlightenment philosophers began taking note of the role the mercantile system played in people’s lives and how much it stifled freedom.

[[File: David_Hume_Ramsay.jpg|300px|thumbnail|left|David Hume (1711-1776)]]

Among the most important writers of the British Enlightenment was Scottish thinker David Hume (1711-1776). Two of Hume’s most important works were <i>Essays</i> and <i>The History of England</i> and although neither of those works, or any of Hume’s writings for that matter, never focused specifically on international relations or macroeconomics, his thoughts on those issues were scattered throughout all of his works. <ref> Haar, Edwin van de. “David Hume and International Political Theory: A Reappraisal.” <i>Review of International Studies</i> 34 (2008) p. 226</ref>

Although Hume recognized that sometimes wars were inevitable, he believed that they were for the most part bad for economic progress. Hume argued that any benefits gained from territorial conquest were often mitigated by the fact that wars usually disturb free commerce, create lazy laborers, and are almost always expensive and increase the national debt. <ref> Haar, p. 234</ref> Ultimately, the entire concept of the empire itself was financially ruin some and for that reason alone should be abolished, Hume advocated. He believed that empires were usually beneficial to the mother country in the beginning, but almost always became financial burdens that hurt the overall economy. <ref> Haar, p. 236</ref> David Hume’s revolutionary economic ideas resonated with many Enlightenment thinkers, no more so than his fellow Scotsman, Adam Smith.

[[File: Colonisation_1754png.png|300px|thumbnail|left|Map Depicting the Mother Countries and Their Colony Possession during the Enlightenment]]

Adam Smith (1723-1790) synthesized and improved on many of David Hume economic theories to create an economic worldview that would influence global economics until the present. In Smith’s most famous work, <i>The Wealth of Nations</i>, and in his earlier yet no less important, <i>The Theory of Moral Sentiments</i>, he argued that economic freedom was intertwined with political freedom and that many societal benefits actually came from greed, which was a process he referred to as the “Invisible Hand.” Smith’s philosophy was extremely optimistic, as he argued people were inherently good and that economically driven men would seek to better themselves while simultaneously promoting the welfare of society. <ref> Coker, p. 140</ref> But what made Smith a revolutionary thinker was his strident opposition to the old economic order.

“If any of the provinces of the British empire cannot be made to contribute towards the support of the whole empire, it is surely time that Great Britain should free herself from the expense of defending those provinces in time or war, and of supporting any part of their civil or military establishments in time of peace, and endeavour to accommodate her future views and designs to the real mediocrity of her circumstances.” <ref> Smith, p. 740</ref>

There is little doubt that Enlightenment philosophers David Hume and Adam Smith indelibly influenced the modern economic world. Their critique of the mercantile economic system, particularly the idea of government subsidized monopolies and imperialism, influenced political and economic leaders in the late eighteenth and early nineteenth centuries. By the middle of the nineteenth century, the economic policies practiced by the most industrialized nations of the world more closely resembled what Smith and Hume envisioned than what was practiced during the Early Modern Period – the government subsidized monopoly companies were slowly dying, tariffs and other trade restrictions were not as common, and the Classical Gold Standard was the primary economic regime. The days of empire were also coming to a gradual end, signaling the end of one economic and political order and the beginning of another that in many ways still exist.

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