Mercantilism

Why would mercantilism be hard to define? Or is it?

Mercantilism Mercantilism cannot be considered a unified theory of economics because it has been driven more by the political and commercial interests of the state and security concerns than by abstract ideas. It may be thought of as a collection of policies designed to keep the state prosperous by economic regulation.

Mercantilism When did the “mercantile system” arise?

Mercantilism When did the label “mercantile system” arise? When Adam Smith wrote Wealth of Nations. He defined the economic theory in criticizing it while advocating for free markets.

Mercantilism When did the “mercantile system” arise? It followed in the wake of the feudal era: nation-states were replacing feudal estates technology changed shipping and farming urban centers and international trade grew double-entry bookkeeping America—new markets, new mines rise of a money economy

Mercantilism What are the ideas of a mercantile system?

Mercantilism What are the ideas of a mercantile system? A nation’s prosperity depended upon its supply of gold and silver (bullionism—gold/silver=wealth)

Mercantilism What are the ideas of a mercantile system? A nation’s prosperity depended upon its supply of gold and silver (bullionism—gold/silver=wealth) A country needed a positive balance of trade to gain more precious metals. -for a nation to have gold at the end of the year, it must export more than it imports.

Mercantilism What are the ideas of a mercantile system? Nations are in a direct zero-sum competition with each other for wealth. -the total volume of trade is unchangeable. -the only way for a nation to increase its trade was to take it from another. (Anglo-Dutch wars)

Mercantilism What are the ideas of a mercantile system? Each nation tried to achieve economic self- sufficiency -those who founded new industries should be rewarded by the state. -reliance on foreign trade was harmful. -English Navigation Acts (English ships) prevented the Dutch from most trade with England.

Mercantilism What are the ideas of a mercantile system? Agriculture should be encouraged to thrive. -domestic production precluded imports of food, and farmers provided a base for taxation. -colonies could supply food.

Mercantilism What are the ideas of a mercantile system? Commerce should be regulated to produce a favorable balance of trade. -tariffs should be high on imported manufactured goods and low on imported raw materials. -exporting raw or unfinished materials disadvantages a nation, as greater wealth results from performing value-added manufacturing work within that nation.

Mercantilism What are the ideas of a mercantile system? Sea power was essential to control foreign markets. -a powerful merchant fleet alleviates the necessity of using another nation’s ships and becoming dependent on foreign assistance. -a fleet would also add to a nation’s prestige and military power. Colonies provide captive markets for manufactured goods and sources of raw materials.

Mercantilism What are the ideas of a mercantile system? A large population provided a domestic labor force to people colonies. Imported luxury items took money out of the economy unnecessarily and should be avoided.

Mercantilism What are the ideas of a mercantile system? The government should play an active protectionist role in the economy by encouraging exports and discouraging imports. -Tariffs

Mercantilism What is mercantilism not?

Mercantilism What is mercantilism not? free market economy laissez faire the work of the invisible hand belief that gold is just another commodity (its value was derived from its scarcity) non-zero-sum game

Mercantilism Did Adam Smith put mercantilism to rest?

Mercantilism Did Adam Smith put mercantilism to rest? Japan’s WWII expansionism to acquire control of natural resources. Keynes—government intervention in the economy is sometimes necessary. -FDR’s New Deal

Mercantilism Did Adam Smith put mercantilism to rest? Maybe trade surpluses aren’t automatically good and trade deficits automatically bad. -Japan’s trade policies in the 1970s and 1980s caused its stagnation in the 1990s, -whereas the US financial markets offered good investments and growth.

Mercantilism Did Adam Smith put mercantilism to rest? Does mercantilism belong only in 5 th grade as a colonial era concept, or do the ideas endure?