What is the meaning of Mercantilism? Concept and Definition of Mercantilism

Definition, concept, meaning, what is mercantilism

1. Concept of mercantilism

Mercantilism was a system of economic ideas that prevailed in Europe from the 16th century and which claimed that the importance and the wealth of a nation depended on almost in its entirety of its commercial activity. This economic theory emerged in a historic moment in which Europe started out commercial closure who had lived in the middle ages and which, Furthermore, trade began to earn place as main activity from which make important monetary profits.
Mercantilism, as its name implies, based its foundations on the notion that trade and the establishment of an internal market firm should be the core of any modern State which would like to be successful and strong. Thinkers such as Adam Smith, Jean Bodin and Jean Baptiste Colbert would be primarily responsible for spreading and defending this theory, whereby new States should strive by all means to achieve increase their coffers with commercial activities.
It is no coincidence that mercantilist theory appeared in a historical moment in which trade lived an interesting resurgence. In addition, cannot be overlooked the fact that for the moment in which this theory began to have increasingly stronger, Europe had already come into contact with the new world, in such a way that the remittances of silver, gold and other riches were playing an increasingly important.
At the same time seeking to encourage trade and the establishment of powerful domestic markets, this theory also implied the active and direct participation of the State to guide and control all those instances that had to do with the success of the project. In this way, the modern State is characterized by being a State with clearly centralized power and positive interference in the economy, in contrast of what would later happen in times of greater economic liberalism.

2. Definition of mercantilism

Mercantilism is an economic system that is based on the development of trade and export. Their doctrines were developed between the 16th and 18th centuries in Europe.
The establishment of mercantilism, required of a strong State that could take the necessary measures to regulate the economy. It was considered that the prosperity of each nation was linked by the capital accumulated by it, which, in turn, was represented by the accumulation of precious metals in State power.
Mercantilist theorists argued that such capital could increase from a positive balance of trade, i.e., with a level of exports exceeding the level of imports. This resulted in a Government that would implement protectionist policies, protecting domestic production with tariffs on imports and promoting export.
All of this explains why the State should have a strong position in the establishment of mercantilism. Otherwise, fixation of tariff barriers and the adoption of protectionist policies in general would not be possible.
Mercantilism was a peak point, although it also received much criticism. Different theorists pointed out that mercantilism did not have in mind the competitive advantages of each country (every nation has natural conditions that allow you to obtain certain products with less resources, which can export to import others) and that if it was only accumulated wealth in the form of precious metals, this offer would increase and, therefore, would lower its price.
In everyday language, on the other hand, referred to as mercantilism to the mercantile spirit that is applied to things which, in theory, should not be subject to trade. For example: "Don't understand the mercantilism in affective relations".

3. Meaning of mercantilism

Mercantilism, word derived from the latin "mercantis" = referred to trade; as political and economic doctrine, it was current between the 16th and 18th centuries, reaching all the modernity, especially from the commercial boom emerged from the discovery of the American continent; being Jean Baptiste Colbert (1619-1683), who served as Minister of the French King Luis XIV, one of its leading exponents.
According to this conception, the Nations based its wealth of having abundance in precious metals, gold or silver. The intervention of the State in the economy is very strong, which makes monetary control is exercised, to increase and protect local production; and made little external demand, because the favorability of the balance of payments is based on little buying abroad and selling much.
Colbert in France, in the exercise of these ideas, tried to his country to grow at the expense of their neighbors, especially from the Netherlands. For this purpose it fostered largely agrarian and industrial activity establishing real articles of luxury items, for consumption of the Royal Court, but also given the demand for the rest of Europe.
He introduced strong obstacles to imports, as the "tariff of 1667". He founded commercial companies, subsidized the shipowners of ships, and encouraged the development of a merchant. It granted to local entrepreneurs, subsidies and credits that earned no interest. The struggle for global markets prompted the release of imperialist wars.
A great detractor of mercantilism was the Scottish liberal Adam Smith (1723-1790) considering that it was an economic system that the Prince had at your service. In the 18th century comes the Physiocracy.