Capitalism vs Mercantilism
Capitalism and Mercantilism are two Economic Systems & Schools of Thought concepts in AP Economics that students often mix up. In short: capitalism is capitalism is an economic system based on private ownership of resources, where prices and production are guided by markets and the pursuit of profit. Meanwhile, mercantilism is mercantilism was an early economic doctrine that a nation's wealth comes from accumulating gold and running trade surpluses through protectionism. Here is how they compare side by side.
Capitalism is an economic system based on private ownership of resources, where prices and production are guided by markets and the pursuit of profit.
Individuals and firms own capital and make decisions based on supply, demand, and prices. Supporters credit it with efficiency and innovation; critics point to inequality and market failures. Most modern economies are mixed, blending capitalism with government intervention.
Mercantilism was an early economic doctrine that a nation's wealth comes from accumulating gold and running trade surpluses through protectionism.
It favored exports over imports, tariffs, and colonies to amass precious metals. Adam Smith and later economists rejected it, showing that voluntary trade based on comparative advantage benefits both sides.
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