Essay The Logic of Mercantilism - 723 Words

Explain the Logic of Mercantilism and Why it is Generally Viewed as a Deficient Theory Gretchen Serrao Nova Southeastern University Explain the Logic of Mercantilism and Why it is Generally Viewed as a Deficient Theory Mercantilism was an economic system that developed in Europe between the 16th and 18th century during the period of the new monarchies. This economic philosophy is based on the belief that a nation’s wealth depends on accumulated treasure, usually precious metals such as gold and silver, and to increase wealth, government policies should promote exports and discourage imports. Adam Smith, an eighteenth-century Scots professor of moral philosophy who influenced the founding fathers of†¦show more content†¦According to Coleman (1980), â€Å"Smith believed that the natural efforts of every individual to better his own condition when allied to liberty would motivate the ‘invisible hand’ and thus create wealth and prosperity† (p. 775). After a period of time, many people began to revolt against the idea of mercantilism and stressed the need for free trade. The continu ed pressure resulted in the implementation of laissez faire economics in the nineteenth century. Mercantilism aided the monarch and the merchant-capitalists to plan and govern the economic life to secure monopoly gains. Pecquet (2003) suggested that, â€Å"The king captured monopoly revenues in the form of customs duties imposed on the tobacco trade, and English merchants gained exclusive access to most of the world tobacco crop† (p. 467). As a consequence, domestic market was less competitive, legal monopolies drove up prices, consumers were hurt, the purchase power declined, and the further development of economy was affected. All of these reasons support the fact that mercantilism was a deficient theory because its policies benefited only one party and harm the other, and there was no possibility of economics being used to maximize the commonwealth, or common good. References Pecquet, G. M. (2003). British mercantilism and cropShow MoreRelatedLiberalism, Mercantilism, Structuralism And Constructivism1422 Words   |  6 PagesWhen approaching political economics, there are a variety of places and perspectives one may begin from, the most common of which being identifiable as Liberalism, Mercantilism, Structuralism and Constructivism. Each of these political ideologies represent the culmination of works from many famous theorists and intellectuals, all of which help us to better understand how certain economies have the possibility of functioning in different situations. 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