Mercantile capitalism and mercantilist thought started off in the early times, specifically the 16th century to the 18th century. Trade was very much known among countries. As the years progressed, merchants, financiers, public administrators and the kings wanted to unify the country and end the opposition of nobles and landlords. To make sure the state’s power was effective internally, the security and stronghold of the Church and feudal aristocracy was implemented. As a result, the monarch seized the lands owned by the Church and tried to integrate feudal aristocracy into the system and at the same time provided the Church with economic opportunities within the world of trade. As time passed, the new mercantile system allied itself with the …show more content…
Adam Smith gave the formal label of “mercantile system” and defined it as a set of policies in order to achieve favorable balance of trade or payments that encourages exports, discourages imports, impositions on colonial trade, regulated policies on commerce and money and regulation of the industry. To Eli Hecksher, mercantilism focuses on nation-building or transformation of the system. It is a system that’s combines economic protection, and economic nationalism. To German historical economists, mercantilism is an economic policy that aims to promote economic growth and modernization through means of protection and economic nationalism. Thus, mercantilism was justified to be a consolidation of state power, policy making, and economic management of the state to achieve mutual nation-state interests or goals and national economic progress. Early mercantilist assumptions were then created to strengthen the external powers of the state and they were: 1) power is essential and it is the key to acquiring and retaining wealth, 2) wealth is always an essential means to power whether for security or aggression purposes, 3) wealth and power always result to ultimate ends of national policies and both experience long-run harmony between the end. To achieve trade surplus in mercantilism, exports must always be encouraged, new routes for trade and products should be discovered or taken away from another country’s control, number of ships in other countries must be reduced and gold mines or new territories must be discovered and conquered. The export of bullions or gold and silver, must be banned. Consumption of imported necessities and luxuries must also be banned or restricted. The market of local merchants or sellers should be protected. Imports must not be encouraged if such goods are manufactured, supplied or produced
Encomiendas: An encomienda was a grant of Native American labor given to prominent European men in the Americas by the Spanish king. This grant allowed European men to extract tribute from natives in the form of labor and goods. The value of the grants was dramatically increased with the discovery of gold and silver in the Americas. The significance of this term is that although this system was eventually repartitioned, it initiated the tradition of prominent men controlling vast resources and monopolizing native labor.
Smith is against mercantilism, which puts more government emphasis on exports than imports and typically puts high tariffs on imports. The goal of a nation, according to Smith, is to be wealthy, and that means to have plenty of affordable goods and services. To Smith, the best political order would be centered on the market. The goal would be to have a larger market so the citizens would be able to specialize more and increase production. It appears that Smith’s views on the type of political order are along the lines of what we consider capitalism today, and that Smith does not agree with the government involvement in citizen’s life. In this type of political order, the citizens profit from their product, and they also help others by hiring workers and paying rent on the property they are using. The success of the individual is determined by his or her wealth, and wealth is the amount of stuff an individual can buy with his or her money. To be a successful nation, all of the individuals have to be wealthy, and therefore the nation will be
Before liberal economic views emerged, mercantilism was the economic doctrine the government practiced to protect his or her own domestic products. Voltaire’s quote explains the main goal of mercantilism, “It is clear ...
Economic changes Mercantilism •Europeans grow wealthy at the expense of colonies/Native Americans and Africans •Columbian Exchange •Spread of plants, animals, ideas between Europe, Africa and Americas •Triangular trade •Facilitated mercantilism and Columbian Exchange •Global economy Soical changes Christianity blends with traditional Native American and African beliefs •Voudou in Haiti •Santeria in Cuba •Gods replaced by saints, but some old traditions remain (e.g. bloodletting) Soical changes Social classes in Americas based on race •Peninsulares, creoles, mestizos/mulattoes, Native Americans and Africans •Slave trade •Led to decreased population in Africa •Weakened remaining African civilizations and hurt the potential rise of new ones •Spread
“Men desire to have some share in the management of public affairs chiefly on account of the importance which it gives them.” This famous quote by Adam Smith proves what people in the Enlightenment period wanted the most – free market economy and public services. Adam Smith was, in fact, a Scottish economist, who tried to influence the government and convince the ruler to fulfil people’s wishes and needs. Such craving for an “adjustable” trade, led to the first major economic establishment in the Enlightenment period, laissez faire, which banned the government from interfering with private trade. Adam Smith, its huge supporter, managed to get this concept to disseminate safely with various rules and restrictions attached; otherwise, this method might allow too much freedom. The economy during the Renaissance period, transforming especially with Adam Smith’s innovative theories during the Enlightenment, focused on the urge to limit the government’s ability to interfere with the market.
Building a powerful a wealthy state is a nation purpose which is known as mercantilism. It states how power depends on wealth and vice versa. There are major tenets of mercantilism. One was to balance the trade of both gold and silver into the country which was used to maintain domestic employment. The term “mercantile system” was developed from Adam Smith. The system actually was extremely beneficial to the Western European dominate. It helped the trade operation by forming colonies from European countries. It stresses how encouraging exports and restraining imports have enriched the country as well as political economy. The goods traded were beneficial for the increase in
Robert Heilbroner (1996, 11-13), in Teachings, drew upon the insights of Thomas Aquinas who had attempted to provide room for capital accumulation and economic activity beyond the “stringent” moral requirements of Aristotle. In what was known as “the commercial revolution,” an economic ideology known as “mercantilism” dominated the minds of the foremost economic thinkers. According to Heilbroner (1996, 17-18) the system of serfdom and feudalism had eroded behooving society to come up with a new way to structure its economic activity around a labor force that now had more opportunity than in the past. This new market, and with it a newly kindled desire for accumulation, ran in opposition to the Christian values of the time, something that Aquinas (Heilbroner, 1996, 12-13) attempted to address in the Summa Theoligica [1485]. This began a long and rich tradition of economic thinkers attempting to “make peace” with the seemingly amoral activities of an emerging merchant class and the inequities that occur as a result of an evolving market based system; furthermore, this debate continues into the 21st century, and could be seen as the most integral question that faces
The mercantilism which has arisen in Europe in the XVI century was one of early theories of trade. In the XVIII century the protectionism was subjected to sharp criticism in Adam Smith's works which doctrine can be considered as a theoretical basis of free trade. In the XIX century Smith's views have fuller development in David Ricardo's works.
This booming economic evolution emerged in efforts of expansion by the explorers of this age. Respectively, we should recognize these explores for their impact on the development of our global economy. The Columbian Exchange exhibits a great example of the economic benefits created by settlers of the Americas during the Exploration Age. The Columbian Exchange was the mass trade of minerals, food, and other goods between The Americas and Europe. From the Americas to Europe came corn, silver, and gold. From Europe to the Americas Came wheat, pigs, and weapons. Colonists constructed ranches with new farm animals in the Americas while the Americas exported extremely valued minerals to Europe. Both continents were immensely benefited with new sources of valued currency, nutritious food that would lead to population increase, and profitable land to be farmed and harvested. The Columbian Exchange greatly remodeled the economy of the New World and that of Europe. Or as said by William Duiker and Jackson Spielvogel “The ‘Columbian Exchange,’ as it is sometimes called was a process that ultimately brought benefits to all peoples.” Additionally, the Exploration Age embarked the theory of mercantilism. Mercantilism is the theory in which trade produces wealth and is reproduced by accumulation of possible balanced profits. This introduction to the mercantilist theory would be a pedestal for economic methods for the future two and a half centuries. Furthermore, The Exploration Age began the
Mercantilism is essentially economic nationalism, with a goal of economic prosperity. It controlled Western European thought between the 16th and 18th centuries, with economic powers like Britain, France and the Dutch Republic adopting mercantile policies to restrict imports and maximise exports. This was thought to be the foremost way to achieve a positive balance of trade, resulting in the amassing of gold and silver. Although mercantile policies were thought to bring wealth in the form of precious metals, many disagreed that this was the true measure of wealth, notably Adam Smith who argued that wealth is measured by what these metals purchase, such as commodities and a strong labour force (Smith, 2017). This essay will outline the main
One facet of this unique system involved the numerous economic differences between England and the colonies. The English government subscribed to the economic theory of mercantilism, which demanded that the individual subordinate his economic activity to the interests of the state (Text, 49). In order to promote mercantilism in all her colonies, Great Britain passed the Navigation Acts in 1651, which controlled the output of British holdings by subsidizing. Under the Navigation Acts, each holding was assigned a product, and the Crown dictated the quantity to be produced. The West Indies, for example, were assigned sugar production and any other colony exporting sugar would face stiff penalties (Text, 50). This was done in order to ensure the economic prosperity of King Charles II, but it also served to restrict economic freedom. The geographical layout of the American colonies made mercantilism impractical there. The cit...
One of the main aspects of a mercantilist society is the lack of access to enterprise. In these societies, the opportunity for business is granted to a select few, and generally those who have some sort of connection to the ruling class. In addition to having a connection with the ruling class, usually the businesses were partially owned by the government and used this method to indirectly tax the citizens purchasing the
Many countries followed the mercantilism theory trying to become self-sufficient. However, economists believe that if countries who engage in international trade can benefit more under that environment. There are two main theories supporting free trade: absolute advantage and comparative advantage. (Daniels et al, 2015). Absolute advantage was a theory created by Adam Smith suggesting that different countries produce some goods better than others and that unrestricted trade would allow these countries to specialize in the products that give them a competitive advantage. (Daniels et al, 2015)
In order to understand how economics really work in today’s age we must think about how those economic ideas, revolutionary theories of many economists, that helped to shape the economic structure as we know it now, through many individuals and school of economic though that has existed through the ages. These schools are “the mercantilists, the physiocrats, the classical economists, Marxian economics, the neoclassical economists and the monetarist economics. For this essay I will only refer to the classical economists and the neoclassical economists.
During the sixteenth century the first global system for exchange and distribution of goods at both the local and national levels was initiated to mark the beginning of the world market economy (Polanyi, 2001; Wallerstein, 2004). For Polanyi (2001) the traditional mechanisms of the market that once facilitated local trade and barter soon shifted to long distance trade and distribution through what became known as the market economy. He refers to this shift from market to market economy, as “the true starting point” of the social and economic reorganization of society (Polanyi 2001: 61). Focused on the geographic location of goods, and “the division of labor”, he argues that the whole of society and all social relations now ...