Mercantilism

Mercantilism was a dominant economic theory in Europe from the 16th to the 18th centuries. It advocated for a nation to maximize its wealth, typically measured in gold and silver, through government regulation of all of the nation's commercial interests. Core tenets involved a favorable balance of trade (exports exceeding imports), protectionist policies like tariffs and subsidies to support domestic industries, and the accumulation of precious metals. Colonies were considered valuable resources to provide raw materials and markets, contributing to the 'mother country's' prosperity. It often led to colonialism, economic competition, and sometimes even warfare between nations.

Mercantilism meaning with examples

• During the Elizabethan era, England practiced mercantilism, enacting laws to control trade, encourage domestic production, and amass gold. This meant imposing high tariffs on foreign goods to protect local merchants, which caused inflation as products became more expensive and gave England a superior advantage. Colonies in the New World provided resources and markets, further strengthening the nation's wealth through controlled trading, thus increasing national influence and making a profit.
• The Dutch Golden Age, though famed for free trade, was also heavily influenced by mercantilist practices. The Dutch East India Company, a prime example, operated under government license, controlling trade routes and exploiting resources in the East Indies. Their ships navigated international waters, controlling all that came through to maintain the economic power that the government set out.
• France under Louis XIV adopted a strong mercantilist policy under his finance minister, Jean-Baptiste Colbert. Colbert actively supported domestic industries, established state-owned manufactories, and implemented strict trade regulations designed to boost exports and reduce imports. This included the state support of building shipyards, the standardization of goods and protectionist tariffs to improve the French economy.
• The American colonies experienced mercantilism firsthand through the British Navigation Acts, designed to channel trade solely through Britain and benefit its economy. This resentment over imposed restrictions and perceived exploitation fueled the growing unrest and ultimately played a key role in the American Revolution, where America wanted their freedom back and be able to control their trade.
• Historians debate the true extent of mercantilism's success. While it contributed to the rise of powerful nation-states and the development of national economies, the system could also lead to economic stagnation, conflicts, and exploitation, as it was an economic arms race between countries to gain the most profit and dominate the world with wealth.