The Venetian merchant Marco Polo traveled along the Silk Road to China. Mercantilism gradually supplanted local barter systems.

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The Rise of Capitalism

Unlike capitalism, which revolves around production, mercantilism revolves around trade. The core of mercantilism is the simple practice of selling something for more than you paid for it. It's based on the concept of profit, and it grew out of man's mobility.

Mercantilism came to thrive in the non-localized, well-organized societies of ancient Rome and the Middle East. When most of the world still worked on the local barter system of exchanging goods, merchants in these cultures moved goods from place to place, which enabled them to profit.

If something like pottery clay or wheat were abundant locally but scarce in a distant town, merchants brought those goods to towns where they could fetch a higher price. This type of economic mobility was possible because of the relative peace and order of these well-developed societies.

In the 5th century, the decline of the Roman Empire also meant the decline of widespread mercantilism in Europe. But mercantilism continued to thrive throughout Arabia. Arabs, who were predominantly Islamic, were positioned perfectly for a profit as goods moved along Middle Eastern trade routes between Egypt, Persia and the later Roman and Ottoman Empires. The rapid spread of Islam in the 700s brought the practice of mercantilism to Africa, Asia and parts of southern Europe. From Spain and Portugal, mercantilism spread to the rest of Europe, which resumed its mercantile economic system by the 14th century. Over the next 500 years, mercantilism became what we now call capitalism.

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By the 19th century, capitalism was the dominant economic system in most of the world's established nations. Soon after capitalism became the most popular economic system, it also became one of the most despised. In the next section, we'll look at why this economic principle evokes such passionate viewpoints.