| |
Mercantilism (from Latin mercator, ‘seller in a market’) is a descriptive term invented by economists in later years to describe the ideas of some European writers of the 16th and 17th centuries who advocated similar policies, such as an emphasis on manufacture rather than on the production of agricultural raw materials, and protectionist foreign trade measures, both of which would produce an excess of exports over imports, that is, a ‘favourable balance of trade’. The central goal was the accumulation of national treasure, to be achieved by exporting as much as possible and importing as little as possible. Net exports would enrich the state when other countries paid off the balance in precious metals, with wealth. Many mercantilists were more sophisticated and looked on the flow of precious metals as a source of purchasing power for such things as navies and standing armies for emerging nation states.
Adam Smith, in the The Wealth of Nations (1776), showed that imports bring in useful goods and services while exports send out the nation\'s goods in return for sterile metals. In this view exports are a necessary evil to finance imports. Smith showed that exports were a sacrifice, desirable only in as much as they allowed a country to import. Although the crudest forms of mercantilism have been banished, contemporary protectionism is motivated by the same beliefs. TF
Further reading Eli Hecksher, Mercantilism; , J.M. Keynes, ‘Notes on Mercantilism’ in General Theory of Employment, Interest and Money; |
|
