A history of mercantilism in europe

In an era before paper moneyan increase in bullion was one of the few ways to increase the money supply.

What is mercantilism in history

However, even when this results in an increase of net foreign indebtedness, and associated future debtservicing requirements, it will promote economic wealth if the spending is for productive purposes that yield a greater return than is forgone on the assets exchanged to finance the spending. To grow its wealth, England introduced fiscal policies that discouraged colonists from buying foreign products, while creating incentives to only buy British goods. The capitalists invested their capital and made mercantilism more mobile. Ekelund and Robert D. In Britain, government control over the domestic economy was far less extensive than on the Continent , limited by common law and the steadily increasing power of Parliament. Facts Matter. The ideas of this book would eventually lay the foundation for the principles of capitalism, which is an economic system that supports the idea of free trade and choice as a way of achieving prosperity. Agriculture should be encouraged, reducing the need to import food. One group, represented by Jacob Viner , argued that mercantilism was simply a straightforward, common-sense system whose logical fallacies could not be discovered by the people of the time, as they simply lacked the required analytical tools. But Smith points out circumstances in which government interference is necessary. The Jones Act requires all ships carrying cargo between U. Those who believe the theory was simply an error hold that its replacement was inevitable as soon as Smith's more accurate ideas were unveiled. In mercantilism, wealth is viewed as finite and trade as a zero-sum game. She was a visiting scholar from to at the University of Illinois in Chicago and an economics professor there from to

In large part because of its free trade policies, England became the dominant economic power in Europe. According to this interpretation, the reason England was so prosperous during the mercantilist era was that mercantilism was not well enforced.

Smith saw English merchant Thomas Mun as a major creator of the mercantile system, especially in his England's Treasure by Forraign Trade, which Smith considered the archetype of manifesto of the movement Magnusson These inventions made merchants confident for maritime trade which galvanised Merchantilism.

French finance minister and mercantilist Jean-Baptiste Colbert served for over 20 years.

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Shipping was particularly important during the mercantile period. Labor unions have used this argument to justify protection from imports originating in low-wage countries, and there has been much political and media debate about the implications of offshoring of service sector jobs for national employment.

Thus, mercantilism held exports should be encouraged by the government and imports discouraged.

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European Economic History: From Mercantilism to Maastricht and Beyond