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Changing social position was unthinkable. During the 800 years between the 5th and 13th centuries, there was almost no expansion of wealth or income. By the middle of the 18th century England and The Netherlands, the most advanced countries, enjoyed perhaps a 1% annual growth at most. The state's economic theory by then was mercantilism: the government should closely control business, especially foreign trade, in order to build up a stock of gold and silver, the only real sources of wealth. The European Enlightenment introduced a new view of society. Voltaire, Locke and other philosophers stressed that the individual should be the focal point. A person's status or wealth was not immutably fixed for life but could be improved—or squandered —by his actions. In 1776 Adam Smith, an eccentric Glasgow professor, put together a philosophy of "political economy" for the Enlightenment in some 1,000 dense pages titled An Inquiry into the Nature and Causes of the Wealth of Nations. In a further glorification of the individual, Smith argued that if the state would only leave businessmen unfettered, they would automatically produce not only the maximum profits for themselves but also the most goods for the nation and wealth for its people. In contrast to his adulation of the individual, Smith had contempt for high government officials, whom he castigated as being "always, and without any exception, the greatest spendthrifts in the society." Smith's economic notions were based on what he called man's "self-love." As he wrote, "It is not from the benevolence of the butcher, the brewer or the baker that we expect our dinner, but from their regard to their own interest." When countless people in a society sought to satisfy their self-love by earning profits, they unintentionally served the public interest. As if led by an "invisible hand," the butcher, brewer or baker produced as much as was profitable, which through competition resulted in the lowest prices for consumers. In such a society everyone won, and no one lost. Once adopted as government policy in advanced European countries during the late 18th century and early 19th century, Smith's theories unleashed a surge of economic growth. Writes British Historian Paul Johnson: "After nearly five recorded millennia of floundering about in poverty, humanity suddenly in the 1780s began to hit on the right formula: industrial capitalism." Production and consumption in Britain soared a staggering 1,600% during the 19th century.
In the century of Pax Britannica, between 1815 and 1914, capitalism facilitated the economic takeoff of the Western world. Free enterprise made possible the full achievement of the Industrial Revolution that had been spurred on by the invention of the steam engine. The face of Europe was transformed. Textile mills grew up in Belgium and France. Businessmen flung railroads and canals across the American continent. Germany built the mighty Ruhr steel complex.