Question

Introduction to macro economics course FYI

Why is the emergence of capitalism one explanation for the sustained growth beginning 17th and 18th century?

Answer 1

Capitalism is an economic system wherein private ownership in business,production is encouraged.The role of the State is more or less very less.Capitalism in Europe in 17th and 18th century triggered the industrial revolution.The thrust of nation building and improving the economy fell into the hands of entrepreneurs.This capitalism encouraged new ideas,mechanization,led to creation of machines and fuelled the growth.

Emergence of capitalism is the possible reason for sustained growth as dynamics of taking economy forward has been put in the hands of entrepreneurs.Industrial capitalism is characterized by division of labour.There was increase in productivity,The lives of people improved.There was higher disposable income,which further triggered a positive chain of reactions.Economic prosperity is attributed to the fact that capitalism rewarded performers.Value additions created a market for more services and products. It was England which first executed “the takeoff into self-sustained growth.” And by 1850, England had become an economic titan. Its goal was to supply two- thirds of the globe with cotton spun, dyed, and woven in the industrial centers of northern England. England proudly proclaimed itself to be the “Workshop of the World,” a position that country held until the end of the nineteenth century when Germany, Japan and United States overtook it.