Mercantilism
An economic philosophy of the sixteenth through the eighteenth centuries that called for maximizing exports and minimizing imports, thus creating a national profit that kings could spend on military prowess.
An economic philosophy of the sixteenth through the eighteenth centuries that called for maximizing exports and minimizing imports, thus creating a national profit that kings could spend on military prowess.
What is the meaning of Mercantilism?
A definition of Mercantilism is provided here: The economic principle advocating the selling of more goods to other nations than a country buys.
Mercantilism in Global Commerce Policy
In this regard, mercantilism is: a 17th-century set of views, still much alive, which holds that the aim of international trade should be the accumulation of an increased share of global wealth in the form of bullion. The entries on trade policy are here. In the modern world the aim is to accumulate foreign exchange. Mercantilism always seeks to maximize exports and minimize imports. Lars Magnusson points out in Mercantilism : the shaping of an economic language that mercantilism in its traditional form was not a well-structured doctrine containing principles to describe economic behaviour or to prescribe policy measures. Rather, it was characterized by a strong emphasis on the means to achieve national wealth and power. Douglas Irwin notes in Against the Tide : an intellectual history of free trade that virtually all mercantilists would have agreed with the following proposition: exports of manufactures were beneficial and exports of raw materials (for use by foreign manufacturers abroad) were harmful; imports of raw materials were advantageous and imports of manufactured goods were damaging. This proposition sounds quite familiar to the contemporary policy maker. Most mercantilists also were in favour of expanding trade to promote economic development. The entries on trade policy are here. A. W. Coats distinguishes in Mercantilism : Economic Ideas, History, Policy between three levels of mercantilist ideas: (a) the ultimate ends or objectives of economic policy, e.g. the promotion of the wealth, power and security of the state, (b) the intermediate ends, e.g. The entries on trade policy are here. Adequate supply of precious metals, stable exchange rate, favourable balance of trade, protection of home industry, etc., and (c) the means to achieve the intermediate ends, e.g. bounties on exports, duties and prohibitions on imports of finished goods, prohibitions on the export of precious metals, etc. Robert Gilpin distinguishes in his Political Economy of International Relations between benign mercantilism (aimed at protecting the national economic interest as the minimum required for the security of the state) and malevolent mercantilism (aimed at imperialist expansion and national aggrandisement). The entries on trade policy are here. Adherents of mercantilism implicitly assume that global wealth is fixed. They therefore portray trade as a zero-sum activity in which one country can only prosper at the expense of another. Mercantilism is therefore a form of economic nationalism. The massive growth of world trade and wealth over the past two hundred years or more demonstrates that trade is, in fact, a positive-sum activity. The entries on trade policy are here. It also shows that all can prosper through efficient specialization. See also neo-mercantilism.[1]
Mercantilismin the wold Encyclopedia
For an introductory overview on international trade policy, see this entry.
Resources
Notes and References
- Dictionary of Trade Policy, “Mercantilism” entry (OAS)
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