18th Century Economic Shifts and the Bourbon Dynasty

18th Century Economic Policies

The Old Regime had imposed mercantilism, an economic policy which considered that wealth came from accumulating precious metals by means of trade. The state had to control the economy: forbid the export of precious metals, promote trade, boost exports and hinder imports, and gain colonies that would trade their products.

In the 18th century, the birth of new economic policies displaced mercantilism:

• Physiocracy: Proposed by François Quesnay, who believed that the wealth of a nation was on the land (agriculture and mining) because it provides food and items for trade. It defended economic freedom.
• Economic Liberalism: Proposed by Adam Smith. He claimed that individual work was the true source of wealth. The way to enrich a nation is by enriching its individuals; personal benefit will benefit society.

The economy regulates itself through the law of supply and demand; if the supply is higher than demand, its price falls, and on the contrary, the price rises. The role of the state was defending society from threats, protecting individuals from injustice and creating public works. New policies favoured economic and population growth in the 18th century.

The Establishment of the Bourbons

In the 18th century, Spain had a problem in succession and a dynastic change. Charles II died without heirs. In his will, the king appointed Philip of Anjou as his successor; he acceded to the throne as Philip V. The French House of Bourbon was established in Spain. The danger of a possible union of Spain and France and the subsequent breakup of balance led the European powers to endorse the Archduke Charles of Austria as successor. This led to the War of the Spanish Succession.

Changes in Craftsmanship

During the Old Regime, the production of handicrafts was scarce and focused mainly on textiles and metal. In the 18th century, handicraft production grew, especially due to the increase in population and demand. These new methods consisted of home working and manufacturing:

• Cottage industries: Developed where work was carried out by the peasants in their own homes, commissioned by the employer.
• Manufacturing: Was carried out in large specialised workshops, where numerous craftsmen worked for wages.