General characteristics of mercantilism

mercantilism theory pdf

Governments also prohibited the export of tools and capital equipment and the emigration of skilled labor that would allow foreign countries, and even the colonies of the home country, to compete in the production of manufactured goods. With respect to its colonies, British mercantilism meant that the government and the merchants became partners with the goal of increasing political power and private wealth, to the exclusion of other empires.

While the mercantilist policies were designed to benefit the government and the commercial class, the doctrines of laissez-faire, or free markets, which originated with Smith, interpreted economic welfare in a far wider sense of encompassing the entire population.

What is mercantilism in history

In , Locke argued that prices vary in proportion to the quantity of money. Keynes noted that the mercantilists were concerned with the economic system as a whole and they were interested in securing optimum employment of the resources. The storm of criticism against mercantilism was particularly strong in France. The merchants had understood that for the development of trade, money is needed. A strong nation, according to the theory, was to have a large population, for a large population would provide a supply of labour , a market , and soldiers. Fewer imports mean less competition and higher prices. They believed, that commerce and trade were the most productive occupation and agriculture was the least productive. Colbert and a Century of French Mercantilism. If the mercantile power of the burghers of Amsterdam could be broken in both Europe and the lucrative Asian trade, France could prosper. This gave birth to Mercantilism. With the establishment of overseas colonies by European powers early in the 17th century, mercantile theory gained a new and wider significance, in which its aim and ideal became both national and imperialistic.

Salvatore, Dominick, ed. Thus, profit and benefit became two sides of Mercantilism. The ideology was embodied in New France through the establishment under Royal Charter of a number of corporate trading monopolies including La Compagnie des Marchands, which operated from toand the Compagnie de Montmorency, from that date until Mercantilists believed that to maximize a nation's power, all land and resources had to be used to their highest and best useand this era thus saw projects like the draining of The Fens.

Mercantilism examples

Even the emphasis of the mercantilists on more money can be justified on economic grounds. Paris, — At first, the Renaissance did not accept the religious doctrine of Medieval Europe. The constraints of mercantilism were a cause of friction between Britain and its American colonies and were arguably among the elements that led to the American Revolution. Fewer imports mean less competition and higher prices. Industries were organized into guilds and monopolies, and production was regulated by the state through a series of more than one thousand directives outlining how different products should be produced. However, barriers to trade still exist to protect locally entrenched industries. Governments also prohibited the export of tools and capital equipment and the emigration of skilled labor that would allow foreign countries, and even the colonies of the home country, to compete in the production of manufactured goods. Modern mercantilist practices arise from the same source as the mercantilist policies of the sixteenth through eighteenth centuries.

They were aware of the dynamic functions of money.

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Mercantilism: Concept, Factors and Characteristics