A presentation by Rohit Tembe

Mercantilism is the economic doctrine in which government control of foreign trade is of paramount importance for ensuring the prosperity and military security of the state. In particular, it demands a positive balance of trade.

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. Favors for powerful interests were often defended with mercantilist reasoning.

Building a network of overseas coloniesForbidding colonies to trade with other nationsMonopolizing markets with staple ports;Promote accumulation of gold and silverForbidding trade to be carried in foreign ships;Export subsidies;Maximizing the use of domestic resources;Restricting domestic consumption with non-

tariff barriers to trade.

Jean-Baptiste Colbert's work in seventeenth century France exemplified classical mercantilism. In the English-speaking world its ideas were criticized by Adam Smith with the publication of The Wealth of Nations in 1776 and later David Ricardo with his explanation of comparative advantage.

Mercantilism was rejected by Britain and France by the mid-19th century. The British Empire embraced free-trade and used its power as the financial center of the world to promote the same.

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

Much of Adam Smith's The Wealth of Nations is an attack on mercantilism.

Scholars debate over why mercantilism dominated economic ideology for 250 years. One group, represented by Jacob Viner, argues 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.

Mercantilism was the dominant school of thought in Europe throughout the late Renaissance and early modern period (from the 15th to the 18th century). Mercantilism encouraged the many intra-European wars of the period and arguably fueled European expansion and imperialism — both in Europe and throughout the rest of the world — until the 19th century or early 20th century.

England began the first large-scale and integrative approach to mercantilism during the Elizabethan Era (1558–1603). An early statement on national balance of trade appeared in Discourse of the Common Weal of this Realm of England, 1549: "We must always take heed that we buy no more from strangers than we sell them, for so should we impoverish ourselves and enrich them.

In Europe, academic belief in mercantilism began to fade in the late 18th century, especially in England, in light of the arguments of Adam Smith and the classical economists. The repeal of the Corn Laws by Robert Peel symbolised the emergence of free trade as an alternative system.

Mercantilism never returned to popularity among economists as the principle Comparative Advantage shows the gains from international trade. However, during the Great Recession countries raised tariffs in an attempt to protect their industries, sharply reducing world trade.

The Austrian lawyer and scholar Philipp Wilhelm von Hornick, in his Austria Over All, If She Only Will of 1684, detailed a nine-point program of what he deemed effective national economy, which sums up the tenets of mercantilism comprehensively:

That every inch of a country's soil be utilized for agriculture, mining or manufacturing.

That all raw materials found in a country be used in domestic manufacture, since finished goods have a higher value than raw materials.

That a large, working population be encouraged. That all export of gold and silver be prohibited and all domestic money

be kept in circulation. That all imports of foreign goods be discouraged as much as possible. That where certain imports are indispensable they be obtained at first

hand, in exchange for other domestic goods instead of gold and silver. That as much as possible, imports be confined to raw materials that

can be finished [in the home country]. That opportunities be constantly sought for selling a country's surplus

manufactures to foreigners, so far as necessary, for gold and silver. That no importation be allowed if such goods are sufficiently and

suitably supplied at home.

Mercantilism helped create trade patterns such as the triangular trade in the North Atlantic, in which raw materials were imported to the metropolis and then processed and redistributed to other colonies.

Mercantilist ideas were the dominant economic ideology of all of Europe in the early modern period, and most states embraced it to a certain degree. Mercantilism was centered in England and France, and it was in these states that mercantilist polices were most often enacted.

FranceMercantilism arose in France in the early 16th century, soon after the monarchy had become the dominant force in French politics. In 1539, an important decree banned the importation of woollen goods from Spain and some parts of Flanders. The next year, a number of restrictions were imposed on the export of bullion.

Great BritainIn England, mercantilism reached its peak during the 1340-1789 Long Parliament government (1640–1660). Mercantilist policies were also embraced throughout much of the Tudor and Stuart periods, with Robert Walpole being another major proponent.

 The Habsburg Holy Roman Emperors had long been interested in mercantilist policies, but the vast and decentralized nature of their empire made implementing such notions difficult.

Mercantilism was economic warfare and was well suited to an era of military warfare. Since the level of world trade was viewed as fixed, it followed that the only way to increase a nation's trade was to take it from another.

A number of wars, most notably the Anglo-Dutch Wars and the Franco-Dutch Wars, can be linked directly to mercantilist theories. Most wars had other causes but they reinforced mercantilism by clearly defining the enemy, and justified damage to the enemy's economy.