Damaris Coffman, Professor at UCL, Craig Muldrew, a Cambridge economic historian, and Helen Paul from the University of Southampton delve into the ideology of mercantilism that shaped Europe between the 16th and 18th centuries. They discuss the drive for exports and the critique by Adam Smith highlighting the flaws in mercantilism. The conversation explores the interplay between mercantilism and colonialism, along with its lasting influence on modern economics and the persistent debates over trade policies and globalization.
Mercantilism emphasized maximizing exports and minimizing imports to increase a nation's wealth.
Mercantilism implemented restrictive trade policies, such as tariffs and export bans, to protect domestic industries.
Mercantilism justified colonization, exploitation of overseas resources, and raised revenue through protective tariffs.
Deep dives
Mercantilism and its Dominance in Europe
Mercantilism was a dominant economic way of thinking in Europe between the 16th and 18th centuries. It emphasized the idea that exports should be maximized and imports minimized to increase the nation's wealth. This approach was adopted by rulers, political thinkers, and merchants, with the belief that it would benefit both the nation and its leaders. However, Adam Smith's critique in his book, The Wealth of Nations, challenged and discredited the concept of mercantilism. Despite its decline, some elements of mercantilism can still be seen in modern times, with politicians occasionally using rhetoric related to mercantilist ideas.
The Policies of Mercantilism
Governments implemented various policies under mercantilism to restrict trade and boost exports. These policies included setting up regulatory bodies, such as boards of trade, imposing tariffs, and even banning the export of certain goods. The focus was on increasing domestic production and reducing reliance on imports. Mercantilist policies treated trade as a zero-sum game, often resulting in trade wars and military conflicts. The idea was to protect domestic industries and monopolies through state intervention and regulation.
Bullionism, Zero-Sum Game, and the Limitations of Mercantilism
Bullionism, the belief that a nation's wealth lies in its gold and silver reserves, played a significant role within mercantilism. However, the view of wealth as solely based on gold and silver was overly simplistic and failed to consider other forms of money exchange and trade. Mercantilism viewed trade as a zero-sum game, where one nation's gain meant another's loss. This perspective often led to protectionist measures and trade conflicts, as nations tried to restrict imports and protect their own industries. Yet, mercantilism overlooked the potential benefits from cooperation and gains through trade.
The Influential Role of Mercantilism in European Society
Mercantilism had a profound impact on European society for several reasons. It provided a simple and accessible explanation of economic realities, aligning the interests of rulers, merchants, and the crown's wealth with the notion of national wealth. It justified colonization and the exploitation of overseas resources for the benefit of domestic manufacturers. Additionally, mercantilism offered a framework for raising revenue through protective tariffs and bolstering domestic industries. The focus on trade monopolies, economics scarcity, and the role of the state in protecting industries and patents further contributed to the enduring influence of mercantilism.
The Decline of Mercantilism and the Rise of Free Trade
Mercantilism faced challenges from critics like Adam Smith, whose work critiqued the flawed economic ideas associated with the concept. Over time, as overseas empires collapsed and industrialization reshaped economies, mercantilism became less relevant. The advent of free trade ideologies gained prominence, especially in England in the 19th century. However, the tension between protectionism and free trade intensifies in the modern world, driven by concerns about job security, economic inequality, and the impact of globalization. While mercantilism has declined, its ideological legacy continues to shape debates on economic policies and trade relationships.
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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