The trade theory of mercantilism was adopted by the more powerful European countries from the early 1500s to around 1800. This policy accelerated the economic estrangement from the feudal economy and the guild craft production system. He helped to transform Europe from a terrestrial economy to a monetary economy. Its main objective was to promote foreign trade and export for industries, including textiles.
Mercantilism, according to Laura LaHay of the Library of Economics and Liberty, “is economic nationalism for the purpose of building a rich and powerful state.” Economist Adam Smith coined the term market system. The system was most popular between the 16th and 18th centuries in Europe. Countries have tried to maintain a balance of imports to bring money into the country and exports to maintain national employment. The theory states that an economy must export more than it imports to remain economically and politically viable.
In the feudal era of the 16th century, the main raison d’Ãªtre of mercantilism was the consolidation of regional power. Colonization outside of Europe had a great effect on trade and mercantilism as the host country has always traded with its occupied colonies. Past economic policies left most states too weak to help guide their economies, and each small town had its own taxes or tariffs on trade. The mercantile era saw the rise of powerful states, including Spain, England, France and Holland, waging an almost constant war. The increase in war led to an increased need for gold and other metals and therefore to an increase in trade.
Mercantilist policies arose out of the special relationship between a country’s government and its mercantile classes of owners of small and large businesses. Traders paid taxes and levies to help support the military and navy, and in return, the government adopted policies that would protect domestic companies from outside competition. âThe government helped the local industry by imposing tariffs, quotas and bans on imports of goods that competed with local manufacturers,â LaHay reports.
In addition to the monetary demands of war, colonization and conquest, the merchant system arose from eighteenth-century beliefs about the origin of profit and the nature of commerce. Traders believed that buying your products at a low price and selling them at a much higher price was profitable. While this is the common goal of all for-profit businesses, commercialism has applied the concept to the nation as a whole. This has led nations to practice exporting more than they have imported.
The partisans of mercantilism
The Reference for Business reports that “mercantilist writers were generally business people and professionals who wrote and shared their thoughts haphazardly – long before economics became an academic discipline.” The merchants were not philosophers and made no claim to scientific knowledge. Instead, they were “proselytizing and pamphleteering businessmen,” says Reference for Business. Most economic writers came from France and England in the 17th century. They were practical people who wanted to disseminate their economic ideas and thereby increase the profits of their own businesses.
While the British colonized the Americas, mercantilist policies dominated political and trade decisions. The British colonized Virginia in 1607 specifically for the purpose of making money on tobacco crops, says Gary M. Pecquet – in his January 2003 article in the “Cato Journal”, “British Mercantilism and Crop Controls In the Tobacco Colonies â, reprinted by All Business. The harvest became the currency exchange for the region, so small businesses, such as “artisans, innkeepers and other non-farmers, often planted plots of tobacco to raise additional funds,” reports Pecquet. After mercantilist policies of restricting access to imports and controlling exports, a 1621 bill introduced in Parliament banned the planting of tobacco in England and the importation of tobacco from anywhere other than British India and India. colony of Virginia.
Biography of the writer
Dana Griffin has written for a number of guidebooks, trade and travel journals since 1999. She has also been published in “The Branson Insider” journal. Griffin is a CPR / First Aid Instructor Trainer for the American Red Cross, owns a business, and continues to write for publications. She received a Bachelor of Arts in English Composition from Vanguard University.