Mercantilism focused on maximizing exports and minimizing imports, prevailing for over 300 years.
Bullionism viewed wealth based on gold and silver reserves, overlooking other forms of capital.
Mercantilism influenced state policies with protectionism, monopolies, and tariffs, shaping economic intervention and control.
Deep dives
Origins of Mercantilism: Europe Dominated by Economic Thinking
Between the 16th and 18th centuries, Europe was dominated by mercantilism, where the focus was on maximizing exports and minimizing imports. Rulers and thinkers embraced this idea until Adam Smith's critique in 'The Wealth of Nations', discrediting it as a flawed concept. Despite its decline, modern politicians still echo mercantilist rhetoric.
Mercantilist Policies: Restrictions and Zero-Sum Game
Governments pursuing mercantilism implemented trade restrictions like tariffs and export bans to boost exports and limit imports. The concept of trade as a zero-sum game prevails in mercantilism, believing that one country's gain is another's loss. This mindset led to trade wars and the use of military force to protect trading interests.
Bullionism and Capital Accumulation: Views on Wealth
Bullionism views a country's wealth solely based on its gold and silver reserves, simplifying the concept of capital. However, this approach was criticized for overlooking other forms of wealth like financial instruments and overlooking potential inflationary impacts. The need for accumulating bullion was tied to historical practices and notions of power.
Impact of Mercantilism on Governance and Policies
Mercantilism's influence extended to state policies, emphasizing protectionism, monopolies, and patents to advance domestic industries and revenues. The rationalization of trade through protective tariffs and regulation marked a shift towards economic intervention and state control in mercantilist economies.
Legacy and Transition: Mercantilism to Free Trade Ideals
While mercantilism faded with the rise of free trade principles advocated by Adam Smith and later economists, remnants of protectionism persist in modern contexts. The evolution towards free trade and globalization faces challenges balancing national sovereignty, free elections, and free trade amidst populist sentiments and economic complexities.
Melvyn Bragg and guests discuss how, between the 16th and 18th centuries, Europe was dominated by an economic way of thinking called mercantilism. The key idea was that exports should be as high as possible and imports minimised.
For more than 300 years, almost every ruler and political thinker was a mercantilist. Eventually, economists including Adam Smith, in his ground-breaking work of 1776 The Wealth of Nations, declared that mercantilism was a flawed concept and it became discredited. However, a mercantilist economic approach can still be found in modern times and today’s politicians sometimes still use rhetoric related to mercantilism.
With
D’Maris Coffman
Professor in Economics and Finance of the Built Environment at University College London
Craig Muldrew
Professor of Social and Economic History at the University of Cambridge and a Member of Queens’ College
and
Helen Paul, Lecturer in Economics and Economic History at the University of Southampton.
Producer Luke Mulhall
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