Evolution of the Mercantilistic Theory and Its Notion:

Mercantilism is an economic practice by which governments used their economies to augment state power at the expense of other countries. The term “Mercantilism” was coined by Adam smith in his wealth of Nations to describe a loose system of controls epitomized in dispersed writings.

Arguably the most influential proponent of mercantilism, French controller General of Finance Jean-Baptiste Colbert (1619-1683) studied foreign –trade economic theories and was uniquely positioned to execute these ideas. Mercantilism is an economic policy that is designed to maximize the exports and minimize the imports for an economy.

It promotes imperialism, tariffs and subsidies on traded goods to achieve that goal. While China ranks as the most Mercantilist nation, others such as India, Indonesia and Russia have also engaged in innovation Mercantilist practices, placing them in the reports ‘moderate –high ‘ category. The mother nations of colonies benefited most from mercantilism.

The Cardinal Principles Of Mercantilistic Thoughts:

Mercantilists believed that a nation could build wealth in two ways:

1. It could extract gold and silver from mines at home or in its colonies.
2. It could sell more goods than it bought from foreign countries, thus creating a favorable balance of trade.

In mercantilism, Wealth is viewed as finite and trade as a Zero –sum game. Mercantilism was the prevalent economic system in the Western world from the 16th to the 18th Century. The etymology of the word ‘Mercantilism’ came from the Latin ‘mercans’ or ‘buyer’ and ‘ism’ means Doctrine, System, Characteristics. Mercantilism was based on the idea that a nation’s wealth and Power were best served by increasing exports and so involved increasing trade.

The most famous and Powerful mercantilist corporations were the British and Dutch East India Companies. Mercantilism is considered by some scholars to be precursor to capitalism since it rationalized economic activity such as Profits and losses.

In England, the mercantile System is also known as Commercial System or Restrictive System because its practical Policies consisted of numerous restrictions, regulations on commerce. In France, the mercantile System was known as Colbertism named after the Finance minister Colbert .In Germany and Austria, it was called as Cameralism. Sometimes, it is named as Bullionism because of the importance given to Gold and Silver.

Alexander Grey:

It had three hundred years run and so it colored the thought and still more the actions of every Country in Europe.

Haney:

Mercantilism comprises the economic Views that Prevailed among the European Statesmen from 16th to 18th Century.

Elements Determining Mercantilism:

• Economic Factors
• Political Factors
• Religious Factors
• Cultural Factors
• Scientific Factors

Characteristics Features of Mercantilism:

• Wealth
• Foreign Trade
• Commerce and Industry
• Population
• Natural Resources
• Wages and Rent
• Interest
• Taxation
• Theory Of Value
• Factors of Production

Strategies of Mercantilism:

1. Aggressively exploit natural resources abroad. Build colonies to extract wealth.
2. Raise Protective tariffs or quotas or both on foreign imports.
3. Erect non-tariff barriers on foreign imports
4. Attack and capture foreign colonies.
5. Block foreign shipping, Preventing wealth gathered abroad from reaching rival countries.

Therefore, In Conclusion ,Mercantilist Ideas were the dominant economic ideology of all of Europe in the early Modern Europe. However, mercantilist Policies had an important effect on Britain helping turn it into the world’s dominant trader, and an International Super Power.

Written By: A.J.E.Shiny