What is Mercantilism?

PHILO-notes

21 Nov 202104:46

EducationalLearning

32 Likes 10 Comments

TLDRMercantilism, an economic theory and practice from the 16th to 18th centuries, advocated for state control of economies to increase national wealth and power at the expense of rivals. It was based on the belief in a static global wealth, promoting exports and limiting imports through tariffs. England, with few natural resources, implemented policies like the Sugar Act and Navigation Acts to favor British goods and control colonial trade, leading to a positive balance of trade and national wealth. Mercantilism also emphasized the importance of precious metals, large populations, and frugality, laying the groundwork for capitalism but later criticized for its protectionist views and replaced by laissez-faire economics.

Takeaways

🏛️ Mercantilism was an economic theory and practice from the 16th to the 18th century, focusing on state power through economic regulation.
🌍 It was based on the belief that the world's wealth was static, and a nation's wealth and power were best served by increasing exports and limiting imports.
🛃 Many European nations used tariffs to maximize exports and minimize imports, aiming for a favorable balance of trade.
👑 Mercantilism was the economic counterpart of political absolutism, replacing the feudal economic system in Western Europe.
🇬🇧 England, as the epicenter of the British Empire, used fiscal policies to discourage colonists from buying foreign products and incentivize British goods.
🍬 The Sugar Act of 1764 and the Navigation Act of 1651 were examples of England's mercantilist policies to control colonial trade and favor British interests.
💰 Mercantilists believed that a nation's economic health could be assessed by its levels of ownership of precious metals like gold or silver.
🏭 Colonial possessions were seen as markets for exports and suppliers of raw materials, with manufacturing forbidden in colonies to protect the mother country's interests.
👥 A strong nation was believed to require a large population for labor, markets, and military strength.
💼 Thrift, saving, and parsimony were regarded as virtues under mercantilism, as they were seen as necessary for capital creation.
🔄 Mercantilism was criticized by laissez-faire advocates who argued for the benefits of both domestic and foreign trade and against the idea of trade being a zero-sum game.

Q & A

What is mercantilism?
-Mercantilism was an economic theory and practice from the 16th to the 18th century, promoting governmental regulation of a nation's economy to increase state power at the expense of rival nations.
What was the main goal of mercantilism?
-The main goal of mercantilism was to augment state power by maximizing exports and minimizing imports to accumulate wealth and power for the nation.
How did mercantilism view the world's wealth?
-Mercantilism was based on the principle that the world's wealth was static, and nations could best increase their wealth by accumulating the largest possible share of this finite wealth.
What role did tariffs play in mercantilism?
-Tariffs were used to limit imports and encourage exports, thereby helping nations to accumulate wealth and achieve a favorable balance of trade.
How did mercantilism relate to political absolutism?
-Mercantilism was the economic counterpart of political absolutism, supporting strong centralized government control over the economy to increase national wealth and power.
What was England's approach to mercantilism due to its lack of natural resources?
-England implemented fiscal policies to discourage colonists from buying foreign products and created incentives to buy British goods, such as the Sugar Act of 1764 and the Navigation Act of 1651.
What was the Sugar Act of 1764?
-The Sugar Act of 1764 raised duties on foreign refined sugar and molasses imported by the colonies to give British sugar growers a monopoly on the colonial market.
What was the Navigation Act of 1651?
-The Navigation Act of 1651 forbade foreign vessels from trading along the British coast and required colonial exports to first pass through British control before being redistributed throughout Europe.
How did mercantilism view military force in relation to economic health?
-Mercantilism often involved using military might to protect local markets and supply sources, supporting the belief that a nation's economic health relied on its supply of capital.
How was a nation's economic health assessed under mercantilism?
-A nation's economic health was assessed by its levels of ownership of precious metals like gold and silver, which were considered indicators of wealth.
What role did colonies play in the mercantilist system?
-Colonies served as markets for exports and suppliers of raw materials to the mother country, and their manufacturing was restricted to maintain a trade monopoly for the mother country.
What was the mercantilist view on human wants and luxury goods?
-Mercantilism sought to minimize human wants, especially for imported luxury goods, to prevent the outflow of precious foreign exchange.
How did mercantilism promote early capitalism?
-Mercantilism provided a favorable climate for the development of capitalism by encouraging profit and the accumulation of capital through thrift, saving, and parsimony.
Why was mercantilism later criticized?
-Mercantilism was criticized for its protectionist policies and the belief that a nation could only grow rich at the expense of another, whereas advocates of laissez-faire argued that all trade was mutually beneficial.
What did laissez-faire advocates argue against mercantilism?
-Laissez-faire advocates argued that trade was beneficial to all parties, and that the amount of money a state needed would naturally adjust, opposing the mercantilist view that wealth was static and trade balances must be strictly controlled.

Outlines

00:00

📜 Introduction to Mercantilism

Mercantilism was an economic theory and practice from the 16th to the 18th century. It emphasized governmental regulation to augment state power by increasing exports and limiting imports through tariffs. European nations aimed to accumulate wealth, considering the world's wealth as static. England, despite few natural resources, used policies to favor British goods, such as the Sugar Act of 1764 and the Navigation Act of 1651, to create a monopoly and ensure a favorable balance of trade.

⚔️ Mercantilism and Military Might

Under mercantilism, nations used military power to protect local markets and resources, believing that economic health depended on capital, particularly precious metals like gold and silver. Mercantilists saw increased new home construction, agricultural output, and a strong merchant fleet as indicators of economic health.

💰 Principles of Mercantilism

Mercantilism involved several interlocking principles, such as the importance of precious metals, a favorable trade balance, and colonial possessions serving as markets and suppliers. Manufacturing in colonies was restricted, and commerce was monopolized by the mother country. A large population was valued for labor, market, and military purposes, while luxury imports were minimized to conserve wealth.

🏛️ The Role of Laws and Values

Mercantilist policies included laws to limit human wants, promote thrift, saving, and parsimony to create capital. These principles provided a conducive environment for early capitalism. However, later critics, especially advocates of laissez-faire, argued against mercantilist ideas, promoting free trade and denying the notion that wealth was a zero-sum game.

🌍 Critique and Decline of Mercantilism

Laissez-faire proponents criticized mercantilism, asserting that all trade was beneficial and wealth was not limited. They argued for the automatic adjustment of money supply and denied that nations could only grow rich at the expense of others, advocating instead for the mutual benefits of trade.

Mindmap

Keywords

💡Mercantilism

Mercantilism is an economic theory and practice that prevailed from the 16th to the 18th century. It advocated for government regulation of a nation's economy to increase state power at the expense of rivals. The concept is central to the video's theme, illustrating the historical economic policies aimed at augmenting national wealth through exports and limiting imports, as exemplified by England's fiscal policies during the British Empire era.

💡Economic Theory

An economic theory provides a framework for understanding economic phenomena and prescribing policies. In the context of the video, mercantilism is the economic theory that guided the economic practices of nations, particularly focusing on the idea that a nation's wealth and power are best served by increasing exports and restricting imports.

💡State Power

State power refers to the authority and influence a nation holds, often demonstrated through its economic, military, and political strength. The video discusses how mercantilist policies were designed to augment state power by accumulating wealth, which was seen as a means to enhance a nation's influence and control over global affairs.

💡Exports

Exports are goods and services that are produced domestically but sold to other countries. The video emphasizes the mercantilist belief in the importance of increasing exports as a means to bolster a nation's wealth and power, contrasting it with the limitation of imports.

💡Imports

Imports are goods and services that are brought into a country from abroad. The script explains how mercantilists sought to limit imports through tariffs and other restrictions to protect domestic industries and to maintain a favorable balance of trade.

💡Tariffs

Tariffs are taxes imposed on imported goods, which can make these goods more expensive and thus less competitive. The video uses the example of the Sugar Act of 1764 to illustrate how tariffs were used as a mercantilist tool to favor domestic products and disadvantage foreign competitors.

💡Political Absolutism

Political absolutism is a system where a ruler holds absolute power. The script notes that mercantilism was the economic counterpart of political absolutism, suggesting a connection between the concentration of economic control and the concentration of political power.

💡Feudal Economic System

The feudal economic system was a social and economic order characterized by the exchange of goods and services for protection and land tenure. The video mentions that mercantilism replaced this system in Western Europe, marking a significant shift in economic organization and governance.

💡Balance of Trade

The balance of trade is the difference between a country's exports and imports. A favorable balance of trade, where exports exceed imports, was a key goal of mercantilist policy, as discussed in the video, to increase national wealth.

💡Precious Metals

Precious metals, such as gold and silver, were considered a measure of a nation's wealth in mercantilist thought. The video explains that mercantilists believed that ownership of these metals, which could be obtained through trade, was indispensable to a nation's wealth.

💡Laissez Faire

Laissez faire is an economic doctrine that advocates for minimal government intervention in the economy. The video contrasts this with mercantilism, noting that laissez faire supporters criticized mercantilist policies and argued for the benefits of free trade without restrictions.

Highlights

Mercantilism was an economic theory and practice from the 16th to 18th century.

It promoted government regulation of a nation's economy to increase state power at the expense of rivals.

Mercantilism was based on the principle of a static world wealth and the need to increase exports.

European nations aimed to accumulate wealth by maximizing exports and limiting imports with tariffs.

Mercantilism was the economic counterpart of political absolutism.

It replaced the feudal economic system in Western Europe.

England, as the epicenter of the British Empire, introduced fiscal policies to discourage foreign product purchases.

The Sugar Act of 1764 and Navigation Act of 1651 were examples of England's mercantilist policies.

Mercantilism resulted in a favorable balance of trade, increasing Britain's national wealth.

Nations engaged military might to protect local markets and supply sources under mercantilism.

Mercantilists believed in assessing a nation's economic health by ownership of precious metals.

A nation's wealth was also tied to new home construction, agricultural output, and a strong merchant fleet.

Mercantilism contained principles such as the indispensability of precious metals and favorable trade balances.

Colonies were to serve as markets and suppliers, with manufacturing forbidden and commerce as a mother country monopoly.

A strong nation was defined by a large population, providing labor, market, and soldiers.

Minimizing human wants and promoting thrift were seen as virtues to create capital.

Mercantilism provided a climate for the early development of capitalism with its profit promises.

Later, mercantilism was criticized by laissez-faire advocates who argued for the benefits of both domestic and foreign trade.

Critics maintained that money supply would adjust automatically and trade was mutually beneficial.

The idea that a nation could only grow rich at the expense of another was denied by laissez-faire advocates.

Transcripts

Browse More Related Video

What is Mercantilism? | International Business | From A Business Professor

Mercantilism explained

MERCANTILISM, Explained [AP Euro Review—Unit 3 Topic 4]

The Economics of the Industrial Revolution [AP World History Review—Unit 5 Topic 7]

Mercantilism -- Definition for Kids

The ECONOMICS of EMPIRE Building [AP World History Review—Unit 4 Topic 5]

What is Mercantilism?

Takeaways

Q & A