Final answer:
The foundation for capitalism in Europe during the late Middle Ages was the result of a concentration of capital, increased use of credit, the rise of specialized trades, influx of precious metals from the Americas, and the formation of joint-stock companies, all of which were coupled with a transformation in social and political structures that favored merchant power over feudal systems.
Step-by-step explanation:
Foundations of Capitalism in Late Medieval Europe
The late Middle Ages were crucial in laying the foundation for capitalism in Europe. During this period, developments such as the concentration of capital in land and commerce, the use of credit, and risk-sharing business ventures like joint investment schemes laid the groundwork for a capitalist economy.
Moreover, agricultural advancements led to increased crop yields and population growth, resulting in a surplus population that could engage in commerce and trade. Cities began to host manufacturing activities producing goods for broader markets, which facilitated the rise of specialized trades and broadened economic activities.
The influx of gold and silver from the Americas also played a significant role in establishing capitalism. This wealth was traded for goods, causing inflation and inciting merchants to seek wealth through trade and joint-stock companies.
The Italian city-states and their commenda system, a precursor to joint-stock companies, where investors funded merchants, influenced the rise of the investment system in Europe. The evolving political and social structures, including the decline of feudalism and the emergence of centralized nation-states, supported the development of capitalism.
In addition to commercial activities, the intellectual sphere of Europe also contributed to the growth of capitalist ideologies as European intellectuals like Adam Smith discussed the benefits of invested wealth.
The Black Death's impact on the clergy further increased the importance of the merchant class, who provided essential educated services, thereby altering social hierarchies and solidifying merchant wealth and power, essential for the economic transition to capitalism.