Characteristics of mercantilism
In this article you will find the main features of mercantilism and a comprehensive view of economic school itself.
The mercantilist conception arose after the decline of feudal economy and the economy itself takes on a new concept, becoming a science consists of an organic body of theories (from the sixteenth century).
With regard to the historical context where developed mercantilism remember training, upon learning of the sixteenth century, of the great modern nation States such as France by Francis I, England's Henry VIII and the Spain of Charles V. With the development of the States there was also a need to develop new ways to enrich themselves or at least wonder about possible solutions to be adopted, specifically to address the wars of conquest.
The economy was then deprived of the ancients moral constraints dictated by religion becoming a fundamental instrument of Government policy of sovereigns.
In 1500 sailing trips and consequently increased the geographical discoveries, that allowed him to take advantage of new natural sources, especially to commodities and precious metals (especially the gold).
The 16th century was also the scene of numerous changes in the religious sphere. Developed in fact, Thanks to Calvin, the Protestant Reformation and by the new interpretation of the Bible there came the conviction that economic success was a sign of divine benevolence.
The history of economic thought and development gathers under the name “mercantilist” individuals ranging from the early 16th century to the first half of the 18th century, in fact very often you encounter large differences in thinking between different scholars.
Let us now summarize the characteristics of mercantilism:
1) The economy is likely to increase the power of the State
2) The rulers were to curb imports and develop exports
3) States must accumulate gold and precious metals
4) States must extend and leverage colonial possessions
5) States must regulate the production and trade
Among the greatest interpreters of mercantilism are Jean-Baptiste Colbert (1639-1683), He was head of the Central Administration of the French State under Louis XIV, also called the “Sun King”. Putting into practice the ideas of mercantilist Colbert staged a trade policy based on protectionism, He founded factories and State-owned shipping companies and reformed the legislation on businesses. With the belief that the wealth of a State depended on the amount of precious metals in the country implemented a policy aiming at increasing the wealth of colonial France encouraging the development. To succeed he founded factories, He developed the war industry by increasing the number of ships in the fleet and ordered to build new ports. To slow down or decrease the imports of manufactured goods applied high customs duties and, convinced of the need to achieve a surplus in the trade balance (account that records all imports and exports carried out by a country) favoured in particular the export and domestic production, introducing tax exemptions.
In general the mercantilist economic policy and supported the importance of State control of the trade balance.
Here are summarized the duties of the State:
1) Regulate and stimulate the economy
2) Encourage exports and curb imports
3) Promote and support the influx of precious metals, especially gold
The inflationary crises occurred pushed mercantilists to investigate the fundamentals of value of money.
– Jean Bodin and Bernanrdo Davanzati formulated a quantity theory of money
– Antoine de Montchréstien was the first to use the expression “political economy”
– Thomas Mun argued that any judgment should be based on the balance of payments
– Gerard Malynes demonstrated that accumulation of precious metals caused a domestic price increase, with consequential damage to exports.
– Gregory King introduced the concept of elasticity of supply and demand by analyzing grain price fluctuations