Mercantilism

A Mercantilism is an economic policy/industrial policy that emphasizes a positive balance of trade, especially of finished goods.

• See: Tariff, Staple Right, Non-Tariff Barriers To Trade, Bullionism, Stimulus (Economics), Hard Money (Policy), Fiat Money, Floating Exchange Rate, Capitalism.

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References

2013

• (Wikipedia, 2013) ⇒ http://en.wikipedia.org/wiki/Mercantilism Retrieved:2013-12-3.
  • Mercantilism is an economic doctrine based on the theory that a nation benefits by accumulating monetary reserves through a positive balance of trade, especially of finished goods. Mercantilism dominated Western European economic policy and discourse from the 16th to late-18th centuries. Mercantilism was a cause of frequent European wars in that time and motivated colonial expansion. Mercantilist theory varied in sophistication from one writer to another and evolved over time. Favours for powerful interests were often defended with mercantilist reasoning.

    High tariffs, especially on manufactured goods, are an almost universal feature of mercantilist policy. Other policies have included:

    • Building a network of overseas colonies;
    • Forbidding colonies to trade with other nations;
    • Monopolizing markets with staple ports;
    • Banning the export of gold and silver, even for payments;
    • Forbidding trade to be carried in foreign ships;
    • Export subsidies;
    • Promoting manufacturing with research or direct subsidies;
    • Limiting wages;
    • Maximizing the use of domestic resources;
    • Restricting domestic consumption with non-tariff barriers to trade.

      Mercantilism in its simplest form was bullionism, but mercantilist writers emphasized the circulation of money and rejected hoarding. Their emphasis on monetary metals accords with current ideas regarding the money supply, such as the stimulative effect of a growing money supply. Specie concerns have since been rendered moot by fiat money and floating exchange rates. In time, the heavy emphasis on money was supplanted by industrial policy, accompanied by a shift in focus from the capacity to carry on wars to promoting general prosperity. Mature neomercantilist theory recommends selective high tariffs for "infant" industries or to promote the mutual growth of countries through national industrial specialization.

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