Mercantilism

Mercantilism is a economic school that was found in the 16th though 18th centuries. It saw trade as a sort of low-intensity warfare, in which one partner tried to get as big a piece of the “pie” than the others. It was focused on discouraging imports and on encouraging exports. The thought was that imports draw away the currency (gold and silver), and thereby diminish the country’s wealth, while exports draw in more currency and increase the wealth.  France was a great example of a Mercantilist policy at work. The production of luxury items was subsidized, and monopolies were granted to various areas of manufacture. The importation of lace was abolished, and people working in the lace industry were forced to work in factories because they might secretly produce their own lace if they worked at home. Fines were imposed on those who wore buttons that were not the conventional style because they were not produced by the subsidized factories. Calico prints became popular, but the subsidized fabric producers did not make calicos, so severe penalties were established against those who wore them. There were even executions put in place for the fashion offenders. Mercantilism was flawed in many ways. Trade is not a war, and is not, according to the Mercantilists, a zero-sum game. In normal free trade one partner does not “win” by getting a bigger share of the pie; the partners work together to make the whole pie bigger and thereby both increase each others’ wealth. Even though it was flawed Mercantilism did exist in the 16th-18th centuries, especially in absolutist governments.

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One thought on “Mercantilism

  1. Pingback: Classical Liberalism | supererling

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