Answer #1

Mercantilism and capitalism are financial systems that are targeted towards profit. Nonetheless, these systems differ in how they achieve profits. Capitalism is a financial system that works based on the notion of creating wealth so as to promote national economic growth. Conversely, mercantilism places more focus on accumulating wealth through wealth extraction and it is measured against the quantity of gold that a country owns. Wealth extraction is enhanced by colonization so as to amass more wealth.

In capitalism, the individual society members are seen like the main figure when creating wealth. Capitalists believe that the country’s wealth can grow because of the efforts of every person. They view people as competitive naturally. Hence, people with improve their skills so as attain better efficiency as they attempt to add value in their own lives and thus contribute consequently to the financial success of the country. There is currently no set end to creating wealth and countries continue to become wealthier every day.

In contrast, mercantilists believe that prosperity is limited and the people’s skills should thus be honed so as to attain better effectiveness in extracting that kind of wealth. As such, they think that a country should diversify through selling products to other nations so as to amass more wealth, whilst avoiding the act of importing other goods so as to preserve a positive trade balance. This positive trade balances means that more gold will be collected in that particular country.

Capitalism supports competitive business environments where the demand and supply forces determine the cost of services and goods. In contrast, mercantilism requires that the industries are controlled or operated by monopolies that are supported and protected by the main government through the use of subsidies. Capitalism is adopted all through the globe, whereas mercantilism is regarded as extinct.

Answered By: daniel [554 ]