Mercantilism

Mercantilism is the economic theory that a nation's prosperity depends upon its supply of capital and that the global volume of trade is unchangeable. The amount of capital, represented by bullion (amount of precious metal held by the state), is best increased through a balance of trade with large exports and low imports. Mercantilism suggests that the government should advance these goals by playing an active, protectionist role in the economy by encouraging exports and discouraging imports, especially through the use of tariffs. The economic policy based on these ideas is often called the mercantile system.

Related Topics:
Economic theory - Nation - Prosperity - Capital - Trade - Bullion - Precious metal - Balance of trade - Government - Protectionist - Exports - Import - Tariffs

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Mercantilism was the dominant school of economics throughout the early modern period (from the 16th to the 18th century). Domestically, this led to some of the first instances of significant government intervention and control over the economy, and it was during this period that much of the modern capitalist system was established. Internationally, mercantilism encouraged the many European wars of the period and fueled European imperialism. Belief in mercantilism began to fade in the late 18th century, as the arguments of Adam Smith and the other classical economists won out. Today, mercantilism (as a whole) is rejected by all serious economists, though some elements are looked upon favourably.

Related Topics:
Economics - Early modern period - 16th - 18th century - War - Imperialism - Adam Smith - Classical economists

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