History of Free Market CapitalismHumans began establishing community systems that included elements of work, reward, and exchange in prehistory. Over time, we began to domesticate plants and livestock, creating more tradable goods and forcing people to establish foundations on the land and develop economies. Less than 5% of the European population lived in cities before the 12th century. The workers who worked in the cities worked under the feudal system. When the Black Death hit, a labor shortage was created because of the number of people killed. Soon, nobles were fighting to hire serfs to run their estates, and trades had to train foreigners. This is why people began to settle in cities. The business began as trade between towns, but it was not competitive trade. Each city had different products and services, standardized over time. Once they were standardized, trade took place on a larger scale, starting from city to city and eventually reaching nation to nation. Soon, several nations were supplying the same goods and trade became competitive. Most colonies were established with the characteristics of feudalism. Raw goods were returned from the colonies to the mother country, and then the colonies were forced to buy back the finished product. Adam Smith noticed that this does not lead us to development and change, but rather prevents us from moving forward. The ideas he published opened the world's eyes to capitalism.Adam SmithAdam Smith did not necessarily invent many of his ideas, he was responsible for spreading the fundamental ideas of classical economics. Some of his main ideas were to minimize the role of government and taxation in free markets, and that an "invisible hand" guides supply and demand... middle of paper ...... because that they are in They need the product and believe that the seller needs the money they have in exchange for the product. The consumer buys/exchanges money for the product because they are free to do what they want with their money and don't have to think about taxes/regulations. Person 1 and Person 2 decided to exchange products because each has what the other person wants. They can trade as is or sell the items and set the price they want, because in a free market economy the government cannot regulate what producers do. After the American Civil War, the American economy almost doubled in size. This period is called the golden age, where new technologies were introduced. Throughout this period, free market capitalism flourished and helped the United States become the largest industrial nation..