Emergence of early capitalism

The notion that capitalism can be divided into early, middle, and late periods is itself extremely controversial. Some scholars have found capitalism, or elements thereof, in very early times. Some philosophers consider capitalism not a time-bound practice or a historical era at all, but the recognition of some timeless elements of the human condition.

Nonetheless, periodization is often undertaken on the presumption that there was a uniquely notable explosion of capitalistic practice in early-modern Europe.

Since pre-Roman times goods have been bought and sold on markets throughout Europe, and local trading networks have enabled goods to make there way onto European markets from places as far away as China. Much of the expansion of the Roman Empire was at least partially driven by the desire to obtain control of the sources of goods being traded with the Romans (such as Tin and cement), and thus obtain these goods more cheaply by cutting out the middle-men.

The Bruges Bourse opened in 1309 as a place for commodity traders to meet and trade their goods.

In the sixteenth century, merchants of Antwerp developed the idea of shareholdership, to facilitate the building of larger ships, and to make possible more extensive trade. The northern Netherlands became a Republic in 1581, and when Antwerp fell in 1585, many of these merchants went north to Amsterdam. The new Republic was largely controlled by its merchant class rather than by the nobility, and had an economy based on early capitalist principles rather than feudal ones. Specifically, the Republic was an early proponent of Free Trade ideas (e.g. Grotius). Its model of colonization was characterized by a strong belief in the bottom line and was entirely based on private enterprise rather than state control.

Many economic historians regard the Netherlands as the first thoroughly capitalist country in the world. In early modern Europe it featured the wealthiest trading city (Amsterdam) and the first full-time stock exchange. The inventiveness of the traders led to insurance and retirement funds as well as such less benign phenomena as the boom-bust cycle, the world's first asset-inflation bubble, the tulip mania of 1636-1637, and according to Murray Sayle, the world's first bear raider - Isaac le Maire, who forced prices down by dumping stock and then buying it back at a discount ("Japan Goes Dutch", London Review of Books [April 5, 2001]: 3-7).

Britain and France, which each applied a mercantilist approach to economic policy, were able to outcompete the Republic, because in their model, long term politically motivated investments by the state were possible. One consequence of this failure was a crash in the speculative trade in tulips (the 'windhandel') in 1637.