2. Mercantilism - 4. Mercantilism Lars G. Magnusson Subject...

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4. Mercantilism Lars G. Magnusson Subject Economics » History of Thought DOI: 10.1111/b.9780631225737.2003.00005.x 4.1 The History of the Concept In common scholarly and popular vocabulary, the concept of “mercantilism” designates either a system of economic policy or an epoch in the development of economic doctrine during the seventeenth and eighteenth centuries, or both of them, before the publication of Adam Smith's path-breaking Wealth of Nations (1776). The bulk of what is commonly known as “mercantilist literature” appeared in Britain from the 1620s up until the middle of the eighteenth century. However, the concept also appeared as a label for trade protection and dirigiste views during later periods, most often as “neo-mercantilism.” Among the first mercantilist writers, who are explicitly named as such, we find two Englishmen, Thomas Mun and Edward Misselden in the 1620s, while James Steuart's Principles of Political Oeconomy (1767) is conventionally perceived as perhaps the last major “mercantilist” work. Most of the mercantilist writers during the seventeenth and eighteenth centuries were businessmen, merchants and government officials. They wrote mainly about practical matters concerning trade, shipping, the economic effects of tariffs and protection of industries, monetary issues (the devaluation of coins), interest rates, and so on ( Magnusson, 1994 ). The concept of “mercantilism” first appeared in print in Marquis de Mirabeau's Philosophie Rurale in 1763 as systeme mercantile , although it was used by other physiocrats during the same period as well. In France during this period, the concept was utilized in order to describe an economic policy regime characterized by direct state intervention, intended to protect domestic merchants and manufacturers. This system, which was designed primarily to finance state manufactories, was more commonly known as “Colbertism,” after the famous seventeenth-century French finance minister. However, the main creator of “the mercantile system” was Adam Smith. According to Smith, the core of the mercantile system – “the commercial system” as he called it – consisted of the popular folly of confusing wealth with money. He argued that even though mercantilist writers mainly were practically oriented, they nevertheless proposed an analytic principle; namely, that a country must export more than it imported, which would lead to net inflow of bullion. This goal would be achieved through an active policy and thus make the state – or commonwealth – richer. This was the core argument of the much debated so-called “positive balance of trade theory.” According to Adam Smith, the main architect of the mercantile system of economic thinking was the English writer and tradesman Thomas Mun (1571–1641). His main published writings appear in two short treatises, A Discourse of Trade from England unto the East Indies (1621) and perhaps the more important England's Treasure by Forraign Trade
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This note was uploaded on 03/31/2010 for the course ECONOMICS 321 taught by Professor H during the Spring '10 term at Kadir Has Üniversitesi.

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2. Mercantilism - 4. Mercantilism Lars G. Magnusson Subject...

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